HomeMy WebLinkAbout11 - Financial Statement Audit Results and Related Communication for the Fiscal Year Ended June 30, 2024Q �EwPpRT
CITY OF
s NEWPORT BEACH
`q44:09 City Council Staff Report
February 11, 2024
Agenda Item No. 11
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Jason AI -Imam, Finance Director/Treasurer - 949-644-3126,
jalimam@newportbeachca.gov
PREPARED BY: Trevor Power, Accounting Manager - 949-644-3125
tpower@newportbeachca.gov
TITLE: Financial Statement Audit Results and Related Communication for
the Fiscal Year Ended June 30, 2024
/_1 16"t I:7_T91 6
The City of Newport Beach is audited annually by an independent auditing firm, presently
Davis Farr LLP. The audit process takes several months, beginning after the books are
closed (typically in September) and concluding several months later, once the financial
statements have been prepared. On January 23, 2024, the Finance Committee met with
representatives of Davis Farr LLP and reviewed the results of the audit in detail. A copy
of the City's Annual Comprehensive Financial Report (ACFR) for the fiscal year ended
June 30, 2024, is attached to this report. Also attached are the auditors' required
communications with the Finance Committee in its capacity as the City's Audit Committee
and the auditors' Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters.
RECOMMENDATIONS:
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 auditors' opinion letter can be found within the ACFR (Attachment A), which 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 first 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.
Financial Statement Audit Results and Related Communication
for the Fiscal Year Ended June 30, 2024
February 11, 2024
Page 2
These include:
• Planned Scope and Timing of the Audit
• Compliance with All Ethics Requirements Regarding Independence
• Significant Risks Identified
• Qualitative Aspects of the City's Significant Accounting Practices
• Significant Unusual Transactions
• Significant Difficulties Encountered During the Audit
• Uncorrected and Corrected Misstatements
• Disagreements with Management
• Representations Requested from Management
• Management Consultations with Other Accountants
• Other Significant Matters, Findings, or Issues
• Other Information Included in the Annual Comprehensive Financial Report
The auditors reported no significant unusual
encountered in connection with the performance
uncorrected misstatements, no disagreements
findings or issues.
transactions, no significant difficulties
of the audit, no material corrected and
with management, and no other audit
The second letter, 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 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.
11-2
Financial Statement Audit Results and Related Communication
for the Fiscal Year Ended June 30, 2024
February 11, 2024
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 — Annual Comprehensive Financial Report for the Fiscal Year Ended
June 30, 2024
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
11-3
Attachment A
Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2024
11-4
CITY OF NEWPORT BEACH
CALIFORNIA
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11-6
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Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2024
Prepared by the Finance Department
Jason AI -Imam, Finance Director/Treasurer
11-7
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The City of Newport Beach was incorporated September 1, 1906
The present City Seal was adopted July 22,1957
11-8
INTRODUCTORY SECTION V:-z
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11-10
CITY OF NEWPORT BEACH
Annual Comprehensive Financial Report
Fiscal Year Ended June 30, 2024
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 Auditor's Report..........................................................................................25
Management's Discussion and Analysis.........................................................................31
(Required Supplementary Information)
Basic Financial Statements
Government -wide Financial Statements:
Statement of Net Position..............................................................................................53
Statement of 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 ..............66
Proprietary Funds:
Statement of Net Position...........................................................................................70
Statement of Revenues, Expenses and Changes in Net Position...............................71
Statement of Cash Flows............................................................................................72
Fiduciary Funds:
Statement of Fiduciary Net Position............................................................................76
Statement of Changes in Fiduciary Net Position.........................................................77
Notes to the Financial Statements....................................................................................80
Required Supplementary Information
Defined Benefit Plan For Miscellaneous Employees:
Schedule of Changes in the Net Pension Liability and Related Ratios .........................146
Schedule of Contributions............................................................................................148
Defined Benefit Plan For Safety Employees:
Schedule of Changes in the Net Pension Liability and Related Ratios .........................150
Scheduleof Contributions............................................................................................152
Post -Employment Health Care Benefits (OPEB):
Schedule of Changes in the Net OPEB Liability and Related Ratios ............................154
Schedule of Contributions............................................................................................156
Budgetary Comparison Statements:
GeneralFund.............................................................................................................158
Tide and Submerged Land — Operating Fund..............................................................160
Tide and Submerged Land — Harbor Capital Fund......................................................161
Notes to Required Supplementary Information...............................................................162
Supplementary Schedules
Other Governmental Funds:
CombiningBalance Sheet...........................................................................................170
Combining Statement of Revenues, Expenditures and Changes in
FundBalances............................................................................................................176
Budgetary Comparison Schedules:
StateGas Tax Fund....................................................................................................184
SB1 Gas Tax RMRA Fund...........................................................................................185
Asset Forfeiture Fund.................................................................................................186
OTS DUI Grant Fund...................................................................................................187
Circulation and Transportation Fund............................................................................188
Building Excise Tax Fund............................................................................................189
Community Development Block Grant Fund................................................................190
Air Quality Management District Fund.........................................................................191
Environmental Liability Fund........................................................................................192
Supplemental Law Enforcement Services Fund..........................................................193
Opioid Remediation Fund............................................................................................194
ContributionsFund......................................................................................................195
FIINFund....................................................................................................................196
Restricted Programs Fund...........................................................................................197
MeasureM Fund.........................................................................................................198
Oceanfront Encroachment Fund..................................................................................199
American Rescue Plan Act Fund.................................................................................200
Miscellaneous Grants Fund.........................................................................................201
PEGFees Fund...........................................................................................................202
Internal Service Funds:
Combining Statement of Net Position..........................................................................206
Combining Statement of Revenues, Expenses and Changes in Net Position ..............207
Combining Statement of Cash Flows...........................................................................208
Custodial Funds:
Combining Statement of Fiduciary Net Position...........................................................212
Combining Statement of Changes in Fiduciary Net Position........................................213
STATISTICAL SECTION
(Unaudited)
Financial Trends:
Net Position by Component...............................................................................................218
11-12
2
Changesin Net Position....................................................................................................220
Fund Balances of Governmental Funds............................................................................222
Changes in Fund Balance of Governmental Funds...........................................................224
Revenue Capacity:
Assessed Value and Estimated Actual Value of Taxable Property....................................228
Property Tax Rates, Direct and Overlapping Governments...............................................229
Principal Property Taxpayers............................................................................................230
Property Tax Levies & Collections.....................................................................................231
Debt Capacity:
Ratios of Outstanding Debt by Type..................................................................................235
Ratios of General Bonded Debt.........................................................................................236
Schedule of Direct and Overlapping Debt..........................................................................237
Computation of Legal Debt Margin....................................................................................238
Demographic and Economic Information:
Demographic and Economic Statistics..............................................................................242
PrincipalEmployers...........................................................................................................243
Operating Information:
Full -Time City Employees by Function..............................................................................247
Operating Indicators by Function.......................................................................................248
Capital Asset Statistics by Function...................................................................................250
Water Sold by Customer Type..........................................................................................252
UtilityRates.......................................................................................................................253
Major Water Customers....................................................................................................254
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3
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11-14
CITY OF NEWPORT BEACH
100 Civic Center Drive
Newport Beach, California 92660
949 644-3127 1 949 644-3339 FAX
newportbeachca.gov/finance
December 30, 2024
Honorable Mayor, Members of the City Council,
and Residents of the City of Newport Beach, California
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 Annual Comprehensive Financial Report (ACFR) of the
City of Newport Beach for the year ended June 30, 2024 is hereby submitted.
The ACFR 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 DavisFarr 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, 2024 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, 2024 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 Orange County relative to the counties of Los
Angeles, San Bernardino, Riverside, and San Diego is illustrated on the map below:
Las
Angeles l
County San
Bernardino
County
® Riverside
Orange County
�1 county
NEWPORT
BEACH
v ®l
Sonl
Diego
County
11-16
Newport Beach surrounds Newport Bay, well known for its picturesque islands and one
of the greatest recreational harbors in the world, accommodating about 9,000 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 82,419, 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.
` Airport Area
`
t
Costa-T-
--
41
' vine
1 `
I�
Eas[binff-
Mariners
/ We�tNewpori
�•��
ti
Harbor View
Fashion island
Ldo Isle
City Hall Spyglass
Newport
Pier
Balboa island
Balboa Pier
� New ort Coast
Corona.0elMar p
The Wedge
Crystal Cave
stal -
Se to Park
N
s
-�_�-
Laguna Beach
Newport Beach was incorporated on September 1, 1906. The City Charter was originally
adopted in 1954 but has been updated and amended over time. The City is governed by
seven Council Members, and 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 Mayor is selected by the City Council from among
its membership and serves a one-year term. The City Council 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 the 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 82,419, the population has been very stable as
indicated by the following chart.
Population
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,0000 '
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Fiscal Year
11-18
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's median household income is higher than the median
household income in the County of Orange and the State of California.
Median2023 -
-
City of Newport Beach
Orange County
California
USA
$156,434
110,042
95,521
77,719
Source: U.S. Census Bureau, 2023
The leading industries here include professional services, scientific services, healthcare,
finance, insurance, legal services, and travel and tourism. Unemployment in the City
increased to 3.6% as of October 2024 which is consistent with the statewide and national
trends. Jobs grew at a slower rate than the previous year due to a slowing economy and
more workers joining or re -joining the labor force. However, the City's unemployment rate
is still lower compared to the state's 5.3%, and the county's 4.1 %, as illustrated in the
following chart.
Historical Unemployment Rates
120% (Raterere not seasonallj adjusted)
tNmport Beach
10.0 % +Orange County
+California
8.0%
6.0%
4.0%
2.0%
0.0
2015 2016 2017 2018 2019 2020 2021 2022
Calendar Year * through October 31, 2024
More detailed information concerning the City's demographics and statistics are
contained within the Statistical Section of this report.
LOCAL ECONOMY
The economic outlook in Newport Beach remains strong, largely due to continued growth
in property values, which has driven the median price of detached single-family homes to
nearly $4 million. Despite elevated interest rates resulting in high borrowing costs and
slower home sales, property tax revenue —the City's largest source of revenue —remains
strong and stable.
11-19
Sales tax and transient occupancy tax (TOT) revenue, the City's second and third largest
revenue sources, respectively, are directly influenced by consumer behavior. A significant
portion of the City's tax revenue depends on luxury markets, such as automobile
dealerships, fine dining, and luxury hotels, making it sensitive to economic headwinds like
high interest rates and shifts in consumer preferences. Nonetheless, growth in sales tax
and TOT revenue is projected, though at a slower pace than in previous years.
TOP THREE REVENUE SOURCES
Most General Fund revenue categories performed at or higher than their budgeted levels
for the fiscal year due to more favorable economic conditions than anticipated when the
budget was developed in April 2023. Actual revenues were $8.3 million or 2.9% higher
than final anticipated estimates, and $11.8 million or 4.1% higher than previous fiscal
year. As discussed in more detail below, the primary positive variances were in property
tax and transient occupancy taxes.
The top three individual revenue sources, Property Taxes, Sales Taxes and Transient
Occupancy Taxes, represent 74.6% of all General Fund revenues. Tax revenues in total,
including business licenses, franchise fees, and other taxes represent 78.1 % of all
General Fund revenues, while only 21.9% is generated from other revenue sources.
General Fund Revenues
■ Property Taxes
■ Sales Taxes
Transient Occupancy Taxes
Other Taxes
■ 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 (49.3%) of all General Fund
revenues. Due to the limited supply of scenic coastal property and the unique access to
Newport Bay, the Newport Beach community has 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. Property tax revenues for Fiscal Year 2023-24 came in $7.8 million
11-20
10
or 5.6% higher than the prior year due to an increase in assessed property values related
to the annual inflation adjustment that is allowed under Proposition 13 and due to changes
in ownership and price appreciation.
Detached single-family residential property values increased 3.2% in 2024, as illustrated
in the following table. Home sales rebounded slightly from the previous year even though
interest rates increased slightly. Newport Beach's estimated median price for a detached
single-family residence is currently $4.0 million, which far exceeds the countywide
estimated median value of $1.3 million. Higher assessed values are projected to continue
due to strong demand, which is expected to support continued growth in future property
tax revenues.
Calendar
Year
Sales
Median
Price
Median %
Change
2015
1,023
$ 1,975,000
5.25%
2016
1,064
$ 2,150,000
8.86%
2017
1,114
$ 2,400,000
1 1.63%
2018
952
$ 2,517,000
4.88%
2019
949
$ 2,435,000
-3.26%
2020
1,143
$ 2,595,000
6.57%
2021
1,409
$ 3,200,000
23.31 %
2022
834
$ 3,730,750
16.59%
2023
689
$ 3,845,000
3.06%
2024*
530
$ 3,968,000
3.20%
Source: HdL Coren & Cone
*Data through October 2024
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 two 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 30 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.
Total Assessed Property Value Growth
$90,000,000,000
5.3%
$80,000,000,000
6.4%
7.1
$70,000,000,000
7.3 5.3%
$60,000,000,000
6.6%
5.9% 6.5%
$50,000,000,000
5.2% 5.7%
0.2% 1.0% 2.9%
$40,000,000,000
$30,000,000,000
$20,000,000,000
$10,000,000,000
N N N N N N
O V a0 O V
Value changes in Newport Beach show continued appreciation in property values in
Fiscal Year 2023-24. Over the past 10 years, assessed valuation increased an average
of 6.0% per year and 5.7% over a twenty-year period. Newport Beach's assessed
property values increased 6.4%, with a local assessed value of $75.9 billion for Fiscal
Year 2023-24.
Sales Tax
The second largest funding source for the General Fund is sales tax revenue, making up
about 14.6% of General Fund revenues. The City's sales tax base is largely generated
from three industry categories — autos and transportation, general consumer goods, and
restaurants/hotels. Most of these industries are also heavily impacted by tourism. To
generate additional sales tax revenue over the long term while encouraging economic
development, the City has historically entered into sales tax abatement agreements with
local automobile dealerships. These agreements include covenants requiring the
dealerships to operate within the City for a specified period of time and to maximize the
City as the point -of -sale. During the current fiscal year, the City had one such agreement
with a luxury automobile dealership, which expired on June 30, 2024.
Sales tax revenue was down 6.7% during the current fiscal year. Consistent with results
across the State of California, sales from all industry groups were down, except for sales
from restaurants and hotels, which were up 6.1 %. Sales were down in the current year
due to a shift in consumer spending from taxable goods, such as new car sales, to
nontaxable items, such as travel, leisure, and entertainment. For example, sales from
autos and transportation (the city's largest source of sales tax revenue) were down 18%,
partly due to a decrease in demand for new vehicles, which is largely related to higher
interest rates. The decrease in auto sales was also exacerbated by the temporary closure
of a luxury automobile dealership, which is currently undergoing a construction renovation
project.
11-22
12
Sales tax revenue is projected to increase by 4.1 % next fiscal year, largely due to an
increase in demand for general consumer goods and online purchases. In addition, sales
from restaurants and hotels are projected to rise by 3.5% next year, which is a lower
growth rate than the previous year. This is due to menu price increases that have
impacted consumer behavior, as foot traffic to restaurants has been down recently.
Transient Occupancy Tax (TOT)
TOT accrues to the City at a rate of 10% of room charges with 18% of this collection going
to the local destination marketing organization (Visit Newport Beach) 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 21 hotels and resorts and accounts
for approximately 76% of TOT revenues. The residential category is made up of
approximately 1,550 vacation rentals representing 24% of TOT revenue. TOT revenue
from short-term residential stays has more than doubled over the past five years, while
hotel TOT revenue has increased by only 14% over the same five-year period.
Transient Occupancy Tax (TOT) Revenue
$40
535
S30
$5
$0 of
2Q15 2016 2017 2016 2019 2020 2021 2022 2023 2024
M Res identfaL(Short-Term Rents QTOT Revenue a CommercIat (Not ei)TOT Revenue
In the current fiscal year, TOT revenue from short-term residential stays decreased by
5%, while hotel TOT revenue increased by 9%. The decline in revenue from short-term
rentals is due to the cap placed on the number of residential permits. This year, the
number of active residential permits dropped below the cap of 1,550 for the first time since
the cap was enacted several years ago. The increase in revenue from hotels is partly due
to the opening of the Pendry, which opened in September 2023.
LONG TERM FINANCIAL PLANNING
The City continues to be in excellent financial health due to its strong underlying tax base,
disciplined fiscal decisions, and stable governance. Conservative budgeting and sound
financial policies have resulted in a trend of General Fund operating surpluses and strong
11-23
13
reserve levels. The City annually completes a Long -Range Financial Forecast covering
the next 20 years pursuant to City Council Policy F-3 — Budget Adoption and
Administration. That forecast shows positive General Fund results in each of the next 20
years and does not indicate any long-term financial trends of concern. The City's long-
term financial planning has been guided by its strong financial policies, prudent budgeting
decisions, and proactive planning in such critical areas as facilities replacement and
pensions. These policies are regularly evaluated and updated as conditions and needs
change.
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 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 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
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. Per current policy, appropriations for
operating expenditures are balanced in relation to current revenue sources and do not
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. As a result of early retirement plans,
attrition, outsourcing, and lay-offs implemented in the years following the onset of the
Great Recession, the full-time work force was reduced by approximately 4% between FY
2012-13 and FY 2016-17 as depicted in the chart below. In the years since, thoughtful
additions to the City's workforce have been implemented with a continued focus on fiscal
discipline and maintaining balanced budgets.
11-24
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Full Time Positions Trend
780
770
760
752
750
c
-
0
H
740
736
O
730
p
730
728
724
720'
710
700
690
2013 2014 2015 2016 2017
766
741
775
730
726 727 728
725
2018 2019 2020 2021 2022 2023 2024 2025
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
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 continue.
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 2024, 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 well -controlled expenditure framework coupled with a
very solid level of budget management. Additionally, Fitch Ratings rating agency also
reaffirmed the City's AAA credit rating noting the City's consistent tax base and well -
controlled expenditure framework coupled with conservative financial management would
enable the City to maintain financial stability and solid reserves in a potential moderate
economic downturn. The City has also employed an aggressive strategy to paydown its
unfunded pension liability. The City has committed to a pension paydown plan that
requires $45 million in annual contributions towards its unfunded pension liability, which
is $15 million more than the amount required to be paid, as further described in the
Pension section below. This paydown strategy is anticipated to result in eliminating the
City's pension liability in 2033.
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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 Planning Reserve
(FFPR) in FY 2023-24 by allocating resources to a new library lecture hall, to update and
modify fueling support facilities and a transfer station, to finalize construction of a new
Junior Lifeguard building, and to replace a public restroom.
Beginning Balance 7/1/23
$ 24,800,492
Sources
Licenses, Permits and Fees
68,617
Donations
37,951
Transfer In from General Fund
11,072,033
Investment Income
765,875
Net increase in fair value of investments
516,408
Total Sources
12,460,884
Uses
Library Lecture Hall
(10,748,980)
Parks and Community Centers
(850,000)
Jr. Guard Capital Project
(286,361)
Fueling Facilities and Transfer Station
(4,940,281)
Total Uses
(16,825,622)
Ending Balance 6/30/24 $ 20,435,754
Overall, the FFPR balance decreased by $4.4 million from the prior fiscal year.
Pensions
As of the actuarial valuation date of June 30, 2023, the City had an Unfunded Accrued
Liability (UAL) of $341 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).
• Through negotiated cost sharing, saw employees contribute 51.9% of the Normal
Cost of the plan, or $11.2 million in Fiscal Year 2023-24.
11-26
16
• Adopted a fixed and shorter amortization period for the unfunded liability.
• Made Additional Discretionary Payments (ADPs)
• Contributed no less than Actuarial Determined Contribution (ADC) each and every
year.
• Analyzed the 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.
• Maintained 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 ACFR — see Note (11) of Notes to the Financial Statements.
The City implemented GASB 75 in fiscal year 2017-18, 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 ACFR — see Note (12) 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 its 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
City evaluates the cost and benefits of paying down the unfunded pension and OPEB
liabilities on a faster schedule. Currently, the City Council has committed to a fixed $45
million per year contribution toward the unfunded pension liability, which is approximately
$15 million more than is required by CalPERS. Fiscal year 2023-24 represented five years
in a row the City Council appropriated additional funding towards an accelerated payment
of the unfunded liability from year-end budget surplus funds. The $45 million paydown
strategy is anticipated to result in eliminating the City's pension liability in 2033.
Additionally, in fiscal year 2023-24 City Council approved a one-time payment of $5.8
million towards paying down the City's OPEB liability. As a result, beginning in fiscal year
2024-25, the OPEB liability is fully funded and the City is expecting to accrue $4 million
of annual savings.
11-27
17
AWARDS AND ACKNOWLEDGMENTS
The City has prepared an Annual Comprehensive Financial Report for the past 31 years.
The City has received awards for excellence in financial reporting in 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 Annual Comprehensive Financial Report for the fiscal year ended
June 30, 2023. In order to be awarded a Certificate of Achievement, a government unit
must publish an easily readable and efficiently organized Annual Comprehensive
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
Annual Comprehensive 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 Accounting Division. In addition, the Finance
Department staff would like to thank the City Manager, the Mayor, and the City Council
for their interest in and support of planning and conducting the financial operations of the
City in a responsible and progressive manner. We would also like to thank our auditors,
DavisFarr LLP, for their time and assistance in the preparation of the report.
/,-- �Awhw
Grace K. Leung Jason Al -Imam
City Manager Finance Director/Treasurer
11-28
18
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Newport Beach
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2023
Executive Director/CEO
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City Councilmembers
Mayor Sara J. Weber
District 1
Councilmember
District 7
City Executive Staff
Aaron Harp Grace Leung Leilani Brown
City Attorney City Manager City Clerk
Tara Finnigan.......................................................................................................................... Assistant City Manager
Seimone Jurjis........................................................................................................................ Assistant City Manager
Jason AI-Iman...................................................................................................................Finance Director/Treasurer
JeffBoyles....................................................................................................................................................Fire Chief
PaulBlank............................................................................................................................................. Harbormaster
Barbara Salvini................................................................................................................. Human Resources Director
Melissa Hartson.................................................................................................................... Library Services Director
DaveMiner.................................................................................................................................... Acting Police Chief
DaveWebb............................................................................................................................... Public Works Director
Sean Levin....................................................................................................... Recreation & Senior Services Director
Mark Vukojevic.................................................................................................................................Utilities Director
11-30
20
Board of IRL
ORATE
Harbor Commission
Library Trustees
Building & Fire Parks, Beaches &
Code of AppealsP" ecreation Commission
MAYOR &
City Arts COUNCI Planning
Commission Commission
city
Civil Service Boar EELVM� 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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DavisFarr
CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Karman Avenue I Suite 1100 1 Irvine, CA 92612
Main: 949.474.2020 1 Fax: 949.263.5520
INDEPENDENT AUDITOR'S REPORT
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
Report on the Audit of the Financial Statements
Opinions
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 (the "City"), as of and for the year June 30, 2024, and the related notes to
the financial statements, which collectively comprise the City's basic financial statements as
listed in the table of contents.
In our opinion, the accompanying financial statements 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,
2024, and the respective changes in financial position and, where applicable, cash flows
thereof for the year then ended in accordance with accounting principles generally accepted
in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America (GAAS) and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Our
responsibilities under those standards are further described in the Auditor's Responsibilities
for the Audit of the Financial Statements section of our report. We are required to be
independent of the City and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements relating to our audit. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with accounting principles generally accepted in the United States
of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the City's
11-35
25
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
ability to continue as a going concern for twelve months beyond the financial statement date,
including any currently known information that may raise substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinions. Reasonable assurance is a high level of assurance
but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS and Government Auditing Standards will always detect a material
misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control. Misstatements
are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the
financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the
audit.
• Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, and design and perform audit procedures responsive to
those risks. Such procedures include examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit 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,
no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the City's ability to continue as a going
concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain
internal control -related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management's Discussion and Analysis, Budgetary Comparison Schedules for the General
Fund and each major special revenue fund, Schedules of Changes in the Net Pension Liability
and Related Ratios, Schedules of Contributions, Schedule of Changes in the Net OPEB Liability
and Related Ratios and Schedule of OPEB Contributions be presented to supplement the basic
11-36
26
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
financial statements. Such information is the responsibility of management and, 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 required supplementary information in
accordance with GAAS, 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 information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Supplementary 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 Combining and Individual
Nonmajor Fund Financial Statements and Budgetary Comparison Schedules are presented for
the purpose of additional analysis and are not a required part of the basic financial statements.
Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial
statements.
The Combining and Individual Nonmajor Fund Financial Statements and Budgetary
Comparison Schedules have 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 GAAS. In our opinion, the Combining and
Individual Nonmajor Fund Financial Statements and Budgetary Comparison Schedules are
fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the Annual Comprehensive
Financial Report. The other information comprises the Introductory Section and Statistical
Section but does not include the financial statements and our auditor's report thereon. Our
opinions on the financial statements do not cover the other information, and we do not
express an opinion or any form of assurance thereon. In connection with our audit of the
basic financial statements, our responsibility is to read the other information and consider
whether a material inconsistency exists between the other information and the financial
statements, or the other information otherwise appears to be materially misstated. If, based
on the work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 30, 2024, 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
11-37
27
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
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 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.
Irvine, California
December 30, 2024
11-38
28
FINANCIAL SECTION
MANAGEMENT'S DISCUSSION AND ANALYSIS
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MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the City of Newport Beach's Annual Comprehensive Financial Report (ACFR)
presents management's discussion and analysis of the City's financial performance during the
fiscal year that ended on June 30, 2024. 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 Annual Comprehensive Financial Report contains the following
information: Independent Auditors' 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 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 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 net position
has 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 public safety, public
works, community development, community services, and general administration. Taxes
and other general revenues finance most of these activities.
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 current 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 that receive significant financial support from
user fees and charges 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) provide
goods or services mostly to non -government users and are the 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 and other
equipment maintenance, risk management, retiree insurance, telecommunications
systems, information technology services, etc.). Because the Internal Service Funds
primarily serve government users, 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 the City's fiduciary activities are reported in a separate statement of
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32
fiduciary net position, and a statement of changes in fiduciary net position. 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 Budgetary Comparison
Schedules for the General Fund and two other major funds, the Schedule of Changes in Net
Pension Liability and Related Ratios, the Schedule of Changes in Net Post -Employment Health
Care Benefits (OPEB) Liability and Related Ratios, and the related Schedules of Contributions
for the Pension and OPEB plans.
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 fiscal year ended June 30, 2024
was $2.6 billion, increasing $65.8 million or 2.6% 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 $60.6 million. This increase is primarily due to a combined
$55.0 million increase in cash and investments and restricted cash and investments with fiscal
agent mostly related to the receipt of contributions for operating activities and capital improvement
projects and the issuance of limited obligation improvement bonds for two assessment districts.
The remaining $5.6 million increase is attributable to an increase in account receivables most of
which is related to a future contribution for the construction of a new library lecture hall, offset by
decreases in other receivables such as lease receivables, intergovernmental receivables, and a
public -private partnership receivable. Capital assets increased $19.7 million, of which $10.9
million is related to additions to infrastructure and work in progress, and $7.3 million is due to
additions to land and structures.
Current liabilities increased $18.3 million primarily due to increases in accounts payable offset by
a decrease in unearned revenue.
Long-term liabilities increased $2.5 million. The increase is primarily due to increases in insurance
related liabilities and lease liabilities, offset by decreases in outstanding certificates of participation
and decreases in the City's net pension liability and net OPEB liability as investment returns in
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33
both plans finished better than expected. See Note (11) and Note (12) of the Notes to the
Financial Statements for more information.
Figure 1
Net Position
June 30
(in thousands)
Governmental Activities
Business -Type Activities
Total
2023
2024
2023
2024
2023
2024
Current and other assets
$ 633,179
$ 699,910
$ 36,647 $
30,548
$ 669,826 $
730,458
Capital assets
2,372,769
2,391,089
135,267
136,639
2,508,036
2,527,728
Total assets
3,005,948
3,090,999
171,914
167,187
3,177,862
3,258,186
Deferred outflows of resources
141,903
145,027
5,319
5,341
147,222
150,368
Current liabilities
41,327
58,840
4,245
4,986
45,572
63,826
Long-term liabilities
479,521
482,299
15,170
14,928
494,691
497,227
Total liabilities
520,848
541,139
19,415
19,914
540,263
561,053
Deferred inflows ofresources
271,428
268,341
101
79
271,529
268,420
Net position
Net investment in capital assets
2,256,306
2,275,100
131,016
132,332
2,387,322
2,407,432
Restricted
79,152
123,445
-
-
79,152
123,445
Unrestricted
20,117
28,001
26,701
20,203
46,818
48,204
Total net position, before restatement
2,355,575
2,426,546
157,717
152,535
2,513,292
2,579,081
Restatement
-
(1,595)
-
(1,595)
Total net position
$ 2,355,575
$ 2,426,546
$ 156,122 $
152,535
$ 2,511,697 $
2,579,081
'Prior year net position was restated due to unbilled receivables adjustment in Fiscal Year 2022-23. See note (20) of the Notes to the Financial Statements for more information
The largest portion of the City's net position, at $2.4 billion of net position, reflects the net
investment in capital assets (e.g., land, right of way, street trees, buildings, infrastructure,
equipment, and intangibles) less accumulated depreciation, accumulated amortization, 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 $123.4 million of net position, an increase of $44.3 million from the
prior fiscal year, primarily due to increased restricted net position related to public works and
community services. Public works' increase is mainly from new limited obligation improvement
bond proceeds restricted for use on two assessment districts not being completely spent during
the fiscal year, while Community services' increase is mainly from tidelands property related
revenues not being spent during the fiscal year as resources are being accumulated for future
large scale capital improvement projects related to the harbor.
As of June 30, 2024, unrestricted net position was $48.2 million, an increase of $1.4 million from
the prior fiscal 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.
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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 determines the annual change in net position.
Revenues:
Program revenues:
Charges for services
Operating grants and 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
Figure 2
Changes in Net Position
For the Years Ended June 30
(in thousands)
Governmental Activities
Business -Type
Activities
Total
2023
2024
2023
2024
2023
2024
$ 74,454
$ 81,473
$ 36,700
$ 39,117
$ 111,154 $
120,590
20,132
34,498
-
115
20,132
34,613
5,810
35,647
-
-
5,810
35,647
100,396
151,618
36,700
39,232
137,096
190,850
138,359
146,137
-
-
138,359
146,137
46,552
43,445
46,552
43,445
30,202
31,737
30,202
31,737
10,080
10,252
-
-
10,080
10,252
2,520
9,368
258
1,462
2,778
10,830
5,552
2,855
-
5,552
2,855
233,265
243,794
258
1,462
233,523
245,256
333,661
395,412
36,958
40,694
370,619
436,106
26,912
28,392
-
-
26,912
28,392
121,310
151,626
121,310
151,626
75,904
88,360
75,904
88,360
13,048
16,814
13,048
16,814
27,937
33,034
27,937
33,034
6,666
6,215
6,666
6,215
-
-
30,702
37,322
30,702
37,322
5,344
6,959
5,344
6,959
271,777
324,441
36,046
44,281
307,823
368,722
61,884
70,971
912
(3,587)
62,796
67,384
Net position at beginning of year 2,293,691 2,355,575 156,805 157,717 2,450,496 2,513,292
Restatement - - (1,595) ' - (1,595) '
Net position at beginning of year, as restated 2,293,691 2,355,575 156,805 156,122 2,450,496 2,511,697
Net position at end of year $ 2,355,575 $ 2,426,546 $ 157,717 $ 152,535 $ 2,513,292 $ 2,579,081
'Prior year net position was restated due to unbilled receivables adjustment in Fiscal Year 2022-23. See note (20) of the Notes to the Financial Statements for more information.
Revenues Associated with Governmental Activities Discussion
Figure 2 illustrates in detail how the $395.4 million in Governmental Activities revenue was
derived. Figure 3 summarizes this revenue by major source. As shown on Figures 2 and 3, $81.5
million, or 20.6%, of the revenues were recovered from those who directly benefited from the
programs as a charge for service. Another $70.1 million, or 17.7%, 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 $243.8 million, or
61.7%, represented general revenues of the City including taxes, intergovernmental revenues,
and other miscellaneous revenues.
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Figure 3
Governmental Activities Revenue Sources
For the Year Ended June 30, 2024
18% 58%
■Charges for Services
■Contributions and Grants
Taxes
21 % Other
3%
As illustrated in Figure 2, program revenues related to Governmental Activities increased $51.2
million from the prior year. This increase was primarily attributable to an increase in capital grants
and contributions, most of which was due to the issuance of limited obligation improvement bonds
for two assessment districts. Additionally, operating grants and contributions increased mainly
due to earning American Rescue Plan Act grant revenue by spending part of the grant money on
reimbursing the City for public safety services incurred on fire operations and on the City's Junior
Lifeguard building. The City also received and earned a portion of private contributions from the
Newport Beach Public Library Foundation and Junior Guard Foundation for a library lecture hall
and the aforementioned Junior Lifeguard program.
The City's general revenues related to Governmental Activities increased about $10.5 million from
the prior year primarily due to increases in property taxes, transient occupancy taxes, other taxes,
and investment income, offset by decreases in sales taxes and other general revenues. Revenue
increases across various categories illustrates that Newport Beach's underlying local economy
continues to remain strong.
Property tax is the largest revenue source for the City and collections finished the year $7.8 million
higher than the previous fiscal 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 $43.4 million, sales taxes represent the second largest individual revenue source for the City.
Sales taxes decreased $3.1 million from the previous fiscal year. This decrease in sales tax
revenue was due to consumer spending shifting from taxable sales, such as automobiles and
transportation, to nontaxable sales, such as entertainment. Additionally, luxury vehicle sales
finished significantly lower due in part to the temporary closure of a luxury automobile dealership
while undergoing a construction renovation project.
Transient occupancy taxes (TOT), the City's third largest revenue source, finished the year at
$31.7 million, which is an increase of $1.5 million from the previous fiscal year. Hotel TOT revenue
11-46
36
increased due to the opening of the new Pendry hotel and continued robust demand, which offset
a slowdown in residential TOT.
Investment income, comprised of both interest income and unrealized gains/losses, increased
about $6.8 million from the prior fiscal year. Because the federal funds rate remained constant
throughout most of the fiscal year, the increase in investment income is mostly a result of the
availability of elevated interest rates throughout more of the fiscal year than the previous year.
This allowed the City to reinvest earnings throughout the year at higher rates.
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 one department (Public Works) 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 $324.4 million of Governmental Activities expense was
derived. The increase of $52.7 million from the prior year is mostly due to an increase in the
government -wide adjustment for internal service fund activity as there was a net loss in total in
the internal service funds due to an increase in workers' compensation and general liability
expenses. An increase in the government -wide adjustment related to pension expense, and
increases in salaries and benefits also contributed to the increase in Governmental Activities
expenses.
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37
Figure 4 below summarizes the Governmental Activities expenses shared across functions.
Figure 4
Governmental Activities Functional Expenses
For the Year Ended June 30, 2024
2
59 %
9%
■ Public Safety
■ Public Works
10%
47% ■Community Services
General Government
Community Development
Interest
27%
4
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
For the Years Ended June 30
(in thousands)
2023
Total Cost Net (Cost)
of Service of Service
$ 26,912
$ (10,988)
121,310
(92,434)
75,904
(49, 373)
13,048
(765)
27,937
(11,155)
6,666
(6,666)
$ 271,777
$ (171,381)
2024
Total Cost Net (Cost)
of Service of Service
$ 28,392
$ (10,212)
151,626
(115,049)
88,360
(22, 387)
16,814
(5,338)
33,034
(13,622)
6,215
(6,215)
$ 324,441
$ (172,823)
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38
$160.0
$140.0
$120.0
$100.0
$80.0
$60.0
$40.0
$20.0
$0.0
Figure 6
Program Expenses and Revenues — Governmental Activities
For the Year Ended June 30, 2024
(in millions)
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 $40.7 million.
Program revenues totaled $39.2 million and were supplemented by about $1.5 million of general
revenues related to investment income. As shown in Figure 7 on the following page, Water
activities represents about $33.9 million (86.5%) of program revenues, while Wastewater activities
represents $5.3 million (13.5%) of program revenues.
11-49
39
$40.0
$35.0
$30.0
$25.0
$20.0
$15.0
$10.0
$5.0
$0.0
Figure 7
Program Expenses and Revenue — Business -type Activities
For the Year Ended June 30, 2024
(in millions)
Water
_Total Expenses ■Program Revenues
Wastewater
Expenses Associated with Business -Type Activities Discussion
Current year expenses for Business -type Activities totaled $44.3 million, an increase of about
$8.2 million over prior year as shown in Figure 2. This is attributable to increases in salaries and
benefits, maintenance, utilities, and miscellaneous expenses.
Major Business -type expenses in the current fiscal year included the following:
Water
Of the $37.3 million in water related expenses, $12.6 million (33.7%) is for the purchase of water,
$6.0 million (16.0%) covers employee related costs, $9.9 million (26.5%) is for maintenance,
supplies, and depreciation of the water system, $2.2 million (5.8%) is for professional services,
$2.2 million (5.9%) is for utility payments and the remaining $4.4 million (12.1 %) is collectively
attributable to other miscellaneous expenses.
Wastewater
Of the $7.0 million in wastewater related expenses, $2.7 million (39.5%) is for maintenance,
supplies, and depreciation of the wastewater system, $1.9 million (26.6%) is for employee related
costs, and the remaining approximately $2.4 million (33.9%) is attributable to professional
services, utility payments and other miscellaneous expenses.
Figure 7 summarizes Business -type expenses separately for Water and Wastewater activities.
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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 current financial resources measurement focus, the City's Governmental Funds
provide information on near -term inflows, 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 $295.1 million, an increase of $47.1 million from the prior fiscal year. The increase is
net result of increases in fund balances in almost every major fund below, including the General
Fund, the Tide and Submerged Land — Operating Fund, the Tide and submerged Land — Harbor
Capital Fund, Debt Service Fund, other special revenue funds, other capital projects funds, and
other permanent funds in aggregate, offset by a decrease in the Facilities Financial Planning
Reserve Fund. The General Fund represented $96.4 million or 32.7% of the combined fund
balances of the Governmental Funds.
Figure 8
Governmental Funds Fund Balance
June 30
(in thousands)
General Fund
Tide and Submerged Land - Operating
Tide and Submerged Land - Harbor Capital
Facilities Financial Planning Reserve
Debt Service Fund
Non -major special revenue
Non -major capital projects
Non -major permanent
2023
2024
Change
$ 91,443
$ 96,441
$ 4,998
6,107
8,548
2,441
30,215
43,107
12,892
24,800
20,436
(4,364)
2,184
2,323
139
26,518
32,274
5,756
60,148 85,087 24,939
6,543 6,846 303
$ 247,958 $ 295,062 $ 47,104
The following describes the classification of fund balance as of June 30, 2024. Additional
information on the City's fund balance can be found in Note (15) of the Notes to the Financial
Statements.
Nonspendable Fund Balance — The City has $11.8 million in fund balance classified as
nonspendable to indicate that it cannot be readily converted to cash. Of the $11.8 million
nonspendable fund balance, $1.3 million is for prepaid items, $215,285 is for inventories, $5.7
million is for long-term loan receivables, and $4.6 million is for permanent endowments.
Restricted Fund Balance — The City has $112.8 million in fund balance classified as restricted
to indicate that it has externally imposed restrictions on how the money may be spent. Of the
$112.8 million restricted fund balance, $7.4 million is restricted in the Tide and Submerged Land
— Operating Fund, of which $5.7 million is restricted for capital projects and maintenance and
repairs, and $1.7 million is restricted for the Upper Newport Bay restoration; $43.1 million is
restricted in the Tidelands and Submerged Land - Harbor Capital Fund for capital projects related
to the harbor; and $2.3 million is restricted for debt service. Of the remaining $60.0 million in
restricted fund balance, $32.5 million is restricted for various special revenue funds, $25.0 million
is restricted for the Assessment District Fund, $292,893 is restricted for the Fire Station Fund,
and $2.2 million of fund balance is restricted for permanent funds.
Committed Fund Balance - The City has $88.1 million in fund balance classified as committed
to indicate that the City Council has committed how the money will be spent. Of the $88.1 million
committed fund balance, $6.8 million is committed in the General Fund mostly for contract
services and maintenance and repairs; $1.1 million is committed in the Tide and Submerged Land
- Operating Fund for oil and gas related uses; $20.4 million is committed in the Facilities Financial
Planning Reserve Fund; $3.0 million is committed in the Fire Station Fund; $505,166 is committed
in the Civic Center and Park Fund; $16.1 million is committed in the Parks and Community Center
Fund; $310,593 is committed in Balboa Village Parking Management District Fund; $4.2 million
is committed to the Facilities Maintenance Fund; $11.7 million is committed in the Neighborhood
Enhancement Fund; $122,146 is committed in the Junior Lifeguards Fund; $15.7 million is
committed in the Unrestricted Capital Improvements Fund; $6.5 million is committed to the
Miscellaneous FFP Projects Fund; and $687,908 is committed to the Police Facility Fund; and
$1.0 million is committed to the Park Maintenance Fund.
Assigned Fund Balance - The City does not have any fund balance classified as assigned.
Assigned fund balance is 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 $82.4 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:
General Fund revenues finished $11.8 million or 4.1 % higher than the prior year mostly
due to a combined $6.2 million net increase in the City's top three revenues sources -
property taxes, sales taxes and transient occupancy taxes - with a $7.8 million increase
in property taxes as the City's assessed valuation continued to increase due primarily to
the appreciation of property values; offset with a $3.1 million decrease in sales taxes as
consumer spending shifted from taxable sales to nontaxable sales; and a $1.5 million
increase in transient occupancy taxes due to the opening of a new hotel and continued
strong hotel occupancy rates. Additionally, property income increased $3.5 million
compared to the previous year mostly due to the normal increase in parking rates and the
number of travelers returning to more pre -pandemic levels, and there was a full year's
worth of rental income from a property that was acquired late in the previous fiscal year.
General Fund expenditures finished $18.7 million or 7.7% higher than the prior fiscal year
mostly due to the expected increase in salaries and benefits related to routine step
increases, cost of living adjustments, new positions, increased pension costs and capital
outlays. Notably, capital outlays related to leases increased $3.3 million due to the leasing
of additional space in a homeless shelter to help individuals experiencing homelessness
within the City. Though revenues exceeded expenditures by about $33.9 million, there
were substantial transfers activity in the General Fund with transfers in totaling $26.9
million and transfers out totaling $59.4 million, mostly for funding capital improvement
projects. In total, fund balance in the General Fund increased $5.0 million and ended the
year at $96.4 million.
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42
• Fund balance for the Tide and Submerged Land — Operating Fund increased $2.4 million
and ended the current year with $8.5 million in fund balance. The increase was mostly
due to an increase in property income related to parking revenues and investment
earnings.
• Fund balance for the Tide and Submerged Land — Harbor Capital Fund increased $12.9
million ending at $43.1 million. This was largely due to reduction in expenditures as two
major harbor dredging capital improvement projects nearing completion.
• Fund balance for the Facilities Financial Planning Reserve Fund decreased $4.4 million
to end the current year at $20.4 million in fund balance. This was mainly due to transfers
to other funds to cash fund construction projects related to a new library lecture hall and
upgrading a fueling facility and transfer station.
• Fund balance for the Debt Service Fund increased $139,136 ending at $2.3 million. The
increase was due to increase in investment income and a decrease in debt service related
to servicing certificates of participation.
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 also include information for individual funds.
Enterprise Fund results for the year included the following:
Net position in the Water Fund decreased $683,219 in total mostly due to the City's
highest producing water well being out of service for most of the fiscal year undergoing
maintenance and a prior period restatement. The out of service well resulted in increased
expenses for the purchase of water and for system maintenance which were offset by
increases in water sales revenue related to a rate increase, and an increase in non -
operating investment related revenues, resulting in a positive change to net position.
However, the prior period restatement reduced net position, ultimately resulting in an
overall decrease to net position in the Water Fund. See note (20) in the Notes to the
Financial Statements for additional information about the prior period restatement.
Net position in the Wastewater Fund decreased $854,173. Similarly to the Water Fund,
the decrease in net position was mainly due to increased system maintenance expenses
and a prior period restatement, offset by an increase in sewer service and connection fees
revenue as the City Council previously adopted a resolution to increase sewer rates each
January 1st during calendar years 2024 through 2028. Increasing sewer rates should
improve the Wastewater Fund's net position in future years. See note (20) in the Notes to
the Financial Statements for additional information about the prior period restatement.
Major Internal Service Fund activity in the current fiscal year included the following:
• Total net position in the Internal Service Funds decreased $15.0 million in the current fiscal
year. This was mostly due to operating loss of $25.1 million, which was mostly due to an
increase in expenses related to the City's self -insured general liability and workers'
compensation programs, offset by increases in nonoperating revenues like investment
earnings, gain on sale of capital assets and transfers in. The increase in transfers in was
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43
directly attributable to an additional one-time $5.8 million payment to pay down the City's
OPEB liability.
GENERAL FUND BUDGETARY HIGHLIGHTS
Changes to Original Budget
Final budgeted revenues for the General Fund increased $2.5 million from the original budget
during the year ended June 30, 2024. Factors contributing to this fluctuation are highlighted as
follows:
• Final budgeted intergovernmental revenue increased $2.4 million primarily due to
adjustments related to the Newport Beach Fire Department's mutual aid reimbursements,
revenue sharing with the County under a Waste Disposal Agreement, and the acceptance
of grants.
• Property taxes revenue increased $1.3 million due to the Proposition 13 inflationary
adjustment and increases in assessed values related to changes in ownership and new
construction.
• Final budgeted sales tax decreased from the adopted budget by $3.3 million. The main
factor behind this decline was a decrease in demand for luxury automobiles as well as a
temporary closure of a local new car dealership for renovations.
• Charges for services increased from the adopted budget by $396,600. This adjustment
is related to increased revenue received for recreation classes and special events.
• Property income revenues increased by $1.3 million mainly due to the grossing up of full
revenues related to the Dove Street property management. The adopted budget included
the net revenue associated with the property, but the budget was revised to capture the
full revenue associated with the property.
• Other revenues increased by $247,849 from the adopted budget due to contributions to
the Newport Beach Library Foundation for library materials and programming accounts
and the Friends of the Newport Library program to enhance programs such as Summer
Reading, Sunday Musicales, National Library Week, and Young Adult Programs.
• Donations were adjusted upward by $113,851 related to donations to the Library Services
Department, Police Department, Fire Department, and the Recreation & Senior Services
Department.
Final budgeted expenditures for the General Fund increased $16.1 million from the original budget
during the year ended June 30, 2024. The significant factors contributing to the increase are as
follows:
• The addition of $5.3 million to the benefits and salary budget associated with an additional
discretionary payment of $5.0 million toward the City's unfunded pension liability and
roughly $300,000 in overtime for police services due to the Police Department's new
Boardwalk and Quality of Life Enforcement program that tackles boardwalk safety and
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44
quality of life issues throughout the City, and acceptance of the Stonegarden Grant which
enhances cooperation and coordination amongst various agencies to raise the level of law
enforcement presence on the coastline.
• Budgeted carryovers from Fiscal Year 2022-23 totaling $5.5 million were added to the
adopted budget.
The addition of $1.3 million related to grossing up the expenditures related to the Dove
Street property management as the adopted budget represented net activity, but the
budget was revised to capture the full expenditures associated with the property.
• The addition of $1.8 million related to the Fire Department's mutual aid reimbursements,
purchase of a new outfitted ambulance unit, and purchases of a lifeguard computer -aided
design system and software license renewal for the records and management system.
Variance with Final Bud
Actual General Fund revenues came in at $9.1 million above final budgeted revenues for the year
ended June 30, 2024. Significant factors contributing to this favorable variance are summarized
as follows:
• Property tax revenues came in $3.4 million higher than the final budget, largely due to
supplemental taxes.
• Investment earning revenues were $3.1 million higher than final budgeted revenues due
to interest income from bonds and elevated interest rates.
• Other taxes ended the year $1.3 million higher than projected due primarily to business
license taxes, utility franchise fees, and solid waste franchise fees.
• Charges for services came in $291,475 higher due primarily to receipts for paramedic
service fees, plan check fees, as well as revenue received from recreation fee -based
classes, and the Junior Lifeguard program.
• Property income ended the year $1.6 million higher mainly due to overages in Beacon
Bay, Balboa Yacht Basin, as well as parking revenue, and GASB 87.
• Intergovernmental revenues came in $333,024 higher than the final budget largely due to
payments from the Newport Beach Fire Department to the IGT-GEMT program resulting
in additional revenue to the City, as well as reimbursements for mutual aid.
• Other revenues exceeded the budgeted amount by $980,168 and were made up largely
of the net of bad debt and damage to city property revenues.
Actual General Fund expenditures of $262.7 million were less than final budgetary estimates of
$275.6 million. The $12.9 million favorable variance was due largely in part to routine savings in
salaries and benefits from vacancies as well as contract services. Salary and benefit savings
totaled $8.0 million and are spread across multiple departments, with savings in the larger
departments (such as the Police Department, the Public Works Department, and the Fire
Department) totaling $3.3 million.
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45
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City's capital assets for Governmental and Business -type Activities as of June 30, 2024
amount to $2.5 billion, net of accumulated depreciation/amortization. This is comprised of a broad
range of tangible 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; and intangible capital assets including the
rights to use land and rights of way, structures and equipment. Total capital assets increased
$19.7 million over the prior fiscal year.
Land
Intangible right to use
land and rights of way
Structures
Intangible right to use structures
Equipment
Intangible right to use equipment
Intangible right to use subscriptions
Infrastructure
Work in progress
Totals
Figure 9
Capital Assets
June 30
(net of depreciation/amortization, in thousands)
Governmental
Business -Type
Activities
Activities
Total
2023
2024
2023
2024
2023
2024
$ 1,918,486
$ 1,922,330
$ 2,219 $
2,219
$ 1,920,705
$ 1,924,549
-
-
3,809
3,755
3,809
3,755
196,235
199,676
378
363
196,613
200,039
12,007
14,045
-
-
12,007
14,045
19,346
19,050
101
126
19,447
19,176
236
162
-
-
236
162
2,231
2,145
-
-
2,231
2,145
210,389
211,479
121,062
125,767
331,451
337,246
13,839
22,200
7,697
4,408
21,536
26,608
$ 2, 372, 769
$ 2,391,087
$ 135,266 $
136,638
$ 2, 508, 035
$ 2, 527, 725
Major capital asset events during the current fiscal year included the following:
Capital asset additions totaled $60.3 million in both the Governmental and Business -type
Activities in the current year. Of the $60.3 million, $9.5 million is related to structure
additions of a junior lifeguard facility, upgrading a park to synthetic turf with new lighting
and a pickleball court; $19.5 million represents additions of infrastructure assets mostly
related to the road system and water system; $4.5 million is related to equipment and
intangible right to use equipment, and intangible right to use subscriptions additions; $3.3
million is related to intangible right to use structures. The remaining $23.5 million is
comprised of additions of non-depreciable/non-amortizable assets such as work in
progress of $19.6 million, and land and rights of way of $3.9 million.
Of the $50.2 million of additions in governmental assets in the current year, additions in
infrastructure contributed $11.3 million, which was mostly due to upgrades in the road
system. The remaining $38.9 million added in the current year as governmental assets is
comprised of $9.5 million of structure additions and $3.9 million of land additions, both
mostly related to the completion of a new junior lifeguard program facility, upgrading a
park with a new multipurpose synthetic turf field and adding a pickleball court to a separate
park; $17.7 million of work in progress, mostly related to construction of a new lecture hall
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at the central library, upgrades to the road system, and a water wheel that will help keep
the harbor waters clear of debris; $4.5 million of equipment and subscription additions,
mostly related to vehicle purchases and information technology related purchases; and
$3.3 million of intangible right to use structures related to the use of a local shelter for
people experiencing homelessness in the City.
• The $10.1 million of business -type asset additions in the current year is comprised of $8.2
million in water system infrastructure additions, mostly related to replacing water lines and
updating a water well, and $1.9 million of work in progress additions related to water
system improvements, most notably replacing a major water main.
Additional information on the City's capital assets can be found in Note (6) of the Notes to the
Financial Statements.
Long-term Debt
Figure 10
Outstanding Debt
June 30
(in thousands)
Governmental
Business -Type
Total
Activities
Activities
2023 2024
2023 2024
2023
2024
Certificates of participation $ 97,610 $ 93,525
$ - $ -
$ 97,610 $
93,525
Bond premium 1,007 865
- -
1,007
865
Totals $ 98,617 $ 94,390
$ - $ -
$ 98,617 $
94,390
The City's total debt decreased $4.2 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 (7) of the Notes to the Financial Statements.
FACTORS AFFECTING NEXT YEAR'S BUDGET
Economy
The City's assessed property values continue to increase, providing a strong revenue base for
the City. However, recent reductions in sales tax revenue have raised concerns about the broader
economy. Nonetheless, sales tax revenue is projected to begin rebounding in Fiscal Year 2024-
25. Additionally, transient occupancy tax revenue from hotels continues to grow, as tourism
remains a strong source of income for the City. Therefore, the local economy in Newport Beach
remains strong, with a positive economic outlook for the foreseeable future. This positions the
City to withstand the impacts of a potential recession and maintain long-term fiscal sustainability.
Local Revenue Trends
Property tax revenue, the City's largest source of revenue, is projected to increase approximately
4.2% next fiscal year, which is largely related to the Proposition 13 inflationary adjustment and
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47
due to changes in ownership and new construction. Although higher interest rates and elevated
mortgage rates have slowed home sales, property tax revenue for Fiscal Year 2024-25 is
projected to be higher largely due to an increase in assessed values. Property tax revenues are
expected to continue growing for the foreseeable future.
Sales tax revenue is the second largest source of General Fund revenue. Approximately 84% of
sales tax revenue is generated from autos and transportation, restaurants and hotels, general
consumer goods, and the State and County pools. Sales tax revenue is projected to be 4.1 %
higher next fiscal year, largely due to moderate growth in restaurants and hotels, general
consumer goods, and the State and County pools. Revenue from these three industry groups is
projected to increase by 5% next fiscal year, which is offset by modest growth in autos and
transportation. Revenue from autos and transportation is projected to increase by 0.6%, due in
part to the temporary closure of a luxury automobile dealership undergoing a construction
renovation project.
Transient occupancy tax (TOT) revenue, which is the third largest source of revenue in the
General Fund, continues to remain strong. This trend is expected to continue with TOT revenues
projected to increase approximately 3% next fiscal year, which is largely due to hotels reporting
record high TOT receipts.
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 that support a wide
variety of programs and initiatives.
The City Council adopted a Fiscal Year 2024-25 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.
The budget for Fiscal Year 2024-25 includes $45 million of funding for the continuation of an
aggressive pension paydown strategy, which is approximately $15 million more than the amount
required to be paid. This aggressive pension paydown strategy of making $45 million payments
to CalPERS each year is expected to eliminate the City's pension liability by 2033.
In Fiscal Year 2023-24, $7.1 million in contributions were made to the OPEB Trust. Additionally,
$3.9 million in investment income was recognized in the OPEB Trust, bringing the value of the
OPEB Trust Fund assets to $46.2 million as of June 30, 2024. This amount exceeds the value of
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48
the explicit portion of the OPEB liability. Since the OPEB liability is fully funded, contributions to
the OPEB Trust are no longer required. Therefore, OPEB Trust assets will be used to fund future
benefit payments. Beginning in Fiscal Year 2024-25, annual savings totaling approximately $4
million are expected from the elimination of the OPEB liability.
Overall, the City's total debt burden is low and remains affordable. The economy benefits from
the City's mature, robust tax base and strong employment across diverse 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 between 2009 and 2012, with growth in each of the last 30 years.
A strong financial profile is a particularly important factor considered by rating agencies when
evaluating the creditworthiness of local government debt. The rating agencies Fitch, Moody's, and
Standard & Poor's have all assigned the City the highest -quality credit rating of AAA. Both
Moody's and Fitch reaffirmed their AAA ratings in 2024. Expenditure controls over the past
decade have included additional employee contributions toward pension costs, contracting
services, and freezing vacant positions when necessary, usually during recessionary periods.
Financial operations produced net surpluses (after transfers) in the last ten years due to
conservative budgeting and a stable and growing tax revenue base. The City has used surpluses
for important one-time purposes, such as paying down debt and investing in infrastructure and
neighborhood capital improvements. The City's financial management policies are strong and
have been further enhanced in recent years.
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) 644-3123. The City's Budgets, Annual Comprehensive Financial
Reports, as well as other City financial information can be found on the City's website at:
www.newportbeachca.gov/financialinfo.
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CITY OF NEWPORT BEACH
Statement of Net Position
June 30, 2024
Assets:
Cash and investments (note 2)
Receivables:
Accounts (net of allowance)
Interest
Intergovernmental receivables
Lease receivables (note 3)
Public -private partnership receivable (note 18)
Restricted cash and investments with fiscal agent (note 2)
Internal balances
Investment in joint ventures (note 13)
Inventory
Prepaid items
Capital assets (note 6):
Non-depreciable/non-amortizable
Depreciable/amortizable
Accumulated depreciation/amortization
Total assets
Deferred Outflows of Resources:
Deferred amount from pension plans (note 11)
Deferred amount from OPEB (note 12)
Total deferred outflows of resources
Liabilities:
Accounts payable
Accrued payroll
Accrued interest payable
Deposits payable
Unearned revenue
Noncurrent liabilities:
Due within one year:
Lease liability (note 7)
Subscription liability (note 7)
Other (note 7)
Due in more than one year:
Net pension liability (note 11)
Net OPEB liability (note 12)
Lease liability (note 7)
Subscription liability (note 7)
Other (note 7)
Total liabilities
Deferred Inflows of Resources:
Deferred amount from pension plans (note 11)
Deferred amount from OPEB (note 12)
Deferred amount from leases (note 3)
Deferred amount from public -private partnerships (note 18)
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
Activities
Activities
Total
$ 359,465,817
$ 28,972,098 $
388,437,915
14,089,676
6,102,021
20,191,697
1,316,897
92,534
1,409,431
13,493,376
10,736
13, 504,112
268,028,069
-
268,028,069
714,546
714,546
35,126,167
35,126,167
4,629,537
(4,629,537)
-
270,127
270,127
679,067
679,067
2,097,926
2,097,926
1,944,530,634 6,627,893 1,951,158,527
760,313,084 210,612,679 970,925,763
(313,755,179) (80,601,365) (394,356,544)
3,090,999,744 167,187,059 3,258,186,803
124,099,025 4,189,507 128,288,532
20,927,518 1,151,419 22,078,937
145,026,543 5,340,926 150,367,469
36,287,807
4,678,774
40,966,581
6,686,759
280,733
6,967,492
3,247,902
-
3,247,902
3,301,637
26,034
3,327,671
9,316,215
-
9,316,215
1,272,450
44,364
1,316,814
289,030
-
289,030
15,386,741
-
15,386,741
306,754,409
10,224,331
316,978,740
17,042,719
927,270
17,969,989
13,066,932
3,732,290
16,799,222
1,543,725
-
1,543,725
126,942,939
126,942,939
541,139,265 19,913,796 561,053,061
2,246,776 44,187 2,290,963
642,920 35,281 678,201
264,667,787 - 264,667,787
784,001 784,001
268,341,484 79,468 268,420,952
2,275,099,514 132,331,781 2,407,431,295
1,002,804
1,002,804
55,096,135
55,096,135
56,839,874
56,839,874
1,336,346
1,336,346
2,323,115
2,323,115
4,629,781
4,629,781
2,216,508
- 2,216,508
28,001,461
20,202,940 48,204,401
$ 2,426,545,538 $ 152,534,721 $ 2,579,080,259
See accompanying notes to basic financial statements
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CITY OF NEWPORT BEACH
Statement of Activities
For the Year Ended June 30, 2024
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
$ 28,392,550
$ 15,953,090
$ 2,189,588
$ 37,954
$ 18,180,632
Public safety
151,625,944
27,903,642
8,672,982
-
36,576,624
Public works
88,359,562
9,397,103
21,543,775
35,031,614
65,972,492
Community development
16,813,900
10,849,048
590,147
36,736
11,475,931
Community services
33,034,132
17,370,410
1,501,469
539,991
19,411,870
Interest on long-term debt
6,215,237
-
-
-
-
Total governmental activities
324,441,325
81,473,293
34,497,961
35,646,295
151,617,549
Business -type activities
Water
37,322,293
33,842,356
97,212
33,939,568
Wastewater
6,959,273
5,274,889
18,287
5,293,176
Total business -type activities
44,281,566
39,117,245
115,499
- 39,232,744
Total primary government
$ 368,722,891 $
120,590,538 $
34,613,460 $
35,646,295 $ 190,850,293
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, beginning, as previously reported
Restatement for correction of error (note 20)
Net position, beginning, as restated
Net position at end of year
See accompanying notes to basic financial statements
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54
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental
Business -type
Activities
Activities
Total
$ (10,211,918)
$ $
(10,211,918)
(115,049,320)
(115,049,320)
(22,387,070)
(22,387,070)
(5,337,969)
(5,337,969)
(13,622,262)
(13,622,262)
(6,215,237)
(6,215,237)
(172,823,776)
(172,823,776)
(3,382,726)
(3,382,726)
(1,666,097)
(1,666,097)
(5,048,823)
(5,048,823)
(172,823,776)
(5,048,823)
(177,872,599)
146,136,873
146,136,873
43,444,542
43,444,542
31,736,961
31,736,961
4,896,557
4,896,557
5,152,384
5,152,384
203,135
-
203,135
5,834,247
893,332
6,727,579
3,534,164
568,429
4,102,593
2,855,069
-
2,855,069
243,793,932
1,461,761
245,255,693
70,970,156
(3,587,062)
67,383,094
2,355,575,382
157,717,018
2,513,292,400
(1,595,235)
(1,595,235)
2,355,575,382
156,121,783
2,511,697,165
$ 2,426,545,538
$ 152,534,721 $
2,579,080,259
See accompanying notes to basic financial statements
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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 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 Debt Service Fund is used to account for debt service transactions related
to the Certificates of Participation issued to finance the construction of the Civic
Center Complex and the construction of Fire Station No. 2.
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.
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CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2024
Page 1 of 2
Assets
Cash and investments (note 2)
Receivables:
Accounts (net of allowance)
Interest
Intergovernmental receivables
Lease receivables (note 3)
Public -private partnership receivable (note 18)
Restricted cash and investments with fiscal agent (note 2)
Due from other funds (note 4)
Advance to other funds (note 4)
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 4)
Due to other funds (note 4)
Total liabilities
Deferred Inflows of Resources:
Unavailable revenue
Deferred amount from leases (note 3)
Deferred amount from public -private partnerships (note 18)
Total deferred inflows of resources
Fund balances:
Nonspendable:
Prepaid items
Inventories
Long-term loan receivable
Permanent endowment
Restricted:
Upper Newport Bay restoration
Other (note 15)
Committed:
Capital re -appropriations
Oil and gas
Other (note 15)
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources and fund balances
al Revenue Funds
Tide and Tide and
Submerged Submerged
General Land - Operating Land - Harbor Ca
$ 85,538,605 $
7,057,434 $
48,689,151
6,183,059
2,224,279
-
403,601
39,628
137,249
10,533,790
-
-
78,878,480
189,149,589
-
714,546
6,816,287
5,676,659
-
1,160,659
101,646
215,285
$ 195,406,425 $
199,287,122 $
48,826,400
$ 9,195,144 $
1,305,980 $
42,395
6,117,226
62,414
-
3,041,127
260,510
3,068,326
980,433
-
-
-
5,676,659
21,421,823
2,609,337
5,719,054
285,689
-
-
77,257, 725
187,410,062
720,001
77,543,414
188,130,063
1,160,659
101,646
215,285
-
5,676,659
1,683,144 -
-
5,710,272 43,107,346
436,303
- -
-
1,052,660
6,350,542
-
82,601,740
96,441,188
8,547,722 43,107,346
$ 195,406,425 $ 199,287,122 $ 48,826,400
See accompanying notes to basic financial statements
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CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2024
Page 2 of 2
Capital Project Fund Debt Service Fund
Facilities
Financial Planning Debt Service
Reserve Fund
Assets
Cash and investments (note 2)
Receivables:
Accounts (net of allowance)
Interest
Intergovernmental receivables
Lease receivables (note 3)
Public -private partnership receivable (note 18)
Restricted cash and investments with fiscal agent (note 2)
Due from other funds (note 4)
Advance to other funds (note 4)
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 4)
Due to other funds (note 4)
Total liabilities
Deferred Inflows of Resources:
Unavailable revenue
Deferred amount from leases (note 3)
Deferred amount from public -private partnerships (note 18)
Total deferred inflows of resources
Fund balances:
Nonspendable:
Prepaid items
Inventories
Long-term loan receivable
Permanent endowment
Restricted:
Upper Newport Bay restoration
Other (note 15)
Committed:
Capital re -appropriations
Oil and gas
Other (note 15)
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources and fund balances
Other
Governmental
Funds Totals
$ 20,371,975 $ $ 111,480,369 $ 273,137,534
4,643,968 1,011,297 14,062,603
63,779 - 395,718 1,039,975
- 1,039,804 1,919,782 13,493,376
- - 268,028,069
- - 714,546
7,505,205 27,620,962 35,126,167
- - 6,816,287
- 5,676,659
39,723 1,302,028
215,285
$ 25,079,722 $ 8,545,009 $ 142,467,851 $ 619,612,529
$ - $ 47 $ 11,148,502 $ 21,692,068
- 3,436 6,183,076
- 3,301,637
5,267,456 9,316,215
- - 5,676,659
6,221,847 241,439 6,463,286
- 6,221,894 16,660,833 52,632,941
4,643,968 - 1,599,312 6,528,969
264,667,787
720,001
4,643,968 1,599,312 271,916,757
39,723 1,302,028
- 215,285
- 5,676,659
4,629,781 4,629,781
- - 1,683,144
2,323,115 59,938,876 111,079,609
436,303
- - 1,052,660
20,435,754 59,829,107 86,615,403
(229,781) 82,371,959
20,435,754 2,323,115 124,207,706 295,062,831
$ 25,079,722 $ 8,545,009 $ 142,467,851 $ 619,612,529
See accompanying notes to basic financial statements
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CITY OF NEWPORT BEACH
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position
June 30, 2024
Fund balances of governmental funds
$ 295,062,831
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.
2,371,916,763
All liabilities (both current and long-term) are reported in the Statement of Net Position.
Amounts exclude long-term debt activity from internal service funds which have been
added below:
Certificates of participation payable - Series 2010E
(87,800,000)
Certificates of participation payable - Series 2020A
(5,725,000)
Bond premium - Series 2020A
(864,633)
Lease liability
(14,198,968)
Subscription liability
(326,977)
Deferred inflows for improvements by the operator to the underlying asset of a
public -private partnership are recognized only in the government -wide statements
for governmental activities.
(64,000)
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
121,343,453
Deferred inflows of resources
(2,217,713)
Pension liability
(300,029,538)
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
20,170,193
Deferred inflows of resources
(619,714)
OPEB liability
(16,432,820)
Accrued interest payable for the current portion of interest due on long-term debt
has not been reported in the governmental funds.
(3,247,902)
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.
6,528,969
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.
38,150,930
Investment in joint ventures is not a current financial resource and therefore not reported
in the governmental funds.
270,127
Internal balance created by the consolidation of internal service fund activities
related to enterprise funds is not reported in the governmental funds.
4,629,537
Net position of governmental activities
$ 2,426,545,538
See accompanying notes to basic financial statements
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CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 1 of 2
Revenues:
Taxes and assessments:
Property tax
Sales tax
Transient occupancy tax
Other taxes
Intergovernmental
Licenses, permits and fees
Charges for services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property income
Donations
Special assessments
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Special Revenue Funds
Tide and
Tide and
Submerged
Submerged
General
Land - Operating
Land - Harbor Capital
$ 146,136,871
$
$
43,444,542
31,736,961
10,252,076
4,977,096
6,481
5,568,126
103,338
25,117,366
38,081
4,157,294
37,902
-
3,200,616
194,821
1,309,710
1,652,435
77,382
790,072
18,970,340
15,308,476
6,624,712
418,774
-
-
983,010
14,041
296,615,507
15,780,522
8,724,494
21,368,625
516,156
-
139,582,338
-
54,085,488
1,507,721
15,384,163
20,637
27,388,952
2,487,623
-
3,574,983
726,928
546,959
1,250,081
83,092
262,717,722 5,259,065 546,959
33,897,785 10,521,457 8,177,535
Transfers in (note 5)
26,926,241
Transfers out (note 5)
(59,400,346)
Leases (as lessee)
3,259,414
Inception of subscription -based IT arrangements
315,569
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning
Fund balances, ending
11,252,355 4,715,000
(19,333,407) -
(28,899,122) (8,081,052) 4,715,000
4,998,663 2,440,405 12,892,535
91,442,525 6,107,317 30,214,811
$ 96,441,188 $ 8,547,722 $ 43,107,346
See accompanying notes to basic financial statements
11-74
64
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 2 of 2
Capital Project Fund Debt Service Fund
Facilities Other
Financial Planning Debt Service Governmental
Reserve Fund Funds
Revenues:
Taxes and assessments:
Property tax
Sales tax
-
Transient occupancy tax
-
Other taxes
-
Intergovernmental
-
Licenses, permits and fees
68,617
Charges for services
-
Fines and forfeitures
-
Investment income
765,875
Net increase in fair value of investments
516,408
Property income
-
Donations
37,951
Special assessments
-
Other
-
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in (note 5)
Transfers out (note 5)
Leases(aslessee)
Inception of subscription -based IT arrangements
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning
Fund balances, ending
1,388,851
Totals
$ $ 146,136,871
- 43,444,542
31,736,961
- 963,173 11,215,249
2,073,983 20,657,672 27,715,232
- 948,030 6,688,111
61,917 25,217,364
- - 4,195,196
87,785 3,827,939 9,386,746
- 1,548,348 4,584,645
- 295,230 41,198,758
- 5,614,105 6,070,830
- 26,843,142 26,843,142
- 178,204 1,175,255
2,161,768 60,937,760 385,608,902
122,977
22,007,758
550,206
140,132,544
9,938,981
65,532,190
329,743
15,734,543
183,559
30,060,134
45,927,164
50,776,034
4,085,000 5,335,081
6,615,252 6,698,344
10,700,252 57,052,630 336,276,628
1,388,851
(8,538,484)
3,885,130
49,332,274
11,072,033
8,677,620
34,788,805
97,432,054
(16,825,622)
-
(7,675,179)
(103,234,554)
-
-
3,259,414
-
-
-
315,569
(5,753,589)
8,677,620
27,113,626
(2,227,517)
(4,364,738)
139,136
30,998,756
47,104,757
24,800,492
2,183,979
93,208,950
247,958,074
$ 20,435,754 $
2,323,115
$ 124,207,706
$ 295,062,831
See accompanying notes to basic financial statements
11-75
65
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, 2024
Net change in fund balances - total governmental funds
$ 47,104,757
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
as depreciation expense. This is the amount by which capital outlay exceeded
depreciation in the current period.
Capital outlay
31,465,934
Depreciation expense
(12,726,650)
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 on bonds
4,085,000
Amortization of principal on leases
1,132,423
Amortization of principal on subscriptions
355,544
Inception of leases
(3,259,414)
Inception of subscription -based IT arrangements
(315,569)
Amortization of deferred inflows for improvements by the operator to the underlying asset of a
public -private partnership are recognized only in the government -wide statements for
governmental activities.
8,000
Premium on bonds is recognized as revenues in the period received; however, in the
statement of activities, it is amortized over the life of the bond.
Amortization of bond premium - Series 2020A
142,131
Accrued interest for debt service is the net change in accrued interest for the current period.
113,074
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.
1,688,919
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.
7,058,228
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.
5,369,988
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 expense of the internal
service funds is reported in the statement of activities.
(14,952,609)
Investment in joint ventures creates an explicit, measurable equity interest reported only
in the statement of activities.
55,496
Internal balance created by the consolidation of internal service funds activities related
to enterprise funds is reflected as a reduction of expenses in the statement of activities.
3,644,904
Change in net position of governmental activities $ 70,970,156
See accompanying notes to basic financial statements
11-76
66
FINANCIAL SECTION
FUND FINANCIAL STATEMENTS
PROPRIETARY FUNDS
67
11-77
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11-78
68
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.
11-79
69
CITY OF NEWPORT BEACH
Proprietary Funds
Statement of Net Position
June 30, 2024
Assets and Deferred Outflows of Resources
Current assets:
Cash and investments (note 2)
Receivables:
Accounts (net of allowance)
Interest
Intergovernmental receivables
Inventories
Prepaid items
Total current assets
Noncurrent assets:
Capital assets (note 6):
Land
Intangible right to use land
Structures
Equipment
Intangible right to use equipment
Software
Intangible right to use subscriptions
Infrastructure
Work in progress
Less accumulated depreciation/amortization
Total capital assets (net of accumulated
depreciation/amortization )
Total assets
Deferred outflows of resources:
Deferred amount from pension plans (note 11)
Deferred amount from OPEB (note 12)
Total deferred outflows of resources
Liabilities and Deferred Inflows of Resources
Current liabilities:
Accounts payable
Accrued payroll
Deposits payable
Due to other funds (note 4)
Workers' compensation - current
General liability - current
Compensated absences - current
Lease liability - current
Subscription liability - current
Total current liabilities
Noncurrent liabilities:
Workers' compensation (note 7)
General liability (note 7)
Compensated absences (note 7)
Lease liability (note 7)
Subscription liability (note 7)
Net pension liability (note 11)
Net OPEB liability (note 12)
Total noncurrent liabilities
Total liabilities
Deferred inflows of resources:
Deferred amount from pension plans (note 11)
Deferred amount from OPEB (note 12)
Total deferred inflows of resources
Net Position
Net investment in capital assets
Unrestricted
Total net position
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
Net position of business -type activities
Enterprise Funds
Governmental
Total Activities
Enterprise Internal Service
Water Wastewater Funds Funds
$ 25,516,076 $ 3,456,022 $ 28,972,098 $ 86,328,283
5,288,749
813,272
6,102,021
27,073
81,485
11,049
92,534
276,922
8,747
1,989
10,736
-
-
-
-
463,782
795,898
30,895,057
4,282,332
35,177,389
87,891,958
2,219,450
- 2,219,450
-
3,883,062
3,883,062
-
688,396
- 688,396
39,581
344,080
35,988 380,068
48,586,874
-
- -
363,725
4,360,625
-
- -
2,271,273
156,834,559
48,826,594 205,661,153
-
4,393,623
14,820 4,408,443
-
(58,686,738)
(21,914,627) (80,601,365)
(36,450,302)
109,676,432 26,962,775 136,639,207 19,171,776
140,571,489 31,245,107 171,816,596 107,063,734
3,027,028 1,162,479 4,189,507 2,755,572
831,931 319,488 1,151,419 757,325
3,858,959 1,481,967 5,340,926 3,512,897
4,589,147
89,627 4,678,774
14,595,739
213,382
67,351 280,733
503,683
26,034
- 26,034
-
-
- -
353,001
4,035,291
-
- -
3,577,058
-
-
3,539,392
44,364
- 44,364
73,074
-
- -
204,832
4,872,927 156,978 5,029,905 26,882,070
19,415,272
7,264,260
10,108,774
3,732,290 3,732,290 67,340
- - - 1,300,946
7,387,359 2,836,972 10,224,331 6,724,871
669,977 257,293 927,270 609,899
11,789,626 3,094,265 14,883,891 45,491,362
16,662,553 3,251,243 19,913,796 72,373,432
31,926 12,261 44,187 29,063
25,493 9,788 35,281 23,206
57,419 22,049 79,468 52,269
105,369,006 26,962,775 132,331,781 17,445,675
22,341,470 2,491,007 24,832,477 20,705,255
$ 127,710,476 $ 29,453,782 157,164,258 $ 38,150,930
(4,629,537)
$ 152,534,721
See accompanying notes to basic financial statements
11-80
70
CITY OF NEWPORT BEACH
Proprietary Funds
Statement of Revenues,
Expenses and Changes in Net Position
For the Year Ended June 30, 2024
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal Service
Water Wastewater
Funds
Funds
Operating revenues:
Charges for sales and services:
Water sales
$ 33,543,566 $
$ 33,543,566
$ -
Charges for services
543
543
37,930,386
Sewer service and connection fees
- 5,242,974
5,242,974
-
Employee contributions
- -
-
24,130
Other
395,459 50,202
445,661
4,335,068
Total operating revenues
33,939,568 5,293,176
39,232,744
42,289,584
Operating expenses
Purchase of water
12,583,108
-
12,583,108
-
Salaries and benefits
5,956,940
1,854,288
7,811,228
4,092,908
Depreciation/amortization
1,833,639
646,683
2,480,322
4,100,760
Professional services
2,195,023
602,106
2,797,129
858,195
Maintenance and supplies
3,251,231
1,387,887
4,639,118
3,301,916
System maintenance
4,802,920
712,965
5,515,885
-
Utilities
2,177,696
97,518
2,275,214
-
Fleet parts and supplies
-
-
-
500,453
System maintenance
151,358
Telecommunication
194,919
Hardware
381,955
Software
541,072
Workers' compensation
11,588,497
Claims and judgments
25,766,286
Compensated absences
2,498,119
OPEB ARC - cash subsidy
-
-
-
11,002,082
Other
1,733,430
780,325
2,513,755
2,425,284
Total operating expenses
34,533,987
6,081,772
40,615,759
67,403,804
Operating (loss)
(594,419)
(788,596)
(1,383,015)
(25,114,220)
Nonoperating revenues (expenses)
Investment income
781,623
111,709
893,332
2,535,077
Net increase in fair value of investments
500,179
68,250
568,429
1,549,091
Gain on sale of capital assets
-
-
-
284,927
Interest expense
(20,903)
(20,903)
(9,984)
Total nonoperating revenues
1,260,899
179,959
1,440,858
4,359,111
Income (loss) before transfers
666,480
(608,637)
57,843
(20,755,109)
Transfers in (note 5)
-
-
5,802,500
Change in net position
666,480
(608,637)
57,843
(14,952,609)
Net position, beginning of year, as previously reported
128,393,695
30,307,955
53,103,539
Restatement for correction of error (note 20)
(1,349,699)
(245,536)
Net position, beginning of year, as restated
127,043,996
30,062,419
53,103,539
Net position, end of year
$ 127,710,476
$ 29,453,782
$ 38,150,930
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
(3,644,904)
Change in net position of business -type activities
$ (3,587,062)
See accompanying notes to basic financial statements
CITY OF NEWPORT BEACH
Proprietary Funds
Statement of Cash Flows
For the Year Ended June 30, 2024
Cash flows from operating activities:
Cash received from customers or user departments
Cash payments to employees for services
Cash payments to suppliers for goods and services
Cash payments for other operating activities
Cash received for other operating activities
Net cash provided by operating activities
Cash flows from noncapital financing activities:
Cash received from other funds
Net cash provided by noncapital financing activities
Cash flows from capital and related financing activities:
Acquisition of capital assets
Lease liabilities and related
Subscription liabilities and related
Proceeds from sale of capital assets
Net cash (used) for capital and related financing activities
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 (loss)
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation
Changes in operating assets and liabilities:
(Increase) in accounts receivable
(Increase) in intergovernmental receivables
(Increase) in inventories
Decrease in prepaid items
Increase (decrease) in accounts payable and accrued payroll
(Decrease) in deposits payable
Increase 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 (used) by operating activities
Noncash investing, capital and financing activities:
Net increase in fair value of investments
Obtaining an intangible right to use lease asset
Total of noncash activities
Enterprise Funds
Governmental
Total Activities
Enterprise Internal Service
Water Wastewater Funds Funds
$ 33,077,216 $
5,082,806 $
38,160,022 $
37,905,795
(6,097,147)
(1,907,241)
(8,004,388)
(10,528,302)
(24,109,071)
(3,002,739)
(27,111,810)
(28,950,995)
(1,337,971)
(730,123)
(2,068,094)
-
4,359,198
1,533,027 (557,297) 975,730 2,785,696
5,802,500
5,802,500
(3,837,902) (14,818) (3,852,720) (3,680,695)
(65,023) (65,023) (63,152)
(370,992)
284,927
(3,902,925) (14,818) (3,917,743) (3,829,912)
1,294,554
182,510
1,477,064
4,081,647
1,294,554
182,510
1,477,064
4,081,647
(1,075,344)
(389,605)
(1,464,949)
8,839,931
26,591,421
3,845,630
30,437,051
77,488,352
$ 25,516,077 $
3,456,025 $
28,972,102 $
86,328,283
$ 25,516,076 $ 3,456,022 $ 28,972,098 $ 86,328,283
$ 25,516,076 $ 3,456,022 $ 28,972,098 $ 86,328,283
$ (594,419) $ (788,596) $ (1,383,015) $ (25,114,220)
1,833,639 646,683 2,480,322 4,100,760
(452,722)
(159,660)
(612,382)
(24,591)
(8,747)
(508)
(9,255)
-
(25,209)
-
-
180,657
934,249
(188,569)
745,680
13,662,489
(5,424)
(5,424)
-
7,054,410
2,152,257
-
-
-
957,126
117,579
45,156
162,735
107,037
(291,128)
(111,803)
(402,931)
(265,020)
2,127,446 231,299 2,358,745 27,899,916
$ 1,533,027 $ (557,297) $ 975,730 $ 2,785,696
$ 500,179 $ 68,250 $ 568,429 $ 1,549,091
- - - 9,837
$ 500,179 $ 68,250 $ 568,429 $ 1,558,928
See accompanying notes to basic financial statements
11-82
72
FINANCIAL SECTION
FUND FINANCIAL STATEMENTS
FIDUCIARY FUNDS
im
73
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11-84
74
FIDUCIARY FUNDS
The Custodial Funds are used to account for assets held by the City as an
agent for other government entities, private organizations, or individuals.
The Other Post -Employment Benefits (OPEB) Trust Fund is used to account
for the activities of the City's trust for the OPEB plan.
11-85
75
CITY OF NEWPORT BEACH
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2024
Assets
Cash and investments (note 2)
Restricted cash and investments with fiscal agent (note 2)
Receivable:
Interest
Intergovernmental receivable
Total assets
Liabilities
Due to others
Total liabilities
Net Position
Restricted for:
Individuals, organizations, and other governments
Total net position
Custodial OPEB
Funds Trust
$ 285,349 $ -
4,245,553 46,202,050
86 5,625
45,980 -
4,576,968 46,207,675
13,186 12,338
13,186 12,338
4,563,782 46,195,337
$ 4,563,782 $ 46,195,337
See accompanying notes to basic financial statements
11-86
76
CITY OF NEWPORT BEACH
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
For the Year Ended June 30, 2024
Additions
Special assessments
Investment earnings
Other
Total additions
Deductions
Debt service
Administrative
Other
Total deductions
Net increase in fiduciary net position
Net position, beginning of year, as previously reported
Restatement for removal of Flexible Spending Account Fund
(note 20)
Restatement for addition of OPEB Trust Fund (note 20)
Total restatements
Net position, beginning of year, as restated
Net position, end of year
Custodial OPEB
Funds Trust
$ 3,277,101 $ -
152,832 3,964,765
1,165,060 7,130,405
4,594,993 11,095,170
2,007,651 -
96,944 55,551
127,861 -
2,232,456 55,551
2,362,537 11,039,619
2,226,973 -
(25,728) -
35,155,718
(25,728) 35,155,718
2,201,245 35,155,718
$ 4,563,782 $ 46,195,337
See accompanying notes to basic financial statements
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78
FINANCIAL SECTION
FINANCIAL STATEMENTS
11-89
79
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies
The basic financial statements of the City of Newport Beach (the "City") have been prepared in
conformity with accounting principles generally accepted in the United States of America
("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 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 (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'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, 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 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 the City's Central Library, Civic Center, and most recently the new
Fire Station No. 2. The Corporation is governed by a Board of Directors, which is comprised
of the seven City Council Members of the City. The Corporation's financial data and
transactions are 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.
11-90
80
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
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 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.
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
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
b. Basis of Accounting and Measurement Focus (Continued)
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.
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
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
b. Basis of Accountina and Measurement Focus (Continued
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 $2,216,508. 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 City Manager,
and the authority for periodic maintenance dredging in the Newport Bay resides with the
City Council.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
b. Basis of Accounting and Measurement Focus (Continued)
Proorietary & 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 the 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.
Fiduciary funds are also reported using the economic resources measurement focus and
the accrual basis of accounting.
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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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
C. Fund Classifications (Continued)
GPnPrA 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.
Capital Proiect Fund
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
The Debt Service Fund is used to account for debt service transactions related to the
Certificates of Participation issued to finance the construction of the City's Civic Center
Complex and the construction of Fire Station No. 2.
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.
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.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
C. Fund Classifications (Continued)
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, and
retiree insurance liabilities; the cost of maintaining and replacing the City's rolling stock fleet,
parking equipment, coordinated communications systems equipment, certain fire
equipment, and recreation equipment; and 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 Custodial Funds, a type of Fiduciary Fund, are used to account for
assets held by the City as an agent for property owners with special assessments, and local
businesses in business improvements districts. The Other Post -Employment Benefit
(OPEB) Trust Fund is used to account for the activities of the City's trust for the OPEB plan.
d. New Accountinq Pronouncements
Current Year Standards
In fiscal year 2023-24, the City implemented the following GASB Statements:
GASB Statement No. 100, Accounting Changes and Error Corrections, effective for
periods beginning after June 15, 2023. The objective of this statement is to amend
GASB Statement No. 62 and clarify the existing definition of accounting changes,
and requires enhancements to accounting and financial reporting for accounting
changes and error corrections to provide more understandable, reliable, relevant,
consistent and comparable information.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
d. New Accounting Pronouncements (Continued)
Pendina Accountina Standards
GASB has issued the following pronouncements that may impact future financial reporting
requirements:
GASB Statement No. 101, Compensated Absences, effective for periods beginning
after December 15, 2023. The objective of this Statement requires that liabilities for
compensated absences be recognized for (1) leave that has not been used and (2)
leave that has been used but not yet paid in cash or settled through noncash means.
A liability should be recognized for leave that has not been used if (a) the leave is
attributable to services already rendered, (b) the leave accumulates, and (c) the
leave is more likely than not to be used for time off or otherwise paid in cash or
settled through noncash means. Leave is attributable to services already rendered
when an employee has performed the services required to earn the leave. Leave
that accumulates is carried forward from the reporting period in which it is earned to
a future reporting period during which it may be used for time off or otherwise paid
or settled.
GASB Statement No. 102, Certain Risk Disclosures, effective for reporting periods
beginning after June 15, 2024. The objective of this Statement is to provide users of
government financial statements with essential information about risks related to a
government's vulnerabilities due to certain concentrations or constraints. This
Statement requires a government to assess whether a concentration or constraint
makes the primary government reporting unit or other reporting units that report a
liability for revenue debt vulnerable to the risk of a substantial impact. Additionally,
this Statement requires a government to assess whether an event or events
associated with a concentration or constraint that could cause the substantial impact
have occurred, have begun to occur, or are more likely than not to begin to occur
within 12 months of the date the financial statements are issued.
GASB Statement No. 103, Financial Reporting Model Improvements, Effective for
reporting periods beginning after June 15, 2025. The objective of this Statement is
to improve key components of the financial reporting model to enhance its
effectiveness in providing information that is essential for decision making and
assessing a government's accountability. This Statement also addresses certain
application issues.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
e. Cash and Investments
Cash and cash equivalents are defined to be cash on hand and demand deposits.
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. Typically, the City's funds
may deposit or withdraw from the City's cash and investments pool on demand without
penalty. The net change in fair value and interest earned on the pooled cash and
investments is allocated to the respective funds based on each fund's average monthly
pooled cash and investments balance. Each fund's share of the pooled cash and
investments balance is treated as cash and cash equivalents on the City's statements of
cash flows. Consistent with GAAP only the City's proprietary funds report a statement of
cash flows.
f. Accounts Receivable
Accounts receivable represent all service and capital project billings other than
intergovernmental receivables stated below. As of June 30, 2024, 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.
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, 2024, the balance of these accounts totaled $13,504,112.
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.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
Caaital Assets
Capital assets are tangible and intangible assets, which include land, structures, equipment,
and infrastructure assets, and are reported in the applicable governmental or business -type
activities columns in the Government -wide Financial Statements. Tangible 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. Buildings, infrastructure, and
improvements are capitalized if cost is in excess of $30,000 and the expected useful life is
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 outlays for tangible capital assets and improvements are capitalized as
projects are constructed. Tangible capital assets acquired through lease obligations are
valued at the present value of future lease payments at the date acquired. Contributed
tangible capital assets are valued at their estimated acquisition value at the date of
contribution. Intangible capitals assets are generally an estimated present value of certain
future lease or software subscription payments for the leases or subscriptions in which the
City is the lessee or subscriber.
Capital assets used in operations are depreciated/amortized using the straight-line method
in the government -wide financial statements and in the fund financial statements of the
proprietary funds. Tangible capital assets are depreciated over their estimated useful lives.
Intangible assets are amortized over the shorter of the estimated useful life of the underlying
asset or the period of time included in the estimated present value. Depreciation/
amortization is charged as an expense against operations and accumulated depreciation/
amortization is reported on the respective balance sheet. The ranges of useful life for
depreciation purposes for each capital asset class are as follows:
Structures
15-75 years
Equipment
3-15 years
Infrastructure
20-75 years
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Summary of Significant Accounting Policies (Continued)
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.
k. 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 fiscal 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
January 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
I. 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 that permits a maximum of three years' accrual for every employee, above which
the excess either stops accruing or 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
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.
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11-100
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
m. Deposits Payable
In the government -wide and fund -level financial statements, deposits payable represents
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 criteria have 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 assets 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
outflow 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 outflow 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.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
o. Deferred Inflows/Outflows of Resources (Continued)
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 assets 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: 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 and OPEB 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
and OPEB 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 inflow for certain
leases for which the City is lessor, and relates to a present value estimate of certain future
lease payments. This amount generally is amortized over the same time period associated
with the related present value estimate. The fifth item is a deferred inflow from a certain
public -private partnership arrangement where the City is the transferor, and represents the
sum of certain improvements by the operator to the underlying public -private partnership
asset and a present -value estimate of certain future payments from the operator to the City.
This amount is generally amortized over the same time period associated with the related
present value estimate.
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.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
p. Fund Balance Classifications (Continued)
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 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
The 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.
q. 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.
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(1)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Summary of Significant Accounting Policies (Continued)
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)
June 30, 2022
June 30, 2023
July 1, 2022 to June 30, 2023
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, 2023
June 30, 2023
July 1, 2022 to June 30, 2023
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(1) Summary of Significant Accounting Policies (Continued)
t. Lease Liabilities and Receivables
Lease liabilities and receivables are estimated present values of future lease payments.
Estimating present values involves various related estimates, including lease terms and
interest rates. The estimated lease term is the time period that the lease is noncancelable,
plus extension and termination time periods if based on the lease agreement it is reasonable
that the extensions will be exercised, and the terminations will not be exercised. When a
lease's implicit interest rate is not known, estimates are made of either the City's incremental
borrowing rate or the rate the City may charge a lessee. Non -lease components of lease
agreements have been treated as separate non -lease agreements when practicable, and
are excluded from the City's estimated lease liabilities and receivables. Leases that do not
meet GASB's definition of a lease liability or receivable (e.g., short-term leases, etc.) are
also excluded from the City's estimated lease liabilities and receivables.
U. Subscription -Based Information Technology (IT) Arrangements
The City is a participant in subscription -based IT arrangements as detailed in note 7. The
City recognizes a subscription liability and intangible right to use subscription assets in the
financial statements. At the commencement of the arrangement, the City initially measures
the liability at the present value of payments expected to be paid during the arrangement
term. Subsequently, the liability is reduced by the principal portion of payments made. The
intangible right to use subscription assets are initially measured at the initial amount of the
subscription liability. Subsequently, the intangible right to use subscription assets are
amortized over the life of the arrangement term.
V. Public -Private Partnerships (PPP)
The City's public -private partnership receivable is an estimated present -value of future
payments from the operator to the City. The estimated public -private partnership term is the
time period that the operator's right to use the underlying public -private partnership asset is
noncancelable, plus extension and termination time periods if based on the public -private
partnership arrangement it is reasonable that the extensions will be exercised, and the
terminations will not be exercised. When the public -private partnership arrangement's
implicit interest rate is not known an estimate is made of the rate the City may charge an
operator. Non -public -private partnership components of public -private partnership
arrangements have been treated as separate arrangements when practicable and are
excluded from the City's estimated receivable. Arrangements that do not meet GASB's
definition of a public private partnership (e.g., leases that do not require the operator to
improve the City's existing assets, etc.) are also excluded from the City's estimated
receivable.
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(2)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Cash and Investments
Cash and investments as of June 30, 2024, are classified in the accompanying financial
statements as follows:
Statement of net position:
Cash and investments $388,437,915
Cash and investments
with fiscal agent 35,126,167
Fiduciary funds:
Cash and investments 285,349
Cash and investments with fiscal agent 50,447,603
Total cash and investments $474,297,034
Cash and investments as of June 30, 2024, consist of the following:
Cash on hand $ 27,606
Deposits with financial institutions 16,631,116
Cash and receivables in investment accounts 1,485,892
Investments 456,152,420
Total cash and investments $474,297,034
Investments Authorized by the California Government Code and the Citv's Investment Poli
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,
where more restrictive) that address interest rate risk and concentration of credit risk. Certain
investments related to debt proceeds and the City's OPEB trust are excluded from the table below,
because they are governed neither by the California Government Code nor by the City's
investment policy. Debt proceeds held by bond trustees are instead governed by the provisions
of debt agreements of the City. Investments in the City's OPEB trust are governed by the
agreement between the City and the trustee.
0
11-106
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(2) Cash and Investments (Continued)
Maximum
Maximum
Maximum
Percentage
Investment in
Minimum
Authorized Investment Type
Maturity
of Portfolio
One Issuer
Rating
Local Agency Bonds
5 years
30%
5%
A
U.S. Treasury Obligations
5 years
No Limit
No Limit
None
U.S. Agency Securities
5 years
No Limit
30%
None
FHLMC
5 years
No Limit
30%
None
Banker's Acceptances
180 days
40%
5%
A-1
Commercial Paper
270 days
40%
5%
A-1
Negotiable Certificates of Deposit
2 years
30%
5%
A-1
Repurchase Agreements
30 days
No Limit
5%
A-1
Reverse Repurchase Agreements
30 days
10%
5%
None
Medium -Term Notes
5 years
30%
5%
A
Mutual Funds
N/A
20%
10%
AAA
Money Market Mutual Funds
N/A
20%
20%
AAAm
Mortgage Pass -Through Securities
5 years
20%
5%
AAA
California Asset Management Program (CAMP
N/A
$75 million
$75 million
None
Local Agency Investment Fund (LAIF)
N/A
$75 million
$75 million
N/A
Supranationals
5 years
20%
10%
AA -
*Excluding amounts held by bond trustee and by the OPEB trust that are not subject to California
Government
Code restrictions.
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.
11-107
97
(2)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Cash and Investments (Continued)
Maximum
Maximum
Percentage
Investment in
Authorized Investment Type
Maximum Maturity
Allowed
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 - 1 Year
0% - 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
0%- No Limit
No Limit
Forward Purchase Agreement
6 months - No Limit
0% - 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
0% - 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 and by the OPEB trust) to market interest rate fluctuations is provided by
the following table that shows the distribution of the City's investments by maturity:
98
11-108
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(2) Cash and Investments (Continued)
Investment Maturities
(In Years)
Investment Type
Fair Value
Less than 1
1 to 3
3 to 5 More than 5
Total
Money Market Funds
$ 12,329,522 $
12,329,522
$ - $
$ -
$ 12,329,522
U.S. Treasury Bills
77,815,938
77,815,938
-
77,815,938
U.S. Treasuries
111,989,778
75,073,780
24,277,195
12,638,803
111,989,778
Commercial Papers
4,812,662
4,812,662
-
-
4,812,662
Certificates of Deposit
5,999,433
5,999,433
-
-
5,999,433
U.S. Agency Bonds
15,353,100
8,069,550
3,318,350
3,965,200
15,353,100
U.S. Agency Discount Bonds
10,643,320
10,643,320
-
-
10,643,320
FHLMC
12,570,371
5,545,275
7,025,096
12,570,371
Asset Backed Securities
5,871,122
2,440,518
3,430,604
-
5,871,122
Corporate Bonds
44,625,358
22,953,449
10,077,159
11,594,750
44,625,358
CAMP
51,011,428
51,011,428
-
-
51,011,428
LAIF
10,320,499
10,320,499
-
10,320,499
Yankee Bonds
1,997,680
1,997,680
-
1,997,680
Supranationals
6,381,433
6,381,433
-
6,381,433
Investments with Fiscal Agent:
Money Market Funds
17,432,588
17,432,588
-
17,432,588
U.S. Treasury Bills
435,789
435,789
-
435,789
U.S. Treasuries
17,767,397
9,514,318
8,253,079
17,767,397
U.S. Agency Securities
2,301,100
1,438,373
862,727
2,301,100
LAIF
291,852
291,852
-
291,852
Investments with OPEB Trust:
Money Market Funds
1,600,784
1,600,784
-
1,600,784
Mutual Funds - Fixed Income
16,834,993
16,834,993
-
16,834,993
Mutual Funds - Equity
27,766,273
27,766,273
-
27,766,273
Totals
$ 456,152,420 $
370,709,457
$ 57,244,210 $
28,198,753 $
$ 456,152,420
Assuming 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, FHLMCs,
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, 2024, the City held asset backed securities of about $5.9 million.
The City's FHLMCs may pay down principal prior to maturity. As of June 30, 2024, the City held
FHLMCs of about $12.6 million.
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, 2024, the City held
corporate and Yankee bonds with make whole call provisions as summarized below:
11-109
99
(2)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Cash and Investments (Continued)
Maturity
Value
July 2024
$ 1,997,680
February 2025
977,990
March 2027
1,921,060
September 2027
1,044,524
January 2029
1,185,972
February 2029
1,200,972
Total
8,328,198
$ 16,656,396
Investments with call dates may be called anytime on or after the call date. As of June 30, 2024,
the City held corporate bonds with call dates as summarized below:
Maturity Value Call Date
April 2025 $ 1,450,264 March 2025
February 2026 878,076 February 2025
May 2027 2,928,870 April 2027
Total $ 5,257,210
Investments may have both a make whole call provision and a regular call date. As of June 30,
2024, the City held corporate bonds with both a make whole call provision and a regular call date
as summarized below:
Maturity
Value
Call Date
July 2024
$ 469,098
July 2024
September 2024
992,830
August 2024
March 2025
2,934,180
February 2025
April 2025
2,927,460
March 2025
August 2025
2,368,813
May 2025
July 2026
1,980,340
July 2025
September 2027
977,340
August 2027
June 2029
1,243,438
May 2029
Total $ 13,893,499
100
11-110
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(2) Cash and Investments (Continued)
Approximately $5.7 million of the investments that are FHLMC's or have either a regular call date
or both a make whole call provision and a regular call date, also have interest rate reset dates. If
$2.9 million of the securities with interest rate reset dates are not called by their call date, then
these securities will convert to floating rate securities tied to a benchmark index. Prior to their call
date, these securities pay a fixed rate of interest. An additional $2.8 million of the securities with
interest rate reset dates are FHLMC's with a potential variable coupon rate.
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations
As of June 30, 2024, 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 June 30, 2024 for
each investment type.
Minimum
Legal
Investment Type
Fair Value
Rating
AAA AAAm
AA+ AA AA-
A-1+ A71
A+ A A- Not Rated
Money Market Funds
$12,329,522
AAAm
$ - $12,329,522 $
- $ - $ -
$ - $ -
$ - $ - $ - $ -
U.S. Treasury Bills
77,815,938
None
- -
- - -
77,815,938 -
- - - -
U.S. Treasuries
111,989,778
None
- -
111,989,778 - -
- -
- - - -
Commercial Papers
4,812,662
A-1
- -
- - -
- -
- - - 4,812,662
Certificates of Deposit
5,999,433
A71
- -
- - -
2,999,895 2,999,538
- - - -
U.S. Agency Bonds
15,353,100
None
- -
15,353,100 - -
- -
- - - -
U.S. Agency Discount Bonds
10,643,320
IN
- -
- - -
10,643,320 -
- - - -
FHLMC
12,570,371
None
- -
12,570,371 - -
- -
- - - -
Asset Backed Securities
5,871,122
AAA
4,573,711 -
- - -
- -
- - - 1,297,411
Corporate Bonds
44,625,358
A-
- -
9,119,006 977,340 6,031,192
- -
10,300,913 15,238,577 2,958,330 -
CAMP
51,011,428
None
- 51,011,428
- - -
- -
- - - -
LAIF
10,320,499
None
- -
- - -
- -
- - - 10,320,499
Yankee Bonds
1,997,680
A-
- -
- - -
- -
- - 1,997,680 -
Supranationals
6,381,433
AA-
6,381,433 -
- - -
- -
- - - -
Investments with Fiscal Agent:
Nbney Market Funds
17,432,588
AAm
- 17,432,588
- - -
- -
- - - -
U.S. Treasury Bills
435,789
None
- -
- - -
435,789 -
- - - -
U.S. Treasuries
17,767,397
None
- -
17,767,397 - -
- -
- - - -
U.S.AgencySecurities
2,301,100
None
- -
2,301,100 - -
- -
- - - -
LAIF
291,852
None
- -
- - -
- -
- - - 291,852
Investments with OPEB Trust:
Nbney Market Funds
1,600,794
None
- 1,600,784
- - -
- -
- - - -
Mutual Funds - Fixed Income
16,834,993
None
- -
- - -
- -
- - - 16,834,993
NLtual Funds - Equity
27,766,273
None
27,766,273
Totals
$456,152,420
$10,955,144 $82,374,322 $169,100,752 $977,340 $6,031, 192
$91,894,942 $2,999,538
$10,300,913 $15,238,577 $4,956,010 $61,323,690
11-111
101
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(2) Cash and Investments (Continued)
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. There were no investments in any one
issuer (excluding U.S. treasury bills, U.S. treasuries, mutual funds, and pooled investments) that
represented 5% or more of total City investments.
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, 2024, 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.
Investment in California Asset Manaaement Trust's Cash Reserve Portfolio (CAMP
The City voluntarily invests in the Cash Reserve Portfolio (CAMP) of the California Asset
Management Trust (CAMT). CAMT is an external investment pool that is both a California joint
exercise of powers authority regulated by California Government Code Section 6509.7 and a
common law trust regulated by CAMT's bylaws and declaration of trust. Oversight of CAMT is
provided by CAMT's trustees. Other than CAMT's initial trustees, CAMT's board of trustees
appoints trustees to indefinite terms, and these appointed trustees are subject to approval by
participants in CAMT that have executed CAMT's declaration of trust. Because the City has not
executed CAMT's declaration of trust, the City has no voting rights with CAMT.
11-112
102
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(2) Cash and Investments (Continued)
One of CAMP's investment objectives is to maintain a stable net asset value of $1.00 per share.
According to CAMT's audited financial statements for calendar year 2023, "In accordance with
GASB Statement No. 79, Cash Reserve Portfolio securities are valued at amortized cost, which
approximates fair value.". CAMP is rated AAAm by S&P Global. Under normal circumstances the
City may withdraw from its investment with CAMP "upon proper notice without restrictions". CAMT
may suspend withdrawals in limited circumstances.
Investment in State Investment Pool
The City voluntarily invests in the Local Agency Investment Fund (LAIF). LAIF is an external
investment pool that is regulated by California Government Code Sections 16429.1 — 16429.4.
Oversight of LAIF is provided by the Local Investment Advisory Board (LIAB). LIAB's chairman
is the State Treasurer or his or her designee. The State Treasurer also appoints the remaining
four members of LIAB to serve two-year terms or at the State Treasurer's pleasure. California
Government Code Section 16429.2 specifies the required qualifications of the State Treasurer's
appointees to LIAF.
LAIF provides the fair value of the City's investment in LAIF, which is reported in the
accompanying financial statements and is based upon the City's pro-rata share of the fair value
of 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's credit risk is not rated by a nationally recognized statistical rating
organization.
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 transactions of $10 million or more.
11-113
103
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(2) Cash and Investments (Continued)
Investments in Other Post -Employment Benefits (OPEB) Trust
The City established a trust account with Public Agency Retirement Services (PARS) to hold
assets that are legally restricted for use in administering the City's OPEB plan. The OPEB Trust's
cash and investments are managed by a third -party portfolio manager under guidelines approved
by the City. Those guidelines are as follows:
Risk Tolerance Moderate
Risk Management The portfolio is constructed to control risk through diversification of
asset classes (cash, fixed income, and equity), investment styles
(large cap, small cap, international, etc.), and securities.
Disciplined mutual fund selection and monitoring processes help to
drive return potential while reducing portfolio risk.
Investment Objective To provide growth of principal and income. It is expected that
dividend and interest income will comprise a significant portion of
total return, although growth through capital appreciation is equally
important.
Strategic Ranges 0% - 20% Cash
30% - 50% Fixed Income
50% - 70% Equity
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:
• Quoted prices for similar assets or liabilities in active markets
• Quoted prices for identical or similar assets or liabilities in markets that are not active
• Inputs other than quoted prices that are observable for the asset or liability
• Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
11-114
104
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(2) Cash and Investments (Continued)
Following are the City's recurring fair value measurements as of June 30, 2024:
Money Market Funds
U.S. Treasury Bills
U.S. Treasuries
Commercial Papers
Certificates of Deposit
U.S. Agency Bonds
U.S. Agency Discount Bonds
FHLMC
Asset Backed Securities
Corporate Bonds
CAMP
LAIF
Yankee Bonds
Supranationals
Investments with Fiscal Agent:
Money Market Funds
U.S. Treasury Bills
U.S. Treasuries
U.S. Agency Securities
LAIF
Investments with OPEB Trust:
Money Market Funds
Mutual Funds - Fixed Income
Mutual Funds - Equity
Totals
(3) Lease Receivables
City as Lessor
Quoted Prices
Investments
in Active
Quoted Prices
That Are Not
Markets for
for Similar Significant
Subject to Fair
Identical Assets
Assets in Active Unobservable
Fair Value
Value Hierarchy
(Level 1)
Markets (Level 2) Inputs (Level 3)
$12,329,522
$ 12,329,522
$ -
$ - $ -
77,815,938
-
77,815,938 -
111,989,778
111,989,778 -
4,812,662
4,812,662 -
5,999,433
5,999,433 -
15,353,100
15,353,100 -
10,643,320
10,643,320 -
12,570,371
12,570,371 -
5,871,122
5,871,122 -
44,625,358
-
44,625,358 -
51,011,428
51,011,428
- -
10,320,499
10,320,499
- -
1,997,680
-
1,997,680 -
6,381,433
6,381,433 -
17,432, 588 17,432, 588
435,789 435,789 -
17,767,397 17,767,397 -
2,301,100 - 2,301,100 -
291,852 291,852 - -
1,600,784 1,600,784 - - -
16,834,993 - 3,183,119 13,651,874 -
27,766,273 - 5,475,356 22,290,917 -
$ 456,152,420 $ 92,986,673 $ 8,658,475 $ 354,507,272 $ -
Lease agreements that meet the requirements of GASB 87 for which the City is the lessor are
disclosed as lease receivables on the City's financial statements. Included in the City's lease
receivables are over 900 agreements related to land and structures. GASB 87 excludes certain
inflows (e.g., certain variable payments, etc.) from the measurement of lease receivables. For the
fiscal year ending June 30, 2024, the City recognized $4,487,725 of variable payments related to
the lease receivables that were excluded from the measurement of the lease receivables. Lease
inflows, including inflows excluded from GASB 87, are included on the City's financial statements
as property income. Lease inflows for interest revenue from amortization of the GASB 87 lease
11-115
105
(3)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Lease Receivables (Continued)
receivables totaled $3,092,111. Lease inflows for lease revenue from amortization of the related
GASB 87 deferred inflows of resources from leases was $10,363,339. Lease receivables at June
30, 2024 were $268,028,069.
Regulated Lease
While not technically a lease, the City licenses streetlight space for cellphone antennas and
related equipment to a cellphone company. Restrictions to the license cause the license to be a
GASB 87 regulated lease that is excluded from GASB 87's present value calculations and notes.
Generally, these licensed streetlight spaces are licensed nonexclusively, but some of these
licensed spaces may be licensed exclusively. The total revenue recognized during the fiscal year
for this license was $8,182. Below are the expected future minimum payments to the City from
this license. License payments by the cellphone company to the City do not secure debt issued
by the City.
Year Ending License
June 30, Payments
2025 $ 8,186
2026 1,500
2027 1,500
2028 1,500
2029 1,500
2030-2034 7,500
2035-2039 7,000
Total $ 28,686
(4) Interfund Receivables and Payables
At June 30, 2024, interfund receivables and payable were as follows:
General Fund
Debt Service Fund
Internal Service Fund
Other Governmental Funds
Due From Due To
$ 6,816,287 $ -
- 6,221,847
- 353,001
241,439
106
11-116
(4)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Interfund Receivables and Payables (Continued)
The above balances are primarily due to reclassification of negative cash balances in the city-
wide cash pool.
At June 30, 2024, interfund advances receivable and payable were as follows:
Due From Due To
General Fund $ 5,676,659 $ -
Tide and Submerged Land - Harbor Capital Fund - 5,676,659
The General Fund advance to the Tide and Submerged Land — Harbor Capital Fund was utilized
for dredging within the City's Tidelands. Repayment of the advance to the General Fund is funded
from incremental revenue increases generated from certain leases, mooring rents, commercial
and residential pier rents, and parking meter revenues.
The annual amortization of the repayment of the advance is as follows:
Harbor Capital Fund Advance - Repayment Terms
(Zero -Interest Advance)
Advance #1
Advance #2
Dredging
Marina Park
Fiscal
Projects
Project
Total
Year
Repayment
Repayment
Repayment
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
Totals $ 2,676,659 $ 3,000,000 $ 5,676,659
107
11-117
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(5) Interfund Transfers
Interfund transfers at June 30, 2024, consisted of the following:
General Fund
O Tide and Submerged Land -
Operating
Facilities Financial Planning
Reserve
~ Other Governmental Funds
Totals
Transfers In
Tide and
Tide and
Facilities
Submerged
Submerged
Financial
Internal
Other
Land -
Land - Harbor
Planning
Service
Governmental
General Fund Operating
Capital
Reserve
Debt Service Funds
Funds Total
$ - $11,170,010
$ 4,715,000
$11,072,033
$ 8,677,620 $5,802,500
$ 17,963,183 $ 59,400,346
19,333,407 19,333,407
- - 16,825,622 16,825,622
7,592,834 82,345 7,675,179
$26,926,241 $11,252,355 $ 4,715,000 $11,072,033 $ 8,677,620 $5,802,500 $ 34,788,805 $103,234,554
The City typically uses transfers to fund ongoing subsidies and to set aside resources for long-
term needs such as capital facilities replacement and major maintenance. The General Fund
transferred:
• $11,170,010 to the Tide and Submerged Land — Operating Fund to subsidize the
maintenance and operation;
• $4,715,000 to the Tide and Submerged Land — Harbor Capital Fund to cash fund Harbor
Capital projects;
• $11,072,033 to the Facilities Financial Planning Reserve Fund to cash fund construction
projects for General Fund supported facilities;
• $8,677,620 to the Debt Service Fund for the debt service payments related to the Civic
Center Certificates of Participation and the Fire Station No. 2 Certificates of Participation;
• $5,802,500 to the Retiree Insurance Internal Service Fund to fund the OPEB Trust; and
• $17,963,183 to Other Governmental Funds, which includes $12,776,641 to the
Unrestricted Capital Improvements Fund to cash fund General Fund capital
improvements, $15,290 to close Measure M project, $1,665,952 the Neighborhood
Enhancement Fund for capital improvements, $1,000,000 to the Park Maintenance Fund
for maintenance of parks, $2,500,000 to the Facilities Maintenance Fund for maintenance
of facilities, and $5,300 to the Assessment District Fund services.
The Tide and Submerged Land — Operating Fund transferred $19,333,407 to the General Fund
to reimburse for tidelands related expenditures.
11-118
108
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(5) Interfund Transfers (Continued)
The Facilities Financial Planning Reserve Fund also transferred $16,825,622 to Other
Governmental Funds as follows:
• $6,955,012 to the Parks and Community Centers Fund to fund construction of a new
library lecture hall;
• $4,940,281 to the Miscellaneous FFP Projects Fund for CNG fueling support facility and
transfer station rehabilitation;
• $4,643,968 to the Contributions Fund to fund the construction of a new library lecture hall;
and
• $286,361 to the Junior Lifeguards Fund to cash fund construction projects related to the
Junior Lifeguard Building.
Other Governmental Funds transferred $7,675,179 to other funds as follows:
• The Contributions Fund transferred $135,892 to the General Fund and $82,345 to the Tide
and Submerged Land - Operating Fund, to reimburse those funds for expenses related to
a storm drain dry weather diversion capital project;
• The American Rescue Plan Act Fund transferred $5,226,642 to the General Fund for
public safety services incurred on fire operations;
• The Assessment District Fund transferred $1,230,300 to the General Fund as
reimbursement for engineering and design work related to Assessment Districts;
• The Unrestricted Capital Improvements Fund transferred $1,000,000 to the General Fund
for the Travelodge North Homekey project.
11-119
109
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(6) Capital Assets
Capital asset activity for the year ended June 30, 2024, was as follows:
Governmental Activities:
Non-depreciable/non-amortizable:
Land and rights of way
Work in progress
Depreciable/amortizable:
Structures
Intangible right to use structures
Equipment
Intangible right to use equipment
Intangible right to use subscriptions
Infrastructure
Less accumulated depreciation/amortization for:
Structures
Intangible right to use structures
Equipment
Intangible right to use equipment
Intangible right to use subscriptions
Infrastructure
Net depreciable/amortizable
Net capital assets
Beginning
D'I----
Additions
Deletions
Balance
June 30, 2024
$1,918,486,226 $
3,908,965
$ (64,792)
$1,922,330,399
13,838,976
17,712,529
(9,351,270)
22,200,235
1,932,325,202
21,621,494
(9,416,062)
1,944,530,634
260,708,379
9,509,647
(37,808)
270,180,218
13,927,685
3,259,414
-
17,187,099
60,805,831
3,843,617
(1,129,005)
63,520,443
353,888
9,837
-
363,725
2,634,434
616,790
(584,372)
2,666,852
400,132,758
11,340,723
(5,078,734)
406,394,747
738,562,975
28,580,028
(6,829,919)
760,313,084
(64,472,932)
(6,031,296)
-
(70,504,228)
(1,921,060)
(1,221,283)
-
(3,142,343)
(41,460,147)
(4,088,541)
1,078,403
(44,470,285)
(117,809)
(83,595)
-
(201,404)
(403,595)
(454,384)
336,407
(521,572)
(189,743,313)
(7,577,849)
2,405,815
(194,915,347)
(298,118,856)
(19,456,948)
3,820,625
(313,755,179)
440,444,119
9,123,080
(3,009,294)
446,557,905
$2,372,769,321 $ 30,744,574 $ (12,425,356) $2,391,088,539
Governmental Activities capital assets net of accumulated depreciation/amortization at June 30,
2024 are comprised of the following:
General Capital Assets, net
Internal Service Fund Capital Assets, net
Total
$ 2,371,916,763
19.171.776
$ 2,391,088,539
M
11-120
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(6) Capital Assets (Continued)
Business -type Activities:
Beginning Balance
Balance Additions Deletions June 30, 2024
Non-depreciable/non-amortizable:
Land $ 2,219,450 $ - $ - $ 2,219,450
Work in progress 7,697,408 1,856,408 (5,145,373) 4,408,443
9,916,858 1,856,408 (5,145,373) 6,627,893
Depreciable/amortizable
Intangible right to use land and right of way 3,883,062 - - 3,883,062
Structures 688,396 - - 688,396
Equipment 337,180 42,888 - 380,068
Infrastructure 198,854,753 8,189,807 (1,383,407) 205,661,153
Total Capital Assets 203,763,391 8,232,695 (1,383,407) 210,612,679
Less accumulated depreciation/amortization for
Intangible right to use land and right of way
(74,169)
(53,656)
-
(127,825)
Structures
(310,212)
(15,357)
-
(325,569)
Equipment
(236,129)
(17,935)
-
(254,064)
Infrastructure
(77,792,931)
(2,393,374)
292,398
(79,893,907)
(78,413,441)
(2,480,322)
292,398
(80,601,365)
Net depreciable/amortizable
125,349,950
5,752,373
(1,091,009)
130,011,314
Net capital assets
$ 135,266,808
$ 7,608,781
$ (6,236,382)
$ 136,639,207
Depreciation/amortization expense was charged in the following functions in the Statement of
Activities:
Governmental Business -type
General Government
Public Safety
Public Works
Community Development
Community Service
Water
Wastewater
a�! V,VVV,VJT y! —
2,299,560 -
174,632 -
478,587 -
9,817,815 -
- 1,833,639
Totals $ 19,456,948 $ 2,480,322
11-121
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(6) Capital Assets (Continued)
Internal Service Fund depreciation/amortization of $4,100,760 is allocated to governmental
functions above.
(7) Lonq-Term Liabilities
Changes in Long -Term Liabilities
The long-term liabilities for governmental activities for the fiscal year ended June 30, 2024, are
as follows:
Governmental activities:
Other debt:
Certificates of participation - Series 2010B
Certificates of participation - Series 2020A
Bond premium - Series 2020A
Other long-term liabilities:
Workers' compensation payable
Claims and judgments payable
Compensated absences
Lease liability
Subscription liability
Total governmental activities
Amounts
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
$ 91,190,000 $ $ (3,390,000) $ 87,800,000 $ 3,510,000
6,420,000 (695,000) 5,725,000 725,000
1,006,764 (142,131) 864,633 -
16,396,153 11,588,497 (4,534,087) 23,450,563 4,035,291
8,689,061 25,766,286 (23,614,029) 10,841,318 3,577,058
12,691,040 2,498,119 (1,540,993) 13,648,166 3,539,392
12,274,149 3,269,251 (1,204,018) 14,339,382 1,272,450
2,235,133 315,569 (717,947) 1,832,755 289,030
$ 150,902,300 $ 43,437,722 $ (35,838,205) $ 158,501,817 $ 16,948,221
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.
The long-term liabilities for business -type activities for the fiscal year ended June 30, 2024, are
as follows:
Beginning
Ending
Due Within
Balance Additions
Deletions
Balance
One Year
Business -type activities:
Lease liability $3,820,774 $ -
$ (44,120)
$3,776,654
$ 44,364
Total business -type activities $3,820,774 $ -
$ (44,120)
$3,776,654
$ 44,364
11-122
112
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(7) Long -Term Liabilities (Continued)
2010 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 also were applied to pay
certain costs of issuance incurred in connection with the Certificates.
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, 2024, the City has received $31,524,132 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 payments for the Series 2010B Certificates, which
are payable through July 1, 2040, range from $3,510,000 to $7,245,000. The total outstanding
balance at June 30, 2024 amounted to $87,800,000. The use of the following assets has been
pledged as security for the outstanding balance: the Central Library and the Civic Center.
11-123
113
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Long -Term Liabilities (Continued)
The annual amortization requirements of the outstanding Series 2010B Certificates of
Participation are as follows:
Year Ending
June 30,
Principal
Interest
Total
2025
$ 3,510,000
$ 6,142,971
$ 9,652,971
2026
3,675,000
5,889,360
9,564,360
2027
3,850,000
5,623,515
9,473,515
2028
4,025,000
5,345,089
9,370,089
2029
4,210,000
5,053,726
9,263,726
2030-2034
24,115,000
20,386,712
44,501,712
2035-2039
30,250,000
10,695,372
40,945,372
2040-2041
14,165,000
1,026,996
15,191,996
Totals
$ 87,800,000
$ 60,163,741
$ 147,963,741
2020 Certificates of Participation
In Fiscal Year 2020-21, the City issued $7,860,000 of Series 2020A Certificates of Participation.
The 2020A Certificates were issued to finance the acquisition, improvement, and equipping of
Fire Station No. 2. The proceeds of the Certificates also were applied to pay certain costs of
issuance incurred in connection with the Certificates.
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 June 15, 2021, 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 2020A Certificates'
interest rate is 4.00%. Principal payments are payable annually on July 1 of each year. The
remaining principal payments of the Series 2020A Certificates, which are payable through July 1,
2030, range from $725,000 to $915,000. The total outstanding balance at June 30, 2024
amounted to $5,725,000. The use of the following assets has been pledged as security for the
outstanding balance: Fire Station 5 and Fire Station 7.
114
11-124
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Long -Term Liabilities (Continued)
The annual amortization requirements of the outstanding Series 2020A Certificates of
Participation are as follows:
Year Ending
June 30,
2025
2026
2027
2028
2029
2030-2031
Totals
Claims and Judaments
Principal
Interest
Total
$ 725,000
$ 214,500 $
939,500
755,000
184,900
939,900
785,000
154,100
939,100
815,000
122,100
937,100
850,000
88,800
938,800
1,795,000
72,500
1,867,500
$ 5,725,000 $ 836,900 $ 6,561,900
The City retains the risk of loss for general liability and workers' compensation claims as described
in Note (9). 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, 2024, 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, 2024, for general liability and workers' compensation
was $10,841,318 and $23,450,563, respectively.
Compensated Absences
The City's policies relating to compensated absences are described in Note (1). This liability at
June 30, 2024, is $13,648,166. Compensated absences are liquidated from the Compensated
Absences internal service fund.
Unused Credit
The City has a letter of credit in the amount of $300,938.
115
11-125
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Long -Term Liabilities (Continued)
Leases
Lease agreements that meet the requirements of GASB 87 for which the City is lessee are
disclosed as lease liabilities on the City's financial statements that are presented on the accrual
basis of accounting and with an economic resources measurement focus. Included in the City's
lease liabilities are agreements related to water well easements, lifeguard communication
equipment, and part of a homeless shelter. For lease provisions subject to GASB 87 during the
fiscal year there were no variable lease payments that were not previously included in the City's
lease liabilities.
Estimates of the future lease payments for the City's lease liability for governmental activities are
as follows:
Year Ending
June 30
Principal
Interest
Total
2025
$ 1,272,450
$ 76,212
$ 1,348,662
2026
1,273,326
69,199
1,342,525
2027
1,212,633
62,367
1,275,000
2028
1,219,317
55,683
1,275,000
2029
1,226,038
48,963
1,275,001
2030-2034
6,232,288
142,712
6,375,000
2035-2038
1,903,330
9,170
1,912,500
Totals
$ 14,339,382
$ 464,306
$ 14,803,688
116
11-126
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Long -Term Liabilities (Continued)
Estimates of the future lease payments for the City's lease liability for business -type activities are
as follows:
Fiscal
Year Ending
June 30,
Principal
Interest
Total
2025
$ 44,364
$ 20,660
$ 65,024
2026
44,608
20,415
65,023
2027
44,854
20,169
65,023
2028
45,101
19,922
65,023
2029
45,350
19,673
65,023
2030-2034
230,529
94,588
325,117
2035-2039
236,955
88,162
325,117
2040-2044
243,560
81,557
325,117
2045-2049
250,350
74,767
325,117
2050-2054
257,328
67,789
325,117
2055-2059
264,501
60,616
325,117
2060-2064
271,874
53,243
325,117
2065-2069
279,453
45,664
325,117
2070-2074
287,243
37,874
325,117
2075-2079
295,250
29,868
325,118
2080-2084
303,480
21,637
325,117
2085-2089
311,939
13,178
325,117
2090-2094
280,510
4,584
285,094
2095-2099
39,402
181
39,583
Totals
$ 3,776,651
$ 774,547
$ 4,551,198
Subscription -Based Information Technology Arrangements
Subscription -based information technology arrangements (SBITAs) that meet the requirements
of GASB 96 for which the City is a subscriber are disclosed as SBITA liabilities on the City's
financial statements that are presented on the accrual basis of accounting with an economic
resources measurement focus. Included in the City's SBITA liabilities are subscriptions related
to library operations, public communications, recreation classes registrations, website hosting,
performance evaluations, public safety, etc. GASB 96 excludes certain outflows (e.g., certain
variable payments, etc.) from the measurement of SBITA liabilities.
117
11-127
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Long -Term Liabilities (Continued)
During the fiscal year, outflows of resources from the City to one SBITA vendor included variable
payments that were not previously included in the City's SBITA liabilities. The city's recreation
class registration software vendor charges fees for every class registration. These fees cover both
credit card processing and the registration software subscription. The amount of fees paid to the
software vendor varies with the number of registrations. However, the fees will not decrease
below the vendor's annual minimum fee. Only the estimated annual minimum software
subscription fee has been included in the City's GASB 96 subscription liabilities.
For the fiscal year ended June 30, 2024, there were approximately $21,907 of software
subscription fees in excess of the annual minimum. Part way through the fiscal year, the City's
existing recreation class registration software's contract ended. The City's recreation class
registration software's new contract has both transaction fees (e.g., credit card processing, etc.)
and a separate fixed software subscription fee. Consequently, the City is not expecting to disclose
variable software subscription fees after the fiscal year ended June 30, 2024.
Estimates of the future subscription payments for the City's SBITA liabilities are as follows:
Year Ending
June 30, Principal _
2025 $ 289,030 $
2026
2027
2028
2029
2030-2033
Totals
(8) Limited Obligation Bonds
243,771
234,542
235,836
215,788
Interest Total
9,282 $ 298,312
7,872
251,643
6,559
241,101
5,266
241,102
3,980
219,768
613,788 6,067 619,855
$1,832,755 $ 39,026 $1,871,781
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 Special Assessment District
Custodial Fund. Bonds outstanding at June 30, 2024, for each district under the Bond Acts of
1911 and 1915 areas follows:
11-128
118
(8)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
Limited Obligation Bonds (Continued)
Assessment District
Reassessment District 2012
Assessment District No.
117
Assessment District No.
116
Assessment District No.
116B
Assessment District No.
113
Assessment District No.
111
Assessment District No.
120-2
Assessment District No.
124
Totals
Bonds Outstanding
Original Issue June 30, 2024
$ 13,583,436 $
574,037
2,955,000
2,255,000
1,575,000
1,300,000
665,000
550,000
4,565,000
4,140,000
2,412,000
2,097,000
2,505,000
2,505,000
23,625,000
23,625,000
$ 51,885,436 $ 37,046,037
(9) 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:
TVpe of Coverage
Self -Insured Retention
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
11-129
119
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(9) Risk Management — General Liability and Workers' Compensation (Continued)
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 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 claims payable was $34,291,881 at June 30, 2024, which represents the
discounted present value of all outstanding claims. The claims are discounted using an interest
rate of 3%.
Unpaid claims, beginning of fiscal year
Insured claims (including IBNR)
Claim payments
Unpaid claims, end of fiscal year
(10) Deferred Compensation Plan
General Liability
Workers' Compensation
June 30, 2023
June 30, 2024
June 30, 2023
June 30, 2024
$ 8,695,880
$ 8,689,061
$ 15,754,588
$ 16,396,153
5,618,185
25,766,286
4,903,042
11,588,497
(5,625,004)
(23,614,029)
(4,261,477)
(4,534,087)
$ 8,689,061 $ 10,841,318 $ 16,396,153 $ 23,450,563
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 set aside
a portion of their salary and defer taxation on the contributions and any investment earnings 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 $157,659,215 at June
30, 2024.
(11) Pension Plans
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
(CalPERS), which acts as a common investment and administrative agent for its
participating member employers.
11-130
120
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(11) Pension Plans (Continued)
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 five years of service.
All members are eligible for non -duty disability benefits after five 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.
The Plans' provisions and benefits in effect for the measurement period ended June 30,
2023 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, 2012
2.5%@55
5 years of service
monthly for life
50-55
2.0% - 2.5%
11.5% - 13.0%
30.06% - 31.56%
Miscellaneous
On or after
November 24, 2012
2.0%@60
5 years of service
monthly for life
50-63
1.092% - 2.418%
11.5% - 13.0%
26.64% - 28.14%
Safet
On or after
January 1, 2013
2.0%@62
5 years of service
monthly for life
52-67
1.0% - 2.5%
11.5% - 13.0%
27.14% - 28.64%
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 of service
5 years of service
5 years of 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% - 2.7%
13.5% - 14.6%
13.5% - 14.6%
13.5% - 14.6%
65.11% - 66.21%
65.11% - 66.21%
68.54% - 69.71%
121
11-131
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(11) Pension Plans (Continued)
Employees Covered— At the measurement date of June 30, 2023, the following employees
were covered by the benefit terms for each Plan:
Miscellaneous Safety
Inactive employees or beneficiaries
currently receiving benefits 778 475
Inactive employees entitled to
but not yet receiving benefits 665 110
Active employees
517 276
Totals 1,960 861
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. 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, 2023, using an annual actuarial valuation as of June 30, 2022
rolled forward to June 30, 2023 using standard update procedures. The General Fund,
Tidelands Funds, Water Fund, and Wastewater Fund 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.
11-132
122
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(11) Pension Plans (Continued)
Actuarial Assumptions — The total pension liabilities in the June 30, 2022 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 increases
Investment Rate of Return
Mortality Rate Table (1)
Post Retirement Benefit Increase
Miscellaneous
Safety
June 30, 2022
June 30, 2022
June 30, 2023
June 30, 2023
Entry -Age Normal Cost Method
6.90%
6.90%
2.30%
2.30%
2.80%
2.80%
Varies by Entry
Age and Services
6.80%11)
6.80%(1)
Derived using CaIPERS' membership
data for all funds
The lesser of contract COLA or 2.30%
until Purchasing Power Protection
Allowance Floor on Purchasing Power
applies, 2.3% thereafter
(1) The mortality table used was developed based on CalPERS-specific data.
The probabilities of mortality are based on the 2021 CalPERS Experience
Study and Review of Actuarial Assumptions. Mortality rates include full
generational mortality improvement using 80% of Scale MP-2020 published by
the Society of Actuaries. For more details on this table, please refer to the 2021
experience study report from November 2021 that can be found on the
CaIPERS website.
All other actuarial assumptions used in the June 30, 2022 valuation were based on the
results of an actuarial experience study for the period from 2000 to 2019, including updates
to salary increase, mortality and retirement rates. The Experience Study report can be
obtained at the CalPERS website under Forms and Publications.
Discount Rate — The discount rate used to measure the total pension liability was 6.90%.
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.
11-133
123
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(11) Pension Plans (Continued)
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. Using historical returns of all of the funds'
asset classes, expected compound (geometric) returns were calculated over the next 20
years using a building-block approach. The expected rate of return was then adjusted to
account for assumed administrative expenses of 10 basis points.
The expected real rates of return by asset class are as follows:
Asset Class(i)
Global equity - Cap -weighted
Global equity - Non -Cap -weighted
Private Equity
Treasury
Mortgage -backed Securities
Investment Grade Corporates
High Yield
Emerging Market Debt
Private Debt
Real Assets
Leverage
Assumed
Asset Real Return
Allocation Years 1-10(1),(2)
30.00%
4.54%
12.00%
3.84%
13.00%
7.28%
5.00%
0.27%
5.00%
0.50%
10.00%
1.56%
5.00%
2.27%
5.00%
2.48%
5.00%
3.57%
15.00%
3.21 %
-5.00%
-0.59%
(1 ) An expected inflation of 2.30% used for this period.
(2) Figures are based on the 2021 Asset Liability Management study.
Subsequent Event— During the time period between the valuation date and the publication
of this report, price inflation has been higher than the assumed rate of 2.3% per annum.
Since inflation influences cost of living adjustments for retirees and beneficiaries and active
member pay increases, higher inflation is likely to put at least some upward pressure on the
pension expense and the net pension liability in future valuations. The actual impact of
higher inflation on future valuation results will depend on, among other factors, how long
11-134
124
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(11) Pension Plans (Continued)
higher inflation persists. At this time, we continue to believe the long-term price inflation
assumption of 2.3% per annum is appropriate.
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, 2022
Changes in the Year:
Service cost
Interest on the total pension liability
Changes in benefit terms
Differences between expected and
actual experience
Contribution - employer
Contribution - employee
Net investment income
Benefit payments, including refunds
of employee contributions
Administrative expense
Net Changes
Balance at June 30, 2023
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Qn00 1QG F!1) (t170 770 1nti Ql')O n)'2 '2ti7
8,045,390
- 8,045,390
34,232,164
- 34,232,164
474,137
- 474,137
5,716,564 - 5,716,564
- 20,800,063 (20,800,063)
4,113,185 (4,113,185)
23,270,469 (23,270,469)
(26,581,149) (26,581,149) -
- (278,531) 278,531
21,887,106 21,324,037 563,069
$ 521,082,608 $400,096,182 $120,986,426
11-135
125
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(11) Pension Plans (Continued)
Safety Plan:
Balance at June 30, 2022
Changes in the Year:
Service cost
Interest on the total pension liability
Changes in benefit terms
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
Net Changes
Balance at June 30, 2023
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
$667,148,312 $470,269,260 $196,879,052
10,727,817
- 10,727,817
45,793,334
- 45,793,334
268,557
- 268,557
9,833,536 - 9,833,536
- 35,285,332 (35,285,332)
3,577,340 (3,577,340)
- 28,993,124 (28,993,124)
(37,885,623) (37,885,623) -
- (345,814) 345,814
28,737,621 29,624,359 (886,738)
$695,885,933 $499,893,619 $195,992,314
Sensitivity of the Net Pension Liability to Changes in the Discount Rate — The fol lowing
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
1 % Decrease 5.90%
Net Pension Liability $ 190,345,838
Safety
5.90%
$ 286,451,219
Current Discount Rate 6.90% 6.90%
Net Pension Liability $ 120,986,426 $ 195,992,314
1 % Increase 7.90% 7.90%
Net Pension Liability $ 63,892,194 $ 121,284,207
11-136
126
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(11) Pension Plans (Continued)
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 Outflows/Inflows of Resources Related to Pensions
For the fiscal year ended June 30, 2024, the City recognized pension expense of
$56,762,175 ($23,469,057 Miscellaneous Plan and $33,293,118 Safety Plan). At June 30,
2024, the City reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Miscellaneous plan:
Pension contributions subsequent to
measurement date
Differences between expected and
actual experience
Change in assumptions
Net differences between projected and actual
and actual earnings on plan investments
Total miscellaneous plan
Safety plan:
Pension contributions subsequent to
measurement date
Differences between expected and
actual experience
Change in assumptions
Net differences between projected and actual
and actual earnings on plan investments
Total safety plan
Total all plans
Deferred
Outflows
of Resources
$ 21,537,720
3,863,463
5,865,289
18,308,754
49,575,226
36,635,838
7,514,668
11,593,442
22,969,358
78,713,306
$ 128,288,532
Deferred
Inflows
of Resources
(522,874)
(522,874)
(1,768,089)
(1,768,089)
$ (2,290,963)
11-137
127
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(11) Pension Plans (Continued)
$58,173,558 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
fiscal year ending June 30, 2025. Other amounts reported as deferred outflows of resources
and deferred inflows of resources related to pensions will be recognized as pension expense
as follows:
Fiscal
Year Ending
June 30, Miscellaneous
Safety
Total
2025 $
9,779,876
$ 11,425,126
$ 21,205,002
2026
4,788,658
9,665,572
14,454,230
2027
12,391,635
18,286,128
30,677,763
2028
554,463
932,553
1,487,016
Thereafter
-
-
-
e. Payable to the Pension Plan
At June 30, 2024, the City had no outstanding contributions to the pension plan required for
the year ended June 30, 2024.
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 fiscal year ended June 30, 2024, the City's covered payroll for employees
participating in the plan was $3,730,194. Employees made contributions of $139,896
(3.75% of current covered payroll), which was matched by the employer in the same
amount. Assets of the plan totaled $2,443,815 at June 30, 2024.
11-138
128
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(12) 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.
Plan Description
The Retiree Health Savings Plan consists of the following post -retirement medical benefits:
PEMHCA
The CalPERS Public Employees' Medical and Hospital Care Act (PEMHCA) plan under the
authority of section 22750 to 22948 of the state of California's government code, is an agent
multiple employer plan. The City pays the required PEMHCA minimum contribution for all
miscellaneous and safety employees retiring directly from the City who enroll in a CalPERS
medical plan. The 2024 PEMHCA minimum contribution amount is $157 per month.
Implicit Subsidy
The City provides healthcare benefits to retirees in the form of an implied rate subsidy, which
results from the pooling of non -Medicare retirees and active employees for premium purposes.
Therefore, retirees receive the benefit of a lower premium, which would be higher if the premium
for retirees was based on age, health status or claims history. The difference between these
amounts is the implicit rate subsidy.
Other Retiree Medical Benefits
The City provides other retiree medical benefits in the form a single -employer defined contribution
plan, a single -employer defined benefit plan, and a hybrid of the two. In January 2006, the City
and employee associations agreed to major changes in the Post -Employment Health Care Plan.
All employees hired after January 1, 2006, and certain employees hired prior to this date, as well
as employees who elected to fully convert to a defined contribution formula (hereafter fully
converted employees), 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. These employees and eligible retirees participate in a Retiree Health Savings ("RHS")
Plan sponsored by the City, the single employer of the plan. Plan assets are held in trust and
managed by MissionSquare Retirement (Trustee), under IRS Revenue Ruling 2002-41 (June 26,
2002) and IRS Notice 2002-45 (June 26, 2002).
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 participate in a program requiring mandatory defined
11-139
129
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(12) Post -Employment Health Care Benefits (OPEB) (Continued)
contributions by employees and the City, 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. 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 made 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 up to a maximum of 15 years. For employees who elected to retain a hybrid plan, the
City made a one-time contribution into their individual RHS account of $75 per month for every
month the employee contributed to the previous defined plan up to a maximum of 15 years. In
order to receive these contributions, the employee must retire from the City. At June 30, 2024,
the liability for the conversion part of the RHS Plan was $893,075. This amount is not included in
the net OPEB liability, but is included in the compensated absences liability. See Note (7).
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.
In 2024, the City closed the OPEB Trust with the California Employers' Retiree Benefit Trust
("CERBT") Fund and transferred its assets to Public Agency Retirement Services ("PARS") to
prefund its OPEB liability. The assets held by PARS are legally restricted for the City's OPEB plan
under Section 115 of the Internal Revenue Code. The City has made discretionary contributions
to the OPEB Trust. Contributions to the OPEB Trust, along with earnings on those contributions,
are irrevocable.
The City determines the timing of the distribution of trust assets and whether those assets will be
paid directly to the insurance provider or used to reimburse the City for plan benefits and expenses
it has paid. The OPEB Trust is reported as a fiduciary fund since it would be misleading to exclude
the OPEB Trust Fund from the City's financial statements. PARS issues a publicly available
financial report detailing the fiduciary net position of the OPEB Trust, which is available upon
request. The plan itself does not issue a separate financial report. PARS is an agent multiple -
employer trust.
11-140
130
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(12) Post -Employment Health Care Benefits (OPEB) (Continued)
Employees Covered
As of the measurement date June 30, 2023, the following current and former employees were
covered by the benefit terms under the plan:
Inactive employees, spouses, or beneficiaries currently receiving benefits 460
Inactive employees or beneficiaries entitled to but not receiving benefits 346
Active employees 807
Total
Contributions
1,613
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, 2024, the City's cash contributions were $6,327,150 to the trust in premium
payments and $1,309,458 for the estimated implicit subsidy, resulting in a total payment of
$7,636,608.
Net OPEB Liability
The City's net OPEB liability was measured as of June 30, 2023, and the total OPEB liability used
to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2023.
The General Fund, Tidelands Funds, Water Fund, and Wastewater Fund 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, 2023 actuarial valuation was determined using the following
actuarial assumptions and applied to all periods included in the measurement, unless otherwise
specified:
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131
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(12) Post -Employment Health Care Benefits (OPEB) (Continued)
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
June 30, 2023
June 30, 2023
Entry -Age Normal Cost Method
6.00%
2.75%
2.80% per annum, in aggregate
6.00%
Initial rate of 8.00%, decreasing 0.25%
annually to an ultimate rate of 4.50% for
Pre-65 and 6.50% decreasing by 0.25%
annually to an ultimate rate of 4.50% for
Post -65.
Derived from CalPERS pension plan
From Society of Actuaries Pub-2010 Public
Retirement Plans Mortality Table Report
The actuarial assumptions used in the June 30, 2023, 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 on OPEB plan investment is assumed to be 6.00%. This
was determined using a building-block method in which expected future real rates of return
(expected returns, net of OPEB plan investment expense and inflation) are developed for each
major asset class. These expected future real rates of return are then combined to produce the
long-term expected rate of return by weighting them based on the target asset allocation
percentage and adding in expected inflation (2.75%). The asset class percentages are taken from
the current composition of the CERBT Fund, and the expected yields by asset class were not
available to the actuary:
Asset Class
Global Equities
Fixed Income
TIPS
Commodities
RE ITs
Totals
Assumed
Long -Term
Asset
Expected Real
Allocation
Rate of Return
49.00%
N/A
23.00%
N/A
5.00%
N/A
3.00%
N/A
20.00%
N/A
100.00% 6.00%
11-142
132
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(12) Post -Employment Health Care Benefits (OPEB) (Continued)
Discount Rate
The discount rate used to measure the total OPEB liability is 6.00% 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.
Changes in the Net OPEB Liability
The changes in the net OPEB liability are as follows:
Balance at June 30, 2022
Increase (Decrease)
Total
Plan
Net
OPEB
Fiduciary
OPEB
Liability
Net Position
Liability
$ 54,234,204
$31,569,252
$22,664,952
Changes in the Year:
Service cost
Interest on the total OPEB liability
Changes of assumptions
Differences between actual and
expected experience
Contribution - employer
Net investment income
Benefit payments, including refunds of
employee contributions
Administrative expenses
Net Changes
635,096 -
635,096
3,150,800 -
3,150,800
292,126 -
292,126
(393,810) -
(393,810)
- 6,327,150
(6,327,150)
- 2,061,410
(2,061,410)
(4,781,574) (4,781,574) -
- (9,385) 9,385
(1,097,362) 3,597,601 (4,694,963)
Balance at June 30, 2023 $ 53,136,842 $ 35,166,853 $ 17,969,989
11-143
133
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(12) Post -Employment Health Care Benefits (OPEB) (Continued)
Change of Assumptions
The mortality table has been updated from the 2017 CalPERS Public Agency Misc. Mortality to
the following tables from the Society of Actuaries (SOA) Pub-2010:
• Employees and retirees: General Headcount Weighted Mortality Table fully generational
using Scale MP-2021.
• Surviving Spouses: Continuing Survivor Headcount Weighted Mortality Table Fully
generational using Scale MP-2021.
• Disabled retirees: Safety Headcount Weighted Mortality Table fully generational using
Scale MP-2021.
• Future health care cost trend rates have been reset to an initial rate of 8.00%, decreasing
0.25% annually to an ultimate rate of 4.50% for Pre-65 and 6.50% decreasing by 0.25%
annually to an ultimate rate of 4.50% for Post-65.
• Salary scale has been updated to 2.80% per year plus merit increased based on the 2021
CalPERS experience study.
• Retirement rates have been updated to be consistent with the 2021 CalPERS experience
study.
• Termination rates have been updated to be consistent with the 2021 CalPERS experience
study.
Chanae 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.
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134
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(12) Post -Employment Health Care Benefits (OPEB) (Continued)
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 Discount Rate 1 % Increase
(5.00%) (6.00%) (7.00%)
Net OPEB Liability $ 23,442,813 $ 17,969,989 $ 13,346,226
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 (7.00% HMO/7.00% PPO) or 1-percentage point higher (9.00% HMO/9.00% PPO) than
current healthcare cost trend rates:
Healthcare Cost Trend Rates
1 % Decrease Current 1 % Increase
(7.00%HMO/7.00%PPO (8.00%HMO/8.00%PPO (9.00%HMO/9.00%PPO
decreasing to decreasing to decreasing to
3.5%HMO/3.5%PPO) 4.50%HMO/4.50%PPO) 5.5%HMO/5.5%PPO)
Net OPEB Liability $15,261,584 $17,969,989 $21,608,100
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2024, the City recognized OPEB expense of $3,758,246. At June
30, 2024, 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 projected and actual experience
Change of assumptions
Net difference between projected and actual earnings
on OPEB plan investments
Totals
Deferred Deferred
Outflows of Inflows of
Resources Resources
$ 12,311,540 $ -
5,400,158 (476,525)
2,205,758 (201,676)
2,161,481
$ 22,078,937 $ (678,201)
11-145
135
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(12) Post -Employment Health Care Benefits (OPEB) (Continued)
The differences between expected and actual experience, and changes of assumptions are
amortized over a six -year period or a nine-year period, depending on the fiscal year the difference
occurred. The net difference between projected and actual earnings on plan investment is
amortized over a five-year period.
An amount of $10,162,093, 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 fiscal year ending June 30, 2025.
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
OPEB will be recognized in OPEB expense as follows:
Fiscal Year
Ending
June 30,
Amount
2025
$ 1,914,265
2026
1,335,302
2027
2,424,073
2028
991,194
2029
1,015,561
Thereafter 1,408,801
Payable to the OPEB Plan
At June 30, 2024, the City had no outstanding amount of contributions to the OPEB plan required
for the year ended June 30, 2024.
(13) Joint Venture Agreements
Bonita Canyon Public Facilities Financing Authority
The Bonita Canyon Public Facilities Financing Authority (Authority) is a joint powers authority
comprised of the City of Newport Beach and the 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 the District's boundaries. In 1998, the Authority issued $45,000,000 of special
tax bonds to be repaid by special assessments. $30,577,712 (81.7%) of the proceeds were used
to pay for the costs of the City acquiring and constructing public facilities including parks and road
improvements. In Fiscal Year 2011-12, the Authority issued $38,330,000 of special tax refunding
bonds to refinance the 1998 Series. In Fiscal Year 2017-18, the Authority issued $28,245,000 of
special tax refunding bonds to refinance the 2012 series; the City is not obligated in any manner
to repay the bonds. As of June 30, 2024, the contributions from property owners have been fully
11-146
136
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(13) Joint Venture Agreements (Continued)
spent and no funds are held in trust by the fiscal agent. The City does not make any annual
contributions to the Authority and 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 the Authority 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 Auth
The City of Newport Beach is a participant in a joint venture consisting of the cities of Anaheim,
Brea, Fountain Valley, Fullerton, Huntington Beach, and Orange for the operation of a
communication network utilized by 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
$824,888. The City's 10.80% interest in the net equity of this joint venture at June 30, 2024,
amounts to $270,127. Complete separate financial statements can be 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 with several other public agencies in Orange County for
the operation of the Integrated Law and Justice Agency of Orange County (ILJAOC). The ILJAOC
was established in fiscal year 2006-07 and consists of 23 member agencies, with an oversight
board consisting of 12 members from the participating agencies. 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, 2024.
The City of Newport Beach acted as the Treasurer/Controller of the ILJAOC from inception
through the end of fiscal year 2010-11. 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.
11-147
137
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(14) Commitments and Contingencies
Claims and Judgments
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 Note 7)
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 VNB
is to attract additional visitor business by promoting the City as the premier tourist and business
destination in Orange County. 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,
2024, the City paid VNB $6,945,387.
Contractual Commitments
Construction and contractual commitments for major construction projects are as follows:
Central Library Lecture Hall
Lower Sunset View Park Concept
Newport Bay Water Wheel
East Coast Highway Pavement Rehab
Balboa Island P-19 Phase 3
Facilities Maintenance Master Plan
WCH Hwy Intersection Imp Ped Bridge
Facilities Maintenance Master Plan
Shorecliffs Comm Water System Impry
Traffic Signal Rehabilitation
Park Master Maintenance Plan
Advanced Metering Infrastructure
Junior Lifeguards Building
Garde Adjustments - Water Valves
Collins Island Bridge Replacement
San Miguel Drive Pavement Rehab
Slurry Seal Program
Sewer Lift Station Improvements
Annual
Budget
$ 22,777,582
9,674,898
4,781,465
5,937,437
3,251,852
2,500,000
1,092,827
2,478,272
2,750,000
1,694,375
1,000,000
1,011,128
3,187, 653
1,572,890
2,429,168
680,000
1,689,022
571,815
Project YTD Unexpended
Expenditures
$ 4,282,389
7,218,549
2,787,548
3,693,199
1,798,116
173,445
17,920
1,576,409
67,967
833,648
90,294
256,280
2,837,402
442,873
239,203
71,025
889,418
13,679
C;nmmitmantc
18,462,635
2,456,349
1,993,917
1,873,289
1,453, 736
1,266,973
1,073,490
901,863
918,115
860,727
804,091
754,848
350,251
738,483
725,263
608,975
566,459
558,136
138
11-148
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(14) Commitments and Contingencies (Continued)
At fiscal year end, the City's encumbrances with contractors were as follows:
Major Governmental Funds
Other Governmental Funds
Tide and
Tide and
Special
Capital
Submerged
Submerged Debt Service
Revenue
Project
General
Land - Operating
Land - Harbor Capital Fund
Funds
Funds
Total
Oceanfront encroachment
$
$
$ $
$ 155,804 $
$ 155,804
Cable franchise reserve
7,883
7,883
Streets and highways
9,599,936
3,552,856
13,152,792
Parks and community centers
-
14,594,621
14,594,621
Facilities
-
460,193
460,193
Public arts and culture
32,500
-
32,500
Fiin
1,071
1,071
Debt service
1,500
-
-
1,500
Capital re -appropriations
-
9,274,595
9,274,595
Beaches
354,000
666,837
-
1,020,837
Marinas
16,835
-
16,835
Dredging
-
21,525
21,525
Equipment
33,121
239,641
-
11,000
-
283,762
Facilities Replacement
-
-
-
100
100
Drainage
-
423,312
423,312
Miscellaneous and studies
-
113,375
113,375
Contract services
4,044,062
-
4,044,062
Supplies and materials
152,490
-
152,490
Maintenance and repairs
1,605,727
2,848,368
4,454,095
General
127,541
127,541
Total encumbrances
$ 5,962,941
$ 610,476
$ 688,362 $ 1,500
$ 9,808,194 $
31,267,420
$ 48,338,893
11-149
139
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(15) Fund Balance
Governmental Fund Balance at June 30, 2024, is classified as follows:
Tide and
Tide and
Submerged
Submerged
General
Lantl-Operating Lan! - Harbor Capital
Nonspendable:
Prepaid items (legally restricted) $
1,160, 659 $
101,646 $
-
Imentodes (legally restricted)
215,284
-
-
Lang -teem loan reca,ble(farts restricted)
5,676,659
-
-
Peimanenl endowment (legally resMcted)
-
-
-
Restncted:
Alfatlade housing
-
-
-
Oceanfront encroachment
-
-
-
UpperNewport bay restoration
-
1,683,144
-
Cable fianchlse reserve
-
-
-
Com unity deelopment
-
-
-
Streets and highways
-
-
-
Publlc safety
-
-
-
Facllibes
-
-
-
Tmn.ta, ion
-
-
-
Alrqualltyimpmlement
-
-
-
EnNmnmentalllabiltty mitigation
-
-
-
Public arts and culture
-
-
-
Pa ing
Training
-
-
-
Libralas
-
-
-
Schdarships
-
-
-
Fiin
Debt service
-
-
-
Capitalre- appmpnations
-
5,099,]96
11,822,548
Beaches
-
354,000
666,837
Marinas
-
16,835
-
Dredging
-
-
30,817,961
Equipment
-
239,641
-
Ganeml Plan Maintenance
-
-
-
Can, mMed:
Facilities replacement
-
-
-
Facilities maintenance
-
-
ON. centerand peal,
-
-
-
Oil and gas IiaNlities
-
1,052,660
-
Paalcing management
-
-
-
Neighboihocd enhancement
-
-
Capitalre-appmpnations
436,303
-
-
Drainage
-
-
-
Streels and highways
-
-
-
Facilities
-
-
-
Miscellaneous and studies
-
-
-
Parks and community centers
-
-
-
Contrect seMces
4,194063
Supplies and materials
390:091
Maintenance and repairs
1,605,]27
Equipment
33, 121
Geneml
12],541
Unassigned
82,601,740
Total fund balances $
96,441,188 $
Other Goyannnn tat Fund,
Facilities Spacial Capital
Financial Planning Debt SeMce Revenue Project Permanent
Reserve Fund Funds Funds Funds Totals
If - $ - $ 39,723 $ - $ - $ 1,302,028
2,323,115
20,435,754
484,021
212,543
3.550.006
9,5911
817,396
611,470
1,528,948
8,555,811
1,154,535
252,714
556.121
1.094.lum
3,971,674
11,000
63,1]2
3,411
292,893
617,907
]83,6]8
505,166
162,449
10,811,958
2,836,212
12,387,394
10,486,563
113,375
1].246.041
229,75)
8, 547, 722 $ 43, 107,346 $ 20,435,754 $ 2.323,115 $ 32,274095 $ 85,087,322 $
215,284
5.676.659
:[:YF)li�[Sk)rfS
484,021
212,543
1,683,144
3.5 '006
3,411
9,599,936
817,396
292893
611:470
1,528,948
8,555,811
1, 154,535
252,714
556,121
226,570 226'570
218,581 216,581
1,094,800
2,323, 115
45,655, 929
1,020,837
16,835
1,773,357 32,591,318
250,641
63.172
21, 123,661
]63,618
505,166
1. M2,680
162,449
10,811,958
436,303
2:16,212
12367,394
10.486,583
113,375
1],2A6,041
4,194,063
390,091
- 4,454,093
33,121
127,541
82,371,965
6,846,289 $ 295,062,831
140
11-150
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(16) Deficit Fund Equity
The following funds reported deficit equity balances:
Special Revenue Funds:
OTS DUI Grant
Community Development Block Grant
Internal Service Funds:
Insurance Reserve
Compensation Absences
$ 159
229,622
4,399,439
6,021,996
The OTS DUI Grant Fund is used to account for federal funding for the Selective Traffic
Enforcement Program (STEP). These funds are used exclusively for DUI enforcement. The City
will receive reimbursement in the following fiscal year, which will eliminate the deficit fund balance.
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 City will receive
reimbursement in the following fiscal year, which will eliminate the deficit fund balance.
The Insurance Reserve Fund is used to account for the City's self -insured general liability and
workers' compensation program. The City's intention is to eliminate the deficit fund balance
through a future interfund transfer.
For the Compensated Absences Fund, the City's Reserve Policy sets the maximum cash reserve
at 50% of the long-term compensated absences liability and targets a lesser amount that is the
median between that amount and a three-year average of the actual payments made for the cash -
out of accumulated leave balances. Accordingly, this deficit fund balance is intentional and in
compliance with the City Council -approved Reserve Policy.
(17) Tax Abatements
The City may enter into sales tax abatement agreements with automobile dealerships under City
Council Resolution 99-64. Under that Resolution, the City may rebate sales taxes "for the sole
purpose of reimbursing [automobile dealerships] for costs incurred for a project necessary to
make the project financially feasible." Automobile dealerships must covenant "to complete the
project, to remain and operate the project for a specified period of time... [, and] to maximize the
City as the point -of -sale...". Automobile dealership sales tax rebates are based on negotiations
that require City Council approval. On an accrual basis, for the fiscal year ended June 30, 2024,
the City rebated sales taxes to automobile dealerships totaling $369,781 under this program.
11-151
141
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(18) Public -Private Partnerships
Agreements that meet the requirements of GASB 94 for which the city is transferor are disclosed
as public -private partnerships (PPP) receivables on the City's financial statements. The City's
PPP receivable is related to the facilities for the Balboa Island Ferry, Inc. (operator). GASB 94
excludes certain inflows (e.g., certain variable payments, etc.) from the measurement of PPP
receivables. Payments from the operator to the City include variable payments, because the
operator pays the City the greater of a minimum base amount or a specified percentage of the
operator's gross receipts. For the fiscal year ending June 30, 2024, the City recognized $7,629
of payments related to PPP receivables that were excluded from the measurement of the PPP
receivables. A discount rate of 1.50% was applied to the measurement of the PPP receivable.
The PPP agreement leases facilities to the operator for the continued operation of a ferry between
Balboa Island and Balboa Peninsula. The City retains the right to inspect the property anytime
without notice to the operator. Please see the Statement of Net Position for additional information
about the nature and amounts of the PPP receivable and PPP deferred inflow.
(19) Subsequent Events
301 Balboa Boulevard East Property Purchase
On August 27, 2024, the City Council authorized staff to execute an agreement with Bobby and
Linda Hanada for the purchase of property at 301 Balboa Boulevard East for future expansion of
public parking access. The negotiated purchase price for the property at 301 Balboa Boulevard
East is $2.6 million, which will be funded from General Fund surplus. The close of escrow is
anticipated to be December 2024.
Affordable Housing Loan Agreement to American Family Housing for the Travelodge North
Homekey Project
On July 11, 2023, the City Council approved a loan commitment of $3.0 million to American Family
Housing, LLC (AFH) to provide local match funds for costs associated with the acquisition,
rehabilitation and conversion of the Travelodge North Motel property, located at 1400 Bristol
Street into permanent supportive housing. The City's funding is conditional based upon multiple
requirements of the developer securing commitments for the balance of the project cost,
approximately $42.4 million. The developer is finalizing negotiations of various loan and funding
agreements and approvals. On December 10, 2024, City Council authorized the City Manager to
finalize negotiations and execute the Affordable Housing Loan Agreement between the City and
AFH. The terms of the agreement is for the City to loan $3.0 million with a 55-year term, at a 3.0%
simple interest rate, commencing upon completion of the project. The $3.0 million loan will be
disbursed through escrow during construction of the project to cover constructions costs and will
be funded by from available funds in the Facilities Financial Planning Reserve Fund.
11-152
142
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(20) Prior Period Restatements
Utility Services Revenues
The City restated net position in both the Water and Wastewater Funds due to a correction of an
error regarding the unbilled receivables for utility services for revenues in the prior year that
related to the current fiscal year ending June 30, 2024.
Proprietary Funds
Government -Wide
Description Water Wastewater _
Beginning net position, as previously reported $128,393,695 $ 30,307,955 $
To adjust net position for an overstatement
in unbilled receivables
Beginning net position, as restated
Flexible Spending Account Fund
Business Type
Activities
157,717,018
(1,349,699) (245,536) (1,595,235)
$127,043,996 $30,062,419 $ 156,121,783
The City implemented GASB 100: Accounting Changes and Error Corrections — an Amendment
of GASB Statement No. 62 which requires the City to report any changes in the presentation of
the reporting of major funds. The City removed the reporting of the Flexible Spending Account
(FSA) Fund from the Fiduciary Fund as it does not meet the requirements of a custodial fund. The
FSA fund has been consolidated into the General Fund.
Fiduciary Funds
Description Total Custodial Funds
Beginning fund balance, as previously reported $ 2,226,973
To adjust net position for the removal
of Flexible Spending Account Fund
Beginning net position, as restated
(25,728)
$ 2,201,245
11-153
143
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2024
(20) Prior Period Restatements (Continued)
OPEB Trust Fund
In 2024, the City closed the OPEB Trust with the California Employers' Retiree Benefit Trust
("CERBT") Fund and transferred its assets to Public Agency Retirement Services ("PARS") to
prefund its OPEB liability. The assets held by PARS are legally restricted for the City's OPEB plan
under Section 115 of the Internal Revenue Code. The City has made discretionary contributions
to the OPEB Trust. Contributions to the OPEB Trust, along with earnings on those contributions,
are irrevocable.
The City determines the timing of the distribution of trust assets and whether those assets will be
paid directly to the insurance provider or used to reimburse the City for plan benefits and expenses
it has paid. The OPEB Trust is reported as a fiduciary fund since it would be misleading to exclude
the OPEB Trust Fund from the City's financial statements. PARS issues a publicly available
financial report detailing the fiduciary net position of the OPEB Trust, which is available upon
request. The plan itself does not issue a separate financial report. PARS is an agent multiple -
employer trust.
Fiduciary Funds
Description OPEB Trust Fund
Beginning fund balance, as previously reported $
To adjust net position for the addition of the
OPEB Trust Fund
35,155,718
Beginning net position, as restated $ 35,155,718
11-154
144
FINANCIAL SECTION
REQUIRED SUPPLEMENTARY INFORMATION
Z
o
V
LLJ
ttA
V
Z
_Z
LL
145
11-155
CITY OF NEWPORT BEACH
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2024
Last 10 Years
Defined Benefit Plan for Miscellaneous Employees
Page 1 of 2
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years
2024
2023
2022
2021
2020
Measurement Period
June 30, 2023
June 30, 2022
June 30, 2021
June 30, 2020
June 30, 2019
Total Pension Liability
Service cost
$ 8,045,390
$ 8,261,032
$ 7,438,050
$ 7,347,708
$ 7,084,444
Interest on total pension liability
34,232,164
32,759,522
31,805,532
30,565,919
29,409,624
Differences between expected and actual experience
5,716,564
(1,394,332)
1,624,975
369,351
403,676
Changes in assumptions
-
15,640,771
-
-
-
Changes in benefits
474,137
-
-
-
-
Benefit payments, including refunds of employee contributions
(26,581,149)
(24,940,419)
(22,976,493)
(21,516,515)
(20,129,701)
Net Change in Total Pension Liability
21,887,106
30,326,574
17,892,064
16,766,463
16,768,043
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)
Plan fiduciary net position as a percentage of the total pension liability
499,195,502 468,868,928 450,976,864 434,210,401 417,442,358
$ 521,082,608 $ 499,195,502 $ 468,868,928 $ 450,976,864 $ 434,210,401
$ 20,800,063
$ 18,352,430
$ 18,612,457
$ 16,346,284
$ 15,700,833
4,113,185
3,974,974
4,057,107
4,067,751
3,955,144
23,270,469
(30,856,252)
76,031,841
16,074,793
19,895,019
(278,531)
(256,962)
(336,753)
(454,777)
(216,502)
700
1,570
(26,581,149)
(24,940,419)
(22,976,493)
(21,516,515)
(20,129,701)
21,324,037
(33,726,229)
75,388,159
14,517,536
19,207,063
378,772,145 412,498,374 337,110,215 322,592,679 303,385,616
$ 400,096,182 $ 378,772,145 $ 412,498,374 $ 337,110,215 $ 322,592,679
$ 120,986,426 $ 120,423,357 $ 56,370,554 $ 113,866,649 $ 111,617,722
76.78 % 75.88 % 87.98 % 74.75 % 74.29
Covered payroll $ 48,099,822 $ 45,210,057 $ 44,809,856 $ 43,902,594 $ 42,153,383
Net pension liability as percentage of covered payroll 251.53 % 266.36 % 125.80 % 259.36 % 264.79
Notes to Schedule:
Benefit Changes:
The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two
Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to be
material by the plan actuary. In 2022, SB 1186 increased the standard retiree lump sum death benefit from $500 to $2,000 for any death occuring on or after July 1, 2023. The impact, if
any, is included in the changes of benefit terms.
Change in Assumptions:
Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15 % to 6.90 % . In determining the long-term expected rate of
return, CaIPERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the price inflation
assumption were changed in accordance with the 2021 CaIPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15 % for measurement
dates June 30, 2017 through June 30, 2021, 7.65 % for measurement dates June 30, 2015 through June 30, 2016, and 7.50 % for measurement date June 30, 2014.
11-156
146
CITY OF NEWPORT BEACH
an
Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2024
Last 10 Years
Defined Benefit Plan for Miscellaneous Employees
Page 2 of 2
SCHEDULE OF
CHANGES IN THE NET PENSION LIABILITY AND RELATED
RATIOS
Last Ten Fiscal Years
2019 2018
2017
2016
2015
Measurement Period
June 30, 2018 June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
Total Pension Liability
Service cost
$ 7,334,861 $ 7,151,754
$ 6,303,642
$ 6,087,960
$ 6,523,874
Interest on total pension liability
28,226,598 27,069,673
26,375,073
25,427,094
24,624,559
Differences between expected and actual experience
2,243,854 (4,912,853)
(2,686,814)
(4,736,006)
-
Changes in assumptions
(2,522,093) 22,616,424
-
(6,309,248)
-
Changes in benefits
-
Benefit payments, including refunds of employee contributions
(18,458,539) (17,249,398)
(16,714,022)
(16,374,370)
(15,290,340)
Net Change in Total Pension Liability
16,824,681 34,675,600
13,277,879
4,095,430
15,858,093
Total Pension Liability -beginning
400,617,677 365,942,077
352,664,198
348,568,768
332,710,674
Total Pension Liability -ending (a)
$ 417,442,358 $ 400,617,677
$ 365,942,077
$ 352,664,198
$ 348,568,767
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 (ay(b)
Plan fiduciary net position as a percentage of the total pension liability
Covered payroll
Net pension liability as percentage of covered payroll
$ 15,797,595
$ 10,509,243
$ 9,904,636
$ 6,615,920
$ 5,793,768
3,979,337
4,134,130
4,206,942
4,321,646
4,319,336
23,855,196
28,349,491
1,241,432
5,687,908
38,237,161
(435,499)
(375,172)
(155,791)
(287,862)
-
(827,021)
-
-
-
-
(700)
(2,387)
26,981
(18,458,539)
(17,249,398)
(16,714,022)
(16,374,370)
(15,290,340)
23,910,369
25,368,294
(1,519,190)
(9,777)
33,059,925
279,475,247
254,106,953
255,626,143
255,635,920
222,575,995
$ 303,385,616
$ 279,475,247
$ 254,106,953
$ 255,626,143
$ 255,635,920
$ 114,056,742 $ 121,142,430 $ 111,835,124 $ 97,038,055 $ 92,932,847
72.68 % 69.76
$ 41,468,634 $ 41,727,563 $
275.04% 290.32%
69.44 % 72.48 % 73.34
40,031,404 $ 38,512,011 $ 37,775,051
279.37 % 251.97 % 246.02
11-157
147
CITY OF NEWPORT BEACH
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2024
Last 10 Years
Defined Benefit Plan for Miscellaneous Employees
Pagel of 2
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years
2024
2023
2022
2021
2020
Actuarially determined contribution
$ 15,211,001 $
15,250,219
$ 14,432,250 $
14,600,178 $
13,080,630
Contributions in relation to the actuarially determined contributions
(21,537,720)
(20,794,397)
(18,372,473)
(18,730,840)
(16,351,592)
Contribution deficiency (excess)
$ (6,326,719) $
(5,544,178)
$ (3,940,223) $
(4,130,662) $
(3,270,962)
Covered payroll
$ 50,824,016 $
48,099,822
$ 45,210,057 $
44,809,856 $
43,902,594
Contributions as a percentage of covered payroll
42.38 %
43.23 %
40.64 %
41.80 %
37.25
Notes to Schedule:
Valuation date:
06/30/2021
06/30/2020
06/30/2019
06/30/2018
06/30/2017
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Entry age
Entry age
Entry age
Entry age
Entry age
Amortization method
(1)
(1)
(1)
(1)
(1)
Asset valuation method
Market Value
Market Value
Market Value
Market Value
Market Value
Inflation
2.30 %
2.50 %
2.50 %
2.50 %
2.625
Salary increases
(2)
(2)
(2)
(2)
(2)
Investment rate of return
6.80 % (3)
7.00 % (3)
7.00 % (3)
7.00 % (3)
7.25 % (3)
Retirement age
(4)
(4)
(4)
(4)
(4)
Mortality
(5)
(5)
(5)
(5)
(5)
(1) Level percentage of payroll for bases established prior to June
30, 2019 and level dollar amount for bases established after June 30, 2019
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment and administrative expense;
includes inflation
(4) Retirement assumptions are based on retirement rates resulting
from the most recent CalPERS Experience Study adopted by the CalPERS Board
(5) Mortality assumptions are based on mortality rates resulting
from the most recent CalPERS Experience Study adopted by the CalPERS Board
11-158
148
CITY OF NEWPORT BEACH
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2024
Last 10 Years
Actuarially determined contribution
Contributions in relation to the actuarially determined contributions
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered payroll
Notes to Schedule:
Valuation date:
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Amortization method
Asset valuation method
Inflation
Salary increases
Investment rate of return
Retirement age
Mortality
Defined Benefit Plan for Miscellaneous Employees
Page 2 of 2
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years
2019
2018
2017
2016
2015
$ 12,374,026 $
11,924,053
$ 10,412,963
$ 9,943,342 $
7,117,065
(15,713,898)
(15,742,587)
(10,412,963)
(9,943,342)
(7,117,065)
$ (3,339,872) $
(3,818,534)
$
$ $
$ 42,153,383 $
41,468,634
$ 41,727,563
$ 40,031,404 $
38,512,011
37.28 %
37.96 %
24.95 %
24.84 %
18.48
O6/30/2016
06/30/2015
06/30/2014
06/30/2013
06/30/2012
Entry age
Entry age
Entry age
Entry age
Entry age
(1)
(1)
(1)
(1)
(1)
Market Value
Market Value
Market Value
Market Value
Market Value
2.75 %
2.75 %
2.75 %
2.75 %
2.75
(2)
(2)
(2)
(2)
(2)
7.375 % (3)
7.5 % (3)
7.5 % (3)
7.5 % (3)
7.5 % (3)
(4)
(4)
(4)
(4)
(4)
(5)
(5)
(5)
(5)
(5)
11-159
149
CITY OF NEWPORT BEACH
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2024
Last 10 Years
Defined Benefit Plan for Safety Employees
Page 1 of 2
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years
2024
2023
2022
2021
2020
Measurement Period
June 30, 2023
June 30, 2022
June 30, 2021
June 30, 2020
June 30, 2019
Total Pension Liability
Service cost
$ 10,727,817
$ 10,918,046
$ 9,817,913
$ 9,622,985
$ 9,292,715
Interest on total pension liability
45,793,334
43,860,290
42,760,906
41,449,511
40,081,524
Differences between expected and actual experience
9,833,536
(3,451,985)
196,690
957,686
4,798,077
Changes in assumptions
-
22,634,816
-
-
-
Changes in benefits
268,557
-
Benefit payments, including refunds of employee contributions
(37,885,623)
(35,654,758)
(33,765,218)
(32,285,653)
(30,443,097)
Net Change in Total Pension Liability
28,737,621
38,306,409
19,010,291
19,744,529
23,729,219
Total Pension Liability - beginning
667,148,312
628,841,903
609,831,612
590,087,083
566,357,864
Total Pension Liability -ending (a)
$
695,885,933
$ 667,148,312
$
628,841,903
$
609,831,612
$ 590,087,083
Plan Fiduciary Net Position
Contributions -employer
$
35,285,332
$ 32,394,203
$
32,367,091
$
28,539,301
$ 28,344,445
Contributions -employee
3,577,340
3,417,660
3,347,740
3,249,005
3,162,044
Net investment income
28,993,124
(38,537,209)
93,813,435
19,685,354
24,254,890
Administrative expense
(345,814)
(317,056)
(413,178)
(556,832)
(263,991)
Plan to plan resource movement
(1,570)
Benefit payments
(37,885,623)
(35,654,758)
(33,765,218)
(32,285,653)
(30,443,097)
Other miscellaneous income/(expense)
855
Net change in Plan Fiduciary Net Position
29,624,359
(38,697,160)
95,349,870
18,631,175
25,053,576
Plan Fiduciary Net Position - beginning
470,269,260
508,966,420
413,616,550
394,985,375
369,931,799
Plan Fiduciary Net Position - ending (b)
$
499,893,619
$ 470,269,260
$
508,966,420
$
413,616,550
$ 394,985,375
Net pension liability - ending (a)-(b)
$
195,992,314
$ 196,879,052
$
119,875,483
$
196,215,062
$ 195,101,708
Plan fiduciary net position as a percentage of the total pension liability
71.84 %
70.49 %
80.94 %
67.82 %
66.94
Covered payroll
$
36,538,774
$ 35,231,003
$
34,863,204
$
34,279,062
$ 33,935,043
Net pension liability as percentage of covered payroll
536.40 %
558.82 %
343.85 %
572.40 %
574.93
Notes to Schedule:
Benefit Changes:
The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of
Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to
be material by the plan actuary. In 2022, SB 1168 increased the standard retiree lump sum death benefit from $500 to $2,000 for any death occurring on or after July 1, 2023. The
impact, if any, is included in the changes of benefit terms.
Change in Assumptions:
Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15 % to 6.90 % . In determining the long-term expected
rate of return, CaIPERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the
price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15 % for
measurement dates June 30, 2017 through June 30, 2021, 7.65 % for measurement dates June 30, 2015 through June 30, 2016, and 7.50 % for measurement date June 30, 2014.
11-160
150
CITY OF NEWPORT BEACH
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2024
Last 10 Years
Defined Benefit Plan for Safety Employees
Page 2 of 2
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years
2019 2018 2017 2016 2015
Measurement Period
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
Total Pension Liability
Service cost
$ 9,223,465
$ 9,015,985
$ 8,075,553
$ 8,077,826
$ 8,091,585
Interest on total pension liability
38,458,387
37,083,966
36,239,226
35,098,055
33,807,462
Differences between expected and actual experience
3,278,018
(2,192,667)
(1,613,985)
(316,827)
-
Changes in assumptions
(1,630,045)
30,110,384
(8,359,009)
Changes in benefits
-
Benefitpayments,including refunds of employee contributions
(29,183,598)
(28,074,414)
(27,447,982)
(25,838,982)
(24,529,802)
Net Change in Total Pension Liability
20,146,227
45,943,254
15,252,812
8,661,063
17,369,245
Total Pension Liability - beginning
546,211,637
500,268,383
485,015,571
476,354,508
458,985,263
Total Pension Liability -ending (a)
$ 566,357,864
$ 546,211,637
$ 500,268,383
$ 485,015,571
$ 476,354,508
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)
Plan fiduciary net position as a percentage of the total pension liability
Covered payroll
Net pension liability as percentage of covered payroll
$ 26,779,897 $ 19,260,537 $ 18,496,776 $ 21,529,513 $ 12,089,637
3,104,318 2,967,318 2,826,831 2,969,503 3,122,237
29,064,749 34,814,011 1,561,480 7,049,577 47,151,493
(532,480) (462,427) (193,780) (357,866) -
(855) 2,387
(29,183,598) (28,074,414) (27,447,982) (25,838,982) (24,529,802)
(1,011,188)
28,220,843 28,505,025 (4,754,288) 5,351,745 37,833,565
341,710,956 313,205,931 317,960,219 312,608,474 274,774,909
$ 369,931,799 $ 341,710,956 $ 313,205,931 $ 317,960,219 $ 312,608,474
$ 196,426,065 $ 204,500,681 $ 187,062,452 $ 167,055,352 $ 163,746,034
65.32 % 62.56 % 62.61 % 65.56 % 65.63
$ 32,866,620 $ 32,450,020 $ 30,816,246 $ 30,189,633 $ 29,944,665
597.65 % 630.20 % 607.03 % 553.35 % 546.83
11-161
151
CITY OF NEWPORT BEACH
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2024
Last 10 Years
Defined Benefit Plan for Safety Employees
Page 1 of 2
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years
2024 2023
2022
2021
2020
Actuarially determined contribution
$ 25,872,229 $ 25,952,201
$ 25,115,878
$ 25,341,788
$ 22,980,289
Contributions in relation to the actuarially determined contributions
(36,635,838) (35,283,235)
(32,317,538)
(32,251,903)
(28,531,744)
Contribution deficiency (excess)
$ (10,763,609) $ (9,331,034)
$ (7,201,660)
$ (6,910,115)
$ (5,551,455)
Covered payroll
$ 38,168,411 $ 36,538,774
$ 35,231,003
$ 34,863,204
$ 34,279,062
Contributions as a percentage of covered payroll
95.98 % 96.56 %
91.73 %
92.51 %
83.23
Notes to Schedule:
Valuation date:
06/30/2021 06/30/2020
06/30/2019
06/30/2018
06/30/2017
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Entry age Entry age
Entry age
Entry age
Entry age
Amortization method
(1) (1)
(1)
(1)
(1)
Asset valuation method
Market Value Market Value
Market Value
Market Value
Market Value
Inflation
2.30 % 2.50 %
2.50 %
2.50 %
2.625
Salary increases
(2) (2)
(2)
(2)
(2)
Investment rate of return
6.80 % (3) 7.00 % (3)
7.00 % (3)
7.00 % (3)
7.25 % (3)
Retirement age
(4) (4)
(4)
(4)
(4)
Mortality
(5) (5)
(5)
(5)
(5)
(1) Level percentage of payroll for bases established prior to June 30, 2019 and level dollar amount for bases established after June 30, 2019
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment and administrative expense; includes inflation
(4) Retirement assumptions are based on retirement rates resulting
from the most recent CalPERS Experience Study adopted
by the CalPERS Board
(5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CaIPERS Board
11-162
152
CITY OF NEWPORT BEACH
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2024
Last 10 Years
Actuarially determined contribution
Contributions in relation to the actuarially determined contributions
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered payroll
Notes to Schedule:
Valuation date:
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Amortization method
Asset valuation method
Inflation
Salary increases
Investment rate of return
Retirement age
Mortality
Defined Benefit Plan for Safety Employees
Page 2 of 2
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years
2019 2018
2017
2016
2015
$ 22,227,698 $ 21,524,636
$ 19,338,360
$ 18,466,207
$ 13,393,374
(28,346,069) (26,620,697)
(19,338,360)
(18,466,207)
(20,993,374)
$ (6,118,371) $ (5,096,061)
$
$
$ (7,600,000)
$ 33,935,043 $ 32,866,620
$ 32,450,020
$ 30,816,246
$ 30,189,633
83.53 % 81.00 %
59.59 %
59.92 %
69.54
06/30/2016 06/30/2015
06/30/2014
06/30/2013
06/30/2012
Entry age Entry age
Entry age
Entry age
Entry age
(1) (1)
(1)
(1)
(1)
Market Value Market Value
Market Value
Market Value
Market Value
2.75 % 2.75 %
2.75 %
2.75 %
2.75
(2) (2)
(2)
(2)
(2)
7.375 % (3) 7.5 % (3)
7.5 % (3)
7.5 % (3)
7.5 % (3)
(4) (4)
(4)
(4)
(4)
(5) (5)
(5)
(5)
(5)
11-163
153
CITY OF NEWPORT BEACH
Post -Employment Health Care Benefits (OPEB) Retirement Plan
As of June 30, 2024
Last 10 Years
Page 1 of 2
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years'
2024 2023 2022 2021
Measurement Period
Total OPEB Liability
Service cost
Interest
Differences between expected and actual experience
Changes in assumptions
Changes in benefits terms
Benefit payments, including refunds of member contributions
Net change in Total OPEB Liability
Total OPEB Liability - beginning
Total OPEB Liability - ending (a)
$ 635,096 $
530,843 $
529,600 $
521,285
3,150,800
3,237,390
2,909,400
2,944,050
(393,810)
1,120,534
6,159,865
(219,772)
292,126
2,473,450
(302,512)
-
(4,781,574)
(4,731,846)
(3,786,232)
(3,787,663)
(1,097,362)
2,630,371
5,510,121
(542,100)
54,234,204
51,603,833
46,093,712
46,635,812
Plan fiduciary net position
Contributions - employer
$ 6,327,150
Contributions - member
-
Net investment income
2,061,410
Benefit payments, including refunds of member contributions
(4,781,574)
Administrative expense
(9,385)
Other expense
Net change in plan fiduciary net position
3,597,601
Plan fiduciary net position - beginning 31,569,252
$ 6,185,537 $ 5,785,342 $ 4,674,814
(4,845,154) 7,184,241 900,087
(4,731,846) (3,786,232) (3,787,663)
(9,000) (9,908) (12,037)
Plan fiduciary net position - ending (b)
$ 35,166,853 $
31,569,252 $
34,969,715 $
25,796,272
City's Net OPEB liability -ending (a)-(b)
$ 17,969,989 $
22,664,952 $
16,634,118 $
20,297,440
Plan fiduciary net position as a percentage of the total OPEB liability
66.18 %
58.21 %
67.77 %
55.96
Covered -employee payroll �1I
$ 81,451,477 $
79,636,594 $
78,621,426 $
77,637,171
City's Net OPEB liability as percentage of covered -employee payroll
22.06 %
28.46 %
21.16 %
26.14
Notes to Schedule:
(1) Covered -employee payroll is used because contributions are not entirely based on a measure of pay.
' Fiscal year 2018 was the first year of implementation, therefore only seven years are shown.
11-164
154
CITY OF NEWPORT BEACH
Post -Employment Health Care Benefits (OPEB) Retirement Plan
As of June 30, 2024
Last 10 Years "
Page 2 of 2
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years"
Measurement Period
Total OPEB Liability
Service cost
Interest
Differences between expected and actual experience
Changes in assumptions
Changes in benefits terms
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)
City's Net OPEB liability - ending (a)-(b)
Plan fiduciary net position as a percentage of the total OPEB liability
Covered- employee payroll I'I
City's Net OPEB liability as percentage of covered -employee payroll
2020
2019
2018
June 30, 2019
June 30, 2018
June 30, 2017
$ 524,717
$
509,434
$
478,341
2,795,490
2,814,685
2,830,153
2,532,319
-
-
114,311
(3,627,695)
(3,641,715)
(3,513,406)
2,339,142
(317,596)
(204,912)
44,296,670
44,614,266
44,819,178
$ 46,635,812
$
44,296,670
$
44,614,266
$ 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
$ 22,614,741
$
22,599,722
$
25,519,576
51.51 %
48.98 %
42.80
$ 75,814,626
$
73,999,059
$
74,484,613
29.83 %
30.54 %
34.26
11-165
155
CITY OF NEWPORT BEACH
Post -Employment Health Care Benefits (OPEB) Retirement Plan
As of June 30, 2024
Last 10 Years
Page 1 of 2
Actuarially determined contribution
Contributions in relation to the actuarially determined contributions
Contribution deficiency (excess)
Covered -employee payroll (1)
Contributions as a percentage of covered -employee payroll
Notes to Schedule:
Valuation date:
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years"
2024
2023
2022
2021
$ 3,289,777
$ 4,359,593
$ 4,124,923
$ 4,108,719
(12,311,540)
(7,154,265)
(4,950,445)
(6,511,545)
$ (9,021,763)
$ (2,794,672)
$ (825,522)
$ (2,402,826)
$ 81,451,477
$ 81,451,477
$ 79,636,594
$ 78,621,426
-15.12%
-8.78%
-6.22%
-8.28%
June 30, 2023
June 30, 2021
June 30, 2019
June 30, 2019
(1) Covered -employee payroll is used because contributions are not entirely based on a measure of pay.
Fiscal year 2018 was the first year of implementation, therefore only seven years are shown.
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CITY OF NEWPORT BEACH
Post -Employment Health Care Benefits (OPEB) Retirement Plan
As of June 30, 2024
Last 10 Years
Page 2 of 2
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 $
75,814,626 $
73,999,059
Contributions as a percentage of covered -employee payroll
-6.93%
-6.77%
-7.18%
Notes to Schedule:
Valuation date: June 30, 2017 June 30, 2017 June 30, 2015
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157
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
General Fund
For the Year Ended June 30, 2024
Page 1 of 2
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Taxes and assessments:
Property
$ 141,373,233 $
142,715,981 $
146,136,871
$ 3,420,890
Sales
48,532,772
45,257,552
43,444,542
(1,813,010)
Transient occupancy
31,986,150
31,986,150
31,736,961
(249,189)
Other taxes
8,937,999
8,937,999
10,252,076
1,314,077
Intergovernmental
2,289,407
4,644,072
4,977,096
333,024
Licenses, permits and fees
5,746,027
5,746,027
5,568,126
(177,901)
Charges for services
24,429,291
24,825,891
25,117,366
291,475
Fines and forfeitures
3,799,784
3,799,784
4,157,294
357,510
Investment income
1,750,000
1,750,000
3,200,616
1,450,616
Net increase in fair value of investments
-
-
1,652,435
1,652,435
Property income
16,025,781
17,331,591
18,970,340
1,638,749
Donations
412,300
526,151
418,774
(107,377)
Other
(245,007)
2,842
983,010
980,168
Total revenues
285,037,737
287,524,040
296,615,507
9,091,467
Expenditures:
General government:
City council
924,218
929,844
635,839
294,005
City clerk
1,191,331
1,215,050
1,097,388
117,662
City attorney
2,526,824
2,592,211
2,423,648
168,563
City manager
6,760,030
9,887,013
4,420,332
5,466,681
Finance
11,039,023
11,252,744
9,437,432
1,815,312
Human resources
3,770,070
3,826,377
3,353,986
472,391
Total general government
26,211,496
29,703,239
21,368,625
8,334,614
Public safety:
Police
73,415,698
76,169,572
74,047,663
2,121,909
Fire
64,405,996
66,718,421
65,534,675
1,183,746
Total public safety
137,821,694
142,887,993
139,582,338
3,305,655
Public works:
Public works - general services
33,861,833
36,201,348
34,286,251
1,915,097
Public works
12,732,655
13,891,663
12,986,340
905,323
Utilities
5,982,258
6,329,822
6,812,897
(483,075)
Total public works
52,576,746
56,422,833
54,085,488
2,337,345
See accompanying notes to required supplementary information
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
General Fund
For the Year Ended June 30, 2024
Page 2 of 2
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
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total debt service
Total expenditures
Excess of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Inception of leases
Inception of subscription -based IT arrangements
Total other financing
sources (uses)
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
13,995,918
15,697,665
14,380,441
1,317,224
941,714
967,198
1,003,722
(36,524)
14,937,632
16,664,863
15,384,163
1,280,700
2,227,582
2,961,404
2,316,775
644,629
10,259,001
11,114,322
10,143,264
971,058
15,394,067
15,811,350
14,928,913
882,437
27,880,650
29,887,076
27,388,952
2,498,124
3,574,983 (3,574,983)
1,250,081 (1,250,081)
- 83,092 (83,092)
- - 1,333,173 (1,333,173)
259,428,218 275,566,004 262,717,722 12,848,282
25,609,519 11,958,036 33,897,785 21,939,749
19,020,967 26,926,241 26,926,241 -
(34,489,272) (59,400,346) (59,400,346) -
- 3,259,414 3,259,414
315,569 315,569
(15,468,305) (32,474,105) (28,899,122) 3,574,983
10,141,214 (20,516,069) 4,998,663 25,514,732
91,442,525 91,442,525 91,442,525 -
$ 101,583,739 $ 70,926,456 $ 96,441,188 $ 25,514,732
See accompanying notes to required supplementary information
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159
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Tide and Submerged Land - Operating
For the Year Ended June 30, 2024
Revenues:
Intergovernmental
Licenses, permits and fees
Charges for services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property income
Other
Total revenues
Expenditures:
General government
Public works
Community development
Community services
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources:
Transfers in
Transfers out
Total other financing sources
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
$ - $
6,000
$ 6,481 $
481
100,200
100,200
103,338
3,138
12,650
12,650
38,081
25,431
30,000
30,000
37,902
7,902
192,208
192,208
194,821
2,613
-
-
77,382
77,382
13,799,460
13,821,766
15,308,476
1,486,710
-
-
14,041
14,041
14,134,518
14,162,824
15,780,522
1,617,698
516,156
516,156
516,156
-
1,326,696
1,433,117
1,507,721
(74,604)
2,250
5,450
20,637
(15,187)
2,445,960
2,856,653
2,487,623
369,030
1,975,000
4,020,459
726,928
3,293,531
6,266,062
8,831,835
5,259,065
3,572,770
7,868,456 5,330,989 10,521,457 5,190,468
11,152,510 11,252,355 11,252,355 -
(19,020,966) (19,333,407) (19,333,407) -
(7,868,456) (8,081,052) (8,081,052) -
(2,750,063) 2,440,405 5,190,468
6,107,317 6,107,317 6,107,317 -
$ 6,107,317 $ 3,357,254 $ 8,547,722 $ 5,190,468
See accompanying notes to required supplementary information
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160
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Tide and Submerged Land - Harbor Capital
For the Year Ended June 30, 2024
Revenues:
Investment income
Net increase in fair value of investments
Property income
Total revenues
Expenditures:
Capital outlay
Excess (deficiency) of revenues
over expenditures
Other financing sources:
Transfers in
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 436,141 $ 436,141 $ 1,309,710 $ 873,569
- - 790,072 790,072
5,258,302 5,258,302 6,624,712 1,366,410
5,694,443 5,694,443 8,724,494 3,030,051
3,471,406 6,976,976 546,959 6,430,017
2,223,037 (1,282,533) 8,177,535 9,460,068
4,715,000 4,715,000 4,715,000 -
6,938,037 3,432,467 12,892,535 9,460,068
30,214,811 30,214,811 30,214,811 -
$ 37,152,848 $ 33,647,278 $ 43,107,346 $ 9,460,068
See accompanying notes to required supplementary information
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161
CITY OF NEWPORT BEACH
Notes to Required Supplementary Information
June 30, 2024
(1) Budgetary Control and Compliance
The City adheres to the following general procedures in establishing the budgetary data reflected
in the financial statements:
• During May, 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 citizen 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, except for the Opioid Remediation
Fund, for which no budget was adopted.
• The City does not present budget information on Capital Projects Funds since the City
approves project -length budgets. These project -length budgets authorize total
expenditures over the duration of a construction project rather than through year -by -year
budgeting.
• The City 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 the City Council.
• At fiscal year-end, budget appropriations lapse. Budget appropriations for incomplete
capital projects are re -budgeted in the following fiscal year by City 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.
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162
(1)
CITY OF NEWPORT BEACH
Notes to Required Supplementary Information
June 30, 2024
Budgetary Control and Compliance (Continued)
Expenditures exceeded appropriations in the following governmental fund:
Supplemental Law Enforcement Services
Appropriations Expenditures Variance
$200,000 $241,105 $(41,105)
163
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164
FINANCIAL SECTION
SUPPLEMENTARY INFORMATION
OTHER GOVERNMENTAL FUNDS
0
u
LLJ
V
LL
165
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11-176
166
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) in which judicial
proceedings have been completed. All such funds are property of the City, and it is the City's
policy that these 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 Opioid Remediation Fund is used to account for revenues received from various
settlements related to opioid manufacturing and distribution to be used exclusively for opioid
remediation activities.
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167
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.
The Fostering Interest in Nature (FIIN) Fund is restricted for recreation and education
programming as a mitigation effort by the California Coastal Commission.
The Restricted Programs Fund is used to account for revenues received that are restricted for
affordable housing, public arts and culture, parking improvements, and disability access training.
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 Oceanfront Encroachment Fund is restricted for ocean front restoration and improvement
and maintenance to enhance public access and use of ocean beaches as restricted by the Local
Coastal Program.
The American Rescue Plan Act Fund is used to account for federal funding received through
Coronavirus State and Local Fiscal Recovery Funds under the American Rescue Plan Act.
The Miscellaneous Grants Fund is used to account for revenues received from various other
miscellaneous grants.
The PEG Fees Fund is used to account for cable franchise fees received from cable providers for
support of Public, Education, and Government access programming only.
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 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 Police Facility Fund is used to account for the purchase, design and construction of a new
police station.
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 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 Balboa Village Parking Management District Fund is used to account for revenues and
expenditures associated with parking management improvements in Balboa Village.
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168
The Facilities Maintenance Fund is used to account for revenues and expenditures associated
with the maintenance of existing facilities.
The Neighborhood Enhancement Fund is used to account for projects that will enhance
neighborhood aesthetics and functionality.
The Miscellaneous FFP Projects 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 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.
The Park Maintenance Fund is used to account for capital improvement projects associated with
the maintenance of existing parks.
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.
11-179
169
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2024
Page 1 of 7
Special Revenue
SB1 Gas Tax
Circulation and
State Gas Tax
RMRA
Asset Forfeiture
OTS DUI Grant
Transportation
Assets
Cash and investments
$ 3,344,439
$ 520,112
$ 816,276
$
$ 1,061,904
Receivables:
Accounts (net of allowance)
-
-
-
-
Interest
10,233
1,899
1,122
3,425
Intergovernmental receivables
201,787
382,983
-
59,493
-
Restricted cash and investments with fiscal agent
-
-
-
Prepaid items
-
-
-
-
Total assets
$ 3,556,459
$ 904,994
$ 817,398
$ 59,493
$ 1,065,329
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$ 758,658
$ 78,995
$
$
$ 147,180
Accrued payroll
-
-
-
Unearned revenue
Due to other funds
59,652
Total liabilities
758,658
78,995
59,652
147,180
Deferred inflows of resources:
Unavailable revenue
Fund balances (deficits):
Nonspendable:
Prepaid items
Permanent endowment
-
-
-
Restricted
2,797,801
825,999
817,398
918,149
Committed
-
-
-
-
-
Unassigned
-
-
(159)
Total fund balances (deficits)
2,797,801
825,999
817,398
(159)
918,149
Total liabilities, deferred inflows of resources
and fund balances
$ 3,556,459
$ 904,994
$ 817,398
$ 59,493
$ 1,065,329
(continued)
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170
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2024
Page 2 of 7
Special Revenue
Community
Air Quality
Supplemental
Building Excise
Development
Management
Environmental
Law Enforcement
Tax
Block Grant
District
Liability
Services
Assets
Cash and investments
$ 371,255
$
$ 1,739,657
$ 9,946,765
$
Receivables:
Accounts (net of allowance)
24,974
-
10,882
Interest
1,198
5,612
32,084
Intergovernmental receivables
-
229,622
28,062
-
Restricted cash and investments with fiscal agent
-
-
-
Prepaid items
-
-
39,723
Total assets
$ 397,427
$ 229,622
$ 1,773,331
$ 10,029,454
$
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$ 26,608
$ 116,389
$
$ 62,513
$
Accrued payroll
-
-
3,436
Unearned revenue
-
-
Due to other funds
113,233
Total liabilities
26,608
229,622
65,949
Deferred inflows of resources:
Unavailable revenue
229,622
28,062
2,516
Fund balances (deficits):
Nonspendable:
Prepaid items
-
-
39,723
Permanent endowment
-
-
-
Restricted
370,819
1,745,269
9,921,266
Committed
-
-
-
-
Unassigned
-
(229,622)
-
-
Total fund balances (deficits)
370,819
(229,622)
1,745,269
9,960,989
Total liabilities, deferred inflows of resources
and fund balances
$ 397,427
$ 229,622
$ 1,773,331
$ 10,029,454
$
(continued)
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171
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2024
Page 3 of 7
Special Revenue
Opioid
Restricted
Remediation
Contributions
FIIN
Programs
Measure M
Assets
Cash and investments
$
505,567
$ 11,217,521
$ 1,091,280
$ 2,504,366
$ 2,724,129
Receivables:
Accounts (net of allowance)
-
865,280
-
-
-
Interest
3
3,520
8,078
8,797
Intergovernmental receivables
44,277
-
-
963,647
Restricted cash and investments with fiscal agent
-
-
Prepaid items
-
-
-
-
Total assets
$
505,567
$ 12,127,081
$ 1,094,800
$ 2,512,444
$ 3,696,573
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
$ 2,890,037
$
$ 1,882
$ 106,418
Accrued payroll
-
-
-
Unearned revenue
505,567
4,256,433
503,122
Due to other funds
Total liabilities
505,567
7,146,470
1,882
609,540
Deferred inflows of resources:
Unavailable revenue
784,131
554,981
Fund balances (deficits):
Nonspendable:
Prepaid items
Permanent endowment
-
-
-
Restricted
4,196,480
1,094,800
2,510,562
2,532,052
Committed
-
-
-
-
Unassigned
-
-
-
Total fund balances (deficits)
-
4,196,480
1,094,800
2,510,562
2,532,052
Total liabilities, deferred inflows of resources
and fund balances
$
505,567
$ 12,127,081
$ 1,094,800
$ 2,512,444
$ 3,696,573
(continued)
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172
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2024
Page 4 of 7
Special Revenue Capital Projects
Oceanfront
American
Miscellaneous
Assessment
Encroachment
Rescue Plan Act
Grants
PEG Fees
District
Assets
Cash and investments
$
1,166,677
$ 675,566
$
$ 3,463,701
$
Receivables:
Accounts (net of allowance)
35,029
-
75,132
-
Interest
3,763
11,173
153,080
Intergovernmental receivables
-
9,911
-
-
Restricted cash and investments with fiscal agent
-
27,328,069
Prepaid items
-
-
-
-
Total assets
$
1,205,469
$ 675,566
$ 9,911
$ 3,550,006
$ 27,481,149
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
21,917
$ 673,232
$
$
$ 2,460,595
Accrued payroll
-
-
-
Unearned revenue
2,334
-
Due to other funds
9,911
58,643
Total liabilities
21,917
675,566
9,911
2,519,238
Deferred inflows of resources:
Unavailable revenue
Fund balances (deficits):
Nonspendable:
Prepaid items
Permanent endowment
-
-
Restricted
1,183,552
3,550,006
24,961,911
Committed
-
-
-
Unassigned
-
-
-
Total fund balances (deficits)
1,183,552
3,550,006
24,961,911
Total liabilities, deferred inflows of resources
and fund balances
$
1,205,469
$ 675,566
$ 9,911
$ 3,550.006
$ 27,481,149
(continued)
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173
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2024
Page 5 of 7
Capital Projects
Parks and
Civic Center Newport Uptown Community
Fire Station and Park Police Facilitv Underaroundina Centers
Assets
Cash and investments
$ 3,041,090
$ 504,119
$ 685,696
$ 3,400
$ 17,594,132
Receivables:
Accounts (net of allowance)
-
-
-
-
-
Interest
9,810
1,465
2,212
11
56,753
Intergovernmental receivables
-
-
-
-
Restricted cash and investments with fiscal agent
292,893
Prepaid items
-
-
-
-
Total assets
$ 3,343,793
$ 505,584
$ 687,908
$ 3,411
$ 17,650,885
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$ 56,704
$ 418
$
$
$ 1,543,336
Accrued payroll
-
-
-
Unearned revenue
Due to other funds
Total liabilities
56,704
418
1,543,336
Deferred inflows of resources:
Unavailable revenue
Fund balances (deficits):
Nonspendable:
Prepaid items
Permanent endowment
-
Restricted
292,893
-
3,411
-
Committed
2,994,196
505,166
687,908
-
16,107,549
Unassigned
-
-
-
-
Total fund balances (deficits)
3,287,089
505,166
687,908
3,411
16,107,549
Total liabilities, deferred inflows of resources
and fund balances
$ 3,343,793
$ 505,584
$ 687,908
$ 3,411
$ 17,650,885
(continued)
11-184
174
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2024
Page 6 of 7
Capital Projects
Balboa Village
Parking
Management
Facilities Neighborhood Miscellaneous Junior
District
Maintenance Enhancement FFP Proiects Lifeauards
Assets
Cash and investments
$
353,586
$ 4,502,445
$ 12,418,388
$ 6,651,776
$ 127,906
Receivables:
Accounts (net of allowance)
-
-
-
-
-
Interest
1,140
14,524
40,058
413
Intergovernmental receivables
-
-
-
-
Restricted cash and investments with fiscal agent
Prepaid items
-
-
-
-
Total assets
$
354,726
$ 4,516,969
$ 12,458,446
$ 6,651,776
$ 128,319
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
44,133
$ 348,828
$ 727,614
$ 128,949
$ 6,173
Accrued payroll
-
-
-
-
-
Unearned revenue
Due to other funds
Total liabilities
44,133
348,828
727,614
128,949
6,173
Deferred inflows of resources:
Unavailable revenue
Fund balances (deficits):
Nonspendable:
Prepaid items
Permanent endowment
Restricted
-
-
-
-
-
Committed
310,593
4,168,141
11,730,832
6,522,827
122,146
Unassigned
-
-
-
-
Total fund balances (deficits)
310,593
4,168,141
11,730,832
6,522,827
122,146
Total liabilities, deferred inflows of resources
and fund balances
$
354,726
$ 4,516,969
$ 12,458,446
$ 6,651.776
$ 128,319
(continued)
11-185
175
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2024
Page 7 of 7
Capital Projects
Permanent Funds
Total
Unrestricted
Other
Capital
Park
Ackerman
Governmental
Improvements
Maintenance
Bay Dredging
Donation
Funds
Assets
Cash and investments
$
16,591,150
$
1,020,012
$ 5,612,254
$ 1,225,200
$ 111,480,369
Receivables:
Accounts (net of allowance)
-
-
-
-
1,011,297
Interest
3,290
18,103
3,952
395,718
Intergovernmental receivables
-
-
-
1,919,782
Restricted cash and investments with fiscal agent
27,620,962
Prepaid items
-
-
-
39,723
Total assets
$
16,591,150
$
1,023,302
$ 5,630,357
$ 1,229,152
$ 142,467,851
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
871,003
$
63,700
$
$ 13,220
$ 11,148,502
Accrued payroll
-
-
-
3,436
Unearned revenue
5,267,456
Due to other funds
241,439
Total liabilities
871,003
63,700
13,220
16,660,833
Deferred inflows of resources:
Unavailable revenue
1,599,312
Fund balances (deficits):
Nonspendable:
Prepaid items
-
39,723
Permanent endowment
3,857,000
772,781
4,629,781
Restricted
-
-
1,773,357
443,151
59,938,876
Committed
15,720,147
959,602
-
-
59,829,107
Unassigned
-
-
-
(229,781;
Total fund balances (deficits)
15,720,147
959,602
5,630,357
1,215,932
124,207,706
Total liabilities, deferred inflows of resources
and fund balances
$
16,591,150
$
1,023,302
$ 5,630,357
$ 1,229,152
$ 142,467,851
11-186
176
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 1 of 7
Revenue
SB1 Gas Tax
Circulation and
State Gas Tax
RMRA
Asset Forfeiture
OTS DUI Grant Transportation
Revenues:
Othertaxes
$ - $
-
$ - $
- $
Intergovernmental
2,331,825
2,197,540
268,095
281,638
Charge for services
-
-
-
- -
Licenses, permits and fees
299,476
Property income
-
-
-
-
Investment income
131,912
31,060
22,756
35,197
Net increase in fair value of investments
81,601
15,656
13,575
23,346
Donations
-
-
-
-
Special assessments
Other
Total revenues
2,545,338
2,244,256
304,426
281,638 358,019
Expenditures:
Current:
General government
-
-
Public safety
17,393
281,797
Public works
-
-
Community development
Community services
-
-
-
Capital outlay
3,455,116
1,834,308
-
-
1,093,629
Total expenditures
3,455,116
1,834,308
17,393
281,797
1,093,629
Excess (deficiency) of revenues
over expenditures
(909,778)
409,948
287,033
(159)
(735,610)
Other financing sources (uses):
Transfers in
-
-
-
Transfers out
Total other financing sources (uses)
Net change in fund balances
(909,778)
409,948
287,033
(159)
(735,610)
Fund balances (deficits), beginning
3,707,579
416,051
530,365
1,653,759
Fund balances (deficits), ending
$ 2,797,801 $
825,999 $
817,398
(159) $
918,149
(continued)
11-187
177
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 2 of 7
Special Revenue
Community
Air Quality
Supplemental
Building Excise
Development
Management
Environmental
Law Enforcement
Tax
Block Grant
District
Liability
Services
Revenues:
Othertaxes $
$
- $
-
$ 963,173
$ -
Intergovernmental
95,221
112,059
-
241,105
Charge for services
-
-
-
Licenses, permits and fees
190,664
Property income
-
-
-
Investment income
8,919
50,214
293,008
Net increase in fair value of investments
4,688
30,261
180,497
Donations
-
-
-
Special assessments
-
Other
66,962
Total revenues
204,271
95,221
192,534
1,503,640
241,105
Expenditures:
Current:
General government
-
Public safety
- 241,105
Public works
-
421,635 -
Community development
324,843
-
Community services
-
-
-
Capital outlay
21,435
-
377,713 -
Total expenditures
21,435
324,843
-
799,348 241,105
Excess (deficiency) of revenues
over expenditures
182,836
(229,622)
192,534
704,292
Other financing sources (uses):
Transfers in
-
-
-
-
Transfers out
Total other financing sources (uses)
-
Net change in fund balances
182,836
(229,622)
192,534
704,292
Fund balances (deficits), beginning
187,983
1,552,735
9,256,697
Fund balances (deficits), ending
$ 370,819 $
(229,622) $
1,745,269 $
9,960,989 $
(continued)
11-188
178
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 3 of 7
Revenue
Opioid
Restricted
Remediation Contributions
FIIN Programs
Measure M
Revenues:
Othertaxes
$ $ - $
$ $
Intergovernmental
5,083,257
2,965,303
Charge for services
-
61,917
-
Licenses, permits and fees
150,000
Property income
-
24,669
-
Investment income
1,743
33,670 67,756
84,830
Net increase in fair value of investments
1,097
21,022 40,531
50,670
Donations
5,501,518
- 112,587
-
Special assessments
-
-
Other
44,976
66,266
Total revenues
44,976 10,587,615
54,692 523,726
3,100,803
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances (deficits), beginning
Fund balances (deficits), ending
44,976
- 149,948 13,671 -
10,805,241 2,520,338
44,976 10, 805, 241 149,948 13,671 2,520,338
(217,626) (95,256) 510,055 580,465
4,643,968 15,290
(218,237)
4,425,731 15,290
4,208,105 (95,256) 510,055 595,755
(11,625) 1,190,056 2,000,507 1,936,297
$ $ 4,196,480 $ 1,094,800 $ 2,510,562 $ 2,532,052
(continued)
11-189
179
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 4 of 7
Revenue Capital Projects
Oceanfront
American Miscellaneous
Assessment
Encroachment
Rescue Plan Act Grants
PEG Fees
District
Revenues:
Othertaxes
$ $
- $ - $
$
Intergovernmental
7,071,718 9,911
Charge for services
- -
Licenses, permits and fees
307,890
Property income
270,561
-
-
Investment income
33,000
100,757
1,393,470
Net increase in fair value of investments
19,596
61,255
68,033
Donations
-
-
-
Special assessments
26,843,142
Other
-
Total revenues
323,157
7.071,718 9,911
469,902
28,304,645
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances (deficits), beginning
Fund balances (deficits), ending
- 3,535 - 72,433 -
- 9,911 - -
115,499 - 9,401,847
85,228 1,726,042
85,228 1,845,076 9,911 72,433 9,401,847
237,929 5,226,642 397,469 18,902,798
5,300
(5,226,642) (1,230,300)
(5,226,642) (1,225,000.00)
237,929 397,469 17,677,798
945,623 3,152,537 7,284,113
$ 1,183,552 $ $ $ 3,550,006 $ 24,961,911
(continued)
11-190
180
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 5 of 7
Parks and
Civic Center
Newport Uptown
Community
Fire Station
and Park
Police Facility
Undergrounding
Centers
Revenues:
Othertaxes
$ $
$ $
$
Intergovernmental
Charge for services
Licenses, permits and fees
Property income
Investment income
102,256
13,536
18,654
101
528,941
Net increase in fair value of investments
56,411
8,298
14,748
62
303,359
Donations
-
-
-
-
-
Special assessments
Other
-
Total revenues
158,667
21,834
33,402
163
832,300
Expenditures:
Current:
General government
-
2,033
-
-
-
Public safety
-
Public works
Community development
Community services
-
-
-
Capital outlay
181,529
-
4,250
6,361,244
Total expenditures
181,529
2,033
4,250
-
6,361,244
Excess (deficiency) of revenues
over expenditures
(22,862)
19,801
29,152
163
(5,528,944)
Other financing sources (uses):
Transfers in
-
-
-
6,955,012
Transfers out
Total other financing sources (uses)
6,955,012
Net change in fund balances
(22,862)
19,801
29,152
163
1,426,068
Fund balances (deficits), beginning
3,309,951
485,365
658,756
3,248
14,681,481
Fund balances (deficits), ending
$ 3,287,089 $
505,166
$ 687,908 $
3,411 $
16,107,549
(continued)
11-191
181
Revenues:
Othertaxes
Intergovernmental
Charge for services
Licenses, permits and fees
Property income
Investment income
Net increase in fair value of investments
Donations
Special assessments
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances (deficits), beginning
Fund balances (deficits), ending
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 6 of 7
Balboa Village
Parking
Management Facilities Neighborhood Miscellaneous Junior
District Maintenance Enhancement FFP Projects Lifeguards
11,052
176,997
450,872
1,717
6,771
109,416
294,045
466
17,823
286,413
744,917
2,183
86,475
2,673,645
6,551,637
289,263
167,481
86,475
2,673,645
6,551,637
289,263
167,481
(68,652)
(2,387,232)
(5,806,720)
(289,263)
(165,298)
2,500,000
1,665,952
4,940,281
286,361
2,500,000
1,665,952
4,940,281
286,361
(68,652) 112,768
(4,140,768)
4,651,018
121,063
379,245 4,055,373
15,871,600
1,871,809
1,083
$ 310,593 $ 4,168,141 $
11,730,832 $
6,522,827 $
122,146
(continued)
182
11-192
Revenues:
Othertaxes
Intergovernmental
Charge for services
Licenses, permits and fees
Property income
Investment income
Net increase in fair value of investments
Donations
Special assessments
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances (deficits), beginning
Fund balances (deficits), ending
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2024
Page 7 of 7
Capital Projects Permanent Funds
Total
Unrestricted Other
Capital Park Ackerman Governmental
Improvements Maintenance Bay Dredging Donation Funds
$ $ $ $ 963,173
20,657,672
61,917
948,030
- 295,230
31,748 167,037 36,736 3,827,939
18,148 102,289 22,507 1,548,348
- - - 5,614,105
26,843,142
178,204
49,896 269,326 59,243 60,937,760
7,602,296 90,294
7,602,296 90,294
122,977
550,206
- 9,938,981
4,900 329,743
19,940 183,559
- 45,927,164
24,840 57,052,630
(7,602,296) (40,398) 269,326 34,403 3,885,130
12,776,641 1,000,000 34,788,805
(1,000,000) (7,675,179)
11,776,641 1,000,000 27,113,626
4,174,345 959,602 269,326 34,403 30,998,756
11,545,802 5,361,031 1,181,529 93,208,950
$ 15,720,147 $ 959,602 $ 5,630,357 $ 1,215,932 $ 124,207,706
183
11-193
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2024
Budgeted Amounts
Original Final
Revenues:
Variance with
Final Budget
Positive
Actual (Negative)
Intergovernmental $ 2,189,879 $ 2,189,879 $ 2,331,825 $ 141,946
Investment income 21,669 21,669 131,912 110,243
Net increase in fair value of investments - - 81,601 81,601
Total revenues 2,211,548 2,211,548 2,545,338 333,790
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance, ending
1,864,993 5,690,245 3,455,116 2,235,129
346,555 (3,478,697) (909,778) 2,568,919
3,707,579 3,707,579 3,707,579 -
$ 4,054,134 $ 228,882 $ 2,797,801 $ 2,568,919
11-194
184
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
SB1 Gas Tax RMRA Special Revenue Fund
For the Year Ended June 30, 2024
Budgeted Amounts
Original Final
Revenues:
Variance with
Final Budget
Positive
Actual (Negative)
Intergovernmental
$ 1,846,884
$ 1,846,884
$ 2,197,540
$ 350,656
Investment income
3,321
3,321
31,060
27,739
Net increase in fair value of investments
-
-
15,656
15,656
Total revenues
1,850,205
1,850,205
2,244,256
394,051
Expenditures:
Capital outlay
2,000,000
1,834,308
1,834,308
-
Net change in fund balance
(149,795)
15,897
409,948
394,051
Fund balance, beginning
416,051
416,051
416,051
-
Fund balance, ending
$ 266,256
$ 431,948
$ 825,999
$ 394,051
11-195
185
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2024
Revenues:
Intergovernmental
Investment income
Net increase in fair value of investments
Total revenues
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)
$ -
$ -
$ 268,095
$ 268,095
-
-
22,756
22,756
-
-
13,575
13,575
-
-
304,426
304,426
65,000
65,000
17,393
47,607
(65,000)
(65,000)
287,033
352,033
530,365
530,365
530,365
-
$ 465,365
$ 465,365
$ 817,398
$ 352,033
11-196
186
Revenues:
Intergovernmental
Expenditures:
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance, ending
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
OTS DUI Grant Special Revenue Fund
For the Year Ended June 30, 2024
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ 376,000 $ 281,638 $ (94,362)
376,000 281,797 94,203
- (159) (159)
(159) $ (159)
187
11-197
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Circulation and Transportation Special Revenue Fund
For the Year Ended June 30, 2024
Revenues:
Licenses, permits and fees
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
Budgeted Amounts
Original Final
Variance with
Final Budget
Positive
Actual
(Negative)
$ 299,476
$ 299,476
35,197
35,197
23,346
23,346
358,019
358,019
- 1,253,127 1,093,629 159,498
- (1,253,127) (735,610) 517,517
1,653,759 1,653,759 1,653,759 -
$ 1,653,759 $ 400,632 $ 918,149 $ 517,517
11-198
188
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Building Excise Tax Special Revenue Fund
For the Year Ended June 30, 2024
Revenues:
Licenses, permits and fees
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
Budgeted Amounts
Original Final
Variance with
Final Budget
Positive
Actual (Negative)
$ 202,950 $ 202,950 $ 190,664 $ (12,286)
3,006 3,006 8,919 5,913
- - 4,688 4,688
205,956 205,956 204,271 (1,685)
- 379,207 21,435 357,772
205,956 (173,251) 182,836 356,087
187,983 187,983 187,983 -
$ 393,939 $ 14,732 $ 370,819 $ 356,087
11-199
189
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2024
Revenues:
Intergovernmental
Total revenues
Expenditures:
Community development
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 385,974 $ 1,074,362 $ 95,221 $ (979,141)
385,974 1,074,362 95,221 (979,141)
183,586 1,074,362 324,843 749,519
208,000 - - -
2,548 - - -
394,134 1,074,362 324,843 749,519
(8,160) - (229,622) (229,622)
$ (8,160) $ - $ (229,622) $ (229,622)
11-200
190
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2024
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
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 100,000 $ 100,000 $ 112,059 $ 12,059
16,734 16,734 50,214 33,480
- - 30,261 30,261
116,734 116,734 192,534 75,800
- 216,319 - 216,319
116,734 (99,585) 192,534 292,119
1,552,735 1,552,735 1,552,735 -
$ 1,669,469 $ 1,453,150 $ 1,745,269 $ 292,119
11-201
191
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Environmental Liability Special Revenue Fund
For the Year Ended June 30, 2024
Revenues:
Othertaxes
Investment income
Net increase in fair value of investments
Other revenue
Total revenues
Expenditures:
Public works
Capital outlay
Total expenditures
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Budgeted Amounts
Original Final
Variance with
Final Budget
Positive
Actual (Negative)
$ 670,563
$ 670,563
$ 963,173
$ 292,610
153,829
153,829
293,008
139,179
-
-
180,497
180,497
40,000
40,000
66,962
26,962
864,392
864,392
1,503,640
639,248
714,458
714,458
421,635
292,823
-
1,273,486
377,713
895,773
714,458
1,987,944
799,348
1,188,596
149,934
(1,123,552)
704,292
1,827,844
9,256,697
9,256,697
9,256,697
-
$ 9,406,631
$ 8,133,145
$ 9,960,989
$ 1,827,844
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Supplemental Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2024
Revenues:
Intergovernmental
Expenditures:
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Budgeted Amounts
Original Final
Variance with
Final Budget
Positive
Actual (Negative)
$ 250,000 $ 250,000 $ 241,105 $ (8,895)
200,000 200,000 241,105 (41,105)
50,000 50,000 - (50,000)
$ 50,000 $ 50,000 $ - $ (50,000)
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Opioid Remediation Special Revenue Fund
For the Year Ended June 30, 2024
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Other $ - $ - $ 44,976 44,976
Expenditures:
General government - 395,766 44,976 350,790
Net change in fund balance - (395,766) - 395,766
Fund balance, beginning - - - -
Fund balance, ending $ - $ (395,766) $ - $ 395,766
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Contributions Special Revenue Fund
For the Year Ended June 30, 2024
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
Revenues:
Intergovernmental
$ - $ 7,643,957
$ 5,083,257
$ (2,560,700)
Investment income
36,532 36,532
1,743
(34,789)
Net increase in fair value of investments
- -
1,097
1,097
Donations
- 9,079,969
5,501,518
(3,578,451)
Other
- 42,650
-
(42,650)
Total revenues
36,532 16,803,108
10,587,615
(6,215,493)
Expenditures:
Capital outlay
8,502,000
20,805,623
10,805,241
10,000,382
Excess (deficiency) of revenues
over expenditures
(8,465,468)
(4,002,515)
(217,626)
3,784,889
Other financing sources:
Transfers in
-
4,643,968
4,643,968
-
Transfers out
-
(218,237)
(218,237)
-
Total other financing sources (uses)
-
4,425,731
4,425,731
-
Net change in fund balance
(8,465,468)
423,216
4,208,105
3,784,889
Fund balance, beginning
(11,625)
(11,625)
(11,625)
-
Fund balance, ending
$ (8,477,093)
$ 411,591
$ 4,196,480
$ 3,784,889
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
FUN Special Revenue Fund
For the Year Ended June 30, 2024
Budgeted Amounts
Original Final
Variance with
Final Budget
Positive
Actual (Negative)
Revenues:
Investment income $ 23,910 $ 23,910 $ 33,670 $ 9,760
Net increase in fair value of investments - - 21,022 21,022
Donations - 75,000 - (75,000)
Total revenues 23,910 98,910 54,692 (44,218)
Expenditures:
Community services
Net change in fund balance
Fund balance, beginning
Fund balance, ending
147,000 233,669 149,948 83,721
(123,090) (134,759) (95,256) 39,503
1,190,056 1,190,056 1,190,056 -
$ 1,066,966 $ 1,055,297 $ 1,094,800 $ 39,503
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Restricted Programs Special Revenue Fund
For the Year Ended June 30, 2024
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Charges for services
$ -
$ -
$ 61,917
$ 61,917
Licenses, permits and fees
150,000
150,000
150,000
-
Property income
32,118
32,118
24,669
(7,449)
Investment income
-
-
67,756
67,756
Net increase in fair value of investments
-
-
40,531
40,531
Donations
35,000
35,000
112,587
77,587
Other
16,672
16,672
66,266
49,594
Total revenues
233,790
233,790
523,726
289,936
Expenditures:
Community development
-
20,000
-
20,000
Community services
-
46,351
13,671
32,680
Total expenditures
-
66,351
13,671
52,680
Net change in fund balance
233,790
167,439
510,055
342,616
Fund balance, beginning
2,000,507
2,000,507
2,000,507
-
Fund balance, ending
$ 2,234,297
$ 2,167,946
$ 2,510,562
$ 342,616
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Measure M Special Revenue Fund
For the Year Ended June 30, 2024
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 2,728,303
$ 4,920,550
$ 2,965,303
$ (1,955,247)
Investment income
7,122
7,122
84,830
77,708
Net increase in fair value of investments
-
-
50,670
50,670
Total revenues
2,735,425
4,927,672
3,100,803
(1,826,869)
Expenditures:
Capital outlay
1,857,000
6,185,248
2,520,338
3,664,910
Excess (deficiency) of revenues
over expenditures
878,425
(1,257,576)
580,465
1,838,041
Other financing sources:
Transfers in
-
15,290
15,290
-
Net change in fund balance
878,425
(1,242,286)
595,755
1,838,041
Fund balance, beginning
1,936,297
1,936,297
1,936,297
-
Fund balance, ending
$ 2,814,722
$ 694,011
$ 2,532,052
$ 1,838,041
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Oceanfront Encroachment Special Revenue Fund
For the Year Ended June 30, 2024
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Property income
$ 259,728
$ 259,728
$ 270,561
$ 10,833
Investment income
-
-
33,000
33,000
Net increase in fair value of investments
-
-
19,596
19,596
Total revenues
259,728
259,728
323,157
63,429
Expenditures:
Capital outlay
-
302,041
85,228
216,813
Net change in fund balance
259,728
(42,313)
237,929
280,242
Fund balance, beginning
945,623
945,623
945,623
-
Fund balance, ending
$ 1,205,351
$ 903,310
$ 1,183,552
$ 280,242
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CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
American Rescue Plan Act
For the Year Ended June 30, 2024
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ -
$ 7,071,718
$ 7,071,718
$ -
Expenditures:
General government
-
3,535
3,535
-
Public works
-
115,499
115,499
-
Capital outlay
10,100,000
1,726,042
1,726,042
-
Total expenditures
10,100,000
1,845,076
1,845,076
-
Excess (deficiency) of revenues
over expenditures
(10,100,000)
5,226,642
5,226,642
-
Other financing uses:
Transfers out
-
(5,226,642)
(5,226,642)
-
Net change in fund balance
(10,100,000)
-
-
-
Fund balance, beginning
-
-
-
-
Fund balance (deficit), ending
$ (10,100,000)
$ -
$ -
$ -
11-210
200
Revenues:
Intergovernmental
Expenditures:
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance, ending
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Miscellaneous Grants Special Revenue Fund
For the Year Ended June 30, 2024
Budgeted Amounts
Original Final
$ - $ 9,911 $
Variance with
Final Budget
Positive
Actual (Negative)
9,911 9,911 -
201
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
PEG Fees Special Revenue Fund
For the Year Ended June 30, 2024
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ 360,000
$ 360,000
$ 307,890
$ (52,110)
Investment income
-
-
100,757
100,757
Net increase in fair value of investments
-
-
61,255
61,255
Total revenues
360,000
360,000
469,902
109,902
Expenditures:
General government
-
90,000
72,433
17,567
Net change in fund balance
360,000
270,000
397,469
127,469
Fund balance, beginning
3,152,537
3,152,537
3,152,537
-
Fund balance, ending
$ 3,512,537
$ 3,422,537
$ 3,550,006
$ 127,469
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202
FINANCIAL SECTION
SUPPLEMENTARY INFORMATION
1►ITCn►1 A 1 CE'n\/140'C CI Ik1r%C
..
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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.
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205
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Net Position
June 30, 2024
Total
Insurance
Compensated
Retiree
Equipment
Information
Internal
Assets
Reserve
Absences
Insurance
Maintenance
Technology
Service Funds
Current assets:
Cash and investments
$ 44,053,148
$ 7,752,988
$ 932,028
$ 20,743,381
$ 12,846,738
$ 86,328,283
Receivables:
Accounts (net of allowance)
26,216
-
857
-
-
27,073
Interest
140,638
24,789
3,231
66,868
41,396
276,922
Inventories
-
-
-
463,782
-
463,782
Prepaid items
69,865
57,837
668,196
795,898
Total current assets 44,220,002 7,777,777 1,005,981 21,331,868 13,556,330 87,891,958
Noncurrent assets:
Capital assets:
Equipment
45,058,356
3,528,518
48,586,874
Intangible right to use equipment
-
363,725
363,725
Structures
39,581
-
39,581
Software
-
4,360,625
4,360,625
Intangible right to use subscriptions
1,723,597
547,676
2,271,273
Less accumulated depreciation/amortization
(29,481,200)
(6,969,102)
(36,450,302)
Total capital assets (net of accumulated
depreciation/amortization)
- 17,340,334
1,831,442
19,171,776
Total assets
44,220,002
7,777,777
1,005,981 38,672,202
15,387,772
107,063,734
Deferred outflows of resources:
Deferred amount from pension plans
-
-
- 917,183
1,838,389
2,755,572
Deferred amount from OPEB
252,071
505,254
757,325
Total deferred outflows of resources
-
1,169,254
2,343,643
3,512,897
Liabilities
Current liabilities:
Accounts payable
14,315,707
208,793
71,239
14,595,739
Accrued payroll
11,853
151,607
185,588 43,861
110,774
503,683
Due to other funds
-
-
353,001 -
-
353,001
Workers' compensation - current
4,035,291
-
4,035,291
General liability - current
3,577,058
-
3,577,058
Compensated absences - current
-
3,539,392
-
3,539,392
Lease liability - current
-
-
73,074
73,074
Subscription liability - current
-
-
- 169,441
35,391
204,832
Total current liabilities
21,939,909
3,690,999
538,589 422,095
290,478
26,882,070
Noncurrent liabilities:
Workers' compensation
19,415,272
-
- -
-
19,415,272
General liability
7,264,260
-
7,264,260
Compensated absences
-
10,108,774
-
10,108,774
Lease liability
-
-
67,340
67,340
Subscription liability
1,300,946
-
1,300,946
Net pension liability
2,238,339
4,486,532
6,724,871
Net OPEB liability
202,999
406,900
609,899
Total noncurrent liabilities
26,679,532
10,108,774
- 3,742,284
4,960,772
45,491,362
Total liabilities
48,619,441
13,799,773
538,589 4,164,379
5,251,250
72,373,432
Deferred inflows of resources:
Deferred amount from pension plans
-
-
- 9,675
19,388
29,063
Deferred amount from OPEB
7,724
15,482
23,206
Total deferred inflows of resources
17,399
34,870
52,269
Net Position
Invested in capital assets
- 15,801,398
1,644,277
17,445,675
Unrestricted
(4,399,439)
(6,021,996)
467,392 19,858,280
10,801,018
20,705,255
Total net position
$ (4,399,439)
$ (6,021,996) $
467,392 $ 35,659,678
$ 12,445,295
$ 38,150,930
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CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Revenues, Expenses
and Changes in Net Position
For the Year Ended June 30, 2024
Total
Insurance
Compensated
Retiree
Equipment
Information
Internal
Reserve
Absences
Insurance
Maintenance
Technology
Service Funds
Operating revenues:
Charges for services
$ 13,827,679
$ 2,999,486
$ 4,359,593
$ 8,530,463
$ 8,213,165
$ 37,930,386
Employee contributions
-
-
24,130
-
-
24,130
Other
206,884
-
3,055,688
462,496
610,000
4,335,068
Total operating revenues
14,034,563
2,999,486
7,439,411
8,992,959
8,823,165
42,289,584
Operating expenses:
Salaries and wages
-
-
-
1,166,646
2,926,262
4,092,908
Depreciation/amortization
3,464,942
635,818
4,100,760
Professional services
125,250
732,945
858,195
Maintenance and supplies
1,638,837
1,663,079
3,301,916
Fleet parts and supplies
500,453
-
500,453
Telecommunication
-
194,919
194,919
System maintenance
151,358
-
151,358
Hardware
-
381,955
381,955
Software
541,072
541,072
Workers' compensation
11,588,497
-
11,588,497
Claims and judgments
25,766,286
-
25,766,286
Compensated absences
-
2,498,119
-
2,498,119
OPEB
-
11,002,082
11,002,082
Other
-
-
2,425,284
2,425,284
Total operating expenses
37,354,783
2,498,119
13,427,366
7,047,486
7,076,050
67,403,804
Operating income (loss)
(23,320,220)
501,367
(5,987,955)
1,945,473
1,747,115
(25,114,220)
Nonoperating revenues
Investment income 1,241,067 210,890 104,471 610,819 367,830 2,535,077
Net increase in fair value of investments 748,014 124,970 85,176 370,906 220,025 1,549,091
Gain on sale of capital assets - - - 284,690 237 284,927
Interest expense (8,590) (1,394) (9,984)
Total nonoperating revenues 1,989,081 335,860 189,647 1,257,825 586,698 4,359,111
Income (loss) before transfers (21,331,139) 837,227 (5,798,308) 3,203,298 2,333,813 (20,755,109)
Transfers in - 5,802,500 5,802,500
Change in net position
(21,331,139) 837,227
4,192
3,203,298
2,333,813
(14,952,609)
Net position, beginning
16,931,700 (6,859,223)
463,200
32,456,380
10,111,482
53,103,539
Net position, ending
$ (4,399,439) $ (6,021,996) $
467,392
$ 35,659,678
$ 12,445,295
$ 38,150,930
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CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Cash Flows
For the Year Ended June 30, 2024
Total
Insurance
Compensated
Retiree
Equipment
Information
Internal
Reserve
Absences
Insurance
Maintenance
Technology
Service Funds
Cash flows from operating activities:
Receipts from user departments
$ 13,801,463
$ 2,999,486
$ 4,359,641
$ 8,532,040
$ 8,213,165
$ 37,905,795
Payments to employees
(4,522,234)
(1,786,620)
-
(1,213,185)
(3,006,263)
(10,528,302)
Payments to suppliers
(9,338,468)
(13,240,726)
(2,830,262)
(3,541,539)
(28,950,995)
Other operating cash receipts
206,884
3,079,818
462,496
610,000
4,359,198
Net cash provided (used) by operating activities
147,645
1,212,866
(5,801,267)
4,951,089
2,275,363
2,785,696
Cash flows from noncapital financing activities:
Cash received from other funds
5,802,500
5,802,500
Net cash provided by noncapital financing activities
5,802,500
5,802,500
Cash flows from capital and related financing activities:
Acquisition of capital assets
-
(3,267,454)
(413,241)
(3,680,695)
Lease liabilities and related
(63,152)
(63,152)
Subscription liabilities and related
(177,102)
(193,890)
(370,992)
Proceeds from sale of capital assets
284,690
237
284,927
Net cash (used) for capital and related financing activities
(3,159,866)
(670,046)
(3,829,912)
Cash flows from investing activities:
Investment income
1,997,065
331,927
188,657
979,575
584,423
4,081,647
Net cash provided by investing activities
1,997,065
331,927
188,657
979,575
584,423
4,081,647
Net increase in cash and cash equivalents
2,144,710
1,544,793
189,890
2,770,798
2,189,740
8,839,931
Cash and cash equivalents, beginning
41,908,438
6,208,195
742,138
17,972,583
10,656,998
77,488,352
Cash and cash equivalents, ending
$ 44,053,148
$ 7,752,988
$ 932,028
$ 20,743,381
$ 12,846,738
$ 86,328,283
Reconciliation to the statement of net position:
Cash and investments reported on statement of net position
$ 44,053,148
$ 7,752,988
$ 932,028
$ 20,743,381
$ 12,846,738
$ 86,328,283
Cash and cash equivalents
$ 44,053,148
$ 7,752,988
$ 932,028
$ 20,743,381
$ 12,846,738
$ 86,328,283
Reconciliation of operating income (loss) to net cash
provided by operating activities:
Operating income (loss)
$ (23,320,220)
$ 501,367
$ (5,987,955)
$ 1,945,473
$ 1,747,115
$ (25,114,220)
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities:
Depreciation
-
-
3,464,942
635,818
4,100,760
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(26,216)
48
1,577
-
(24,591)
(Increase) in inventories
-
-
(25,209)
-
(25,209)
(Increase) decrease in prepaid items
49,178
189,376
(57,837)
(60)
180,657
Increase (decrease) in accounts payable and accrued
payroll
14,238,236
(245,627)
(2,736)
(325,273)
(2,111)
13,662,489
Increase in workers' compensation
7,054,410
7,054,410
Increase in general liability
2,152,257
-
2,152,257
Increase in compensated absences
-
957,126
-
-
957,126
Increase in net pension liability and deferred cash flows
-
35,627
71,410
107,037
(Decrease) in net OPEB liability and deferred cash flows
-
(88,211)
(176,809)
(265,020)
Total adjustments
23,467,865
711,499
186,688
3,005,616
528,248
27,899,916
Net cash provided (used) by operating activities
$ 147,645
$ 1,212,866
$ (5,801,267)
$ 4,951,089
$ 2,275,363
$ 2,785,696
Noncash investing, capital, and financing activities:
Net increase in fair value of investments
$ 748,014
$ 124,970
$ 85,176
$ 370,906
$ 220,025
$ 1,549,091
Obtaining an intangible right to use lease asset
-
-
-
9,837
9,837
Total of noncash activities
$ 748,014
$ 124,970
$ 85,176
$ 370,906
$ 229,862
$ 1,558,928
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FINANCIAL SECTION
SUPPLEMENTARY INFORMATION
11-219
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CUSTODIAL FUNDS
Custodial 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 Custodial 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 and 1915 Act
special assessment bonds.
The Tourism Business Improvement Fund is used to account for the Newport
Beach Tourism Business Improvement District's special assessment on short
term room rental revenue collected by the City for Visit Newport Beach Inc.
The Other Business Improvement Fund is used to account for monies
collected from local business districts for district property improvements and
business enhancement.
The Police Custodial Fund is used to account for monies received by the City's
police department in a custodial capacity, such as warrants and items pending
adjudication.
The Flexible Spending Account Fund is used to account for monies withheld
by the City from employees' wages based on their voluntary enrollment in flexible
spending accounts.
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211
Assets
Cash and investments
Restricted cash and investments with fiscal agent
Receivable:
Interest
Intergovernmental receivable
Total assets
Liabilities
Due to others
Total liabilities
CITY OF NEWPORT BEACH
Custodial Funds
Combining Statement of Fiduciary Net Position
June 30, 2024
Custodial Funds
Special
Tourism
Other
Flexible
Total
Assessment
Business
Business
Police Spending
Custodial
District
Improvement
Improvement
Custodial Account
Funds
$ 25,705
$ 6,420
$ 5,605
$ 247,619 $
$ 285,349
4,245,553
-
-
-
4,245,553
86
86
45,980
-
-
-
45,980
4,317,324
6,420
5,605
247,619
4,576,968
516
6,420
5,605
645
13,186
516
6,420
5,605
645
13,186
Net Position
Restricted for:
Individuals, organizations, and other governments 4,316,808 246,974 4,563,782
Total net position $ 4,316,808 $ $ $ 246,974 $ $ 4,563,782
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212
CITY OF NEWPORT BEACH
Custodial Funds
Combining Statement of Changes in Fiduciary Net Position
For the Year Ended June 30, 2024
Additions
Special assessments
Investment earnings
Other
Total additions
Deductions
Debt service
Administrative
Other
Total deductions
Net increase (decrease) in fiduciary net position
Net position, beginning of year, as previously reported
Restatement for removal of Flexible Spending Account Fund
Net position, beginning of year, as restated
Net position, end of year
Custodial Funds
Special Tourism
Other Flexible
Total
Assessment Business
Business Police Spending
Custodial
District Improvement
Improvement Custodial Account
Funds
$ 3,277,101 $
$ $ - $
$ 3,277,101
151,966
866
152,832
1,080,001
85,059
1,165,060
4,509,068
85,925
4,594,993
2,007,651 2,007,651
96,944 - 96,944
127,861 127,861
2,104,595 127,861 2,232,456
2,404,473 (41,936) 2,362,537
1,912,335 288,910 25,728 2,226,973
(25,728) (25,728)
1,912,335 288,910 - 2,201,245
$ 4,316,808 $ $ $ 246,974 $ - $ 4,563,782
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11-224
214
STATISTICAL SECTION
This page left blank intentionally.
11-226
216
FINANCIAL TRENDS
This section of the City of Newport Beach's Annual Comprehensive Financial
Report (ACFR) 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 have 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 Annual
Comprehensive Financial Reports and underlying accounting records for the relevant years.
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217
CITY OF NEWPORT BEACH
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2015
20162
20173
20184
Governmental activities:
Net investment in capital assets
$ 2,176,644,408
$ 2,193,773,102
$2,201,552,683
$ 2,208,832,391
Restricted
45,689,702
44,033,677
45,753,736
49,791,908
Unrestricted
(150,532,773)
(130,468,268)
(133,461,197)
(122,024,754)
Total governmental activities
$ 2,071,801,337
$ 2,107,338,511
$2,113,845,222
$ 2,136,599,545
Business -type activities
Net investment in capital assets
$ 113,914,514
$ 117,055,576
$ 116,238,944
$ 119,375,596
Unrestricted
21,756,124
23,430,189
28,890,311
29,183,382
Total business -type activities
$ 135,670,638
$ 140,485,765
$ 145,129,255
$ 148,558,978
Primary government:
Net investment in capital assets
$ 2,290,558,922
$ 2,310,828,678
$2,317,791,627
$ 2,328,207,987
Restricted
45,689,702
44,033,677
45,753,736
49,791,908
Unrestricted
(128,776,649)
(107,038,079)
(104,570,886)
(92,841,372)
Total primary government
$ 2,207,471,975
$ 2,247,824,276
$2,258,974,477
$ 2,285,158,523
Reflects restatement of net position due to compensated absences and deferred outflow adjustments related to
fiscal year ended June 30, 2016.
2 Reflects restatement of net position due to deferred outflow adjustments related to fiscal year ended June 30, 2017.
3 Reflects restatement of net position due to implementation of GASB 75 in fiscal year ended June 30, 2018.
4 Reflects restatement of net position due to adjustments for capital assets and compensated absences liability in
fiscal year ended June 30, 2019.
5 2022 data varies from trend due to receipt of revenues such as property taxes and sales taxes that were not spent
or restricted by the end of the fiscal year.
6 Reflects restatement of net position due to unbilled receivables adjustments related to fiscal year ended June 30,
2023.
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.
The City of Newport Beach implemented GASB 87 for the fiscal year ended June 30, 2022.
The City of Newport Beach implemented GASB 96 for the fiscal year ended June 30, 2023.
The City of Newport Beach implemented GASB 100 for the fiscal year ended June 30, 2024.
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218
CITY OF NEWPORT BEACH
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2019 2020 2021 2022 20236 2024
$
2,218,040,304
$
2,217,852,660
$
2,227,572,605
$
2,223,773,786
$ 2,256,305,577
$
2,275,099,514
56,426,811
67,708,225
67,189,020
78,100,496
79,152,428
123,444,563
(102,035,181)
(90,214,086)
(72,301,558)
(8,183,288)
20,117,377
28,001,461
$
2,172,431,934
$
2,195,346,799
$
2,222,460,067
$
2,293,690,994
$ 2,355,575,382
$
2,426,545,538
$
119,346,350
$
120,291,689
$
124,775,772
$
128,244,924
$ 131,015,969
$
132,331,781
30,331,669
30,276,662
27,039,499
28,559,633
25,105,814
20,202,940
$
149,678,019
$
150,568,351
$
151,815,271
$
156,804,557
$ 156,121,783
$
152,534,721
$
2,337,386,654
$
2,338,144,349
$
2,352,348,377
$
2,352,018,710
$ 2,387,321,546
$
2,407,431,295
56,426,811
67,708,225
67,189,020
78,100,496
79,152,428
123,444,563
(71,703,512)
(59,937,424)
(45,262,059)
20,376,345 5
45,223,191
48,204,401
$
2,322,109,953
$
2,345,915,150
$
2,374,275,338
$
2,450,495,551
$ 2,511,697,165
$
2,579,080,259
11-229
219
CITY OF NEWPORT BEACH
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2015
2016
2017
2018
Expenses:
Governmental activities:
General government
$ 24,558,041 $
19,335,275
$ 20,443,569 $
19,011,099
Public safety
96,945,872
91,046,455
102,494,314
107,647,562
Public works
45,774,939
45,443,988
54,039,601
47,615,000
Community development
10,073,248
9,943,868
12,056,086
12,377,394
Community services
22,418,287
22,700,052
26,583,440
27,307,115
Interest on long-term debt
7,711,334
7,615,094
7,472,188
7,381,743
Total governmental activities expenses
207,481,721
196,084,732
223,089,198
221,339,913
Business -type activities:
Water
21,175,954
21,605,197
22,004,013
23,724,918
Wastewater
3,452,398
3,818,165
4,218,926
4,158,155
Total business -type activities expenses
24,628,352
25,423,362
26,222,939
27,883,073
Total primary government expenses
232,110,073
221,508,094
249,312,137
249,222,986
Program revenues:
Governmental activities:
Charges for services:
General government
3,647,210
3,722,557
5,089,123
5,355,887
Public safety
19,386,017
19,108,222
19,899,242
20,733,883
Public works
5,276,991
5,319,510
5,214,426
5,789,579
Community development
8,608,645
8,419,588
10,838,114
9,956,226
Community services
13,667,775
13,964,018
13,653,466
13,974,329
Operating grants and contributions:
10,673,286
17,826,914
11,632,188
11,943,941
Capital grants and contributions:
38,157,665 1
2,717,504
27,993,317 1
1,815,464
Total governmental activities program revenues
99,417,589
71,078,313
94,319,876
69,569,309
Business -type activities:
Charges for services:
Water
27,705,129
24,499,952
25,371,307
26,931,193
Wastewater
3,326,362
3,065,762
3,161,114
3,445,772
Operating grants and contributions:
-
-
-
-
Total business -type activities program revenues
31,031,491
27,565,714
28,532,421
30,376,965
Total primary government program revenues
130,449,080
98,644,027
122,852,297
99,946,274
Net revenues (expenses):
Governmental activities
(108,064,132)
(125,006,419)
(128,769,322)
(151,770,604)
Business -type activities
6,403,139
2,142,352
2,309,482
2,493,892
Total net revenues (expenses)
$ (101,660,993) $
(122,864,067)
$ (126,459,840) $
(149,276,712)
General revenues and other changes in net position:
Governmental activities:
Taxes:
Property tax
$ 84,121,461
$ 91,516,611
$ 96,964,060
$ 101,593,290
Sales tax
24,832,412
33,937,986
33,702,895
36,373,253
Sales tax in -lieu
8,046,424
2,870,474
-
-
Transient occupancy tax
20,369,158
21,083,199
22,382,361
22,857,737
Business license tax
4,141,282
4,024,386
4,149,016
4,282,935
Franchise tax
4,189,130
4,047,584
4,026,005
4,228,469
Othertaxes
354,919
327,009
358,209
3,346,987
Investment income
437,272
584,259
589,001
632,808
Net increase (decrease) in fair value of investments
61,337
376,311
-
-
Other
3,161,567
4,001,486
2,290,482
3,416,348
Transfers
-
-
(3,500,000)
-
Total governmental activities
149,714,962
162,769,305
160,962,029
176,731,827
Business -type activities:
Investment income
123,445
216,576
77,752
184,906
Net increase (decrease) in fair value of investments
34,921
148,527
-
-
Other
-
2,375,000
Capital contributions
22,516
-
Transfers
-
-
3,500,000
-
Total business -type activities
158,366
2,762,619
3,577,752
184,906
Total primary government
149,873,328
165,531,924
164,539,781
176,916,733
Changes in net position
Governmental activities
41,650,830
37,762,886
32,192,707
24,961,223
Business -type activities
6,561,505
4,904,971
5,887,234
2,678,798
Total primary government
$ 48,212,335
$ 42,667,857
$ 38,079,941
$ 27,640,021
1 Data varies from trend because of one-time receipt of developer contributions.
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CITY OF NEWPORT BEACH
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2019 2020 2021 2022 2023 2024
$ 20,549,224
$ 20,714,050
$ 20,177,482
$ 19,374,179 $
26,911,510
$ 28,392,550
111,556,065
119,194,302
119,184,958
104,767,466
121,309,057
151,625,944
53,339,878
60,054,860
63,689,155
65,031,715
75,904,138
88,359,562
11,493,204
12,842,020
12,157,226
9,664,500
13,048,442
16,813,900
27,758,097
26,668,079
28,214,205
24,508,702
27,937,349
33,034,132
7,187,971
7,064,521
7,321,612
6,877,577
6,666,044
6,215,237
231,884,439
246,537,832
250,744,638
230,224,139
271,776,540
324,441,325
26,898,075
27,387,120
28,943,243
27,117,471
30,701,834
37,322,293
4,222,228
4,291,755
5,223,245
4,094,448
5,343,891
6,959,273
31,120,303
31,678,875
34,166,488
31,211,919
36,045,725
44,281,566
5,887,265
3,846,962
2,914,007
3,625,809
12,386,628
15,953,090
21,979,376
22,232,248
22,038,904
23,156,703
26,273,944
27,903,642
5,778,441
5,054,694
5,067,478
7,538,103
8,770,525
9,397,103
9,902,445
9,599,848
10,491,970
11,119,757
11,269,905
10,849,048
13,556,360
16,936,285
17,601,288
22,302,788
15,753,446
17,370,410
14,021,506
14,659,016
20,361,620
16,800,039
20,131,513
34,497,961
6,638,356
7,352,407
7,658,387
8,693,429
5,809,562
35,646,295
77,763,749
79,681,460
86,133,654
93,236,628
100,395,523
151,617,549
26,843,751
27,100,429
30,739,726
32,104,202
32,033,631
33,842,356
4,069,265
4,110,815
4,618,186
4,825,249
4,666,685
5,274,889
-
-
-
116,629
-
115,499
30,913,016
31,211,244
35,357,912
37,046,080
36,700,316
39,232,744
108,676,765
110,892,704
121,491,566
130,282,708
137,095,839
190,850,293
(154,120,690)
(166,856,372)
(164,610,984)
(136,987,511)
(171,381,017)
(172,823,776)
(207,287)
(467,631)
1,191,424
5,834,161
654,591
(5,048,823)
$ (154,327,977)
$ (167,324,003)
$ (163,419,560)
$ (131,153,350)
$ (170,726,426)
$ (177,872,599)
$ 108,365,261
$ 113,313,535
$ 119,157,057
$ 124,335,985
$ 138,358,730
$ 146,136,873
37,168,063
36,232,969
38,956,275
46,164,860
46,552,459
43,444,542
24,697,446
21,097,384
16,886,197
26,677,331
30,201,649
31,736,961
4,428,440
4,882,419
4,481,349
4,363,145
4,901,385
4,896,557
4,286,496
4,394,156
4,204,224
4,561,278
4,996,526
5,152,384
2,633,720
2,592,369
4,166,549
4,333,071
181,800
203,135
2,644,319
2,621,488
2,603,982
1,995,214
3,208,250
5,834,247
2,234,249
2,520,033
(2,086,189)
(6,856,640)
(687,766)
3,534,164
3,495,085
2,116,884
3,354,808
2,644,194
5,552,372
2,855,069
189,953,079
189,771,237
191,724,252
208,218,438
233,265,405
243,793,932
713,970
732,099
525,295
345,218
520,736
893,332
612,358
625,864
(469,799)
(1,190,093)
(262,867)
568,429
35,832,389 22,914,865 27,113,268 71,230,927 61,884,388 70,970,156
1,119,041 890,332 1,246,920 4,989,286 912,460 (3,587,062)
$ 36,951,430 $ 23,805,197 $ 28,360,188 $ 76,220,213 $ 62,796,848 $ 67,383,094
11-231
221
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2015
2016
2017
2018
General fund:
Nonspendable
$ 15,784,396
$ 15,210,896 $
14,434,017
$ 14,050,930
Restricted
5,389,810
3,083,133
3,797,009
4,412,302
Committed
11,847,852
2,726,020 1
10,570,638 2
13,444,487
Assigned
1,421,225
4,201,311
567,132
590,368
Unassigned
55,509,258
56,618,041
60,009,244
61,415,049
Total general fund
$ 89,952,541
$ 81,839,401 1 $
89,378,040 2
$ 93,913,136
All other governmental funds
Nonspendable
$ 4,669,269
$ 4,629,781
$ 4,666,256
$ 4,787,243
Restricted
29,842,384
33,662,859
31,950,139
38,629,419
Committed
26,159,261
40,248,977
49,510,047
41,731,742
Unassigned
(12,495,729)
(15,422,984)
(6,308,331)
(376,162)
Total all other governmental funds
$ 48,175,185
$ 63,118,633
$ 79,818,111
$ 84,772,242
Total all governmental funds
$ 138,127,726
$ 144,958,034
$ 169,196,151
$ 178,685,378
1 Data varies from trend due to the moving of general fund capital projects to a separate capital project fund.
2 Data varies from trend due to additional funds set aside for seawall construction and pension -related items.
3 Data varies from trend due to the relocation of restricted funds to special revenue funds.
4 Data varies from trend due to the City's absence of fund balance not restricted or committed to be used for
specific purposes in fiscal year ended June 30, 2022.
5 Data varies from trend due to additional funds set aside mainly in the Facilities Financial Planning Reserve
Fund and Unrestricted Capital Improvements Fund.
6 Data varies from trend due to issuance of special Assessment District bonds.
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222
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2019
2020
2021
2022
2023
2024
$ 13,147,221
$ 11,864,115
$ 10,637,097
$ 9,407,143 $
8,239,567
$ 7,052,603
4,757,437
5,710,434
4,876,025
- 3
-
-
13,335,675
2,210,811
3,235,746
4,429,573
5,465,426
6,786,845
1,199,682
2,598,828
1,489,350
- 4
-
-
64,146,123
76,699,284
85,715,180
83,302,665
77,737,532
82,601,740
$ 96,586,138
$ 99,083,472
$ 105,953,398
$ 97,139,381 $
91,442,525
$ 96,441,188
$ 4,715,545 $ 4,646,529 $ 4,707,330 $ 4,690,430 $ 4,650,931 $ 4,771,150
45,958,167 53,310,518 63,914,627 73,013,208 73,657,409 112,762,753 6
40,732,124 48,032,259 47,863,154 73,243,534 5 78,218,834 81,317,521
(253) (50,137) (136,299) (119,371) (11,625) (229,781)
$ 91,405,583 $ 105,939,169 $ 116,348,812 $ 150,827,801 $ 156,515,549 $ 198,621,643
$ 187,991,721 $ 205,022,641 $ 222,302,210 $ 247,967,182 $ 247,958,074 $ 295,062,831
Fund Balances
$250,000,000
$200,000,000
$150,000,000 -
$100,000,000
$50,000,000
yj 20117 2018 2019 2020 2021 2022 2023 2024
INTotal General Fund
■Total all other Governmental Funds
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223
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
Revenues:
Taxes
$ 146,664,903
$ 158,386,385
$ 162,184,218
$ 171,982,240
Intergovernmental
11,813,208
17,262,147
17,073,653
16,148,754
Licenses, permits and fees
14,676,754
6,571,123
9,844,908
6,405,668
Charges for services
16,914,210
18,827,991
19,197,065
19,828,786
Fines and forfeitures
3,732,405
3,684,602
3,590,700
3,181,823
Investment income
928,729
1,157,539
772,546
1,143,210
Net increase (decrease) in fair value of investments
177,485
769,460
-
-
Property income
21,406,667
22,259,425
23,553,188
25,430,217
Donations
22,249,427
4,190,822
16,827,889
414,123
Special assessments
-
-
-
-
Other
6,984,418
2,982,924
2,277,322
2,893,770
Total revenues
245,548,206
236,092,418
255,321,489
247,428,591
Expenditures:
Current:
General government
14,060,512
14,629,672
15,086,397
16,099,310
Public safety
94,568,122
96,225,784
98,750,981
109,760,129
Public works
33,694,578
36,000,905
35,961,024
38,012,230
Community development
9,876,706
10,913,205
11,696,779
12,979,656
Community services
20,235,546
21,784,680
23,607,284
25,538,966
Capital outlay
47,169,671
31,934,463
30,822,972
24,054,866
Debt service:
Principal
4,183,000
4,272,000
4,401,000
3,335,000
Interest and fiscal charges
7,957,811
7,839,341
7,704,957
7,617,107
Total expenditures
231,745,946
223,600,050
228,031,394
237,397,264
Excess (deficiency) of revenues over (under)
expenditures
13,802,260
12,492,368
27,290,095
10,031,327
Other financing sources (uses):
Transfersin
53,281,956
48,523,132
45,342,446
45,308,862
Transfers out
(57,431,956)
(54,185,192)
(49,390,226)
(45,850,962)
Proceeds from sale
995,802
Certificates of participation issued
-
-
-
-
Premium on certificates of participation issued
-
-
-
-
Proceeds from loan issuance
1,339,000
Payment to refunded loan escrow agent
(1,339,000)
Leases(aslessee)
-
-
-
-
Inception of subscription -based IT arrangements
-
-
-
-
Totalotherfinancingsources(uses)
(4,150,000)
(5,662,060)
(3,051,978)
(542,100)
Net change in fund balances
$ 9,652,260
$ 6,830,308
$ 24,238,117
$ 9,489,227
Debt service as a percentage of
noncapital expenditures 6.6% 7.2% 6.0% 5.3%
Data varies from trend due to implementation of GASB 96 for the fiscal year ended June 30, 2023.
11-234
224
CITY OF NEWPORT BEACH
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2019
2020
2021
2022
2023
2024
$ 183,455,182
$ 182,983,069
$ 188,351,057
$ 211,259,402
$ 226,067,296
$ 232,533,623
15,818,543
12,672,931
22,233,872
19,683,307
21,080,285
27,715,232
6,302,603
5,783,862
6,566,555
6,995,700
6,719,969
6,688,111
19,472,866
21,125,622
18,434,439
22,897,475
25,214,184
25,217,364
3,347,714
3,509,883
3,923,726
4,191,518
3,892,875
4,195,196
3,490,992
3,765,753
3,201,376
2,756,712
4,525,340
9,386,746
2,938,136
3,477,299
(2,634,682)
(8,900,762)
(465,873)
4,584,645
26,674,107
25,651,360
28,842,374
33,770,750
35,830,362
41,198,758
402,709
795,561
5,491,871
1,805,249
717,157
6,070,830
-
-
-
8,086,594
4,948,430
26,843,142
5,173,716
5,950,279
3,504,103
1,441,813
3,412,302
1,175,255
16,769,920
15,968,085
17,154,507
17,397,786
20,680,878
22,007,758
116,054,531
118,290,847
126,006,313
127,590,486
132,441,032
140,132,544
44,132,877
45,730,965
46,817,293
54,293,534
56,046,234
65,532,190
12, 310, 621
12, 612, 751
12, 996, 840
13, 021, 562
14, 735, 582
15, 734, 543
26,372,495
24,474,242
26,745,189
26,421,141
27,558,760
30,060,134
26,347,312
20,376,106
33,728,085
28,603,393
68,434,127
50,776,034
3,470,000
3,576,000
3,247,000
5,138,250
5,296,166
5,335,081
7,428,469
7,265,703
7,306,143
7,141,264
6,908,693
6,698,344
252,886,225
248,294,699
274,001,370
279,607,416
332,101,472
336,276,628
14,190,343
17,420,920
3,913,321
24,380,342
(159,145)
49,332,274
54,664,532 40,373,981 70,379,824 76,061,564 128,499,591 97,432,054
(59,548,532) (40,763,981) (65,965,012) (74,776,934) (128,879,043) (103,234,554)
7,860,000
1,373,936
- 3,259,414
529,489 ' 315,569
(4,884,000) (390,000) 13,648,748 1,284,630 150,037 (2,227,517)
$ 9,306,343 $ 17,030,920 $ 17,562,069 $ 25,664,972 $ (9,108) $ 47,104,757
4.8% 4.8% 4.2% 4.8% 4.5% 4.2%
11-235
225
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11-236
226
REVENUE CAPACITY
This section of the City of Newport Beach's Annual Comprehensive Financial
Report (ACFR) 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 Annual
Comprehensive Financial Reports and underlying accounting records for the relevant years.
11-237
227
CITY OF NEWPORT BEACH
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
Secured
Fiscal Year
Ended
Total Taxable
Total Direct
June 30
Residential
Commercial
Other
Unsecured
Assessed Value
Change
Tax Rate
2015
36,814,891,583
5,007,508,388
1,348,136,131
1,581,520,801
44,752,056,903
5.69%
1.000%
2016
39,263,791,190
5,264,898,550
1,394,764,145
1,465,016,213
47,388,470,098
5.89%
1.000%
2017
41,834,060,284
5,539,551,197
1,398,481,252
1,569,593,832
50,341,686,565
6.23%
1.000%
2018
44,862,969,434
5,953,148,011
1,499,414,812
1,464,683,763
53,780,216,020
6.83%
1.000%
2019
48,246,937,786
6,466,645,074
1,474,416,367
1,513,162,553
57,701,161,781
7.29%
1.000%
2020
50,791,887,238
6,807,750,346
1,552,189,492
1,592,979,478
60,744,806,554
5.27%
1.000%
2021
53,636,707,086
6,979,031,018
1,428,005,141
1,645,923,436
63,689,666,681
4.85%
1.000%
2022
56,171,689,696
7,152,717,180
1,745,857,017
1,509,466,705
66,579,730,598
4.54%
1.000%
2023
60,461,442,254
7,647,078,297
1,489,884,026
1,731,351,434
71,329,756,011
7.13%
1.000%
2024
64,292,506,871
8,048,003,322
1,681,329,931
1,908,193,032
75,930,033,156
6.45%
1.000%
NOTE:
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
11-238
228
CITY OF NEWPORT BEACH
Direct and Overlapping Property Tax Rates
(Rate per $100 of assessed value)
Last Ten Fiscal Years
Fiscal Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
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
0.047
0.047
0.047
0.047
0.047
0.032
0.047
0.047
0.047
0.051
School districts
0.182
0.183
0.173
0.176
0.161
0.173
0.186
0.170
0.175
0.158
Total Overlapping Rate
0.229
0.230
0.220
0.223
0.208
0.205
0.233
0.217
0.222
0.209
Total Direct & Overlapping Rate
$ 1.229
$ 1.230
$ 1.220
$ 1.223
$ 1.208
$ 1.205
$ 1.233
$ 1.217
$ 1.222
$ 1.209
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
11-239
229
CITY OF NEWPORT BEACH
Principal Property Taxpayers
Current Year and Nine Years Ago
2024
2015
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
$ 833,108,564
1
1.10%
$ 1,835,109,685
1
4.10%
PH Finance LLC
346,858,756
2
0.46%
N/A
-
0.00%
Villas at Fashion Island LLC
285,563,203
3
0.38%
N/A
0.00%
Fashion Island Retail LLC
242,270,076
4
0.32%
N/A
0.00%
Newport Center Hotel LLC
232,256,357
5
0.31%
N/A
0.00%
HG Newport Owner LLC
193,028,546
6
0.25%
N/A
0.00%
520 Newport Center Drive LLC
190,606,965
7
0.25%
N/A
0.00%
Newport Bluffs LLC
173,753,982
8
0.23%
146,556,073
3
0.33%
650 Newport Center Drive LLC
172,594,406
9
0.23%
N/A
-
0.00%
Bay Island Club
159,120,374
10
0.21%
82,471,372
10
0.18%
$ 2,829,161,229
3.73%
$ 2,064,137,130
4.61%
Source: HdL, Coren & Cone
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230
CITY OF NEWPORT BEACH
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the Fiscal
Year of Levy
Total Collections
to Date
Fiscal Year
Taxes Levied
Collections in
Ended
for the Fiscal
Percent of
Subsequent
Percent of
June 30
Year
Amount'
Levy
Years 2
Amount
Levy
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%
886,688
101,587,690
98.98%
2021
107,647,017
105,781,072
98.27%
862,772
106,643,844
99.07%
2022
113,318,692
110,354,271
97.38%
789,969
111,144,240
98.08%
2023
123,844,578
121,011,910
97.71%
1,020,161
122,032,071
98.54%
2024
129,506,001
126,637,893
97.79%
- 3
126,637,893
97.79%
Net collections reflect deductions for refunds and impoundments.
2 Exclusive of penalty charges.
3 The total amount of Fiscal Year 2024 delinquent taxes collected in subsequent years was not available as of the
date the information was collected for the City's Annual Comprehensive Financial Report.
Source: Orange County Auditor Controller's Office
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231
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11-242
232
DEBT CAPACITY
This section of the City of Newport Beach's Annual Comprehensive Financial
Report (ACFR) 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 Annual
Comprehensive Financial Reports and underlying accounting records for the relevant years.
11-243
233
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11-244
234
CITY OF NEWPORT BEACH
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
Subscdption-
Fiscal
based
Year
Pre-
Infonnation
Total
Ended
Certificates of
Annexation
Technology
Governmental
June 30
Participation '
Agreement
CDBG Loan
Leases s
Arrangements'
AcWiUes
2015
117,197,765
2,400,000
1,339,000
-
-
120,936,765
2016
114,137,212
1,200,000
1,207,000
-
-
116,544,212
2017
110,956,659
-
1,066,000
-
-
112,022,659
2018
107,651,106
-
916,000
-
-
108,567,106
2019
104,220,553
-
756,000
-
-
104,976,553
2020
100,695,000
-
585,000
-
-
101,280,000
2021
106,781,026
-
403,000
-
-
107,184,026
2022
102,698,895
-
208,000
13,321,040
-
116,227,935
2023
98,616,764
-
-
12,274,149
2,235,132
113,126,045
2024
94,389,633
-
-
14,339,382
1,832,755
110,561,770
Business -type Activities
Percentage of
Total Business -type
Total Primary
Personal
Debt Per
Leases a
Activities
Government
Income z
Capita z
-
-
120,936,765
1.77%
1,386
-
-
116,544,212
1.77%
1,383
-
-
112,022,659
1.66%
1,319
-
-
108,567,106
1.48%
1,245
-
-
104,976,553
1.36%
1,204
-
-
101,280,000
1.24%
1,181
-
-
107,184,026
1.31 %
1,248
1,512,574
1,512,574
117,740,509
1.34%
1,406
3,820,774
3,820,774
116,946,819
1.27%
1,402
3,776,654
3,776,654
114,338,424
1.22%
1,387
Note: This schedule excludes claims and judgments, employee compensated absence, pension, 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.
3 The GASB 87 and GASB 96 debts on this schedule are not money borrowed by the City, but are present -value calculations of estimated future payments by the City based on assumptions
specified in GASB 87 and GASB 96. The City of Newport Beach implemented GASB 87 for the fiscal year ended June 30, 2022. The City of Newport Beach implemented GASB 96 for the fiscal
year ended June 30, 2023.
11-245
235
Fiscal Year
Ended
June 30
Certificates of
Participation'
2015
117,197,765
2016
114,137,212
2017
110,956,659
2018
107,651,106
2019
104,220,553
2020
100,695,000
2021
106,781,026
2022
102,698,895
2023
98,616,764
2024
94,389,633
CITY OF NEWPORT BEACH
Ratios of General Bonded Debt
Last Ten Fiscal Years
Amounts
Percent of
General
Restricted for
Assessed
Bonded Debt
Debt Service
Total
Value
Per Capita
(2,350,210)
114,847,555
0.26%
1,316
(2,362,904)
111,774,308
0.24%
1,326
(2,364,034)
108,592,625
0.22%
1,279
(2,384,338)
105,266,768
0.20%
1,207
(2,362,228)
101,858,325
0.18%
1,168
(1,159,389)
99,535,611
0.16%
1,160
(2,255,795)
104,525,231
0.16%
1,217
(2,199,363)
100,499,532
0.15%
1,200
(2,183,979)
96,432,785
0.14%
1,156
(2,323,115)
92,066,518
0.12%
1,117
' 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.
11-246
236
CITY OF NEWPORT BEACH
Direct and Overlapping Debt
June 30, 2024
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
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 Community 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 Board of Education General Fund Obligations
Coast Community College District General Fund Obligations
Coast Community College District Pension Obligation Bonds
Santa Ana Unified School District General Fund Obligations
TOTAL OVERLAPPING DEBT
DIRECT DEBT:
City of Newport Beach Certificates of Participation
Workers' compensation payable
Claims and judgments payable
Compensated absences
Leases (3)
Subscription -based Information Technology Arrangements (3)
TOTAL DIRECT DEBT
TOTAL DIRECT AND OVERLAPPING DEBT
GROSS COMBINED TOTAL DEBT (Z)
Percentage
Applicable (')
$ 75,930,0 33,156
Outstanding Debt
6/30/24
Estimated Share of
Overlapping Debt
1.961 %
$
18,210,000
$
357,098
35.244%
886,956,084
312,598,802
2.678%
154,276,441
4,131,523
5.019%
144,765,000
7,265,755
14.567%
9,940,000
1,447,960
100.000%
6,410,000
6,410,000
73.630%
215,994,635
159,036,850
6.180%
409,228,633
25,290,330
2.671%-
399,676,768
43,283,102
100.000%
100.000%
13,300,000
13,300,000
100.000%
8,175,000
8,175,000
100.000%
37,046,036
37,046,036
100.000%
3,182,000
3,182,000
100.000%
19,270,000
19,270,000
9.862%
440,385,000
43,430,769
9.862%
10,030,000
989,159
35.244%
1,075,000
378,873
35.244%
925,000
326,007
6.180%
42,399,216
2,620,272
$
2,821,244,813
$
688,539,536
100.000%
$
94,389,633
$
94,389,633
100.000%
23,450,563
23,450,563
100.000%
10,841,318
10,841,318
100.000%
13,648,166
13,648,166
100.000%
14,339,382
14,339,382
100.000%
1,832,755
1,832,755
$
158,501,817
$
158,501,817
$ 847,041,353
847,041,353
(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.
(3) The GASB 87 and GASB 96 debts on this schedule are not money borrowed by the City, but are present -value calculations of estimated future payments by
the City based on assumptions specified in GASB 87 and GASB 96. The City of Newport Beach implemented GASB 87 for the fiscal year ended June 30,
2022. The City of Newport Beach implemented GASB 96 for the fiscal year ended June 30, 2023.
Ratios to 2023-24 Net Assessed Valuation:
Total Overlapping Debt 0.91 %
Total Direct Debt ($158,501,817) 0.21 %
Gross Combined Total Debt 1.12%
Source: California Municipal Statistics, Inc.
11-247
237
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
2015
2016
2017
2018
Assessed valuation
$ 44,752,056,903
$ 47,388,470,098
$ 50,341,686,565
$ 53,780,216,020
Conversion percentage
25%
25%
25%
25%
Adjusted assessed valuation
11,188,014,226
11,847,117,525
12,585,421,641
13,445,054,005
Debt limit percentage
15%
15%
15%
15%
Debt limit
1,678,202,134
1,777,067,629
1,887,813,246
2,016,758,101
Total net debt applicable to limit:
General obligation bonds
Legal debt margin
$ 1,678,202,134
$ 1,777,067,629
$ 1,887,813,246
$ 2,016,758,101
Total debt applicable to the limit
as a percentage of debt limit
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
11-248
238
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
2019 2020 2021 2022 2023 2024
w .. .. , - - w ., , , w ., ., w ., - -,-w -w w , - , , - . w
25% 25% 25% 25% 25% 25%
14,425,290,445 15,186, 201,639 15, 922,416, 670 16,644,932,650 17,832,439,003 18,982,508,289
15% 15% 15% 15% 15% 15%
2,163,793,567 2,277,930,246 2,388,362,501 2,496,739,897 2,674,865,850 2,847,376,243
$ 2,163,793,567 $ 2,277,930,246 $ 2,388,362,501 $ 2,496,739,897 $ 2,674,865,850 $ 2,847,376,243
0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
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240
DEMOGRAPHIC AND ECONOMIC INFORMATION
This section of the City of Newport Beach's Annual Comprehensive Financial
Report (ACFR) 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 Annual
Comprehensive Financial Reports and underlying accounting records for the relevant years.
11-251
241
CITY OF NEWPORT BEACH
Demographic and Economic Statistics
Last Ten Fiscal Years
Fiscal Year
Population'(')
Personal Income
Per
Capita
Unemployment
(in thousands)
Rate
Income(2)
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%
2021
85,865
8,175,464
95,213 (4)
6.0%
2022
83,727
8,791,502
105,002
3.0%
2023
83,411
9,219,835
110,535
3.0%
2024
82,419
9,389,008
113,918
3.5%
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
Annual Comprehensive Financial Report.
2 Unemployment rate represents an average of all monthly unemployment rates within a
fiscal year.
Sources:
(1) California State Department of Finance, E-4 Population Estimates for Cities, Counties
and State and E-1 Population and Housing Estimates for Cities, Counties and the State.
(2) U.S. Census Bureau - American Community Survey 1-Year Estimates
(3) State of California, Employment Development Department
(4) HdL, Coren & Cone
11-252
242
CITY OF NEWPORT BEACH
Principal Employers'
Current Year and 9 years ago
2024
2015
Percent of
Percent of
Number of
Total
Number of
Total
Employer
Employees
Rank
Employment
Employees
Rank
Employment
Hoag Memorial Hospital
5,483
1
6.78%
4,567
1
5.48%
Pacific Life Insurance
1,657
2
2.05%
1,258
2
1.51%
PIMCO
1,168
3
1.44%
896
6
1.07%
Irvine Management Company
1,053
4
1.30%
N/A
2 -
N/A
Glidewell Dental
791
5
0.98%
1,098
3
1.32%
Tower Semiconductor
790
6
0.98%
692
8
0.83%
City of Newport Beach
765
7
0.95%
727
7
0.87%
Newport -Mesa Unified School District
750
8
0.93%
909
5
1.09%
Balboa Bay Club and Resort
729
9
0.90%
370
10
0.44%
Resort at Pelican Hill
679
10
0.84%
927
4
1.11 %
Marriott Newport Coast Villas
449
11
0.55%
N/A
2 -
N/A
CBRE Inc.
404
12
0.50%
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 2015.
Source: Data obtained from companies listed and compiled by City Finance Department.
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244
OPERATING INFORMATION
This section of the City of Newport Beach's Annual Comprehensive Financial
Report (ACFR) 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 Annual
Comprehensive Financial Reports and underlying accounting records for the relevant years.
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246
Function
General government
Public safety
Community development
Public works
Community services
Water
Wastewater
CITY OF NEWPORT BEACH
Full-time City Employees by Function
Last Ten Fiscal Years
Fiscal Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
78
77
77
79
80
78
80
81
85
94
370
374
371
372
375
375
376
376
377
385
52
52
52
53
53
53
52
53
56
59
109
104
99
98
96
99
98
98
102
104
75
79
81
79
78
78
78
78
79
80
31
32
31
33
33
33
33
33
32
34
13
12
13
11
11
11
11
11
11
10
Total 728 730 724 725 726 727 728 730 741 766
Source: City Finance Department
11-257
247
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
2015
2016
2017
2018
3,472
3,158
3,178
3,266
59,753
64,762
69,246
56,685
305
300
247
248
1,281
1,201
1,216
1,307
2,711
1,890
1,439
1,403
27,175
27,000
20,490
22,925
303,152
305,000
425,000
437,751
13,740
14,000
13,500
13,071
187
194
229
210
16.39
11.66
13.80
14.07
20
17
41
137
260
250
202
211
1,610,818 1,575,000 1,464,640 1,424,594
1 Data varies with trend due to inclusion of responses to fires, hazardous materials, medical and other emergencies.
2 Data varies with trend due to COVID-19 restrictions in 2021.
3 Data varies with trend due to COVID-19 restrictions being lifted in 2022.
Source: City of Newport Beach
11-258
248
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
Fiscal Year
2019
2020
2021
2022
2023
2024
3,520
3,093
2,872
2,650
2,800
2,615
67,048
73,372
86,439
83,307
85,003
86,002
209
11,913
12,204
13,251
13,486
13,493
1,033
2,842
475
2 3,015
s 2,807
2,824
1,402
913
920
901
903
739
14,840
11,729
7,805
13,590
12,885
16,069
469,959
439,954
455,442
392,605
454,418
527,754
13,386
9,300
6,287
8,805
10,048
10,190
210
256
160
252
184
176
13.75
13.44
14.87
14.28
11.06
10.77
46
10
25
3
12
9
196
221
240
209
178
192
1,376,041 1,084,206 1,043,629 1,195,151 1,172,951 1,213,486
11-259
249
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
2015
2016
2017
2018
Police:
Stations
1
1
1
1
Fire:
Fire Stations
8
8
8
8
Lifeguard Headquarters
1
1
1
1
Public works:
Streets (miles)
395
399
400
400
Streetlights
5,977
5,978
5,978
5,978
Traffic Signals
808
808
808
808
Recreation & Senior Services:
Parks
64
64
64
64
Community Centers (includes leased property)
14
15
15
15
Aquatic Center
1
1
1
1
Water:
Water Mains (miles)
299.58
299.77
300.64
300.30
Maximum Daily Capacity (thousands of gallons)
27,800
27,800
27,800
27,800
Wastewater:
Sanitary Sewers (miles)
202.64
202.75
202.72
203.56
Storm Sewers (miles)
94.14
92.08
94.74
95.12
Library Services:
Libraries
4
4
4
4
Source: City of Newport Beach
11-260
250
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
2019
2020
2021
2022
2023
2024
1
1
1
1
1
1
8
8
8
8
8
8
1
1
1
1
1
1
400
400
400
400
401
399
5,971
5,972
5,973
5,974
5,974
5,974
808
808
808
808
808
808
65
65
65
66
66
66
15
15
15
14
14
15
1
1
1
1
1
1
300.88
300.82
301.23
301.13
301.48
301.39
27,800
27,800
27,800
27,800
27,800
27,800
203.99
204.10
204.13
204.30
204.72
204.81
95.35
95.89
96.18
97.37
97.81
104.28
4 4 4 4 4 4
11-261
251
CITY OF NEWPORT BEACH
Water Sold by Type of Customer
Last Ten Fiscal Years
(in hundred cubic feet)
Fiscal Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Type of Customer:
Residential
3,853,566
3,072,589
3,564,203
3,603,927
3,439,655
3,747,408
3,811,231
3,714,134
3,242,477
3,154,529
Commercial
2,560,620
1,847,372
2,142,952
2,201,254
2,075,812
2,081,860
2,231,809
2,078,199
1,728,975
1,698,963
Government
396,605
263,116
305,214
289,738
256,398
270,638
299,442
314,128
256,850
224,058
Total
6,810,791
5, 883.077
6. 112,369
6, 994,919
5. 771,865
6, 999.906
6. 442,482
6, 006.461
5. 228,302
5, 777,550
Total direct rate
per 100 cubic ft.
$ 3.08
$ 3.08
$ 3.08
$ 3.08
$ 3.08
$ 3.11 1 $
3.35 2 $
3.60 3 $
3.87 4 $
4.16 5
1 Reflects increase in commodity rate effective January 1, 2020
R
3 eflects increase in commodity rate effective January 1, 2021
3 Reflects increase in commodity rate effective January 1, 2022
4 Reflects increase in commodity rate effective January 1, 2023
5 Reflects increase in commodity rate effective January 1, 2024
Source: City Utilities Department
11-262
252
CITY OF NEWPORT BEACH
Utility Rates'
Last Ten Fiscal Years
Fiscal Year
Ended
Monthly
Rate per
June 30
Base Rate
100 cubic ft
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
2021
30.25
3.85
2022
32.03
4.14
2023
33.77
4.41
2024
37.64
4.69
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
11-263
253
Water Customer
Irvine Company Apartment
Irvine Company Office
Hoag Memorial Hospital
Newport Beach Country Club
Big Canyon Country Club
UDR Newport Beach
Newport -Mesa Unified School District
Irvine Company Retail
Bluffs Homeowners Association
Pacific View - Pierce Bros.
Park Newport Ltd
Newport Dunes Resort
Villa Balboa Community Association
De Anza Corp
690 Hotel LLC
CITY OF NEWPORT BEACH
Major Water Customers
Current Year and Nine Years Ago
2024
2015
Percent of Total
Percent of Total
Water Charges
Rank
Water Revenues
Water Charges
Rank
Water Revenues
$ 805,949
1
2.50%
$ 532,674
1
1.95%
605,192
2
1.88%
474,979
1
1.74%
467,613
3
1.45%
302,746
4
1.11 %
368,577
4
1.14%
325,207
3
1.19%
344,111
5
1.07%
295,721
2
1.08%
342,458
6
1.06%
251,069
8
0.92%
316,461
7
0.98%
269,852
6
0.99%
270,791
8
0.84%
174,528
10
0.64%
263,595
9
0.82%
273,137
7
1.00%
235,776
10
0.73%
187,880
9
0.69%
195,097
11
0.61 %
284,543
5
1.04%
175,223
12
0.54%
122,840
16
0.45%
137,137
13
0.43%
132,508
18
0.42%
133,394
14
0.41 %
89,228
22
0.33%
127,832
15
0.40%
N/A 2
-
N/A
$ 4,789,205
14.87%
$ 3,716,911
13.57%
Company listed operated under The Irvine Company in 2015.
2 Company listed was established in 2021 therefore, no 2015 information was available.
Source: City Revenue Division
11-264
254
11-265
is
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
(949) 644-3123
www.newportbeachca.gov/acfr
11-266
Attachment B
Auditor's Required Communications with the Audit Committee
11-267
*I DavisFarr
CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Karmen Avenue I Suite 1100 1 Irvine, CA 92612
Main: 949.474.2020 1 Fax: 949.263.5520
REQUIRED AUDIT COMMUNICATIONS
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
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 (City) as of and for the year ended June 30, 2024, and have issued our report
thereon dated December 30, 2024. Professional standards require that we advise you of the
following matters during our audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our engagement letter dated July 9, 2024, our responsibility, as described
by professional standards, is to form and express opinions about whether the financial
statements that have been prepared by management with your oversight are presented fairly,
in all material respects, in accordance with accounting principles generally accepted in the
United States of America. Our audit of the financial statements does not relieve you or
management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit
to obtain reasonable, rather than absolute, assurance about whether the financial statements
are free of material misstatement. An audit of financial statements includes consideration of
internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control over financial reporting. Accordingly, as part of
our audit, we considered the internal control of the City solely for the purpose of determining
our audit procedures and not to provide any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial
reporting process. However, we are not required to design procedures for the purpose of
identifying other matters to communicate to you.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously
communicated to you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, as appropriate, and our firm have complied with
all relevant ethical requirements regarding independence.
11-268
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
We identified self -review threats to independence as a result of non -attest services provided.
Those non -attest services included assisting in preparation of the financial statements,
recording journal entries detected during the audit process, assisting in updating
infrastructure records and assisting in preparation of the State Controller's Report. To
mitigate the risk, management has reviewed the financial statements and compared amounts
to the accounting records, reviewed proposed journal entries to supporting documentation
and posted the journal entries to the accounting records. Additionally, management has
reviewed the updates to infrastructure records and compared amounts to underlying
supporting documentation. Furthermore, management has reviewed the State Controller's
Report and agreed the amounts to its accounting records.
Significant Risks Identified
We have identified the following significant risks:
Risk of errors in capital asset records: We evaluated the accuracy of depreciation and
accumulated depreciation by performing a full recalculation by capital asset.
• Risk of valuation as a result a transfer of the other post -employment benefits (OPEB)
trust: We reviewed the transfer of the trust noting the complete closure of CERBT and
opening of the trust with PARS.
• Compliance with federal grant requirements. We plan to review the City's Schedule of
Expenditure of Federal Awards and select major programs to test for compliance with
federal grant requirements. This work is scheduled to begin in late January.
Qualitative Aspects of the City's Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A
summary of the significant accounting policies adopted by the City is included in Note 1 to
the financial statements. No matters have come to our attention that would require us, under
professional standards, to inform you about (1) the methods used to account for significant
unusual transactions and (2) the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management
and are based on management's current judgments. Those judgments are normally based on
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 markedly from management's current judgments. The most sensitive accounting
estimates affecting the financial statements are:
• Management's estimate of the net pension liability.
• Management's estimate of the net OPEB liability.
2
11-269
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
• Management's estimates of the claims payable liabilities related to general liability and
workers' compensation claims.
• Useful lives of depreciable assets.
Management's estimate of the pension liability, OPEB liability and claims payable liabilities
are based on actuarial valuation reports. Management's estimate of the useful lives of
assets are based on actual experience with the use of similar assets over time. We evaluated
the key factors and assumptions used to develop the pension liability, OPEB liability, claims
payable liabilities and useful lives of assets and determined they are reasonable in relation to
the basic financial statements taken as a whole and in relation to the applicable opinion units.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly
sensitive because of their significance to financial statement users. The most sensitive
disclosures affecting the City's financial statements relate to pensions in Note 11 and OPEB in
Note 12. The financial statement disclosures are neutral, consistent, and clear.
Significant Unusual Transactions
For purposes of this communication, professional standards require us to communicate to you
significant unusual transactions identified during our audit. There were no significant unusual
transactions identified as a result of our audit procedures.
Significant Difficulties Encountered During the Audit
We encountered no significant difficulties in dealing with management relating to the
performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also require us to accumulate all
known and likely misstatements identified during the audit, other than those that we believe
are trivial, and communicate them to the appropriate level of management. Further,
professional standards require us to also communicate the effect of uncorrected
misstatements related to prior periods on the relevant classes of transactions, account
balances or disclosures, and the financial statements as a whole and each applicable opinion
unit. Management has corrected all identified misstatements. Uncorrected misstatements or
matters underlying those uncorrected misstatements could potentially cause future -period
financial statements to be materially misstated, even though the uncorrected misstatements
are immaterial to the financial statements currently under audit.
In addition, professional standards require us to communicate to you all material, corrected
misstatements that were brought to the attention of management as a result of our audit
procedures. None of the misstatements identified by us as a result of our audit procedures
and corrected by management were material, either individually or in the aggregate, to the
financial statements taken as a whole or applicable opinion units.
3
11-270
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management
as a matter, whether or not resolved to our satisfaction, concerning a financial accounting,
reporting, or auditing matter, which could be significant to the City's financial statements or
the auditor's report. No such disagreements arose during the course of the audit.
Representations Requested from Management
We have requested and received certain written representations from management, which
are included in a separate letter dated December 30, 2024.
Management Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing
and accounting matters. Management informed us that, and to our knowledge, there were
no consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a
variety of matters, including the application of accounting principles and auditing standards,
significant events or transactions that occurred during the year, operating and regulatory
conditions affecting the entity, and operational plans and strategies that may affect the risks
of material misstatement. None of the matters discussed resulted in a condition to our
retention as the City's auditors.
Other Information Included in the Annual Comprehensive Financial Report
Pursuant to professional standards, our responsibility as auditors for other information,
whether financial or nonfinancial, included in the City's annual report, does not extend beyond
the information identified in the audit report, and we are not required to perform any
procedures to corroborate such other information. However, in accordance with such
standards, we have read the information and considered whether such information, or the
manner of its presentation, was materially inconsistent with its presentation in the financial
statements.
Our responsibility also includes communicating to you any information which we believe is a
material misstatement of fact. Nothing came to our attention that caused us to believe that
such information, or its manner of presentation, is materially inconsistent with the
information, or manner of its presentation, appearing in the financial statements.
This report is intended solely for the information and use of City Council and management of
the City and is not intended to be, and should not be, used by anyone other than these
specified parties.
o,,� (--ter...... (--,e
Irvine, California
December 30, 2024
4
11-271
Attachment C
Auditor's Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters
11-272
*I DavisFarr
CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Karmen Avenue I Suite 1100 1 Irvine, CA 92612
Main: 949.474.2020 1 Fax: 949.263.5520
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
The Honorable Mayor and
Members of the 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 (Government
Auditing Standards), 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 (City), as of and for the year ended June 30, 2024, and the related notes to
the financial statements, which collectively comprise the City's basic financial statements, and
have issued our report thereon dated December 30, 2024.
Report on 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) as a basis for designing 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 of this section 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 or significant deficiencies may exist that were
not identified.
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The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
Report on 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 entity'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 entity's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Irvine, California
December 30, 2024
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