Costa Mesa City Council
February 7, 2023

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File #: 23-1004 Meeting Date: 2/7/2023
Administration and the Motel Isolation Voucher Program could provide the additional funding needed to subsidize services in these key areas.

Community Development Block Grant Coronavirus (CDBG-CV) The Coronavirus Aid, Relief and Economic Security Act of 2020 (the “CaresAct”)provided $5 billion in Community Development Block Grant Coronavirus funding (“CDBG-CV”)to assist low-income and vulnerable Americans impacted by the Coronavirus pandemic. The U.S. Department of Housing and Urban Development (“HUD”)allocated $2 billion of these funds to eligible jurisdictions by using the existing CDBG grant formula. The CDBG-CV program is a COVID 19 resource that was approved as a substantial amendment to the FY 2019-2020 Annual Action Plan and is not a recurring source of funding.

City Council accepted round one of CDBG-CV funds on May 26, 2020 in the amount of $668,658 and round two of CDBG-CV funds on October 9, 2020 in the amount of $1,168,216 for a total CDBG-CV award of $1,836,874. Of this total, $333,942 was allocated for Program Administration to cover staff’s costs of administering the CDBG-CV funds and $138,535 was allocated for the Motel Voucher Program to facilitate the isolation of emergency shelter guests who have tested positive for COVID-

19. ANALYSIS:

CDBG-CV funds set aside for motel isolation vouchers and program administration are not being expended at rates that will meet the required expenditure deadlines, thus a portion of these funds must be reallocated to avoid being recaptured by HUD.

The $138,535 in CDBG-CV funds set aside for motel isolation vouchers has been underutilized, as there is access to free isolation beds within the County’sContinuum of Care system. Using these free isolation beds has allowed the City to retain CDBG-CV funds that can now be reprogrammed for other uses.

Similarly, the $333,942 in CDBG-CV funds allocated for Administration is not on pace to meet expenditure deadlines because the City has effectively used subrecipients to prevent, prepare for, and respond to coronavirus with minimal program oversight needed by City staff. As a result, a portion of these CDBG-CV funds can be reallocated to provide more services for the community.

Workforce Development and Like Skills Training
The City funds Trellis International (Trellis) to administer a workforce development and life skills training program called the Community Impact Team (CIT). The CIT provides employment services and transitional employment opportunities for homeless and extremely low-income Costa Mesa residents seeking to reenter the workforce. The City recently expanded its partnership with Trellis to subsidize three (3) projects per week where Teams perform clean-ups at City parks and along major thoroughfares throughout Costa Mesa. Reallocating $70,000 in CDBG-CV funds to Trellis will allow the CIT to operate in the City of Costa Mesa for an additional 12 months.

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Street Outreach
The City funds City Net to provide after-hours street outreach to unsheltered homeless people, four days a week (Mon, Tue, Thu, Fri) from 4-9pm. This service is extremely important as it offers additional support for both City Outreach and the Community Policing Unit (CPU) in providing case management services to our most vulnerable residents. During 2022, City Net Outreach Workers made contact with 844 people, connected 196 of those to services, and facilitated 38 street exits to housing or specialized treatment facilities. Reallocating $189,000 in CDBG-CV funds to City Net will allow them to provide an additional 10.5 months of street outreach to our unsheltered residents.

Youth Services
The City funds Project Hope Alliance (PHA) to provide on- and off-campus case management of homeless and at-risk Newport Mesa Unified School District (NMUSD) students and their families. The services provided by PHA are vital to preventing both current and future homelessness for Costa Mesa residents. During 2022, PHA assisted a total of 329 NMUSD students across 23 campuses.

Reallocating $35,000 in CDBG-CV funds to PHA will allow them to continue to support NMUSD students and their families through the current school year.

Meals for Seniors
The City currently funds Community SeniorServ (CSS) to provide home-delivered and congregate meals to an estimated 170 Costa Mesa senior citizens per year. During the current fiscal year, CSS’s Congregate Lunch program has seen a 300% increase over last year in the number of seniors served (80 residents this year vs. 24 last year) and food costs are rising. The raw food costs incurred by CSS for the first quarter of 2022 was $34,056, which is $6,132 more than their entire annual award of $27,924.

An additional $50,000 in CDBG-CV funds is needed to provide for the increased number of Costa Mesa seniors facing food insecurity. Staff intends to solicit applications for funding to provide additional meals to our vulnerable senior population, thus fulfilling the City’s procurement requirements.

The reallocation of these funds does not require a substantial amendment to the Annual Action Plan as, per the City’sHUD-approved Citizen Participation Plan, there will not be a substantial change to the purpose, scope, location or beneficiaries of the activities in the original allocation and the amount of the reallocation does not exceed 45% of the total CDBG-CV award. A summary of the allocations, expenditures, balances and proposed reallocations of CDBG-CV funds is outlined in the table below.

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ALTERNATIVES:

The City Council can choose to reject staff’s recommendation and continue to set the available CDBG-CV funds aside for administrative costs; however, this would place the City at risk of having to return the funds to HUD. Hence, this alternative is not advised.

FISCAL REVIEW:

This item does not contemplate the use of General Funds.

LEGAL REVIEW:

The City Attorney’s office has reviewed this report and approved it as to form.

CITY COUNCIL GOALS AND PRIORITIES:

This item supports the following City Council Goal:
· Strengthen the Public’s Safety and Improve the Quality of Life

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CONCLUSION:

Staff recommends the City Council:

1. Approve the recommended reallocation of $344,000 in Community Development Block Grant - Coronavirus (CDBG-CV) funds from Program Administration ($274,000) and the Motel Isolation Voucher Program ($70,000) for street outreach, workforce development, senior meals, and homeless youth programs.

2. Authorize the City Manager (or their designee) and the City Clerk to execute all agreements and/or amendments to the agreements to award CDBG-CV funding in the amount of $70,000 for Trellis International, $189,000 for City Net, and $35,000 for Project Hope Alliance, each for a one- year term.

3. Approve the appropriation of $50,000 in CDBG-CV funds to provide meals for Costa Mesa senior citizens.

181
1 Kingdom Causes, Inc. dba City Net
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022
AM

ENDMENT NUMBER TWO
TO 2020-2021 SUBRECIPIENT AGREEMENT

AMONG THE CITY OF COSTA MESA, AS GRANTEE UNDER THE

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM,
THE COSTA MESA HOUSING AUTHORITY, AND KINGDOM CAUSES, INC. DBA CITY NET Thi
s Amendment Number Two (“Amendment”) is made and entered into this 7th day of February, 20 23 (“Effective Date”), by and between the CITY OF COSTA MESA, a municipal corporation and a grantee under the U.S. Department of Housing and Urban Development (“HUD”) Community Development Block Grant -Coronavirus (“CDBG-CV”) Program (Catalog of Federal Domestic Assistance Number 14-218; Grant No: B-20-MC-06-0503) (“City”), the COSTA MESA HOUSING AUTHORITY, a public body corporate and political (“Authority”), and KINGDOM CAUSES, INC., a California nonprofit corporation DBA CITY NET (“Subrecipient”). City and Authority are collectively referred to herein as “City.” W
HEREAS, City and Subrecipient entered into a 2020-2021 Subrecipient A greement dated May 1, 2021 for Subrecipient to provid e after hours homeless prevention and street outreach services (the “Agreement”); and
W
HEREAS, Section A(3) of the Agreement provides for a term of one (1) year, with the option to extend the Agreement for one (1) additional one (1) year period; and WH
EREAS, on April 30, 2022, City and Subrecipient entered into Amendment One to extend the Agreement through April 30, 2023; and
WH
EREAS, City and Subrecipient desire to extend the term for an additional one (1) year period to extend the Agreement through April 30, 2024; and WH
EREAS, City desires to increase the total amount granted to Subrecipient accordingly and to allocate an additional One Hundred and Eighty-Nine Thousand Dollars ($189,000.00) of CDBG-CV funds; and
WH
EREAS, due to the immediate need for the community to receive the services of Subrecipient, City may provide the CDBG-CV funds immediately upon City Council approval.

N
OW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. The ter
m of the Agreement shall be extended through April 30, 2024.

2. S
ection 1 of the Agreement shall be amended to add subsection (c) Use of CDBG- CV Funds; Duplication of Benefits. SUBRECIPIENT acknowledges that CITY is utilizing CDBG-CV funds allocated to City through the CARES Act in whole or i n par
t to fund the services set forth in this Agreement. SUBRECIPIENT understands and agrees that CDBG-CV funds may only be utilized to prevent, prepare for, and respond to the COVID-19 pandemic. SUBRECIPIENT shall not carry out any of the
activities under this Agreement in a manner that results in a prohibited duplication of benefits as defined by the CARES Act and/or HUD’s CDBG -CV guidance. SUBRECIPIENT must comply with HUD’s requirements for duplicati on ATTACHMENT 1
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2 Kingdom Causes, Inc. dba City Net
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

of benefits imposed on the CITY, which are: CDBG -CV funds may not be used to pay costs if another source of financial assistance is available to pay that cost.

SUBRECIPIENT further agrees to repay the CITY any assistance determined to be duplicative.

3. Section 4 of the Agreement shall be amended to reflect that Subrecipient’s total compensation shall not exceed Three Hundred and Eighty-One Thousand Dollars ($381,000.00). Subrecipient shall be paid according to the fee schedule set forth in the Agreement.

4. Section 8 of the Agreement shall be amended to add subsection (j) Reco rds specifying how the Coronavirus impacted persons assisted and that no other financial resource is available to provide assistance.

5. All terms not defined herein shall have the same meaning and use as set forth in the Agreement.

6. All other terms, conditions, and provisions of the Agreement shall remain in full force and effect.

7. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by and through their respective authorized officers, as of the date first written above.

SUBRECIPIENT

KINGDOM CAUSES, INC. DBA CITY NET
Federal Tax ID Number: 57-1162424

________________________________ Date: __________________________ Signature

________________________________
Name and Title

________________________________ Date: __________________________ Signature

________________________________
Name and Title

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3 Kingdom Causes, Inc. dba City Net
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

CITY OF COSTA MESA

__________________________________ Date: __________________________ Lori Ann Farrell Harrison
City Manager

COSTA MESA HOUSING AUTHORITY

__________________________________ Date: __________________________ Lori Ann Farrell Harrison
Executive Director

ATTEST:

__________________________________
Brenda Green
City Clerk

APPROVED AS TO FORM:

__________________________________ Date: __________________________ Kimberly Hall Barlow
City Attorney/Housing Authority General Counsel

APPROVED AS TO INSURANCE:

__________________________________ Date: __________________________ Ruth Wang
Risk Management

184
4 Kingdom Causes, Inc. dba City Net
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

APPROVED AS TO CONTENT:

________________________________ Date: __________________________ Lori Karaguezian
Project Manager

APPROVED AS TO PURCHASING:

________________________________ Date: __________________________ Carol Molina
Finance Director
185
5 Kingdom Causes, Inc. dba City Net
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

186
1 Trellis International
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

AMENDMEN

T NUMBER TWO
TO 2020-2021 SUBRECIPIENT AGREEMENT

AMONG THE CITY OF COSTA MESA, AS GRANTEE UNDER THE

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM,

THE COSTA MESA HOUSING AUTHORITY, AND TRELLIS INTERNATIONAL This Amendment Number Two (“Amendment”) is made and entered into this 7th day of February, 2023 (“Effective Date”), by and between the CITY OF COSTA MESA, a municipal corporation and a grantee under the U.S. Department of Housing and Urban Development (“HUD”) Community Development Block Grant-Coronavirus (“CDBG-CV”) Program (Catalog of Federal Domestic Assistance Number 14-218; Grant No: B-20-MC-06-0503) (“City”), the COSTA MESA HOUSING AUTHORITY, a public body corporate and political (“Authority”), and TRELLIS INTERNATIONAL, a California nonprofit corporation (“Subrecipient”). City and Authority are collectively referred to herein as “City.”
WHEREAS, City and Subrecipient entered into a 2020-2021 Subrecipient Agreement dated May 1, 2021 for Subrecipient to provide Innovative Street Outreach and Life Skills Training services (the “Agreement”); and
WHEREAS, Section A(3) of the Agreement provides for a term of one (1) year, with the option to extend the Agreement for one (1) additional one (1) year period; and WHEREAS, City and Subrecipient entered in to Amendment Number One on April 30, 2022 to extend the term for an additional one (1) year period through April 30, 2023; and WHEREAS, City and Subrecipient now desire to extend the term for an additional one (1) year period to extend the Agreement through April 30, 2024; and WHEREAS, City desires to increase the total amount granted to Subrecipient accordingly and to allocate an additional Seventy-Thousand Dollars ($70,000.00) of CDBG-CV funds; and WHEREAS, due to the immediate need for the community to receive the services of Subrecipient, City may provide the CDBG-CV funds immediately upon City Council approval of this Amendment Two.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. The term of the Agreement shall be extended through April 30, 2024.

2. Section 1 of the Agreement shall be amended to add subsection (c) Use of CDBG- CV Funds; Duplication of Benefits. SUBRECIPIENT acknowledges that CITY is utilizing CDBG-CV funds allocated to City throu gh the CARES Act in whole or in part to fund the services set forth in this Agreement. SUBRECIPIENT understands and agrees that CDBG-CV funds may only be utilized to prevent, prepare for, and respond to the COVID-19 pandemic. SUBRECIP IENT shall not carry out any of the activitie s under this Agreement in a manner that results in a prohibited duplication of benefits as defined by the CARES Act and/or HUD’s CDBG-CV guidance. SUBRECIPIENT must comply with HUD’s requirements for duplication of benefits imposed on the CITY, which are: CDBG-CV funds may not be used to ATTACHMENT 2
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2 Trellis International
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

pay costs if another source of financial assistance is available to pay that cost.

SUBRECIPIENT further agrees to repay the CITY any assistance determined to be duplicative.

3. Section 4 of the Agreement shall be amended to reflect that Subrecipient’s total compensation shall not exceed One Hundred and Sixty Thousand and Three Hundred and Eighty-Two Dollars ($160,382.00). Subrecipient shall be paid according to the fee schedule set forth in the Agreement.

4. Section 8 of the Agreement shall be amended to add subsection (j) Records specifying how the Coronavirus impacted persons assisted and that no other financial resource is available to provide assistance.

5. All terms not defined herein shall have the same meaning and use as set forth in the Agreement.

6. All other terms, conditions, and provisions of the Agreement shall remain in full force and effect.

7. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by and through their respective authorized officers, as of the date first written above.

SUBRECIPIENT

TRELLIS INTERNATIONAL
Federal Tax ID Number: 47-5324236

________________________________ Date: __________________________ Signature

________________________________
Name and Title

________________________________ Date: __________________________ Signature

________________________________
Name and Title

CITY OF COSTA MESA

188
3 Trellis International
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

__________________________________ Date: __________________________ Lori Ann Farrell Harrison
City Manager

COSTA MESA HOUSING AUTHORITY

__________________________________ Date: __________________________ Lori Ann Farrell Harrison
Executive Director

ATTEST:

__________________________________
Brenda Green
City Clerk

APPROVED AS TO FORM:

__________________________________ Date: __________________________ Kimberly Hall Barlow
City Attorney/Housing Authority General Counsel

APPROVED AS TO INSURANCE:

__________________________________ Date: __________________________ Ruth Wang
Risk Management

APPROVED AS TO CONTENT:

________________________________ Date: __________________________ Lori Karaguezian
Project Manager

APPROVED AS TO PURCHASING:

189
4 Trellis International
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

________________________________ Date: __________________________ Carol Molina
Finance Director
190
5 Trellis International
2020-2021 Subrecipient Agreement
Amendment Two
Rev. 08-2022

191
1 SUBRECIPIENT AGREEMENT

AMONG THE CITY OF COSTA MESA,

THE COSTA MESA HOUSING AUTHORITY AND

PROJECT HOPE ALLIANCE

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM-CORONAVIRUS
(CDBG-CV)
This SUBRECIPIENT AGREEMENT (“A greement”) is entered into as of February 7, 2023 (
“Effective Date”) by and among the CITY OF COSTA MESA, a California municipal cor poration and a grantee under the U.S. Department of Housing and Urban Development ( “HUD”) Community Development Block Grant-Coronavirus (“CDBG-CV”) Program (Catalog of Federal Domestic Assistance Number 14-218; Grant No: B-20-MW-06-0503) (“CITY”), the COSTA MESA HOUSING AUTHORITY, a public body corporate and politic (“AUTHORITY), and PROJECT HOPE ALLIANCE, a California nonprofit corporation (“SUBRECIPIENT”). CI TY and AUTHORITY are collectively referred to herein as “CITY.”
WHE
REAS, the primary objective of the Housing and Community Development Act of 1974, 42 U.

S.C. section 5301 et seq., as amended (“Act”) and the CDBG Program is the development of viable urban
communities by providing decent housing, a suitable living environment and expanding economic opportunities; principally for persons of low and moderate income; and WH
EREAS, pursuant to Title 24, Part 570 of the Code of Federal Regulations (24 C.F.R. 570 et seq.) (“CDBG Regulations”), CITY may engage certain organizations to assist in utilizing CDBG - CV funds pursuant to subrecipient agreements, provided that the activities funded are eligible for funding and meet a national objective; and
WHE
REAS, eligible activities are set forth at 24 C.F.R. 570.201-207; and WHE
REAS, each CDBG-CV funded activity m ust meet one of the following national objectives: (1) benefit low-incom e and moderate-incom e persons; (2) prevent or elim inate slums or blight; or (3) meet other community development needs having a particular urgency because existing conditions
pose a serious and immediate threat to the health or welfare of the community, and other financial resources are not available to meet such needs; and WH
EREAS, pursuant to the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”), and notice dated April 2, 2020, the U.S. Department of Housing and Urban Development (“
HUD”) has awarded $1,168,216.00 in Community Development Block Grant - Cor
onavirus (“CDBG-CV”) funds to the CITY for activities authorized under Title I of the Act and described in the CITY’s 2019 Annual Action Plan Substantial Amendment (the “Action Plan”); and WH
EREAS, CDBG-CV funds must only be used to prevent, prepare for, or respond to the Cor
onavirus (COVID-19) pandemic; and
WHEREAS, the CITY
wishes to engage SUBRECIPIENT to assist the CITY in utilizing such funds to
carry out a part of the CITY’s Federal award by committing $35,000.00 of the CITY’s Federal award, pursuant to this Agreement; and
ATTACHMENT 3
192
2 WHEREAS, due to the immediate need for the community to receive the services of SUBRECIPIENT, CITY may provide the CDBG-CV funds immediately upon City Council approval of this Agreement; and
WHEREAS, the CDBG-CV funds made available for use by the SUBRECIPIENT under this Agreement constitute a subaward of the CITY’s Federal award, the use of which must be in accordance with requirements imposed by Federal statutes, regulations, and the terms and conditions of the CITY’s Federal award; and
WHEREAS, SUBRECIPIENT will use CDBG-CV funds to provide on- and off-campus case management of homeless and at-risk Newport Mesa Unified School District (NMUSD) students and their families; and
WHEREAS, CITY has determined that SUBRECIPIENT’s activities are eligible for funding, meet one of the national objectives and will be used to prevent, prepare for, or respond to the Coronavirus pandemic.

NOW, THEREFORE, for and in consideration of the mutual covenants and conditions set forth herein, the parties hereby agree as follows:

A. SUBRECIPIENT OBLIGATIONS.

1. Scope of Services.
(a) Activities. The subgranting of CDBG -CV funds to SUBRECIPIENT shall be used to provide the specific services as described in the CITY’s Request for Proposal (“RFP”), attached hereto as Exhibit “A,” and SUBRECIPIENT’s response to City ’s RFP (“SUBRECIPIENT’S PROPOSAL”), attached hereto as Exhibit “B,” both incorporated herein. Such services are summarized as follow s: case management services for Costa Mesa elementary, junior high, and high school students experiencing homelessness . In accordance with CITY requirements, SUBRECIPIENT shall ensure that at least seventy percent (70%) of SUBRECIPIENT’s clients served by the CDBG-CV funded program be in the low-income and moderate-income categories as established by HUD. (b) National Objectives. SUBRECIPIENT certifies that SUBRECIPIENT’s activities will meet the national objective of benefitting low-income and moderate-income persons. (c) Levels of Accomplishment – Goals and Performance Measures . SUBRECIPIENT agrees to carry out the activities set forth in this Agreement in accordance with the goals and performance measures set forth in Exhibits A and B. (d) Performance Monitoring . CITY will monitor the performance of SUBRECIPIENT against the goals and performance standards set forth in Exhibits A and B . Substandard performance, as determined by CITY, will constitute noncompliance with this Agreement.

If SUBRECIPIENT does not take action to correct such substandard performance within a reasonable period of time after being notified by CITY, CITY may initiate termination or suspension of this Agreement as set forth herein.
(e) Use of CDBG-CV Funds; Duplication of Benefits. SUBRECIPIENT acknowledges that CITY is utilizing CDBG-CV funds allocated to City through the CARES Act in whole or in part to fund the services set forth in this Agreement. SUBRECIPIENT understands and agrees that CDBG-CV funds may only be utilized to prevent, prepare for, and respond to the COVID-19 pandemic. SUBRECIPIENT shall not carry out any of the activities under this Agreement in a manner that results in a prohibited duplication of benefits as defined by the CARES Act and/or HUD’s CDBG-CV guidance. SUBRECIPIENT must comp ly 193
3 with HUD’s requirements for duplication of benefits imposed on the CITY, which are:

CDBG-CV funds may not be used to pay costs if another source of financial assistance is available to pay that cost. SUBRECIPIENT further agrees to repay the CITY any assistance determined to be duplicative.

2. Non-Profit Status. SUBRECIPIENT represents and warrants that it is a private, not-for-profit corporation, duly organized under the laws of the State of California, and whose officers are recorded in the Articles of Incorporation on file with the State of California.

3. Term of Agreement. Subject to the termination provisions set forth herein, the term of this Agreement is from February 7, 2023 through February 6, 2024, except that SUBRECIPIENT shall be obligated to perform such duties as would normally extend beyond this term, includin g but not limited to obligations with respect to indemnification, audits, reporting, data retention/data reporting, and accounting. The term may be extended for up to one (1) year upon mutual written agreement of the parties.

4. Amount of Grant and Quarterly Disbursement. The amount granted to SUBRECIPIENT shall not exceed Thirty-Five Thousand Dollars ($35,000.00) (“CDBG- CV FUNDS”). SUBRECIPIENT understands and agrees that all funds must be expended by June 30, 2026. CITY will disburse CDBG-CV FUNDS to
SUBRECIPIENT on a quarterly basis subject to and upon receipt and approval of a complete quarterly activity report from SUBRECIPIENT.
(a) Quarterly Reports. SUBRECIPIENT shall cause to be prep ared and submitted to CITY on or before each October 15, January 15, April 15, and July 15 of each year of this Agreement a quarterly activity report in conformity with applicable CDBG Regulations (“Quarterly Activity Report”).
(b) Invoice Submittal. Concurrently with the submittal of each quarterly report as described in subsection 4(a) above, SUBRECIPIENT shall submit both:
(i) in original invoice; and
(ii) true copies of other receipts, agreements, or other documentation supporting and evidencing how the CDBG-CV FUNDS have been expended during the applicable quarter. Drawdowns for the payment of eligible expenses will be made against the budget categories.

For example and by way of illustration, if SUBRECIPIENT intends to expend the applicable quarterly disbursement on staff salary, then true copies of the time card(s) or other satisfactory evidence of employment of the subject staff member with the SUBRECIPIENT shall be submitted as a part of the quarterly report.

5. Administrative Rules. SUBRECIPIENT agrees to conduct all activities of the organization, whether funded in whole or in part by CDBG-CV FUNDS from CITY, in accordance with the
provisions contained in 2 C.F.R. Part 200 .

6. Conflicts. SUBRECIPIENT agrees that no officer, employee, agent or assignee of CITY having direct or indirect control of any CDBG or CDBG-CV mo nies granted to the CITY, inclusive of the subject CDBG FUNDS, shall serve as an officer of SUBRECIPIENT. Further, any conflict or potential conflict of interest of any officer of SUBRECIPIENT shall be fully disclosed in writing prior to the execution of this Agreement ; or, in the event a conflict or
194
4 potential conflict of interest arises after execution of this Agreement , SUBRECIPIENT shall fully disclose the conflict or potential conflict within fifteen (15) days of becoming aware of same, and said writing shall be attached and deemed fully incorporated as a part hereof.

7. Use of CDBG FUNDS.
(a) Income Prohibited. SUBRECIPIENT agrees that it shall not use CDBG-CV FUNDS in any manner that provides income to SUBRECIPIENT. Any earned interest income on funds generated through the use of investment of funds received from CDBG-CV FUNDS shall be cause, at the discretion of the CITY, for recapture of such income and/or the full amount of funds originally granted to SUBRECIPIENT.
(b) Program Income. The use of program income by the SUBRECIPIENT shall comply with the requirements set forth at 24 C.F.R. 570.504. SUBRECIPIENT may use such income during the term of this Agreement for activities permitted under this Agreement and shall reduce requests for additional funds by the amount of any such program income balances on hand. SUBRECIPIENT shall rep ort quarterly all program income (as defined in 24 C.F.R. 570.500(a)) generated by activ ities carried out with CDBG-CV FUNDS made available under this Agreement.
(c) Unexpended Program Income. All unexpended program income shall be returned to the CITY at the end of the term as required by 24 C.F.R. 570.503(b)(7). Any interest earned on cash advances from the United States Treasury and from funds held in a revolving fund account is not program income and shall be remitted promptly to the CITY.

8. Records and Reports. The SUBRECIPIENT shall maintain all records required by the CDBG Regulations specified in 24 C.F.R. 570.206 that are pertinent to the activ ities to be funded under this Agreement and such records as may be required by CITY. Such records shall include but not be limited to the following:
(a) Records providing a full description of each activity undertaken. (b) Records demonstrating that each activity undertaken meets one of the national objectives of the CDBG program.
(c) Records required to determine the eligibility of activities. (d) Records required to document the acquisition, improvement, use or disposition of real property acquired or improved with CDBG-CV FUNDS.
(e) Records documenting compliance with the fair housing and equal opportunity components of the CDBG-CV program.
(f) Financial records as required by 24 C.F.R. 570.502. Such records shall contain documentation of expenses, including evidence of in curring th e expense, invoice(s) for goods or services, all other invoices for which CDBG-CV FUNDS were expended, and payment therefore.
(g) Records necessary to document compliance with Subpart K or 24 C.F.R. Part 570. 195
5 (h) Records demonstrating client eligibility for the services provided. Such records sh all include data including but not limited to: client name, address, income level or other basis for determining eligibility, and description of service provided. If self-certification is used to verify CDBG-CV eligibility, actual client eligibility docume ntation must be collected and analyzed for CDBG-CV eligibility for a minimum of ten percent (10%) of total clients served each quarter. Such information shall be made available to CITY or its designees for review upon request.
(i) Records specifying how the Coronavirus impacted persons assisted and that no other financial resource is available to provide assistance.
(j) Any such other related records as CITY may reasonably require or as required to be maintained pursuant to the CDBG-CV Regulations.

SUBRECIPIENT shall, upon request of CITY, prepare such reports as may be required for CITY and/or SUBRECIPIENT to comply with the CDBG and CDBG-CV Regulations.

9. Client Data and Other Sensitive Information. SUBRECIPIENT must comply with 2 C.F.R. 200.303 and take reasonable measures to safeguard protected personally identifiable information, as defined in 2 C.F.R. 200.82, and other information HUD or CITY designates as sensitive or SUBRECIPIENT considers sensitive consistent with applicable Federal, state, local, and tribal laws regarding privacy and obligations of confidentiality.

10. Retention of Records. All accounting records, reports , supporting documents pertaining to all costs, expenses and the CDBG -CV FUNDS received by SUBRECIPIENT and all documents related to this Agreement shall be maintained and kept available at SUBRECIPIENT’s office or place of business for the duration of the Agreement and thereafter for five (5) years after CITY submits its annual performance and evaluation report to HUD to report the activities assisted under the Agreement for the final time in conformity with the CDBG and CDBG-CV Regulations. Notwithstanding the foregoing, records which relate to (a) complaints, claims, administrative proceedings or litigation arising out of the performance of this Agreement, or (b) costs and expenses of this Agreement to which CITY or any other governmental agency takes exception, shall be retained beyond the five (5) years until complete resolution or disposition of such claims, litigation, appeals, or exceptions.

11. Audit Requirements. If SUBRECIPIENT is granted Seven Hundred Fifty-Thousand Dollars ($750,000.00) or more in federal funds under this Agreement, SUBRECIPIENT shall comply with and/or cause compliance with all audit require ments established by 2 C.F.R. 200.501 et seq.

12. Uniform Administrati ve Requirements. SUBRECIPIENT shall comply with applicable uniform administrative requirements as described in 24 C.F.R. 570.502.

13. Separation of Accounts. All CDBG-CV FUNDS received by SUBRECIPIENT from CITY pursuant to this Agreement shall be maintained in an account in a federally insured banking or savings and loan institution with recordkeeping of such accounts maintained pursuant to applicable requirements set forth in 2 C.F.R. 200 et seq. SUBRECIPIENT is not required to 196
6 maintain separate depository accounts for CDBG-CV FUNDS; provided, however, that SUBRECIPIENT must be able to account for receipt, obligation and expenditure of CDBG-CV FUNDS pursuant to applicable requirements of 2 C.F.R. 200.302 et seq. and any other applicable law. 14. Compliance with Applicable Laws. SUBRECIPIENT shall comply with all applicable federal, state and local laws, ordinances, regulations, and permits, including but not limited to all CDBG and CDBG-CV Regulations relating to financial and contractual procedures, and 2 C.F.R. 200 et seq. and as set forth in 24 C.F.R. 570.502(b), which are on file in the City of Costa Mesa, 77 Fair Drive, Costa Mesa, California 92626, and are fully incorporated herein by reference. If applicable, SUBRECIPIENT shall further comply with the requirements of Part 570 of Title 24 of the Code of Federal Regulations, including subpart K of Part 570, except that SUBRECIPIENT does not assume CITY’s environmental responsibilities described in 24 C.F.R. 570.604 or CITY’s responsibility for initiating the review process under 24 C.F.R. Part 52. (a) SUBRECIPIENT shall maintain all presently required permits and shall secure any new permits required by authorities herein with jurisdiction over the work, project, or services provided by SUBRECIPIENT with the CDBG-CV FUNDS. (b) SUBRECIPIENT shall ensure that the requirements of the National Environmental Policy Act and California Environmental Quality Act are met for any permits, discretionary approvals, or other entitlement required to carry out the terms of this Agreement. 15. Non-Discrimination; Civil Rights Compliance. (a) Compliance. SUBRECIPIENT shall comply with the Unruh Civil Rights Act, and with Title VI of the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 104(b) and Section 109 of Title I of the Housing and Community Development Act of 1974 as amended, Section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975, Executive Order 11063, and Executive Order 11246 as amended by Executive Orders 11375, 11478, 12107 and 12086. (b) No Discrimination in Any Program or Activity. In the performance of this Agreement, SUBRECIPIENT shall not under any program or activity funded in whole or in part with CDBG-CV FUNDS on the basis of sex, race, color, religion, ancestry, national origin, ethnic group identification, age, mental disability, physical disability, medical condition, genetic information, marital status, or sexual orientation: (i) Subject an individual to unlawful discrimination. (ii) Deny any facilities, services, financial aid or other benefits provided under the program or activity. (iii) Provide any facilities, services, financial aid or other benefits that are different or are provided in a different form from that provided to others under the program or activity. (iv) Segregate or separate treatment in any facility in, or in any matter or process related to receipt of any service or benefit under the program or activity. 197
7 (v) Restrict in any way access to, or in the enjoyment of any advantage or privilege enjoyed by others in connection with facilities, services, financial aid or other benefits under the program or activity. (vi) Treat an individual differently from others in determining whether the individual satisfies any admission, enrollment, eligibility, membership, or other requirement or condition that the individual must meet in order to be provided any facilities, services or other benefit provided under the program or activity. (vii) Deny an opportunity to participate in a program or activity as an employee. (c) Non-Discrimination in Administration of Services. SUBRECIPIENT may not utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination on the basis of race, color, national origin, religion, or sex, or have the effect of defeating or substantially impairing accomplishment of the objectives of the program or activity with respect to individuals of a particular race, color, national origin, religion, or sex. (d) Non-Discrimination in Site Selection. SUBRECIPIENT, in determining the site or location of housing or facilities provided in whole or in part with CDBG-CV FUNDS, may not make selections of such site or location which will have the effect of excluding individuals from, denying them the benefits of, or subjecting them to discrimination on the grounds of race, color, national origin, religion, or sex, or which have the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of the Civil Rights Act of 1964 and amendments thereto. (e) Overcoming Effects of Prior Discrimination. If SUBRECIPIENT has previously discriminated against persons on the grounds of race, color, national origin, religion, or sex, SUBRECIPIENT must take affirmative action to overcome the effects of prior discrimination, as and pursuant to applicable requirements of the CDBG Regulations and other applicable federal laws and regulations. (i) Even in the absence of prior discrimination, SUBRECIPIENT should take affirmative action to overcome the effects of conditions which would otherwise result in limiting participation by persons of a particular race, color, national origin, religion or sex. Where previous discriminatory practice or usage tends, on the grounds of race, color, national origin, religion, or sex, to exclude individuals from participation in, to deny them the benefits of, or to subject them to discrimination under any program or activity to which CDBG funding applies, SUBRECIPIENT shall take reasonable action to remove or overcome the consequences of the prior discriminatory practice or usage, and to accomplish the purpose of the Civil Rights Act of 1964. (ii) SUBRECIPIENT shall not be prohibited by this part from taking any eligible action to ameliorate an imbalance in services or facilities provided to any geographic area or specific group of persons within its jurisdiction where the purpose of such action is to overcome prior discriminatory practice or usage. (f) Exceptions. Notwithstanding the foregoing non-discrimination provisions, nothing contained herein shall be construed to prohibit SUBRECIPIENT from maintaining or 198
8 constructing separate living facilities or restroom facilities for the different sexes. Furthermore, selectivity on the basis of sex is not prohibited when only a member of the same sex can properly perform institutional or custodial services for the recipients of the services. (g) Non-Discrimination in Employment. SUBRECIPIENT shall comply with 24 C.F.R. 570.607, including the non-discrimination in employment and contracting opportunities laws, regulations, and executive orders set forth therein. (i) SUBRECIPIENT shall, in all solicitations or advertisements for employees placed by or on behalf of SUBRECIPIENT, state that SUBRECIPIENT is an equal opportunity employer. (ii) SUBRECIPIENT shall send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice to be provided by CITY’s contracting officers advising the labor union or workers’ representative of SUBRECIPIENT commitments under Section 202 of Executive Order 11246 of September 24, 1965, as amended, and shall post copies of the notices in conspicuous places available to employees and applicants for employment. (h) SUBRECIPIENT shall include the provisions of this Section 15 (Non-Discrimination; Civil Rights Compliance) in every subcontract or purchase order unless exempted by rules, regulations, or order of the Secretary of Labor issued pursuant to Section 204 of Executive Order 11246, as amended, so that such provisions will be binding upon each subcontractor or vendor. 16. Ineligibility of SUBRECIPIENT or Contractors. SUBRECIPIENT shall not use CDBG-CV FUNDS directly or indirectly in its operations or to employ, award contracts to, or otherwise engage the services of, or fund any contractor during any period of debarment, suspension, or placement in ineligibility status of the SUBRECIPIENT or such contractor under the provisions of the CDBG Regulations. 17. Conflict of Interest in Procurement. SUBRECIPIENT shall comply with all applicable conflict of interest provisions set forth in 2 C.F.R. Part 200 and 24 C.F.R. 570.611 in the procurement of supplies, equipment, construction, and services by SUBRECIPIENT. 18. Condition for Religious Organization. SUBRECIPIENT shall comply with all applicable conditions prescribed by HUD for the use of CDBG FUNDS by religious organizations if SUBRECIPIENT is a religious organization. 19. Termination of Agreement. (a) Termination without Cause. In accordance with 2 C.F.R. 200.339, this Agreement may be terminated for convenience by CITY or SUBRECIPIENT, in whole or in part, by providing thirty (30) days written notice setting forth the reasons for such termination, the effective date, and, in the case of partial termination, the portion to be terminated. However, if in the case of a partial termination, CITY determines that the remaining portion of the award will not accomplish the purpose for which the award was made, CITY may terminate the award in its entirety. 199
9 (b) Termination for Cause. In accordance with 2 C.F.R. 200.338, CITY may suspend or terminate this Agreement if SUBRECIPIENT materially fails to comply with any terms of this Agreement, which include, but are not limited to, the following: (i) Failure to comply with any of the rules, regulations or provisions referred to herein, or such statutes, regulations, executive orders, and HUD guidelines, policies or directives as may become applicable at any time. (ii) Failure, for any reason, of SUBRECIPIENT to fulfill in a timely and proper manner its obligations under this Agreement. (iii) Ineffective or improper use of funds provided under this Agreement. (iv) Submission by SUBRECIPIENT to CITY reports that are incorrect or incomplete in any material respect. (c) Repayment of Funds by SUBRECIPIENT. In the event this Agreement is terminated, as provided in this section, SUBRECIPIENT shall immediately return to CITY any and all unexpended and unencumbered CDBG FUNDS. Further, SUBRECIPIENT shall comply with the provisions of the section of this Agreement relating to Reversion of Assets. (d) Additional Payment after Notice of Termination at Discretion of CITY. In the event of early termination of the Agreement by either party without cause, at CITY’s sole discretion, SUBRECIPIENT may be compensated for all services rendered through the date of notice of termination and necessarily incurred costs performed in good faith in accordance with the terms of this Agreement that have been previously eligible for reimbursement, to the extent that CDBG-CV funds are available from HUD. In the event of early termination of the Agreement by CITY for cause (except when due to the non-performance or breach by SUBRECIPIENT), at CITY’s sole discretion, SUBRECIPIENT may be compensated for all services rendered through the date of termination and necessarily incurred costs performed in good faith in accordance with the terms of this Agreement that have been previously eligible for reimbursement, to the extent that CDBG-CV funds are available from HUD. 20. Defaults; Remedies. If either party materially fails to comply with any term of this Agreement, said noncompliance shall be considered a breach or default hereunder and a basis for termination for cause as provided herein. (a) Enforcement by CITY Due to Default by SUBRECIPIENT. In the event of default by SUBRECIPIENT, in addition to any other remedies available at law or in equity, CITY may take one or more of the actions provided under CDBG Regulations, including, but not limited to, 2 C.F.R. 200.338 relating to enforcement for breach of this Agreement. (i) The remedies available to the CITY under 2 C.F.R. 200.338 include, without limitation, temporarily withholding cash payments, disallowing non-compliant costs, wholly or partly suspending or terminating the award, and withholding future awards. 200
10 (ii) If the CITY finds that SUBRECIPIENT has violated a term or condition of this Agreement, CITY, in its sole discretion, may require the SUBRECIPIENT to: (1) Repay all monies received from the CITY under this Agreement; and/or (2) Transfer possession of all materials and equipment purchased with grant money to the CITY. (b) Recapture. SUBRECIPIENT shall have the affirmative obligation to repay, and CITY shall have the affirmative right (but not the obligation) to recapture from SUBRECIPIENT, all (or any portion of) CDBG-CV FUNDS disbursed to SUBRECIPIENT hereunder in the event of SUBRECIPIENT’s default hereunder or in the event SUBRECIPIENT refuses to accept or fails to comply with any conditions which may subsequently be imposed by HUD for the operation of the CDBG or CDBG-CV Program. 21. Reversion of Assets. (a) Unencumbered or Unexpended Funds. Upon the termination or expiration of the term of this Agreement, SUBRECIPIENT shall transfer to CITY any unexpended and unencumbered CDBG-CV FUNDS on hand at the time of such termination or expiration and any accounts receivable attributable to the use of subject funds. (b) Real or Personal Property Assets. Any real property or moveable or immovable personal property under SUBRECIPIENT’s control or ownership that is acquired or improved in whole or in part with CDBG-CV FUNDS disbursed under this Agreement, the original cost of which exceeds five thousand dollars ($5,000.00), shall either be, at the election of CITY: (1) used by SUBRECIPIENT for the eligible program services meeting the purposes of the CDBG-CV Program for a period of five (5) years after termination or expiration of this Agreement; or (2) disposed of and proceeds paid to CITY in a manner that results in CITY being reimbursed in the amount of the current fair market value (assuming depreciation in accordance with customary business practices) of the real or personal property less any portion of the current value attributable to SUBRECIPIENT’s out of pocket expenditures using non-CDBG-CV Program funds for acquisition of, or improvement to, such real or personal property and less any direct and reasonable costs of disposition, including a reasonable and customary broker’s fees incurred in listing and completion of sale of such asset. (i) In furtherance of the foregoing, if CITY selects continued use of the capital asset, then SUBRECIPIENT hereby agrees that it shall be subject to an ongoing operating and use covenant relating to the subject real or personal property. The foregoing covenant shall survive the termination or expiration of this Agreement and shall be actionable at law or in equity by CITY against SUBRECIPIENT and its successors in interest. (ii) In the event CITY selects disposition of the subject real or personal property, then SUBRECIPIENT shall exercise due diligence to dispose of such property in conformity with applicable laws and regulations and in accordance with customary business practices. The net proceeds of such disposition shall be disbursed directly to and be payable to CITY upon the close of the applicable disposition transaction, such as close of escrow for the sale of real property, transfer of a motor vehicle “pink slip” in accordance with applicable California Vehicle Code requirements, or completion of 201
11 sale of personal property by bill of sale in accordance with Uniform Commercial Code (UCC) requirements.

22. Independent Contractor. SUBRECIPIENT is and shall be acting at all times as an independent contractor and not as an employee or agent of CITY. Neither CITY nor any of its employees shall have any control over the conduct of SUBRECIPIENT, its age nts or employees, except as set forth in this Agreement.

23. Licensing. SUBRECIPIENT shall obtain and maintain all required licenses, registrations, accreditation and inspections from all age ncies governing its operations. SUBRECIPIENT shall ensure that its staff shall also obtain and maintain all required licenses, registrations, accreditations, and inspections from all agencies governing SUBRECIPIENT’s operations and work hereunder.

24. Inspection of Records. CITY and the United States government and/or their representatives shall have access, for purposes of monitoring, auditing, and examining SUBRECIPIENT ’s activities and performance, to books, records, reports, documents, and papers, and the right to examine comparable records of SUBRECIPIENT’ s subcontractors, bookkeepers and accountants, employees and participants in regard to said program. (a) Monitoring. CITY and the United States government and/or their representatives may schedule on-site monitoring at their discretion. Monitoring activities may also include, but are not limited to, questioning employees and participants in said program and entering any premises or any site in which any of the services or activities funded hereunder are conducted or in wh ich any of the rec ords of SUBRECIPIENT are kept. Nothing herein shall be construed to require access to any privileged or confidential information. (b) Failure to Provide Records. In the event SUBRECIPIENT does not make the above - referenced records available within the City of Costa Mesa, California, SUBRECIPI ENT shall pay all necessary and reasonable expenses incurred by CITY in conducting any audit at the location where said records and books of account are maintained.

25. Assignability. SUBRECIPIENT shal l not assign or transfer any interest in this Agreem ent, whether by assignment, delegation or novation, without the prior written consent of CITY, except that claims for money due or to become due to SUBRECIPIENT from CITY under this Agreement may be assig ned to a bank, trust company or other financial institution, or to a trustee in bankruptcy, without such approval. Any assignment delegation or novation other than as provided above shall be void and inoperative. Written notice of any request for an assignment or transfer shall be promptly furnished to CITY and CITY shall exercise reasonable diligence in reviewing and approving or disapproving such request.

26. Prohibition o n Expending CDBG -CV FUNDS to Obtain Other Funding.

SUBRECIPIENT shall not expend CDBG -CV FUNDS granted hereunder to fund another service provider, to pay a contractor for services outside the scope of this Agreement, to apply for other public agencies’ program funds, or to supplant another funding source , unle ss expressly approved in writing by CITY.

27. Indemnification. SUBRECIPIENT shall indemnify, defend, and hold free and harm less CITY, its elected officials, officers, employees, agents, and volunteers from and against any and all claims, demands, actions, suits or other legal proceedings brought against CITY, its 202
12 elected officials, officers, employees, agents and volunteers, arising out of or relating to the performance of this Agreement by SUBRECIPIENT, its officers, employees, agents, volunteers and/or subcontractors.

SUBRECIPIENT shall further indemnify, defend, and hold harmless CITY, its elected officials, officers, employees, agents, and volunteers from and against any and all claims, demands, suits, actions or proceedings arising from or relating to any failure of SUBRECIPIENT to comply with any applicable laws or regulations.

28. Insurance.
(a) SUBRECIPIENT shall furnish to CITY insurance certificates from its workers’ compensation insurance carrier certifying that it carries such insurance and that the policy shall not be canceled nor the coverage reduced except upon thirty (30) days’ prior written notice to CITY at the address specified in this Agreement. (b) SUBRECIPIENT shall obtain, at its sole cost, a comprehensive general liability insurance policy or policies insuring against liability for any and all claims and suits for damage or injuries to persons or property resulting from or arising out of operations of SUBRECIPIENT, its officers, agents, employees, or volunteers. Said policy or policies of insurance shall provide coverage for both bo dily injury and property damages in not less than the following minimum amounts: One Million Dollars ($1,000,000 .00) com bined single limits, or its equivalent. Said policy or policies shall also contain a provision that no termination, cancellation or change of coverage of any insured or additional insured shall be effective until thirty (30) days’ notice thereof has been given in writing to CITY at the address specified in this Agreement. SUBRECIPIENT shall file with CITY prior to exercising any right or performing any obligation pursuant to this Agreement, and maintain for the period covered by this Agreement, a policy or policies of general liability insurance, or certificate of such insurance, satisfactory to the City Attorney, expressly naming the City of Costa Mesa and the Costa Mesa Housing Authority as additional insured. (c) SUBRECIPIENT shall obtain, at its sole cost, business automobile liability for owned vehicles, hired, and non-owned vehicles, with a policy limit of not less than One Million Dollars ($1,000,000.00) combined single limits, per occurrence for bodily injury and property damage. Said policy or policies shall also contain a provision that no termination, cancellation or change of coverage of any insured or additional insured shall be effective until thirty (30) days’ notice thereof has been given in writing to CITY at the addre ss specified in this Agreement. SUBRECIPIENT shall file with CITY prior to exercising any right or performing any obligation pursuant to this Agreement, and maintain for the period covered by this Agreement, a policy or policies of general liability insurance, or certificate of such insurance, satisfactory to the City Attorney , expressly naming the City of Costa Mesa and the Costa Mesa Housing Authority as additional insured. (d) SUBRECIPIENT shall give CITY prompt and timely notice of any claim made or suit instituted. SUBRECIPIENT shall procure and maintain, at its own cost and expense, any additional kinds and amounts of insurance which, in its own judgme nt, may be necessary for its proper protection in the prosecution of the work. 203
13 B. CITY OBLIGATIONS. 1. Payment of Funds. CITY shall disburse to SUBRECIPIENT from CDBG-CV FUNDS, if and to the extent received from HUD, amounts expended by SUBRECIPIENT in carrying out said program pursuant to this Agreement in quarterly installments determined by CITY. Payment shall be made to SUBRECIPIENT based on the submission of quarterly invoices, in a form prescribed by CITY, detailing such expenses. Invoices must include documentation of expenses by receipts, time records, invoices, canceled checks, or other appropriate documentation that fully and completely discloses the amount(s) and nature(s) of the expenditures. CITY shall pay such invoices within forty-five (45) days after receipt thereof, provided CITY is satisfied that such expenses have been incurred and documented within the scope and provisions of this Agreement and in conformity with the CDBG Regulations and that SUBRECIPIENT is in compliance with the terms and conditions of this Agreement. 2. Sole Source of Funding is CDBG-CV Program Funds. SUBRECIPIENT expressly acknowledges and agrees that the sole source of funding available to CITY to meet its funding obligation to SUBRECIPIENT under this Agreement is from CDBG-CV Program funds allocated to and paid to CITY by HUD and that no other source of revenues or funding is made available, offered, or construed to be provided hereunder by CITY to SUBRECIPIENT. To the extent CITY is not allocated and/or does not receive the CDBG-CV funds necessary to pay SUBRECIPIENT pursuant to the terms of this Agreement, then SUBRECIPIENT acknowledges and agrees there is no other funding source available or committed to meet CITY’s funding described hereunder and no payment obligation of the CITY shall exist or be construed to exist. 3. Audit of Account. CITY will include an audit of the records and accounts maintained by SUBRECIPIENT pursuant to this Agreement in CITY’s annual audit of all CDBG and CDBG-CV funds pursuant to CDBG Regulations, Title 24 of the Code of Federal Regulations, and other applicable federal laws and regulations. In response to audit deficiencies or other findings of noncompliance with this Agreement, CITY may impose additional conditions on the use of the CDBG-CV funds to ensure future compliance, or provide training and technical assistance as needed to correct noncompliance. C. MISCELLANEOUS PROVISIONS. 1. Notices. All notices to the parties required by this Agreement shall be in writing and shall be sent by certified mail, addressed as follows: TO CITY: City of Costa Mesa/Costa Mesa Housing Authority Office of the City Manager/Executive Director 77 Fair Drive Costa Mesa, CA 92626 Attn: Susan Price, Assistant City Manager TO SUBRECIPIENT: Project Hope Alliance 1954 Placentia Ave. #202 Costa Mesa, CA 92627 Attn: Jennifer Friend 204
14 2. No Disposition of Assets Acquired with CDBG-CV FUNDS. SUBRECIPIENT shall not dispose of any real or personal property acquired in full or in part with CDBG-CV FUNDS through sale, use or relocation without the express and prior written permission of the CITY.

3. Disbursement Pursuant to Agreement. SUBRECIPIENT acknowledges that the CITY shall disburse fun ds to SUBRECIPIENT o nly up on execution of this Agreement and CITY is empowered to provide funds to SUBRECIPIENT on ly pu rsuant to th e provision s of this Agreement.

4. Drug-Free Work Place Policy. SUBRECIPIENT, upon notification of contract award, shall establish a Drug-Free Awareness Program to inform employees of the dangers of drug abuse in the work place, the penalties that may be imposed upon employees for drug abuse violations occurring in the work place, and the employee assistance programs available to employees.

Each employee engaged in the performance of a SUBRECIPIENT contract must be notified of this Drug-Free Awareness Program, and must abide by its terms. SUBRECIPIENT shall conform to all the requirements of CITY’s Council Policy No. 100-5, attached hereto as Exhibit “C.” Failure to establish a program, notify employees, or inform the CITY of a drug-related workplace conviction will constitute a material breach of contract and cause for immediate termination of this Agreement by CITY.

5. No Use of CDBG-CV FUNDS for Lobbying. SUBRECIPIENT shall not expend any CDBG- CV FUNDS for the purpose of influencing or attempting to influence any officer or employee of any agency, a member of Congress, any officer or employee of Congress or any employee of a member of Congress in connection with the awarding of any federal contract, the making of any federal grant or loan, the entering into of any cooperative federal agreement, and/or the extension, continuation, renewal, amendment, or modification of any federal contract, grant, loan or cooperative agreement.

SUBRECIPIENT shall complete and submit Standard Form LLL (Disclosure of Lobbying Activities) if it ex pends any funds other than grant fun ds for the purpose of influencing or attempting to influence the persons listed in the above paragraph.

6. Constitutional Use of Funds. As an express condition to this Agreement, SUBRECIPIENT agrees that the fu nds provided by CITY to SUBRECIPIENT hereunder shall not be used to promote any religion, religious creed or cult, denomination, sectarian organization or religious belief o r to fund any proselytizing activities. The parties agree the foregoing covenant is intended to and shall be construed for the limited purpose of assuring compliance with respect to the use of CITY funds by SUBRECIPIENT with applicab le constitutional limitations respecting the establishment of religion as set forth in the establishment clause under the First Amendment of the United States Constitution and Article I, Section 4 of California Constitution, and is not in any manner intended to restrict other activities of SUBRECIPIENT.

7. Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable in any circumstance, such determination shall not affect the validity or enforceability of the remaining terms and provisions hereof or of the offending provision in any other circumstance.

8. Corporate Authority. The persons executing this Agreement on behalf of the parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and that by doing so the parties hereto are formally bound to the provisions of this Agreement. 205
15 9. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one agreement. 11. Entire Agreement; Modification. This Agreement contains the entire agreement of the parties and supersedes all other prior negotiations, understandings or agreements. This Agreement may be modified only upon mutual written agreement of the parties. Notwithstanding the foregoing, SUBRECIPIENT shall agree to any amendment necessary to conform with federal, state or local governmental regulations, guidelines or policies. [Signatures appear on following page.] 206
16 IN WITNESS WHEREOF, CITY and SUBRECIPIENT have caused this Agreement to be executed by their duly authorized officers on the day and year first above written. CITY OF COSTA MESA Lori Ann Farrell Harrison City Manager COSTA MESA HOUSING AUTHORITY Lori Ann Farrell Harrison Executive Director SUBRECIPIENT PROJECT HOPE ALLIANCE Federal Tax ID Number: 75-3099628 DUNS Number: 055708303 Date: __________________ Signature Name Title Date: __________________ Signature Name and Title ATTEST: _______________________________ Brenda Green City Clerk/Housing Authority Secretary 207
17 APPROVED AS TO FORM:
_______________________________
Kimberly Hall Barlow
City Attorney/Housing Authority General Counsel
APPROVED AS TO CONTENT:
_______________________________
Lori Karaguezian
Assistant City Manager
APPROVED AS TO PURCHASING:
_______________________________
Carol Molina
Finance Director
APPROVED AS TO INSURANCE:
_______________________________
Ruth Wang
Risk Management
208

EXHIBIT A

REQUEST FOR PROPOSAL
209

REQUEST FOR PROPOSAL

FOR

Community Services Programs

CDBG-CV

RFP No. 21-13

OFFICE OF THE CITY MANAGER

CITY OF COSTA MESA

Released on June 23rd, 2021

210

REQUEST FOR PROPOSAL
FOR
Community Services Programs - CDBG-CV

To assist in responding to the impacts of the COVID -19 Pandemic, the U.S. Department of Housing and Urban Development (HUD) has allocated a special grant Community Development Block Grant – Coronavirus (CDBG-CV) to the City of Costa Mesa through the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act). The City of Costa Mesa plans to allocate CDBG-CV funds for community-based services that response to the direct impacts of the COVID-19 Pandemic.

The City of Costa Mesa (hereinafter referred to as the “City”) is requesting Proposals from qualified nonprofit agencies who have a demonstrated success in serving low - and moderate -income households that are directly impacted by the COVID-19 Pandemic. Proposals must be for a minimum of one-year program from organizations who can provide any or all of the services listed below, within targeted budget of $162,382. All funds must be expended by June 30, 2023.

The City has previously allocated CDBG-CV funds to provide rental assistance to lower -income households that have experienced a direct financial impact due to the COVID -19 Pandemic, and to support outreach and engagement services for individuals experiencing homelessness and that are impacted by the coronavirus. The City ha s previously released a RFP to solicit proposals for food assistance programs (e.g., food banks); however, no proposals for this service were received. This remains an eligible activity and Council priority. The City now seeks services under this RFP that will support, complement, enhance, or fill a gap in services currently offered to lower-income Costa Mesa residents that are impacted by the COVID-19 Pandemic.

Eligible Population

To be eligible for consideration under this RFP, all applicants must detail how funds will support eligible activities, with at least 70 percent of the program’s beneficiaries being low - and moderate-income as defined by HUD, and that have a documented COVID-related impact.

HUD 2021 Low & Moderate-Income Limits
Household Size Household Income at
80% of OC Median Income
1-Person $75,300
2-Person $86,050
3-Person $96,800
4-Person $107,550
5-Person $116,200
6-Person $124,800
7-Person $133,400
8-Person $142,000

The awarded Contractor, (hereinafter referred to as “Contractor”) shall be in accordance with the Sample Subrecipient Agreement, Appendix B terms and conditions. Prior to submitting a Proposal, Proposers are advised to carefully read the instructions below , including the Sample Subrecipient 211

Agreement and any solicitati on appendix/exhibits. The City reserves the right to award one or more contracts for this service.

Proposers will be subject to oversight, reporting, and requirements for all CDBG -CV programs and services provided , and must have adequate procedures to prevent the duplication of benefits. A duplication of benefits occurs when an individual or entity receives financial assistance from multiple sources for the same purpose, and the total assistance received for that purpose is more than the total need for assistance. The Contractor will be responsible to repay any amount that may be determined to be duplicative by the City, HUD, or auditor as may be determined in a program monitoring or audit.

I. GENERAL INFORMATION
The City of Costa Mesa is a general law city, which operates under the council/manager form of government with an annual General Fund budget of over $154 million and a total budget of over $197 million for fiscal year 2021-2022.

The City of Costa Mesa, incorporated in 1953, has an estimated population of 113,003 and has a land area of 16.8 square miles. It is located in the northern coastal area of Orange County, California, and is bordered by the cities of Santa Ana, Newport Beach, Huntington Beach, Fountain Valley and Irvine.

The City is a “full service city” providing a wide range of services. These services include: police and fire protection; animal control; emergency medical aid; building safety regulation and inspection; street lighting; land use planning and zoning; housing and community development; maintenance and improvement of streets and related structures; traffic safety maintenance and improvement; and full range of recreational and cultural programs.

The City of Costa Me sa is home of the Segerstrom Center for the Arts, Orange County Fairgrounds, South Coast Repertory Theater and the South Coast Plaza Shopping Center, which is the single largest commercial activity center in the City. The volume of sales generated by South Coast Plaza secures its place as the highest volume regional shopping center in the nation.

The successful Proposer, shall have experience in similar types of services. All Proposers responding to this Request for Proposal (RFP) will be evaluated on the basis of their expertise, prior experience on similar projects, demonstrated competence, ability to meet the requested services, adequate staffing, reference check, understanding of services, cost and responsiveness to the needs and concerns of the City of Costa Mesa.

1. Important Notice: The City has attempted to provide all information available. It is the responsibility of each Proposer to review, evaluate, and, where necessary, request any clarification prior to submission of a Proposal. Proposers are not to contact other City personnel with any questions or clarifications concerning this Request for Proposal (RFP). The City’s Purchasing Department contact set out in RFP, Section II, Subsection 2, Inquires, will provide all official communication concerning this RFP. Any City response relevant to this RFP other than through or approved by City’s Purchasing Department is unauthorized and will be considered invalid.

If clarification or interpretation of this solicitation is considered necessary by City, a written addendum shall be issued and the information will be posted on Planetbids. Any interpretation of, or correction to, this solicitation will be made only by addendum issued by the City’s Purchasing Department. It is the responsibility of each Proposer to periodically check the City’s 212

website to ensure that it has received and reviewed any and all addenda to this solicitation. The City will not be responsible for any other explanations, corrections to, or interpretations of the documents, including any oral information.

2. Schedule of Events: This Request For Proposal shall be governed by the following schedule:

Release of RFP June 23, 2021
Pre-Proposal Conference N/A
Deadline for Written Questions June 28, 2021 at 4:00 p.m.

Responses to Questions Posted July 1, 2021
Proposals are Due July 15, 2021 at 10:00 a.m.

Approval of Contract August 3, 2021
**All dates are subject to change at the discretion of the City.

Pre-Proposal Conference: No Pre-Proposal conference will be held.

3. Proposer’s Minimum Requirements: Interested and qualified Proposers that can demonstrate their ability to successfully provide the required services outlined in Appendix A–Scope of Work, of this RFP are invited to submit a proposal, provided they meet the following requirements. All requirements must be met at the time of the proposal due date. If these requirements are not met, the proposal may not receive further consideration, as determined in the sole discretion of the City.
a) Proposers must have at least five years of experience administering program(s) with low - and moderate-income households.
b) Proposers must demonstrate 501(c)(3) determination from the IRS at the time of application. c) Proposers must have services and/or an office located within a 30-mile radius of the City of Costa Mesa.

II. GENERAL INSTRUCTIONS AND PROVISIONS

1. Proposal Format Guidelines: Interested entities or contractors are to provide the City of Costa Mesa with a thorough Proposal using the following guidelines: Proposal should be typed and should contain no more than 20 typed pages using a 12 -point font size, including transmittal letter and resumes of key people, but excluding Index/Table of Contents, tables, charts, graphic exhibits and pricing forms. Each Pro posal will adhere to the following order and content of sections. Proposal should be straightforward, concise and provide “layman” explanations of technical terms that are used. Emphasis should be concentrated on conforming to the RFP instructions, responding to the RFP requirements (APPENDIX A Scope of Work requirements), and on providing a complete and clear description of the offer. Proposals which appear unrealistic in terms of technical commitments, lack of technical competence or are indicative of failure to comprehend the complexity and risk of this contract may be rejected. THE FOLLOWING PROPOSAL SECTIONS ARE TO BE INCLUDED IN THE PROPOSER’S RESPONSE:
 Cover Letter: A cover letter, not to exceed three pages in length, should summarize key elements of the Proposal. An individual authorized to bind the Contractor must sign the letter. Indicate the address and telephone number of the contractor’s office located nearest to Costa Mesa, California, and the office from which the project will be managed. And include proposed working relationship among the offering agency and subcontractors, if applicable. 213

 Background and Project Summary Section: The Background and Project Summary Section should describe your understanding of the City, the work to be done, and the objectives to be accomplished.

 Method of Approach: Provide a detailed description of the approach and methodology that will be used to fulfill services. The section should include:

1. An implementation plan that describes in detail (i) the methods, including controls by which your firm manages projects of the type sought by this RFP; (ii) methodology for soliciting and documenting views of internal and external stakeholders; (iii) and any other project management or implementation strategies or techniques that the respondent intends to employ in carrying out the work.

2. Detailed description of efforts your firm will undertake to achieve client satisfaction and to satisfy the low- and moderate-income requirements.

3. Detailed project schedule, identifying all tasks and deliverables to be performed, durations for each task, and overall time of completion.

4. Detailed description of specific tasks you will require from City staff. Explain what the respective roles of City staff and your staff would be to complete specified tasks.

5. Proposers are encouraged to provide additional innovative and/or creative approaches for providing the service that will maxi mize efficient, safe, and cost - effective operations or increased performance capabilities.

6. Firms, individuals and entities wishing to be considered shall include in their submissions the steps they will, if selected, implement and adhere to for the recruitment, hiring and retention of former employees of the City who have been displaced due to layoff or outsourcing of functions and services formerly provided by the City.
 Qualifications & Experience of the Firm: Describe the qualifications and experience of the organization or entity performing services/projects within the past five years that are similar in size and scope to demonstrate competence to perform these services. Information shall include:

1. If the o wner is a corporation please provide: Name of corporation, corporate office street address, city, state, and zip code, state where incorporated, date of incorporation, first and last name of officers, local office address, city, state & zip, and the date local office opened its doors for business.

2. If the owner is a partnership or joint venture, please provide: Name of partnership or joint venture, principal office street address, city, state, and zip code, state of organization, date of organization, first and last name of general partner(s), local office address, city, state, and zip code, and date local office opened its doors for. 214

3. List all businesses owned or controlled by yourself (applicant) or business manager doing similar business in California unde r another name. List business name and address and specify who owns or controls the business (e.g., self, business manager, etc.).

4. List all businesses for which you or your business manager is or was an officer, director, or partner doing similar business in California under another name. List business name and address, title, date(s) in position; specify who was in position (e.g., self, business manager, etc.).

5. How many years have you been in business under your present business name?

6. Provide a list of current and previous contracts similar to the requirements for Costa Mesa, including all public agencies served (if any). For each, provide a brief description of the service performed, the length of time you have been providing services, and the name, title, and telephone number of the person who may be contacted regarding your organization’s service record.

7. Submit a description of the organization’s qualifications, experience and abilities that make it uniquely capable to provide the services.

8. The City of Costa Mesa is interested in knowing how Proposers support the communities that they serve. Please provide information on your organization’s participation in local community, charitable and civic organizations and events, including mem bership in the Costa Mesa Chamber of Commerce, charitable contributions made by your organization, etc.

Any public entity which submits a Proposal should describe in detail how it currently performs services, like those identified as eligible activities, within its or other jurisdictions, including photographs, written policies and/or video of services provided. If you have performed these services under contract for another public entity, please provide references for those entities as set forth above for private Proposers.
 Financial Capacity: The City is concerned about bidders’ financial capability to perform, therefore, may request sufficient data to allow an evaluation of firm’s financial capabilities.

 Key Personnel: It is essential that the Proposer provide adequate experienced personnel, capable of and devoted to the successful accomplishment of work to be performed under this contract. The Proposer must agree to assign specific individuals to the key positions. o Identify the members of the staff who would be assigned to act for Proposer’s firm in key management and filed positions providing the services described in the Proposal, and the functions to be performed by each.
o Include resumes or curriculum vitae of eac h such staff member, including name, position, telephone number, email address, education, and years and type of experience. Describe for each such person, the relevant transactions on which they have worked.

 Cost Proposal: Provide a fee schedule/pricing information for the project as referenced in the attached in Appendix C. Proposals shall be valid for a minimum of 180 days following submission.
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o Cover letter stating the total lump sum fee.
o A spreadsheet with a detailed fee schedule of the proposed costs. Each fee schedule shall depict individual project asks, number of hours assigned for specific personnel and their basic hourly rates.

 Disclosure: Please disclose any and all past or current business and personal relationships with any current Costa Mesa elected official, appointed official, City employee, or family member of any current Costa Mesa elected official, appointed official, or City employee. Any past or current business relationship may not disqualify the firm from consideration.

 Sample Subrecipient Agreement: The firm selected by the City will be required to execute a Subrecipient Agreement with the City. A sample of the Agreement is enclosed as Appendix B, but may be modified to suit the specific services and needs of the City. If a Proposer has any exceptions or conditions to the Agreement, these must be submitted for consideration with the Proposal. Otherwise, the Proposer will be deemed to have accepted the form of Agreement. See No. 12 of this RFP below.

 Checklist of Forms to Accompany Proposal: As a convenience to Proposers, following is a list of the forms, Appendix C included in this RFP, which should be included with Proposals:

1. Vendor Application Form

2. Company Profile & References

3. Ex Parte Communications Certificate

4. Disclosure of Government Positions

5. Disqualifications Questionnaire

6. Bidder/Applicant/Contractor Campaign Contribution

7. Cost Proposal

2. Process for Submitting Proposals:
 Content of Proposal: The Proposal must be submitted using the format as indicated in the Proposal format guidelines.

 Preparation of Proposal: Each Proposal shall be prepared simply and economically, avoiding the use of elaborate promotional material beyo nd those sufficient to provide a complete, accurate and reliable presentation.

 Cost for Preparing Proposal : The cost for developing the Proposal is the sole responsibility of the Proposer. All Proposals submitted become the property of the City. Fee proposal shall be submitted in a separate file.

 Forms to Accompany Proposal: Appendix C forms shall be attached at the end of the Proposal with the exception of the Cost Proposal which shall be submitted in a separate file.

 Number of Proposals: Submit one (1) PDF file format copy of your proposal in sufficient detail for thorough evaluation and comparative analysis

 Submission of Proposals: Complete written Proposals must be submitted electronically in PDF file format via the planetbids.com website not later than 10:00 216

a.m. (P.S.T) on July 15, 2021. Proposals will not be accepted after this deadline. Bids received after the scheduled closing time will not be accepted . It shall be the sole responsibility of the Bidder to see that the bid is received in proper time. Faxed or e- mailed Proposals will not be accepted. NO EXCEPTIONS.

 Inquiries: Questions about this RFP must be posted in the Q & A tab on Planetbids no later than June 28, 2021 at 4:00 p.m. The City reserves the right not to answer all questions. o The City reserves the right to amend or supplement this RFP prior to the Proposal due date. All addendum(s), responses to questions received, and additional information will be posted to the Costa Mesa Procurement Registry, Costa Mesa-Official City Web Site-Business-Bids & RFP's . Proposers should check this web page daily for new information.
o From the date that this RFP is issued until a firm or entity is selected and the selection is announced, firms or public entities are not allowed to communicate outside the process set forth in this RFP with any City employee other than the contracting off icer listed above regarding this RFP. The City reserves the right to reject any Proposal for violation of this provision. No questions other than posted on Planetbids will be accepted, and no response other than written will be binding upon the City.

 Conditions for Proposal Acceptance: This RFP does not commit the City to award a contract or to pay any costs incurred for any services. The City, at its sole discretion, reserves the right to accept or reject any or all Proposals received as a result of t his RFP, to negotiate with any qualified source(s), or to cancel this RFP in part or in its entirety. The City may waive any irregularity in any Proposal. All Proposals will become the property of the City of Costa Mesa, USA. If any proprietary information is contained in the Proposal, it should be clearly identified.

 Insurance & W-9 Requirements: Upon recommendation of contract award, Contractor will be required to submit the following documents with ten (10) days of City notification, unless otherwise specified in the solicitation:
 Insurance - City requires that licensees, lessees, and vendors have an approved Certificate of Insurance (not a declaration or policy) or proof of legal self-insurance on file with the City for the issuance of a permit or contract. Within ten (10) consecutive calendar days of award of contract, successful Bidder must furnish the City with the Certificates of Insurance proving coverage as specified in the sample contract.
 W-9 – Current signed form W -9 (Taxpayer Identificati on Umber & Certification) which includes Contractor’s legal business name(s).

3. Evaluation Criteria: The City’s evaluation and selection process will be conducted in accordance with Chapter V, Article 2 of the City's Municip al Code (Code). In accordance with the Code, the responsive responsible proposer shall be determined based on evaluation of qualitative factors in addition to cost. At all times during the evaluation process, the following criteria will be used. Sub-criteria are not necessarily listed in order of importance. Additional sub- criteria that logically fit within a particular evaluation criteria may also be considered even if not specified below.

1. Method of Approach ------- 30%
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2. Qualifications of Experience of Key Personnel ------- 30%

3. Qualifications of the Firm -------40%

4. Evaluation of Proposals and Selection Process: In accordance with its Municipal Code, the City will adhere to the following procedures in evaluating Proposals. An Evaluation Committee, which may include members of the City's staff and possibly one or more outside experts, will screen and review all Proposals according to the weighted criteria set forth above.

While price is one basic factor for award, it is not the sole consideration.

A. Responsiveness Screening : Proposals will first be screened to ensure responsiveness to the RFP. The City may reject as non-responsive any Proposal that does not include the documents required to be submitted by this RFP. At any time during the evaluation process, the City rese rves the right to request clarifications or additional information from any or all Proposers regarding their Proposals.

B. Initial Proposal Review: The Committee will initially review and score all responsive written Proposals based upon the Evaluation Criteria set forth above. The Committee may also contact Proposer's references. Proposals that receive the highest evaluation scores may be invited to the next stage of the evaluation process. The City may reject any Proposal in which a Proposer’s approach, qualifications, or price is not considered acceptable by the City. An unacceptable Proposal is one that would have to be substantially rewritten to make it acceptable. The City may conclude the evaluation process at this point and recommend award to the lowest responsible bidder. Alternatively, the City may elect to negotiate directly with one or more Proposers to obtain the best result for the City prior to making a recommendation or selection.

C. Interviews, Reference Checks, Revised Proposals, Discussi ons: Following the initial screening and review of Proposals, the Proposers included in this stage of the evaluation process may be invited to participate in an oral interv iew – to be determined.

During the evaluation process, t he City may also contact and evaluate the Proposer’s references, contact any Proposer to clarify any response or request revised or additional information, contact any current users of a Proposer’s services, solicit information from any available source concerning any aspect of a Proposal, and seek and review any other information deemed pertinent to the evaluation process.

Following conclusion of this stage of the evaluation process, the Committee will again rank all Proposers according to the evaluation criteria set forth above. The Committee may conclude the evaluation process at this point, and make a recommendation for award, or it may request Best and Final Offers from Proposers. The City may accept the Proposal or negotiate the terms and conditions of the agreement with the highest ranked organization. The City may recommend award without Best and Final Offers, so Proposers should include their best Proposal with their initial submission.

Recommendation for award is contingent upon the successful negotiation of final contract terms. Negotiations shall be confidential and not subject to disclosure to competing 218

Proposers unless an agreement is reached. If contract negotiations cannot be concluded successfully within a time period determined by the City, the City may terminate negotiations and commence negotiations with the next highest scoring Proposer or withdraw the RFP.

5. Protests: Failure to comply with the rules set forth herein may result in rejection of the protest.

Protests based upon restrictive specifications or alleged improprieties in the Proposal procedure, which are apparent or reasonably should have been discovered prior to receipt of Proposals shall be filed in writing with the City’s Purchasing Department at least 10 calendar days prior to the deadline for receipt of Proposals. The protest must clearly specify in writing the grounds and evidence on which the protest is based.

Protests based upon alleged improprieties that are not apparent or that could not reasonably have been discovered prior to submission date of the Proposals, such as disputes over the staff recommendation for contract award, shall be submitted in writing to the City’s Purchasing Department, within 48 hours from receipt of the notice from the City advising of City’s recommendation for award of contract. The protest must clearly specify in writing the grounds and evidence on which the protest is based. The City’s Purchasing Department will respond to the protest in writing at least 3 days prior to the meeting at which City’s recommendation to the City Council will be considered. Should Proposer decide to appeal the response of the City’s Purchasing Department, and pursue its protest at the Council meeting, it w ill notify the City’s Purchasing Department of its intention at least 2 days prior to the scheduled meeting.

A. Procedure – All protests shall be typed under the protester’s letterhead and submitted in accordance with the provisions stated herein. All pro tests shall include at a minimum the following information:
• The name, address and telephone number of the protester; • The signature of the protester or the protester’s representative; • The solicitation or contract number;
• A detailed statement of the legal and/or factual grounds for the protest; and • The form of relief requested.

6. Accuracy of Proposals: Proposers shall take all responsibility for any errors or omissions in their Proposals. Any discrepancies in numbers or calculations shall be interpreted to reflect the cost to the City.

If prior to contract award, a Proposer discovers a mistake in their Proposal which renders the Proposal unwilling to perform under any resulting contract, the Proposer must immediately notify the facilitator and request to withdraw the Proposal. It shall be solely within the City's discretion as to whether withdrawal will be permitted. If the solicitation contemplated evaluation and award of "all or none" of the items, then any withdrawal must be for the entire Proposal. If the solicitation provided for evaluation and award on a line item or combination of items basis, the City may consider permitting withdrawal of specific line item(s) or combination of items.

7. Responsibility of Proposers: The City shall not be liable for any expenses incurred by potential Contractors in the preparation or submission of their Proposals. Pre -contractual expenses are not to be included in the Contractor’s Pricing Sheet. Pre -contractual expenses are defined as, including but not limited to, expenses incurred by Proposer in:
 Preparing Proposal in response to this RFP;
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 Submitting that Proposal to the City;
 Negotiating with the City any matter related to the Proposal; and,  Any other expenses incurred by the Proposer prior to the date of the award and execution, if any, of the contract.

8. Confidentiality: The California Public Records Act (Cal. Govt. Code Sections 6250 et seq.) mandates public access to government records. Therefore, unless information is exempt from disclosure by law, the content of any request for explanation, exception, or substitution, response to this RFP, protest, or any other written communication between the City and Proposer, shall be available to the public. The City intends to release all public portio ns of the Proposals following the evaluation process at such time as a recommendation is made to the City Council.

If Proposer believes any communication contains trade secrets or other proprietary information that the Proposer believes would cause substantial injury to the Proposer’s competitive position if disclosed, the Proposer shall request that the City withhold from disclosure the proprietary information by marking each page containing such proprietary information as confidential.

Proposer may not designate its entire Proposal as confidential nor designate its Price Proposal as confidential.

Submission of a Proposal shall indicate that, if Proposer requests that the City withhold from disclosure information identified as confidential, and the City c omplies with the Proposer’s request, Proposer shall assume all responsibility for any challenges resulting from the non - disclosure, indemnify and hold harmless the City from and against all damages (including but not limited to attorney’s fees and costs that may be awarded to the party requesting the Proposer information), and pay any and all costs and expenses related to the withholding of Proposer information. Proposer shall not make a claim, sue, or maintain any legal action against the City or its dire ctors, officers, employees, or agents concerning the disclosure, or withholding from disclosure, of any Proposer information. If Proposer does not request that the City withhold from disclosure information identified as confidential, the City shall have no obligation to withhold the information from disclosure and may release the information sought without any liability to the City.

9. Ex Parte Communications: Proposers and Proposers’ representatives should not communicate with the City Council members abo ut this RFP. In addition, Proposers and Proposers’ representatives should not communicate outside the procedures set forth in this RFP with an officer, employee or agent of the City, including any member of the evaluation panel, with the exception of the R FP Facilitator, regarding this RFP until after Contract Award.

Proposers and their representatives are not prohibited, however, from making oral statements or presentations in public to one or more representatives of the City during a public meeting.

A "Proposer" or "Proposer's representative" includes all of the Proposer's employees, officers, directors, providers and agents, any subcontractors or suppliers listed in the Proposer's Proposal, and any individual or entity who has been requested by the P roposer to contact the City on the Proposer's behalf. Proposers shall include the Ex Parte Communications Form, Appendix C with their Proposals certifying that they have not had or directed prohibited communications as described in this section.

10. Conflict of Interest: The Proposer warrants and represents th at it presently has no interest and agrees that it will not acquire any interest which would present a conflict of interest under California Government Code Sections 1090 et seq., or Sections 87100 et s eq., during the 220

performance of services under any Agreement awarded. The Proposer further covenants that it will not knowingly employ any person having such an interest in the performance of any Agreement awarded. Violation of this provision may result in any Agreement awarded being deemed void and unenforceable.

11. Disclosure of Governmental Position : In order to analyze possible conflicts that might prevent a Proposer from acting on behalf of the City, the City requires that all Proposers disclose in thei r Proposals any positions that they hold as directors, officers, or employees of any governmental entity. Additional disclosure may be required prior to contract award or during the term of the contract. Each Proposer shall disclose whether any owner or em ployee of the firm currently hold positions as elected or appointed officials, directors, officers, or employees of a governmental entity or held such positions in the past twelve months using the attached Disclosure of Government Positions Form, Appendix C.

12. Conditions to Agreement: The selected Proposer will execute a Subrecipient Agreement for Services with the City describing the Scope of Services to be performed, the schedule for completion of the services, compensation, and other pertinent provision s. The contract shall follow the sample form of Agreement provided as Appendix B to this RFP , which may be modified by the City.

All Proposers are directed to particularly review the indemnification and insurance requirements set forth in the sample A greement. The terms of the agreement, including insurance requirements have been mandated by the City and can be modified only if extraordinary circumstances exist.

Submittal of a Proposal shall be deemed acceptance of all the terms set fort h in this RFP and the sample agreement for services unless the Proposer includes with its Proposal, in writing, any conditions or exceptions requested by the Proposer to the proposed Agreement.

13. Disqualification Questionnaire: Proposers shall complete and submit, under penalty of perjury, a standard form of questionnaire inquiring whether a Proposer, any officer of a proposer, or any employee of a Proposer who has a proprietary interest in the Proposer, has ever been disqualified, removed, or otherwise prevented from proposing on, or completing a federal, state, or local government project because of a violation of law or safety regulation and if so, to explain the circumstances. A Proposal may be rejected on the basis of a Propo ser, any officer or employee of such Proposer, having been disqualified, removed, or otherwise prevented from proposing on, or completing a federal, state, or local project because of a violation of law or a safety regulation, Appendix C.

14. Standard Terms and Conditions: The City reserves the right to amend or supplement this RFP prior to the Proposal due date. All addendum(s) and additional information will be posted to the Costa Mesa Procurement Registry, Costa Mesa - Official City Web Site - Business - Bids & RFP's. Proposers should check this web page daily for new information 221

13 APPENDIX A

SCOPE OF WORK

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14 INTRODUCTION
The City of Costa Mesa, a medium urban city with a residential population of 113,003 people and an estimated 193 residents experiencing homelessness on any given night in 2019. Diversifying, stabilizing, and increasing housing to reflect community needs is a priority for the City Council. In February 2021, the City Council adopted a new Strategic Plan to achieve this and four other priorities over the next three years:

1. Achieve Long-Term Fiscal Sustainability

2. Strengthen Public Safety and Keep the Community Safe

3. Maintain and Enhance these City’s Infrastructure, Facilities, Equipment, and Technology

4. Diversify, Stabilize and Increase Housing to Reflect Community Needs

The City of Costa Mesa seeks services under this RFP that will support, complement, enhance, or fill a gap in services currently offered to lower-income Costa Mesa residents that are impacted by the COVID-19 Pandemic. HUD has identified various activities that could be eligible for CDBG-CV funding.

ELIGIBLE ACTIVITIES
In general, applicants can propose use CDBG-CV funds for the same wide range of activities that are eligible under the annual CDBG program. Applicants should keep in mind that the CARES Act requires that all activities assisted with CDBG-CV funds must be used to prevent, prepare for, and respond to coronavirus, and sub-grantees must have adequate policies and procedures in place to prevent duplication of benefits.

This broad list of activities is provided, by HUD, below:

Public Services (including emergency subsistence payments)

Job training in communities affected by coronavirus -related job loss since January 2020 to revitalize affected labor force and business sectors or to help workers re-train for expanding sectors.

Increase the capacity and availability of daycare or after -school services serving low/mod parents that have dropped out of the workforce since January 2020 to enable workers to rejoin the workforce.

Provide equipment, supplies, or materials necessary to carry-out a public service related to the effects of the pandemic, or to enable resilience to the effects of coronavirus in future, such as food banks, youth services, health care, WIFI, or senior services.

Provide testing, diagnosis, vaccination, or other health services to low/mod persons at a mobile location.

Provide emergency subsistence payments (e.g., rent, mortgage, or utilities) on behalf of families to prevent eviction resulting from economic disruption since January 2020.

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15 Provision of New or Quantifiably Increased Public Services

Following enactment of the CARES Act1, the public services cap2 has no effect on CDBG-CV grants and no effect on FY 2019 and 2020 CDBG grant funds used for coronavirus efforts.

See section 105(a)(8) (42 U.S.C. 5305(a)(8)); 24 CFR 570.201(e).

Carry out job training to expand the pool of health care workers and technicians that are available to treat disease within a community.

Provide testing, diagnosis or other services at a fixed or mobile location.

Increase the capacity and availability of targeted health services for infectious disease response within existing health facilities.

Provide equipment, supplies, and materials necessary to carry-out a public service.

Deliver meals on wheels to quarantined individuals or individuals that need to maintain social distancing due to medical vulnerabilities.

NATIONAL OBJECTIVE (REQUIREMENT)
The CARES Act did not suspend the requirement to meet a national objective.

Applicants must ensure that every activity carried out with CDBG-CV funds will do so.

Every CDBG-CV funded activity must meet the standards for one of the following three CDBG National Objectives.

1. An activity that benefits low- and moderate-income (LMI) persons.

2. An activity designed to meet community development needs having a particular urgency. The activity must be designed to alleviate existing conditions which pose a serious and immediate threat to the health or welfare of the community which are of recent origin or which recently became urgent, and the recipient must demonstrate inability to finance the activity on its own and that other sources of funding are not available.

3. An activity that aids in the prevention or elimination of slums or blight.

The proposed activity must achieve one of these national objectives before you can proceed with a final decision to use CDBG-CV funds. You also need to ensure that your CDBG-CV grant meets the overall benefit requirement, meaning no less than 70 percent of the combined CDBG-CV expenditures from all three stages of funding must be used for activities that benefit LMI persons (see Demonstrating Area Benefit methodology for CDBG that should be similarly utilized for the 70 percent requirement under CDBG-CV).

1 On March 27, 2020, President Trump approved the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136) (CARES Act). The CARES Act makes available $5 billion in CDBG coronavirus response (CDBG-CV) funds to prevent, prepare for, and respond to coronavirus.
2 Section 105(a)(8) of the HCD Act caps public service activities at 15 percent of most CDBG grants. Some grantees have a different percentage cap.
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16 Documentation of Eligibility: Applicant information or registration forms (Exhibit A) which includes name, address, income, source of income, household type, ethnicity, racial background, and signature of participant and all adult household members. In addition, Agencies will be required to show adequate low-income backup data, including collecting a 10% sampling of income documentation of the CDBG-CV3 program(s) operated by the Agency.

Since CDBG-CV funded activities must also prevent, prepare for, and respond to the COVID-19 pandemic, some activities may qualify under the Urgent Need objective, even though it is rarely used in the regular CDBG program. Before applicants undertake any Urgent Need national objective analysis, review the extensive discussion and guidance on recordkeeping methods to meet the Urgent Need national objective in the CDBG-CV Notice (see page 51465).

Though CDBG-CV funds may be used for activities that achieve any of the three national objectives, the elimination of slums and blight does not often apply. Under this national objective, CDBG-CV records must document the activity alleviates blighting conditions, and it may be difficult to relate activities that primarily meet this national objective to the prevention, preparation for, and response to coronavirus Additional guidance and resources related to common CDBG-CV eligible activities can be found here.
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EXHIBIT B SUBRECIPIENT’S PROPOSAL
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July 28, 2021

Dear Lori Ann Farrell Harrison,

Thank you for your continued service to our Costa Mesa community. We are grateful for the repurposed financial resources that are to be allocated for homelessness prevention.

In addition to our private philanthropy, the Newport Mesa Unified School District has committed to financially support PHA in order to serve the growing list of kids experiencing homelessness in our Costa Mesa schools. The potential trifecta of district and city support here in Costa Mesa, in combination with our private fundraising, has the potential to drive real change for our kids. Costa Mesa has the opportunity to lead a partnership that will not only address the disproportionate impact of COVID 19 for these kids, but also prevent future homelessness.

We make commitments to kids from Kindergarten through 24 years old; requiring that we are present year-round and 24/7 for the students. The relationships we build with students on campus allow us to readily develop academic goals, increase school attendance, and provide social-emotional support.

Project Hope Alliance has always operated at the intersection of serving kids experiencing homelessness and preventing homelessness as they enter adulthood. We have seen the disproportionate impact of COVID 19 play out before our eyes. This is particularly evident for residents of Westside, where we proudly operate our main office.

For perspective, we were serving 50 Costa Mesa students in February of 2020 and we are now serving over 100 Costa Mesa residents, with an additional 200 on a waitlist. As the economy opens back up, this list will only continue to grow, especially when the moratorium on evictions is lifted.

The proposed funding request of $160,942 covers 12 months of service, broken into two phases; fall and spring semesters. All numbers are based on a 30:1 student to case manager ratio. Not included in the proposals are any hard costs associated with professional development, mental health services or data analysis. We consider those to be a no-cost value-add to the partnership.

For the kids,

Jennifer Friend, JD
Chief Executive Officer
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Project Hope Alliance CDBG Application
to the City of Costa Mesa
CDBG-CV/RFP No. 21-13

Background and Project Summary Section: The Background and Project Summary Section should describe your understanding of the City, the work to be done and the objectives to be accomplished.

We have been serving the Costa Mesa community since 2016, providing wraparound case management for students experiencing homelessness. In 2019 the Newport Mesa Unified School (NMUSD) provided PHA with an MOU authorizing our programmatic presence at all 32 of their campuses. In the Fall of 2020, we received a list of all the students who qualified as homeless and have been working diligently to invite and incorporate them into our wraparound program. By intervening early in a child's educational journey, we exponentially increase the likelihood of their graduating high school and attaining independence and financial stability in life. CDBG grant funds will be used for continued one-on-one case management, mentoring, tutoring, college and FAFSA application assistance, job search assistance, basic needs support like food, clothing, hygiene and 24x7 support. We work with students along the entire educational spectrum from Kindergarten to age 24.

50% of Costa Mesa residents are non-White, 25% are foreign-born, 45% are Hispanic, with 12% living in poverty (compared to 9.5% across Orange County). Project Hope Alliance is already serving 12 of the 13 Title 1 schools in the District and all of them are in Costa Mesa. Title 1 schools typically garner the majority of resources (federal aid) as the campuses represent high need populations. This leaves low income students at non-Title 1 schools bereft of government aid, making PHA's role even more crucial. We are also serving many of these schools, including: (Elementary) California, Davis Magnet, Kaiser, Newport Heights, Victoria, (Middle) Ensign, Costa Mesa, Estancia and (High) Back Bay, Newport Harbor and Costa Mesa. Services include a case management program providing educational, socio-emotional and basic needs support.

NMUSD reported that almost 300 of their students qualified as homeless. This includes those living not only on the streets but in shelters, motels, cars, doubled-up and in places unsafe for human habitation. COVID has had a profound impact on student academic performance. The job losses and correlating housing losses levied a toll on housed and non-housed students alike. By way of example, a study of SoCal students shows that 13% of youth during the first 3 months of the pandemic had no online contact with their teachers and 1/3 had intermittent participation in online learning especially in lower income areas.

As an organization, we have defined five key objectives:
1) Ensure that all students and families that PHA serves who are experiencing homelessness are stably supported through the end of the 2021-22 school year. 2) Expand the In-Place Case Management Program in the 2021-2022 school year to provide full time case management on additional school campuses, in order to match the strategy plan laid out by the signed Memorandum of Understanding 2 228
recently signed by the school district to serve their youth who are experiencing homelessness at their campuses. PHA will prioritize student needs by school zones and assign case managers to the appropriate zones and schools. 3) As a primary outcome of Objective #2, we will work to engage every student in our program who reside in Cost Mesa. The original list contained 236 students (the majority of whom are in Costa Mesa).
4) Continue strategic thought partnership in regard to professional development for district liaisons, educators and administrators within the district. This will include assisting in virtual trainings for said trainees, directed by PHA’s Director of Education and Director of Behavioral Health.
5) Develop a data-sharing platform to provide real-time analytics and reporting of progress. Collaborative review and reflection of data will inform the strategic direction of the services.

Our projected outcomes (success metrics) are a natural outgrowth of the program design and the students we serve:
1) 200 students will be served in the 2021/22 school year 2) Each K-6th grader will be work with a one-on-one mentor and 75% will report that they care about doing well academically
3) 75% of all students in the program will attend school consistently 4) 85% of all students in our program will report a high level of trust with PHA Case Managers
5) 80% of high school senior students in our program will graduate from high school (as opposed to 64% for homeless students in CA)

Method of Approach: Provide a detailed description of the approach and methodology that will be used to fulfill services. The section should include:

1. An implementation plan that describes in detail (i) the methods, including controls by which your firm manages projects of the type sought by this RFP; (ii) methodology for soliciting and documenting views of internal and external stakeholders; (iii) and any other project management or implementation strategies or techniques that the respondent intends to employ in carrying out the work.
i. Methods and Controls
PHA deploys a long-term, onsite intervention model for children and youth experiencing homelessness who face obstacles that prevent them from accessing resources, being a kid and achieving educational and life goals.

We work one-on-one with kids, placing full-time case managers on elementary, junior high and high school campuses. Case managers identify homeless students, remove barriers to their basic needs (such as food, clothing, or transportation); conduct regular check-ins to provide educational support, stable and trusted adult mentors and connections to needed resources. (Case management for post-high school youth is provided individually and is not tied to an educational campus.) 3 229
The primary assessment that case managers use is our innovative and proprietary Hope Index, which covers 10 distinct domains: social and emotional wellness; education; parental and family support; housing; financial stability; basic needs; health and safety; stable and trusted adult; life experiences and passions; and future vision and direction. The tool provides a unique lens on the condition and needs of their students. Case managers also complete a Hope Index every 90 days to assist in tailoring their intervention methods and case management approach to work towards improving scores in areas of deficit for each student, thereby having a direct beneficial impact on the lives of our kids. With the use of the Hope Index, our case managers can track and encourage development of specific skills, knowledge, or capabilities in specific life areas. Hope Index data that are gathered by our case managers is recorded in Salesforce, our enterprise software platform. We analyze this data on a regular basis so that we, as an organization, can better understand our impact and make necessary modifications to our programs.

Because the results of the Hope Index focus on a point-in-time, extrapolating this data across time is not necessarily valid. This is because situations and needs of our youth change constantly. For example, a parent’s sudden loss of employment is likely to have a negative impact on several of the Hope Index domains and subdomains. However, the work that our case managers do is focused on treating each child as a whole and encouraging development across life areas. Additional assessment tools include the Developmental Asset Profile, Youth Assessment and Adverse Childhood Experience Index. After using these assessment tools, the case manager assists the student in creating an individualized case plan.

ii. Methodology for soliciting and documenting views of stakeholders PHA collects survey data, hosts informational meetings and conducts site visits throughout the course of an academic year to a) regularly communicate our work and progress to invested stakeholders and b) to ensure that we are meeting all expectations set forth by our Board of Directors. Upon grant award, the city of Costa Mesa would also receive a survey and be included in any meetings.
iii. Project management/implementation strategies to be employed In addition to the site-based case management, PHA has built an infrastructure that simultaneously handles Marketing, Fundraising and Professional Development for our frontline team. Our strategic priorities are as follows:

One Team: Consciously instill a sense of unity, pride & support amongst the team that fosters psychological safety, diversity and leadership development.

Systems Enhancement: Establish clear and purposeful systems that equip PHA to demonstrate impact, raise money and provide clarity.

Innovation: Actively seek creative solutions to ensure organizational sustainability.

2. Detailed description of efforts your firm will undertake to achieve client satisfaction and to satisfy the low and moderate-income requirements. 4 230
Client Satisfaction
Our clients are the kids and we use an assessment based on social-emotional support.

Our assessment helps us answer the following questions about the young people we serve:

-Do they feel surrounded by people who love, care for, appreciate and accept them? -Do they feel valued, valuable and safe?
-Do they feel that they have been provided with clear rules, consistent consequences for breaking rules and encouragement to always do their best? -Do they have opportunities outside of school to learn and develop new skills and interests with other youth and adults?
-Do they understand the lasting importance of learning and believe in their own abilities?
-Are they developing strong guiding values that will help them make healthy life choices, including responsibility, empathy and self-control?
-Do they have the skills to interact effectively with others, to make difficult decisions, and to cope with new situations?
-Do they believe in their own self-worth and feel that they have control over the things that happen to them?

Low-Income Requirements
Our educational programs are targeted toward those children who are living in extreme poverty and experiencing homelessness. Our programs are designed to help homeless youth overcome the obstacles that prevent them from accessing resources and achieving educational, employment and healthy living goals. Case managers and education specialists work on a one‐on‐one basis with each youth to remove barriers, and connect them to other needed resources. In terms of identification and verification, we work alongside schools and inherit cases from them based on their official verification processes, which aligns with state and local legislation that defines homelessness; being inherently low-income (under the Federal Poverty Level).

3. Detailed project schedule, identifying all tasks and deliverables to be performed, durations for each task and overall time of completion.

If awarded, the proposed 12-month funding will allow PHA to respond in real time and also proactively plan to meet the following objectives:

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Objective
Phase 1
September – December
2021
Phase 2
January 2022 –
August 2022
Ensure that Costa Mesa
students and families
experiencing homelessness
are enrolled in PHA and
stably supported through the
end of the 2020-21 school
year.

• Continue to enroll
all eligible students
(max limit of 81)
• Complete all
screenings
• Case Managers
dedicated solely to
Costa Mesa
students
• Continue to
serve and enroll
eligible students

Expand the services to
provide full time case
management on additional
school campuses.
• Develop a site-
based expansion
strategy, in
collaboration with
school partners
• Prioritize student
needs by school
zones
• Assign Case
Managers to
zones and
schools

Continue enhancing
professional development for
school liaisons, educators,
and administrators within
Costa Mesa.

• Continue assisting
in virtual training
efforts for district
personnel
• PHA’s Director of
Education and
Director of
Behavioral Health
will assist as
needed in
professional
development efforts.
• Advise and assist
in collaborative
trainings for
educators,
liaisons and
administrators
(on-going, as-
needed)
Develop a data-sharing
platform to provide real-time
analytics and reporting of
progress.

• Establish protocols
for data sharing
• Build a shared
digital platform to
report real time data
• Establish regular
data reporting,
and collaborative
reflection to
inform strategic
direction of
services.

4. Detailed description of specific tasks you will require from City staff. Explain what the respective roles of City staff and your staff would be to complete specified tasks.

The only tasks we would require assistance with would be a) the technical assistance when it comes to reporting and b) guidance with any questions that may arise. 6 232

5. Proposers are encouraged to provide additional innovative and/or creative approaches for providing the service that will maximize efficient, safe and cost- effective operations or increased performance capabilities.

Program Approach
Project Hope Alliance is the only Orange County organization that combines a) in-place case management, b) education, c) social and emotional support and d) access to opportunity to create a multi-generational approach to ending not only the instance of homelessness today, but permanently ending the cycle of homelessness tomorrow. No other single organization in Orange County combines all four of these pillars of service to effectively help children and their families move permanently past homelessness.

Financial Impact
A May 2020 study by Edwards Lifesciences, an international medical technology device manufacturer with over $4 billion annually in revenue, completed a study in 2020 around PHA’s innovative work. The ROI study was titled “Project Hope Alliance: Societal Benefits of Ending the Cycle of Homelessness in Orange County”. The study found that PHA’s programs annually save $75,000 per graduate. This is a combination of $40,000 in avoided costs, as well as $35,000 in increased wages per graduate. The avoided costs illustrate the savings to entities like hospital emergency rooms, social service agencies (ex. CalFresh, SNAP, MediCal and CalWORKS. The increased wages give our youth the opportunity to complete college, acquire gainful employment and build stable lives.

Advocacy & Partnerships
PHA’s work has been gaining increasing attention, allowing our leadership to inform policy discussions at the county as well as state level. In 2018, PHA’s leadership team was invited by Jennifer Newsom to visit Sacramento for a 3-day strategic discussion on the crisis of child homelessness. In December 2019, Jennifer Friend, PHA’s CEO, was also named one of Orange County’s Top 100 Influencers by The Orange County Register. Our work has also been recognized in a research study by Edwards Lifesciences, an international medical technology device manufacturer with over $4 billion annually in revenue. In October of 2020, our innovative work was published in a front-page article of the Orange County Register, triggering a wave of calls and donations toward our place-based work on behalf of students living at the motels. A more recent front page news article in the Register solicited an invitation from the Garden Grove Unified School District to serve in all of their schools.

To make system wide and systemic change children and youth experiencing homelessness must not only have a champion, they must have an elevated voice and a seat at the table where decisions are made. Project Hope Alliance serves as a zealous advocate for our children & youth elevating their voices, championing their causes, advising and participating in legislation and policy-making locally, statewide and nationally. Whether it is our contribution to the nation’s leading policy document Hidden in Plain Sight: Homeless Students In America’s Public Schools, or an invitation to provide advice to the U.S. Department of Health & Human Services Administration for Children & Families, PHA is in the fight for the kids. This includes our in-person state and federal lobbying activities in support of the “Every Student Succeeds Act”, the 7 233
Emergency Family Stabilization Act (HR 7950), California State Assembly Bill AB10 and other legislation with elected officials or partners like School House Connections. Similarly, we work in partnership with national communicators and creators like Sesame Street and Lego - engaged in both educating and activating our community to eliminate the barriers homelessness causes in the lives of our kids.

6. Firms, individuals and entities wishing to be considered shall include in their submissions the steps they will, if selected, implement and adhere to the recruitment, hiring and retention of former employees of the City who have been displaced due to layoff or outsourcing of functions and services formerly provided by the City.

Insofar as former city employees are experienced in trauma-informed care for youth experiencing homelessness, have experience working 1:1 with children utilizing education-based programming and meet all minimum requirements, we would welcome the opportunity to interview them for employment if positions were to open up.

Qualifications & Experience of the Firm: Describe the qualifications and experience of the organization or entity performing services/projects within the past five years that are similar in size and scope to demonstrate competence to perform these services.

Information shall include:

1. If the owner is a corporation please provide: Name of corporation, corporate office street address, city, state, and zip code, state where incorporated, date of incorporation, first and last name of officers, local office address, city, state & zip, and the date local office opened its doors for business.

Corporation: Project Hope Alliance
Office Street Address: 1954 Placentia Ave, Suite 202
Date of Incorporation: October 17, 2002
First and last names of officers: Jennifer Friend, CEO; Tracy Carmichael, President Local Office Address: Same as above

2. If the owner is a partnership or joint venture, please provide: Name of partnership or joint venture, principal office street address, city, state and zip code, state of organization, date of organization, first and last name of general partner(s), local office address, city, state and zip code and date local office opened its doors for.

N/A
Experience:

Our CEO, Jennifer Friend, grew up experiencing homelessness and went on to become partner in a law firm before starting at PHA in 2013. Her unique experience motivates the rest of our team to serve with compassion and innovation. Our President, Dr. Tracy Carmichael, has a Ph.D. in Educational Policy and Social Context from UCI and extensive experience in leading nonprofits through mission and capacity building. Our Director of Education, Jennifer Marin, comes from an extensive teaching career at Newport-Mesa Unified School District. Our Director of Behavioral Health, Rachel 8 234
Cardenas, has a Doctorate in Psychology and has spent her career serving at-risk youth in schools, inpatient and outpatient facilities. She specializes in working with trauma-informed treatment and youth experiencing homelessness. Our Program Manager, Bonita Vecchio, has held roles working with trauma and learning disabilities, as well as advocacy for vulnerable populations.

Our case management team includes Guadalupe Contreras, Chrissie Lee, Jose Aleman, and La Shawn Hye who reflect the ethnicities of those we serve. These individuals regularly exceed PHA’s standards for case managers in cultural competency and bilingualism, expertise of the school system and local resource offices, creating comprehensive case plans, communication with families and school staff, among others.

In addition, PHA holds key community partnerships with homeless-serving organizations and school districts. As our work is conducted primarily on-site at school campuses, we have a strong relationship with the Newport Mesa Unified School District and have Sean Boulton, Newport Harbor High Principal, on our Board of Directors. In 2019, we received a Memorandum of Understanding to serve all 32 campuses in the Newport Mesa Unified School District. We signed a similar MOU with the Santa Ana Unified School District in March of 2021.

Previous to 2021, we had not received any CDBG funding. However, after a favorable article in the Orange County Register on PHA in October, we were contacted by the City of Santa Ana with an invitation to apply for CDBG funding to provide services to their students experiencing homelessness. Within the same week, we were approached by Santa Ana Unified School District, who requested that PHA provide case management services to their students who were experiencing homelessness. We now have an agreement with the City, funding has been approved and we are finalizing an MOU with the school district and expect to begin services in March. Our Grant Writer and Director of Finance both have previous experience managing CDBG grants.

3. List all businesses owned or controlled by yourself (applicant) or business manager doing similar business in California under another name. List business name and address and specify who owns or controls the business (e.g., self, business manager, etc.).

N/A

4. List all businesses for which you or your business manager is or was an officer, director, or partner doing similar business in California under another name. List business name and address, title, date(s) in position; specify who was in position (e.g., self, business manager, etc.).

N/A

5. How many years have you been in business under your present business name? 2011-2021: Project Hope Alliance (10 years)
(Note: Prior to 2011, PHA was incorporated as the Project Hope School Foundation) 9 235

6. Provide a list of current and previous contracts similar to the requirements for Costa Mesa, including all public agencies served (if any). For each, provide a brief description of the service performed, the length of time you have been providing services and the name, title and telephone number of the person who may be contacted regarding your organization’s service record.

City of Santa Ana
Description: Provide holistic supportive and educational-related services, centered around an intensive case management model, to 50 school age children, adolescents and young adults (up to age 24) who are experiencing barriers to education and employment due to homelessness. Also provide distance learning support related to the ongoing impact from the COVID pandemic.

Duration: One year
Contact: David Flores, Community Development Analyst
(714) -647-6561

City of Costa Mesa
Description: Serve 25 Costa Mesa students experiencing homelessness, as well as expand the in-place case management program to Estancia High School and/or TeWinkle Intermediate School in the 2021/22 school year.

Duration: One year
Contact: Mike Linares, Housing and Community Development (714) 754-5678

7. Submit a description of the organization’s qualifications, experience and abilities that make it uniquely capable to provide the services.

Project Hope Alliance always looks for ways to innovate so that we can better achieve our mission and goals at a broad level, as well as support a larger number of individual students. One way that we are innovative is by choosing not to work from the “outside- in.” Instead, we operate within an existing system structure (school campuses), which enables us to be a positive influence in children’s lives by offering supportive services directly where the children attend. With a district-wide invitation from the Newport Mesa School District to host our programs on all 32 campuses, we take a kid-centered approach to disrupting the cycles of homelessness in our students’ lives. We currently serve 5 high schools, 2 middle schools and 15 elementary schools, for a total of 22 program schools in the Newport-Mesa School District.

Our work is and has always been child-centric, innovative, revolutionary and more than ever, essential for the success of our youth. By focusing on children’s holistic development, we provide hope so that kids can visualize and realize a future without homelessness while reaching their full potential as self-sufficient adults.

Measurement
Our proprietary Hope Index is another example of innovation. As mentioned earlier, our case managers use the Hope Index during the initial assessment of students who are new to our program. The tool provides a holistic and unique lens on the condition and needs of their students. Case managers utilization of the Hope Index enables them to 10 236
tailor their intervention efforts for each student based on the highlighted needs derived from the assessment.

Mentorship
Another innovation is apparent in how we support our K-6 students, who are assigned a volunteer mentor, trained by Project Hope Alliance. Many of these students need special assistance in literacy and math. Our innovative, multilingual online curriculum is highly adaptive and personalized to each child’s unique needs and level of understanding. These young students enjoy a strong, consistent relationship with a trusted adult, a relationship that promotes a healthy social-emotional development.

These students receive Chromebooks, Wi-Fi hotspots, individualized academic support and materials, personal weekly mentoring sessions, teacher coordination, parent involvement, enrichment activities, support in navigating the school system (IEP, 504) and a variety of items that fill their basic needs.

Data Tracking Capacity
Even in how we do our work, we are innovative, specifically striving to inform our decisions and programs with data. As part of our external relationship-building with school districts, we are continually expanding the type of student-level data we can acquire. For example, in our new service agreement in Santa Ana, we have access to data that informs us of attendance, academic goals and special needs. Internally, Project Hope Alliance tracks the services we provide to each student and school to capture a broad understanding of our impact, as well as dozens of data points that underlie clearly defined outcomes and measures for every program. Hope Index data that is gathered by our case managers is recorded in Salesforce, our enterprise software platform. We analyze this data on a regular basis so that we, as an organization, can better understand our impact and make necessary modifications to our programs. We are also working with Salesforce consultants to optimize the data that we track to better inform our decisions. Program data is reviewed quarterly by the Project Hope Alliance leadership team and annually by the Board of Directors. These reviews result in program refinements for the following year.

8. The City of Costa Mesa is interested in knowing how Proposers support the communities that they serve. Please provide information on your organization’s participation in local community, charitable and civic organizations and events, including membership in the Costa Mesa Chamber of Commerce, charitable contributions made by your organization, etc.

Any public entity which submits a Proposal should describe in detail how it currently performs services, like those identified as eligible activities, within its or other jurisdictions, including photographs, written policies and/or video of services provided. If you have performed these services under contract for another public entity, please provide references for those entities as set forth above for private Proposers.

Financial Capacity: The City is concerned about bidders’ financial capability to perform, therefore, may request sufficient data to allow an evaluation of firm’s financial capabilities.

11 237
Our leadership team is well integrated within the community and holds strong relationships with prominent Orange County philanthropists. Our Chief Executive Officer and President hold multiple speaking engagements throughout the year to generate corporate partnerships and giving campaigns. Our full-time Grants team is dedicated to maintaining the relationships with our current family of corporate and private foundations and growing relationships with new funders. Having a full-time foundation team has allowed us to build our portfolio of grants and major gifts by over 50% in the past five years, resulting in over $2 million annually in funds raised.

As we broaden our base and build community support, we have created a strong social media presence and internal process to cultivate smaller individual gifts. We are working to develop a direct mail program that will allow us to leverage our operational partnerships with individual donors, community service groups and faith communities, among others. Our Community Engagement Coordinator and Grants & Development Coordinator have worked to develop a quarterly communication and fund-generating process targeted toward individual donors, corporate partners, community organizations, and faith-based supporters.

Key Personnel: It is essential that the Proposer provide adequate experienced personnel, capable of and devoted to the successful accomplishment of work to be performed under this contract. The Proposer must agree to assign specific individuals to the key positions.

o Identify the members of the staff who would be assigned to act for Proposer’s firm in key management and filed positions providing the services described in the Proposal, and the functions to be performed by each.
o Include resumes or curriculum vitae of each such staff member, including name, position, telephone number, email address, education, and years and type of experience. Describe for each such person, the relevant transactions on which they have worked.

Jennifer Friend, CEO
[email protected]
Prior to becoming CEO at Project Hope Alliance (PHA), Jennifer Friend enjoyed a successful career as a partner at a large law firm representing national and international clients throughout the civil courts of California. While practicing law, she became involved in PHA’s board and was actively engaged in the organization’s expansion and strategic growth. In 2013, Jennifer answered her calling, left her partnership, and became Project Hope Alliance’s full-time CEO. Her personal experience as a homeless child in Orange County, which inspired the Broadway play Nomad Motel, fuels her deep-rooted passion and commitment to homeless children and youth, while her ability to cast vision, think strategically, lead and direct broader systems change uniquely qualify her to serve as Project Hope Alliance’s CEO.

Jennifer holds a JD from Whittier Law School and a BA in Criminology, Law, and Society from the University of California, Irvine. She currently serves as a Trustee of the UCI Foundation; an Appointed member of the Fiat Lux Alliance; a Member of the Susan 12 238
Samueli Integrative Health Institute Advisory Board; and is a proud parent volunteer for the Newport Harbor High School Marching Band and Davis Magnet School.

Tracy Carmichael, President & Chief Strategy Officer
[email protected]

Dr. Tracy Carmichael serves as Project Hope Alliance’s President & Chief Strategy Officer. Tracy has spent most of her career working to bridge the gap between research and practice within the educational system, a nd developing equity - centered programs that produce opportunities for children to reach their full potential. She has a deep comprehension of non -profit management including strategic planning, fundraising, and outcome measurement. Tracy is a valued resour ce and champion in the development and implementation of the organization’s strategic plans which foster program expansion while maintaining internal efficiency.

Tracy holds a B.A. in Criminology from UC Irvine, an M.A. in Educational Research from the U niversity of Michigan, and a Ph.D. in Education from UC Irvine.

Jennifer Marin, MA
[email protected]

Before joining Project Hope Alliance, Jennifer spent 16 years teaching in the elementary school classrooms of Newport -Mesa Unified School District and serving as a curriculum specialist, teacher trainer, English learner coordinator, Early Intervention for School Success (EISS) coordinator, literacy coach, and grade-level chair. Throughout her impassioned career, she built a stellar reputation as an educator, leader, and advocate for the kids. In recognition of her extraordinary dedication to childhood educa tion, Jennifer was named 2015 -2016 Teacher of the Year at Pomona Elementary. As Director of Education at Project Hope Alliance, Jennifer brings to the organization her passion for and expertise in leveraging education as a tool to ending generational pover ty.

Jennifer received her Bachelor of Arts in Liberal Studies with a concentration in Spanish from California State University, Northridge, and her Master of Arts in Education/Bilingual Credential and Preliminary Administrative Services Credential from L oyola Marymount University, Los Angeles.

Rachel Cardenas, PysD
[email protected]
Prior to joining Project Hope Alliance, Dr. Cardenas worked as a therapist in schools with youth experiencing social, emotional, and behavioral issues and in inpatient and outpatient facilities with individuals experiencing severe mental health concerns. While working in the school system, Rachel also worked as a consultant for teachers and school staff regarding mental health, crisis intervention, behavioral interventions, and social skill development. Rachel worked at Gordon Psychology Group where she led 13 239
their clinical team, developed the training program, and was responsible for training and supervising therapists, case managers, and substance abuse counselors. Rachel specializes in working with individuals who have experienced trauma and has a passion for working with youth. She aims to bring her clinical lens to her work with Project Hope Alliance.

Rachel holds a B.A. in Psychology from Dominican University and a Psy.D in Clinical Psychology from Argosy University.

_Cost Proposal: Provide a fee schedule/pricing information for the project as referenced in the attached in Appendix C. Proposals shall be valid for a minimum of 180 days following submission.

o Cover letter stating the total lump sum fee.

See Cost Plan Document

o A spreadsheet with a detailed fee schedule of the proposed costs. Each fee schedule shall depict individual project asks, number of hours assigned for specific personnel and their basic hourly rates.

See Cost Plan Document

14 240

VENDOR APPLICATION FORM
FOR
RFP No. 21-13 for Community Service Programs - CDBG-CV
TYPE OF APPLICANT:  NEW  CURRENT VENDOR
CONTRACT TERM:  1 YEAR  2 YEAR
Legal Contractual Name of Corporation: ______________________________________ Contact Person for Agreement: ____________________________________________________ Title: ______________________________ E-Mail Address: ______________________ Business Telephone: _________________________ Business Fax: ________________ Corporate Mailing Address: ________________________________________________ City, State and Zip Code: __________________________________________________ Contact Person for Proposals: ______________________________________________________ Title: ______________________________ E-Mail Address: ______________________ Business Telephone: _________________________ Business Fax: ________________ Is your business: (check one)
 NON PROFIT CORPORATION  FOR PROFIT CORPORATION Is your business: (check one)
 CORPORATION  LIMITED LIABILITY PARTNERSHIP
 INDIVIDUAL  SOLE PROPRIETORSHIP
 PARTNERSHIP  UNINCORPORATED ASSOCIATION
X
X
Project Hope Alliance
Jennifer Friend
Chief Executive Officer
[email protected]
(949) 722-7863
(949) 722-7836
1954 Placentia Ave. #202
Costa Mes, CA 92627
John Eumurian
Foundation Relations Manager
[email protected]
(714) 337-1118
(949) 722-7837
X
X
15 241
Names & Titles of Corporate Board Members
(Also list Names & Titles of persons with written authorization/resolution to sign contracts)

Names Title Phone
___________________________________ ___________________________________

___________________________________ ___________________________________

___________________________________ ___________________________________

___________________________________ ___________________________________

___________________________________ ___________________________________

___________________________________ ___________________________________

Federal Tax Identification Number: __________________________________________

City of Costa Mesa Business License Number: ________________________________________ (If none, you must obtain a Costa Mesa Business License upon award of contract.)

City of Costa Mesa Business License Expiration Date: ________________________________

75-3099628
Lynn Hemans
President
Pete Deutschman
Treasurer
Joe Lewis, III
Secretary
Director
Director
Ray Weston
Director
Eric Rans
Director
April Negrete
Tracy Carmichael (Authorized Signee)
President
CEO
John Eumurian (Authorized Signee)
Sean Boulton
Director
Kathy Kiefe (Authorized Signee)
Acctg. Manager
Jennifer Friend (Authorized Signee)
(949) 722-7863
(949) 722-7863
(949) 722-7863
(949) 722-7863
(949) 722-7863
(949) 722-7863
(949) 722-7863
(949) 722-7863
(949) 722-7863
(949) 722-7863
(949) 722-7863
#43665
5/31/2022
16 242

EX PARTE COMMUNICATIONS CERTIFICATION
Please indicate by signing below one of the following two statements. Only sign one statement.

I certify that Proposer and Proposer’s representatives have not had any communication with a City Councilmember concerning informal RFP No. 21-13 for Community Service Programs-CDBG-CV at any time after June 23, 2021.
________________________________ Date: _______________________ Signature
________________________________
Print
OR
I certify that Proposer or Proposer’s representatives have communicated after June 23, 2021 with a City Councilmember concerning informal RFP No. 21-13 for Community Service Programs-CDBG- CV. A copy of all such communications is attached to this form for public distribution. ________________________________ Date: _______________________ Signature
________________________________
Print
07/29/2021
Jennifer Friend
17 243

DISQUALIFICATION QUESTIONNAIRE
The Contractor shall complete the following questionnaire:

Has the Contractor, any officer of the Contractor, or any employee of the Contractor who has proprietary interest in the Contractor, ever been disqualified, removed, or otherwise prevented from bidding on, or completing a federal, state, or local government project because of a violation of law or safety regulation?
Yes _____ No _____
If the answer is yes, explain the circumstances in the following space.

X
18 244

DISCLOSURE OF GOVERNMENT POSITIONS
Each Proposer shall disclose below whether any owner or employee of Contractor currently hold positions as elected or appointed officials, directors, officers, or employees of a governmental entity or held such positions in the past twelve months. List below or state "None."

None
19 245

COMPANY PROFILE & REFERENCES

Company Legal Name:

Company Legal Status (corporation, partnership, sole proprietor etc.):

Active licenses issued by the California State Contractor’s License Board:

Business Address:

Website Address:

Telephone Number: Facsimile Number:

Email Address:

Length of time the firm has been in business:

Length of time at current location:

Is your firm a sole proprietorship doing business under a different name: ___Yes ___No

If yes, please indicate sole proprietor’s name and the name you are doing business under:

Federal Taxpayer ID Number:

Regular Business Hours:

Regular holidays and hours when business is closed:

Contact person in reference to this solicitation:

Telephone Number: Facsimile Number:

Email Address:

Contact person for accounts payable:

Telephone Number: Facsimile Number:

Email Address:

Name of Project Manager:

Telephone Number: Facsimile Number:

Email Address:

Corporation
1954 Placentia Ave. #202
www.projecthopealliance.org
(949) 722-7863
(949) 722-7836
32 years
X
75-3099628
9-5
(949) 500-5828
[email protected]
(949) 722-7836
Jennifer Friend, CEO
Rachel Cardenas, Dir. of Behavioral Health
(949) 722-7801
(949) 722-7836
(949) 722-7836
[email protected]
Kathy Kiefe, Manager of Acctg. & Admin.
[email protected]
(949) 791-2710
8 years
National holidays, Good Friday, Christmas to New Years
20 246
COMPANY PROFILE & REFERENCES (Continued)

Submit the company names, addresses, telephone numbers, email, contact names, and brief contract descriptions of at least three clients, preferably other municipalities for whom comparable projects have been completed or submit letters from your references which include the requested information.

Company Name:

Contact Name:

Contract Amount:

Email:

Address:

Brief Contract Description:

Company Name:

Telephone Number:

Contact Name:

Contract Amount:

Email:

Address:

Brief Contract Description:

Company Name:

Telephone Number:

Contact Name:

Contract Amount:

Email:

Address:

Brief Contract Description:

David Flores
$150,000
20 Civic Center Plaza | Santa Ana, CA 92702
City of Santa Ana
City of Costa Mesa
[email protected], (714) 647-6561
(714) 754-5678
Mike Linares
$20,000
[email protected]
P.O. Box 1200
Costa Mesa, CA 92628-1200
Serve 25 Costa Mesa McKinney-Vento program students as well as expand the in-place case management program to Estancia High School and/or TeWinkle Intermediate School in the 2021/22 school year.

Provide holistic supportive and educational-related services, centered around an intensive case management model, to 50 school age children, adolescents and young adults (up to age 24) who are experiencing barriers to education and employment due to homelessness. Also provide distance learning support related to the ongoing impact from the COVID pandemic.

United Way of Orange County
18012 Mitchell South
Irvine, CA 92614-6008
[email protected]
$300,000
Carol Kim
(949) 263-6121
Funds provided for rapid rehousing services for OC homeless families (96 individuals annually) living in emergency shelters, motels, transitional housing and doubled tripled up.Contract supplied $100,000 per year for 3 years.
21 247
Company Name:

Telephone Number:

Contact Name:

Contract Amount:

Email:

Address:

Brief Contract Description:

Company Name:

Telephone Number:

Contact Name:

Contract Amount:

Email:

Address:

Brief Contract Description:

22 248

BIDDER/APPLICANT/CONTRACTOR CAMPAIGN CONTRIBUTION

DISCLOSURE FORM
Proposer/Provider/Applicant is required to identify any campaign contribution or cumulative contributions greater than $249 to any city council member in the twelve months prior to submitting an application, proposal, statement of qualifications or bid requiring approval by the City Council.

Date Name of Donor
Company/Business
Affiliation
Name of
Recipient Amount
Except as described above, I/we have not made any campaign contribution in the amount of $250 or more to any Costa Mesa City Council Member in the twelve months preceding this Application/Proposal.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Bidder/Applicant/Proposer
Date
Not Applicable
07/29/2021
Jennifer Friend
23 249

MONTHLY COST ALLOCATION PROPOSAL

TASK DESCRIPTION MONTHLY PROGRAM
COST
1 2
3 TOTAL
All originals of plans, field notes, data and calculations, reports, electronic files, etc., will be turned over to the City upon completion of work. Ten percent (10%) of the total contract fee will be withheld under final project documents are submitted to the City.

Case Manager 1
Case Manager 2
Case Manager 3
5,610.00
3,910.16
3,058.38
4 Overhead 833.33
13,411.79
24 250

EXHIBIT C
COUNCIL POLICY NO. 100-5
251

CITY OF COSTA MESA, CALIFORNIA COUNCIL POLICY
BACKGROUND Under the Federal Drug-Free Workplace Act of 1988, passed as part of omnibus drug legislation enacted November 18, 1988, contractors and grantees of Federal funds must certify that they will provide drug-free workplaces. At the present time, the City of Costa Mesa, as a sub-grantee of Federal funds under a variety of programs, is required to abide by this Act. The City Council has expressed its support of the national effort to eradicate drug abuse through the creation of a Substance Abuse Committee, institution of a City-wide D.A.R.E. program in all local schools and other activities in support of a drug-free community. This policy is intended to extend that effort to contractors and grantees of the City of Costa Mesa in the elimination of dangerous drugs in the workplace. PURPOSE It is the purpose of this Policy to: 1. Clearly state the City of Costa Mesa’s commitment to a drug-free society. 2. Set forth guidelines to ensure that public, private, and nonprofit organizations receiving funds from the City of Costa Mesa share the commitment to a drug-free workplace. POLICY The City Manager, under direction by the City Council, shall take the necessary steps to see that the following provisions are included in all contracts and agreements entered into by the City of Costa Mesa involving the disbursement of funds. 1. Contractor or Sub-grantee hereby certifies that it will provide a drug-free workplace by: A. Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in Contractor’s and/or sub-grantee’s workplace, specifically the job site or location included in this contract, and specifying the actions that will be taken against the employees for violation of such prohibition; B. Establishing a Drug-Free Awareness Program to inform employees about:

SUBJECT DRUG-FREE WORKPLACE POLICY NUMBER 100-5 EFFECTIVE DATE 8-8-89 PAGE 1 of 3 252

SUBJECT DRUG-FREE WORKPLACE POLICY NUMBER 100-5 EFFECTIVE DATE 8-8-89 PAGE 2 of 3 1. The dangers of drug abuse in the workplace; 2. Contractor’s and/or sub-grantee’s policy of maintaining a drug-free workplace; 3. Any available drug counseling, rehabilitation and employee assistance programs; and 4. The penalties that may be imposed upon employees for drug abuse violations occurring in the workplace; C. Making it a requirement that each employee to be engaged in the performance of the contract be given a copy of the statement required by subparagraph A; D. Notifying the employee in the statement required by subparagraph 1 A that, as a condition of employment under the contract, the employee will: 1. Abide by the terms of the statement; and 2. Notify the employer of any criminal drug statute conviction for a violation occurring in the workplace no later than five (5) days after such conviction; E. Notifying the City of Costa Mesa within ten (10) days after receiving notice under subparagraph 1 D 2 from an employee or otherwise receiving the actual notice of such conviction; F. Taking one of the following actions within thirty (30) days of receiving notice under subparagraph 1 D 2 with respect to an employee who is so convicted: 1. Taking appropriate personnel action against such an employee, up to and including termination; or 2. Requiring such employee to participate satisfactorily in a drug abuse assistance or rehabilitation program approved for such purposes by a Federal, State, or local health agency, law enforcement, or other appropriate agency; 253

SUBJECT DRUG-FREE WORKPLACE POLICY NUMBER 100-5 EFFECTIVE DATE 8-8-89 PAGE 3 of 3 G. Making a good faith effort to maintain a drug-free workplace through implementation of subparagraphs 1 A through 1 F, inclusive. 2. Contractor and/or sub-grantee shall be deemed to be in violation of this Policy if the City of Costa Mesa determines that: a. Contractor and/or sub-grantee has made a false certification under paragraph 1 above; b. Contractor and/or sub-grantee has violated the certification by failing to carry out the requirements of subparagraphs 1 A through 1 G above; c. Such number of employees of Contractor and/or sub-grantee have been convicted of violations of criminal drug statutes for violations occurring in the workplace as to indicate that the contractor and/or sub-grantee has failed to make a good faith effort to provide a drug-free workplace. 3. Should any contractor and/or sub-grantee be deemed to be in violation of this Policy pursuant to the provisions of 2 A, B, and C, a suspension, termination or debarment proceeding subject to applicable Federal, State, and local laws shall be conducted. Upon issuance of any final decision under this section requiring debarment of a contractor and/or sub-grantee, the contractor and/or sub-grantee shall be ineligible for award of any contract, agreement or grant from the City of Costa Mesa for a period specified in the decision, not to exceed five (5) years. Upon issuance of any final decision recommending against debarment of the contractor and/or sub-grantee, the contractor and/or sub-grantee shall be eligible for compensation as provided by law. 254

CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 23-998 Meeting Date: 2/7/2023
TITLE:

CITY OF COSTA MESA, COSTA MESA PUBLIC FINANCING AUTHORITY, COSTA MESA

FINANCING AUTHORITY, AND COSTA MESA HOUSING AUTHORITY FINANCIAL STATEMENTS, AND HOUSING SUCCESSOR ANNUAL REPORT FOR THE PERIOD ENDING JUNE 30, 2022.

DEPARTMENT: FINANCE DEPARTMENT
PRESENTED BY: CAROL MOLINA, FINANCE DIRECTOR
CONTACT INFORMATION: CAROL MOLINA, FINANCE DIRECTOR, (714) 754-5243 RECOMMENDATION:

1. Staff recommends the City Council receive and file the following reports for the fiscal year ended June 30, 2022:
a. Annual Comprehensive Financial Report (ACFR) (Attachment 1); b. Air Quality Improvement Fund Compliance Report (Attachment 2); c. Audit Communication Letter (Attachment 3); and
d. Independent Accountant's Report on Agreed-Upon Procedures Applied to Appropriation Limit Worksheets (Attachment 4).

2. Staff recommends the City Council and Costa Mesa Public Financing Authority receive and file the Costa Mesa Public Financing Authority audited financial statements for the fiscal year ended June 30, 2022 (Attachment 5).

3. Staff recommends the City Council and Costa Mesa Financing Authority receive and file the Costa Mesa Financing Authority audited financial statements for the fiscal year ended June 30, 2022 (Attachment 6).

4. Staff recommends the City Council and Housing Authority receive and file the following reports for the fiscal year ended June 30, 2022:
a. Independent Financial Audit of the Costa Mesa Housing Authority, including the Low and Moderate Income Housing Asset Fund (Attachment 7); and
b. The Fiscal Year 2021-22 Housing Successor Annual Report prepared under the California Health and Safety Code Section 34176.1 as the housing successor and Section 34328 as a housing authority (Attachment 8).

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BACKGROUND:

Federal Single Audit guidelines require a recipient of federal funds to have an independent annual financial audit and compliance audit of the federal programs. As such, the City has retained an independent public accounting firm of licensed certified public accountants, Davis Farr LLP, to complete an audit of the City’s financial records. The goal of the financial statement audit is to provide users with a reasonable assurance from an independent source that the information presented in the financial statements is reliable and free of material misstatements. All of the financial reports received unmodified opinions from Davis Farr LLP signifying that, without exception, the financial statements fairly present in all material respects the financial position of the City.

ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR)
The ACFR is an audited summary report of the financial transactions of the City for Fiscal Year 2021-

22. The report is presented to the City Council and designed to provide summary financial information.

The financial statements were prepared in conformity with generally accepted accounting principles (GAAP) as set by the Governmental Accounting Standards Board (GASB). The specific financial documents on which the auditor expresses an opinion include (1) the financial statements, and (2) notes to the basic financial statements, which include required supplementary information. These documents, along with the auditor’sopinion letter and management’sdiscussion and analysis, form the core of the ACFR. The additional documents within the ACFR include: the letter of transmittal jointly from the City Manager and Finance Director, the combining and individual fund statements, and a supplemental statistical section presenting detailed information to assist the reader in assessing the economic condition of the City.

The City's audit was performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the Comptroller General of the United States. Such audits utilize sampling of data, inquiries of staff and management, testing of procedures and transactions, confirmation with outside parties, checking of certain internal files and documents, review of meeting minutes, specialized audit checklists, and numerous other accounting techniques. The auditors also considered the City's internal controls in determining what procedures to use and the size of samples to be selected and reviewed. In their report, the auditors indicated that the financial statements were free of material misstatements and all significant transactions were recognized in the proper period.

AIR QUALITY IMPROVEMENT FUND COMPLIANCE REPORT
Assembly Bill 2766 (AB2766) authorized the South Coast Air Quality Management District (SCAQMD) to impose an annual vehicle registration fee and to distribute a portion of that revenue to all local jurisdictions within the South Coast Air Basin. These revenues are to be used solely to reduce air pollution from motor vehicles by implementing new programs and studies necessary for the implementation of the California Clean Air Act. The City's Air Quality Improvement Fund accounts for the use of these funds received from SCAQMD. The Air Quality Improvement Fund Compliance Report received an unmodified (clean) audit opinion.

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AUDIT COMMUNICATION LETTER
Audit clarity standards (AU-C) Section 260 requires defined and documented communications between the auditors and the City Council or Audit Committee. This letter provides an opportunity for the auditors to report on any difficulties or major concerns discovered during the audit and explain their role. They provide commentary on management's responsibilities for accounting policies and states that no significant difficulties were encountered in performing the audit, and no disagreements occurred with management.

INDEPENDENT ACCOUNTANT’S REPORT ON AGREED-UPON PROCEDURES APPLIED TO

APPROPRIATION LIMIT WORKSHEETS
Section 1.5 of Article XIIIB of the California Constitution requires that the City follow the procedures agreed upon by the State of California and the League of California Cities (as presented in the League publication entitled “ArticleXIIIB Appropriations Limitation Uniform Guidelines”)to determine the annual appropriations limit (known as the Gann Limit), which sets forth the maximum amount of special tax revenues an agency is allowed to spend. The auditors perform an "Agreed-Upon Procedure" where they recalculate the Gann Limit. They determined that the City has correctly calculated the Gann Limit.

COSTA MESA PUBLIC FINANCING AUTHORITY FINANCIAL STATEMENTS The Costa Mesa Public Financing Authority was created by a joint powers agreement between the City of Costa Mesa and the former Costa Mesa Redevelopment Agency, dated August 20, 1990, to provide financing for capital improvements, acquisition of capital improvements, and the purchase of local obligations. Davis Farr LLP completed an audit of the Costa Mesa Public Financing Authority’s (a component unit of the City of Costa Mesa) financial statements and the related notes to the financial statements.

COSTA MESA FINANCING AUTHORITY FINANCIAL STATEMENTS
The Costa Mesa Financing Authority was created by a joint powers agreement between the City of Costa Mesa and the Costa Mesa Housing Authority, dated August 1, 2017. It was created pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California to provide financing for capital improvements, acquisition of capital improvements, and the purchase of local obligations. Davis Farr LLP completed an audit of the Costa Mesa Financing Authority’s(a component unit of the City of Costa Mesa) financial statements and the related notes to the financial statements.

COSTA MESA HOUSING AUTHORITY FINANCIAL STATEMENTS AND HOUSING SUCCESSOR

ANNUAL REPORT
On January 17, 2012, under the California Housing Authorities Law (HAL), Health and Safety Code (HSC) Section 34200, et seq., the City Council established the Costa Mesa Housing Authority (Housing Authority). Also on that date, the City Council selected the Housing Authority to be the housing successor and, as of February 1, 2012, to assume the housing assets, duties, functions and obligations of the former Costa Mesa Redevelopment Agency (Former Agency). These actions occurred as a result of the dissolution of the Former Agency under Assembly Bill x1 26, the California Supreme Court’s decision in California Redevelopment Association v. Matosantos, Assembly Bill 1484, and other subsequent dissolution legislation (together, “DissolutionLaw”),which laws regulate

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1484, and other subsequent dissolution legislation (together, “DissolutionLaw”),which laws regulate the administration of successor agencies and housing successors due to the dissolution of all California redevelopment agencies. Further, under Section 34328 of the HAL, the Housing Authority also prepares and presents an annual report on its activities for the preceding year.

Under Section 34176, added by AB x1 26 and amended by AB 1484, the State Department of Finance (DOF) issued a decision letter in January 2013 that confirms the Housing Authority holds all affordable housing assets of the Former Agency as listed in a Housing Asset Transfer schedule prepared by the Housing Authority and submitted to the DOF prior to August 1, 2012. Since dissolution, all housing assets are held and administered by the Housing Authority in the Low to Moderate Income Housing Asset Fund (LMIHAF) under the Dissolution Law, as per Sections 34176 and 34176.1. Under Section 34176.1(f), the Housing Successor is required to conduct an independent financial audit of LMIHAF and prepare an annual report for each fiscal year, and provide such reports to the governing body, within six months after the end of the fiscal year.

From inception, the Housing Authority’s primary function had been to serve as the Housing Successor to the former Agency. Beginning in Fiscal Year (FY) 2018-19, the Housing Authority expanded services beyond the scope of LMIHAF by consolidating the City’s existing homeless outreach program and establishing a new bridge shelter operation for homeless individuals.

ANALYSIS:

Based on the results of their audit, Davis Farr LLP provided the City with an unmodified opinion on the financial statements, which indicates that the City’s financial statements are free of material misstatements and are in accordance with GAAP. This is the best and highest audit opinion the City could receive.

GENERAL FUND FINANCIAL RESULTS
FY 2021-22 General Fund revenues totaled $165.7 million, overall in line with pre-pandemic levels.

Revenues in the past fiscal year were impacted by the closures due to the pandemic, whereas FY 2021-22 started to experience pre-pandemic levels in some of the main revenue categories.

Summary is as follows:
• Sales tax revenue increased by $13.5 million compared to last fiscal year. Sales tax revenues have exceeded pre-pandemic levels due to increased consumer demand and increased prices as a result of inflation.
• Transient occupancy tax (hotel tax) increased by $4.1 million over the prior fiscal year, almost at pre-pandemic levels, as a result of significant increase in tourism and travel, as travel restrictions put in place during the pandemic were lifted. • License & permits and charges for services increased by $2.9 million and $2.1 million, respectively.

General Fund expenditures (before transfers) totaled $140.1 million, approximately $3.1 million below the budget. The variance was due to a deference of debt service payments for the Fire and Rescue Department safety apparatus and citywide vacancies.

General Fund transfers-out totaled $21.4 million and included $8.5 million to the Capital

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General Fund transfers-out totaled $21.4 million and included $8.5 million to the Capital Improvements Fund for capital improvement projects and the transfer for the 5% Capital Assets Needs (CAN) Ordinance, $2.8 million to the Financing Authority Debt Service Fund for bond debt service payments, $1.7 million to the Housing Authority for the homeless shelter and related program costs, $6.4 million to the Internal Service Funds for various equipment, technology and vehicle purchases, and $1.8 million to the Self-Insurance Fund for annual worker’scompensation claims and general liability costs.

GENERAL FUND - FUND BALANCE
The General Fund’s ending fund balance increased by $4.3 million. General Fund expenditures totaled $161.4 million, including transfers, and was offset by $165.7 million in General Fund revenues.

As of June 30, 2022, the City has $25.1 million committed for declared disasters, self-insurance, and economic uncertainty; $13.1 million assigned for compensated absences, Police Retirement 1% Supplemental Plan, workers compensation claims, facilities reserve, strategic plan projects, prepaid items, and inventory; $3.1 million for the Section 115 Trust for post-retirement benefits; and $16.5 million in unassigned fund balance for a total of $57.8 million.

STATEMENT OF NET POSITION
Change in Net Position
At June 30, 2022, the Statement of Net Position which is in essence the City’soverall balance sheet, and reflects the City’stotal assets and liabilities on an All Funds basis, reflects a positive $14.6 million increase. This is primarily due to the receipt of the second tranche of the Federal American Rescue Plan funds along with the City’s prudent financial management.

Pensions and Retiree Medical Liabilities
The City’snet pension liability decreased by $82.8 million to $229.6 million for two reasons: CalPERS rate of return in 2021 earned 13.3%, almost doubling its target of 6.8% and the difference between actual and expected experiences. Three of the City’s four pension plans are administered by CalPERS. The Police 1% Supplemental Plan is administered by the City and is paid on a pay-as-you- go basis.

In addition, FY 2021-22 is the fifth year the City is required to record the OPEB net liability on its financial statements, similar to the pension liability above. The City’snet OPEB liability increased by $3.4 million to $66.3 million. This plan is administered by the City and is paid to retirees on a pay-as- you-go basis.

COSTA MESA FINANCING AUTHORITY FINANCIAL STATEMENTS
The Financing Authority received an unmodified opinion from the auditors, Davis Farr LLP. This is the highest and cleanest attestation report given by independent auditors. The reports that deal with compliance information also received unmodified opinions and no findings were noted.

In Fiscal Year 2021-22, the Financing Authority continued to support debt service payments for the 2017 Lease Revenue Bonds, which were originally issued in October 2017 to fund the Donald Dungan Library, Norma Hertzog Neighborhood Community Center and Lions Park projects; and to

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Dungan Library, Norma Hertzog Neighborhood Community Center and Lions Park projects; and to advance refund the 2007 Certificates of Participation. At June 30, 2022, the 2017 bonds outstanding principal was $23.1 million.

COSTA MESA HOUSING AUTHORITY FINANCIAL STATEMENTS AND HOUSING SUCCESSOR

ANNUAL REPORT
An audit of the Housing Authority’s financial activities, consisting of the LMIHAF activities and homeless assistance programs, was completed as part of the City’soverall financial audit by an independent certified public accounting firm, Davis Farr, LLP. The Housing Authority received an unmodified opinion. This is the highest attestation report given by independent auditors. The reports that deal with compliance information also received unmodified opinions with no findings. The audit results are incorporated as part of the City’sAnnual Comprehensive Financial Report (ACFR). The section in the City’s audit/ACFR relating to the LMIHAF Audit is entitled: Costa Mesa Housing Authority (A Component Unit of the City of Costa Mesa) Financial Statements Year ended June 30, 2022 (Attachment 7).

In FY 2021-22, the Housing Authority received approximately $2.2 million in revenues and incurred $4.0 million in expenditures. The General Fund provided a budgeted $1.7 million transfer to the homeless outreach and bridge shelter programs. At June 30, 2022, the Housing Authority’savailable fund balance was $3.6 million, all of which is restricted for LMIHAF purposes.

ALTERNATIVES:

Not applicable. The reports are for receive and file purposes.

FISCAL REVIEW:

There is no fiscal impact associated with receiving and filing the reports.

LEGAL REVIEW:

The City Attorney’s Office has reviewed the reports, and approves the reports as to form.

CITY COUNCIL GOALS AND PRIORITIES:

This item supports the following City Council Goal:
· Achieve Long-Term Fiscal Sustainability
CONCLUSION:

1. Staff recommends the City Council receive and file the following reports for the fiscal year ended June 30, 2022:
a. Annual Comprehensive Financial Report (ACFR) (Attachment 1); b. Air Quality Improvement Fund Compliance Report (Attachment 2); c. Audit Communication Letter (Attachment 3); and
d. Independent Accountant's Report on Agreed-Upon Procedures Applied to Appropriation Limit Worksheets (Attachment 4).

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2. Staff recommends the City Council and Costa Mesa Public Financing Authority receive and file the Costa Mesa Public Financing Authority audited financial statements for the fiscal year ended June 30, 2022 (Attachment 5).

3. Staff recommends the City Council and Costa Mesa Financing Authority receive and file the Costa Mesa Financing Authority audited financial statements for the fiscal year ended June 30, 2022 (Attachment 6)

4. Staff recommends the City Council and Housing Authority receive and file the following reports for the fiscal year ended June 30, 2022:
a. Independent Financial Audit of the Costa Mesa Housing Authority, including the Low and Moderate Income Housing Asset Fund (Attachment 7); and
b. The Fiscal Year 2021-22 Housing Successor Annual Report prepared under the California Health and Safety Code Seciton34176.1 as the housing successor and Section 34328 as a housing authority (Attachment 8).

261

CITY OF COSTA MESA, CALIFORNIA

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

CITY OF
THE
FISCAL YEAR ENDEDJUNE 30, 2022
"UUBDINFOU

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Annual
Comprehensive
Financial Report
Year

ended June 30, 20
2 2

Prepared

b
y
: Finance
Department

www
.costamesaca.gov

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Annual
Compr
e
hensive
Financial Report

Year ended June 30, 20
2 2

TABLE

OF

CONTENTS

Page

INTRODUCTORY SECTION:

Letter of Transmittal

i

List of Principal Officials

vi
i

Organizational Chart

vii
i

GFOA Certificate of
Achievement for Excellence in Financial Reporting

ix

FINANCIAL SECTION:

Independent Auditor
’
s Report

1 Management’s Discussion and Analysis (Required Supplementary

Information)

5 Basic Financial Statements:

Government
-
wide Financial Stat
ements:

Statement of Net Position

1 6

Statement of Activities

1 7

Fund Financial Statements:

Governmental Funds:

Balance Sheet

1 9

Reconciliation of the Balance Sheet to the Statement of

Net Position

2 1

Statement of Revenues, Expenditures and Changes in Fund

Balances

2 2

Reconciliation of the Statement of Revenues, Expenditures

and Changes in Fund
Balances to the Statement of Activities

2 4

Proprietary Funds:

Statement of Net Position

2 5

Statement of Revenues, Expenses and Changes in Net Position

2 6

Statement of Cash Flows

2 7

Fiduciary Funds:

Statement of
Fiduciary
Net Pos
ition

2 8

Statement of Changes in
Fiduciary
Net Position

2 9

Notes to the Basic Financial Statements

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Compr
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Financial Report

Year ended June 30, 20
2 2

TABLE OF

CONTENTS, (CONTINUED)

Page

Required Supplementary Information:

Miscellaneous Plan:

Schedule of Changes in the Net Pension Liability and Related Ratios

7 6

Schedule of Contributions

7 8

Police Safety Plan:

Schedule of
Changes in the Net Pension Liability and Related Ratios

80 Schedule of Contributions

82 Fire Safety Plan:

Schedule of Proportionate Share of the Net Pension Liability

8 4

Schedule of Contributions

8 6

Police 1% Supplemental
Retirement Plan:

Schedule of Changes in the Net Pension Liability and Related Ratios

8 8

Other Post
-
Employment Benefit Plan:

Schedule of Changes in OPEB Liability and Related Ratios

90 Schedule of Revenues, Expenditures and Changes in Fund

Balances
–

Budget and Actual:

General Fund

92 Government Grants

Fund

9 4

American Rescue Plan Act

Fund

95 Notes to Required Supplementary Information

96 Supplementary Schedules:

Nonmajor Governmental Funds:

Combining Balance Sheet

100

Combining Statement of Revenues, Expenditures and

Changes in Fund Balances

104

Schedule of Revenues, Expenditures and Changes in Fund

Balances
–

Budget

and Actual:

Nonmajor

Special Revenue Funds
:

Gas Tax Fund

10 8

HOME Program Fund

10 9

Air Quality Improvement Fund

1 10

Community Development Fund

111

Supplemental Law Enforcement Services Fund

1 12

Rental
Rehabilitation Fund

113

Narcotics Forfeiture Fund

1 14

Local Law Enforcement Block Grant Fund

115

Office of Traffic Safety Fund

116

Housing Authority Fund

117

Major
and

N
onmajor
C
apital
P
rojects
F
unds:

Capital Improvements

1 1
8 Measure “M2” Fund

1 1
9 Parking Districts Fund

1 20

Golf Course

Improvements

Fund

1 21

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Compr
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hensive
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Year ended June 30, 20
2 2

TABLE OF CONTENTS, (CONTINUED)

Page

Park Development

Fund

1 22

Drainage Fees Fund

1 23

Traffic Impact Fees Fund

1 24

Fire System Development Fees Fund

1 2
5 Jack Hammett Sports Complex Fund

1 2
6 Lions Park
Capital Improvements

Fund

1 2
7 Internal Service Funds:

Combining Statement of Net Position

1 2
9 Combining Statement of Revenues, Expenses and Changes in

Net Position

1 30

Combining Statement of Cash
Flows

1 31

STATISTICAL SECTION:

Table

Net Position by Component
–

Last Ten Fiscal Years

1 1
33 Changes in Net Position
–

Last Ten Fiscal Years

2 134

Fund Balances of Governmental Funds
–

Last Ten Fiscal Years

3 1
3 5

Changes in Fund Balance of
Governmental Funds
–

Last Ten Fiscal Years

4 1
3 6

Tax Revenues by Source, Governmental Funds
–

Last Ten Fiscal Years

5 1
37 Taxable Sales by Category
–

Last Ten Calendar Years

6 1
3 8

Principal Sales Tax Remitters by Category
–

Current Year and Nine Year
s Ago
7 1
3 9

Direct and Overlapping Sales Tax Rates
–

Last Ten Fiscal Years

8 1
40 Property Tax Levies and Collections
–

Last Ten Fiscal Years

9 1
41 Assessed Value and Estimated Actual Value of

Taxable Property
–

Last Ten Fiscal Years

10 1
42 Direct and Overlapping Property Tax Rates
–

Last Ten Fiscal Years

11 1
43 Principal Property Taxpayers
–

Current Year and Nine Years Ago

12 1
44 Ratio of General Bonded Debt Outstanding

and Legal Debt Margin
–

Last Ten Fiscal Years

13 1
4 5

Ratio
s

of
Outstanding Debt by Type
-

Last Ten Fiscal Years

14 1
4 6

Direct and Overlapping Governmental Activities Debt

15 1
4 7

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I

TY OF COSTA MESA, CALIFORNIA

Annual
Compr
e
hensive
Financial Report

Year ended June 30, 20
2 2

TABLE

OF

CONTENTS,

(CONTINUED)

Table

Page

Demographic and Economic Statistics
–

Last Ten Calendar Years

16 1
4 8

Principal Employers
-

Current Year and Nine Years Ago

17 1
4 9

Operating Indicators by Function/Program
–

Last Ten Fiscal Years

18 1
50 Full Time Equivalent City Government Employees by

Function/Program
–

Last Ten Fiscal Years

19 1
51 Capital Asset Sta
tistics by Function/Program
–

Last Ten Fiscal Years

20 1
52 267
i

CITY OF COSTA MESA

77 FAIR DRIVE, P.O. BOX 1200, COSTA MESA, CA 92628- 1200

FROM THE OFFICE OF THE FINANCE DIRECTOR —CITY TREASURER

December 30, 2022

Honorable Mayor and Councilmembers:

The Annual Comprehensive Financial Report (ACFR) of the City of Costa Mesa ( the City) for the fiscal year ended June 30, 2022, is hereby submitted. These statements have been prepared in conformity with generally accepted accounting p rinciples (GAAP) and audited in accordance with generally accepted auditing standards by an independent public accounting firm of licensed certified public accountants.

This report consists of management’s representations conc erning finances of the City .

Responsibility for both accuracy of the data, and completeness and fairness of presentation, including all disc losures, rests with management. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile suffici ent reliable i nformation for preparation of financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement.

Management asserts that to the best of its knowledge and belief, the enclosed data is accurate in all material respects , and reported in a manner designed to pre sent fairly the financial position and results of operations of various funds and component units of the City . All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included.

The City’s financial statements for the fiscal year ended June 30, 2022, have been audited by Davis Farr LLP, an independent public accounting firm of licensed certified public accountants.

The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for th e fiscal year ended June 30, 202 2, 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 upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 2022, are fairly presented in conformity with GAAP. The independent auditor’s report is pre sented as the first component in the financial section of this report.

The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City’s separately issued Single Audit Report.

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GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the independent auditor’s report.

PROFILE OF THE GOVERNMENT

The City, incorporated in 1953, has an estimated population of 112,780 and a land area of

16.8 square miles. It is located in the southern coastal area of Orange County, California, and is bordered by the cities of Santa Ana, Newport Beach, Hun tington Beach, Fountain Valley, and Irvine. The City is approximately 35 miles southeast of Los Angeles and 8 5 miles northwest of San Diego. At its nearest point, the City is approximately 1. 5 miles from the Pacific Ocean. The City is also home to the world-renowned Henry and Renee Segerstrom Concert Hall, the Segerstrom Center for the Arts , the Orange County Fairgrounds , and the new state-of-the-art of the Orange County Museum of the Arts (OCMA).

The City has operated under the council -manager form of government since incorporation.

Policy making and legislative authority are vested in the Mayor and City Council . The City Manager is responsible for implementing policies and ordinances approved by the City Council, overseeing the day-to-day operations of the City, and appointing department heads.

In November 2016, voters approved Measure EE regarding Voting District Formation and six voting districts were formed. Beginning in December 2018, the City Council transitioned from five Council Members elected at-large to seven Council Members. Each of the six district s elects one Council Member and the Mayor is elected at -large every two years. Council members are elected to four-year staggered terms.

The City is a “full service city” and provides a wide range of services including: police and fire protection; emergency medical aid; building safety regulation and inspection; land use planning and zoning; housing and community development; maintenance a nd improvement of streets and related structures; traffic safety, maintenance , and improvement; homeless street outreach and shelter services; and a full range of recreational and cultural programs.

A “full-service city" is defined as a city that is financially responsible for the full set of basic tax-dependent municipal services within its jurisdiction including police, fire, park s and recreation, public works, and land-use planning.

The City maintains budgetary controls, the objective of which is to ens ure compliance with legal provisions embodied in the annual budget approved by the City Council. Annual budgets are legally adopted for all governmental funds on a basis consistent with GAAP , except for certain special revenue and debt service funds for which annual budgets are not adopted.

Budgetary control for management purposes is maintained as authorized by City Council.

The City Manager submits the budget to the City Council, who adopts it prior to the beginning of the fiscal year. Public hearing s are conducted prior to budget adoption. Supplemental appropriations, when required during the fiscal year, are als o approved by the City Council.

Intra-functional and interfund budgetary amendments are approved by the C ity Manager subject to the total amount authorized by City Council.

ECONOMIC CONDITION

During fiscal year 2021-22, the City continued to demonstrate resilience despite two years of challenges from the COVID-19 pandemic. The City’s local economy has fared better than both the nation and State of California based primarily on the strength of a strong retail base, local businesses, and the diverse types of industries located within the City. A strong tax base along with fiscal prudence resulted in a year-end surplus for FY 2021-22. 269
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Fiscal year 2021 -22 marked the second full year of the economic impacts of th e worldwide pandemic, COVID-19. The pandemic reshaped the consumer’s purchasing interests towards more “experiences” such as an increase in dining out, rise in tourism, and entertainment venues. Commuters returning to offices combined with fore ign conflicts abroad put upward pressure on oil prices and left Californians facing the highest average price per gallon on record resulting in fuel and service station receipts 42% higher than last year.

Further, higher priced consumer goods through periods of consistent demand have led to economic inflation. The Federal Reserve Board’s actions to aggressively raise interest rates to curb inflation coupled with supply shortages are anticipated to put downward pressure on building materials and financed general consumer goods, resul ting in slower growth expectations into 2023.

In fiscal year 2021-22, General Fund revenue , not including transfers, increased by $ 24.7 million or 17.5 percent restoring General Fund revenue to essentially pre -pandemic levels.

This is primarily due to a strong rebound in the retail sector and online purchases resulting in a sales tax revenue increase of $13.5 million, or 21.1 percent, over the prior fiscal year which was artificially depressed due to the pandemic . Costa Mesa is home to the renowned luxury retail center South Coast Plaza, Metro Pointe, and a variety of brick and mortar stores. Pent up demand for in person retail and restaurant visits and high inflation passed along in the cost of goods resulted in a significant increase to sales tax revenue. Sales tax revenue has recovered to pre -pandemic levels and exceeded fiscal year 2018-19 revenue, the last full fiscal year prior to the pandemic, by $12.4 million, or 19.1 percent.

Prior to the economic impacts of the pande mic, transient occupancy tax (TOT) revenue showed signs of a slight slowdown. In March 2020, the pandemic spread globally. Costa Mesa hotels experienced a significant reduction in visitors. Increased tourism and travel, as travel restrictions were lifted, led to an increase in this revenue stream. TOT revenue increased by $4.1 million, or 95.4 percent, over the prior fiscal year. While occupancy levels have not returned to pre-pandemic levels, they are increasing. TOT revenue has not fully recovered to pre-pandemic levels.

General Fund expenditures increased by $16.5 million or 2.6 percent compared to the pri or year. This increase essentially reflects a return to pre -pandemic levels of spending and the restoration of staffing and ser ious cuts during the pandemic. For fiscal year 202 1-22, the General Fund ended with a net operating positive of $25.6 million before other financing uses of $21.4 million, comprised of transfers to the Internal Services Funds for the City’s Capital, Technology, and Equipment Funds ; Financing Authority Debt Service Fund for debt service payments; and the Housing Authority for homeless services programs costs . Operating transfers out decreased by $5.3 million, however net financing uses increased by $3.9 million compared to the pr ior fiscal year . This was due to offsetting operating transfers in to the General Fund during FY 2020 -21 for eligible American Rescue Plan Act (ARPA) expenses incurred. The City did not incur any eligible ARPA expenses in FY 2021 -22. The City received its second installment of ARPA funds in June 2022. After the net of other financing uses, the General Fund ended with an increase of $4.3 million to fund balance for fiscal year 2021-22.

The City is cautiously expecting a stable outlook for the local economy . The City enjoys a strong, diverse local economy, well -funded emergency reserves, and a solid commitment to delivering top quality services to the community.

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MAJOR AND FUTURE DEVELOPMENT INITIATIVES

Major Developments (completed):

Orange County Museum of Art (3333 Avenue of the Arts) – The City approved construction of a 53,875-square-foot structure which is the new home to the Orange County Museum of Art located within Costa Mesa’s Theater Arts District. Construction was completed and the grand opening was held in October 2022.

Vans Headquarters Expansion (1588 South Coast Drive) – The Vans Headquarters Expansion Project included the construction of a three -story, 91,032-square-foot office building on the Vans Headquarters Campus located at 1588 South Coast Drive. The project also included a three-story parking structure, and an outdoor seating area and half pipe skate ramp just west of the proposed office building. The project also included a traffic signal on Hyland Avenue at the Vans north driveway. Construction was completed in 2022.

Newport & Ford (1957 Newport Blvd.) – This 38-unit condominium project was approved by the City in October 2018. The project was constructed in phases and was completed in 2022.

Harbor/Hamilton (2095 Harbor Blvd. and Hamilton Street) – This 1.53-acre site was approved for construction of a 28 -unit detached single -family condominium development including seven units with ground level work spaces. Construction of all homes was completed and occupied as of 2022.

Major Developments (approved/under construction):

Anduril Headquarters (1375 Sunflower Street- former LA Times site/The Press) – The Master Plan for this 665,000 -square-foot office project was approved in August 2017 and became the new Orange County headquarters for Anduril Technologies in 2021. Phased construction is underway. Buildout of the entire Campus is projected to be completed in mid-2023.

Vanguard University (55 Fair Drive) – The City approved a Master Plan for Vanguard University in 2019. The Master Plan includes a 20- year investment and facilities plan for updating and replacing existing buildings with more modern facilities, providing additional onsite student housing, and replacing surface parking lots with new parking structure s. Buildout of the Master Plan will accommodate 2,700 students and will take several years to complete. In 2020, the University opened its new 42,687 -square-foot Student Center. Perimeter improvements along Fair Drive and Newport Boulevard include new fencing, landscaping and University signage which was also completed in 2022. In addition, the new 61,006 -square- foot multi -purpose gymnasium, athletic facility, and events center are currently under construction and are projected to be completed by 2024.

Halcyon House (former Symphony Apartments located at 595 Anton Blvd.) – This project consists of 393 apartment units and retail shops at the corner of Anton Boulevard and Avenue of the Arts and was approved in 2015. Construction of Building A was completed in 2022 and Building B is nearing completion and is anticipated to open for leasing in early 2023.

LUX Apartments (2277 Harbor Boulevard) – This project consists of 200 apartment units located on Harbor Boulevard, including 9 very low -income units. The project is under construction and is projected to be completed and open for leasing in 2023.

Avenue of the Arts Hotel Expansion (3350 Avenue of the Arts) – The project is a hotel expansion of an existing 4 -diamond hotel in North Costa Mesa. The Master Pl an includes an expanded parking structure, a new restaurant and hotel lobby, and 150 new hotel rooms on six levels. Minor changes to the design were submitted in 2022 with construction anticipated in 2023.
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The Plant (765-767 Baker Street and 2972 Century Place) – The City approved a Master Plan for the renovation of three existing commercial buildings, totaling 19,100 square feet, for retail and restaurant uses surrounding a central courtyard area located in Costa Mesa’s SoBECA neighborhood. New food stalls and a four-story mixed use building are planned, with 48 residential units, 14 live/work units, and 2,570 square feet of workshop/maker office space above a two-level parking structure.

One Metro West (1683 Sunflower Avenue) – The project is a mixed -use development that includes up to 1,057 residential units, 25,000 square feet of commercial creative office, 6,000 square feet of specialty retail, 1.5-acres of public open space, streetscape improvements, and a Class-I bike trail on Sunflower Avenue providing access to the Santa Ana River Trail. The project was approved by the City Council in 2021, subject to Article 22, Chapter IX of Title 13 of the Costa Mesa Municipal Code.

Future Development (under review):

Project Homekey (Motel 6 site – 2274 Newport Boulevard) – The project consists of a two - phase adaptive re-use of an 88-unit motel for permanent affordable housing. All units will be converted to 300-square-foot studio apartments with new kitchenettes, countertops, flooring, paint, fixtures, appliances, and furniture. Additional common areas for residents will include a new outdoor patio, smoking area, dog run, and community garden. Exterior improvements will include building façade enhancements, public art, and substantial upgrades to e xisting landscaped areas. Construction is expected to commence in early 2023.

Senior Housing Project at City Senior Center (695 West 19th Street) – An application for a Master Plan Screening for a 60-unit housing project on a 0.90-acre portion of the parking lot at the City’s Senior Center property has been submitted and is under review.

DEBT ADMINISTRATION

The City accounts for general debt service under the following funds in the financial statements: the Public Financing Authority (PFA) Debt Service Fund and the Financing Authority (FA) Debt Service Fund. Sources of revenues for retirement of outstanding bonded indebtedness include general property and sales taxes.

In October 2017, the FA issued the 2017 Lease Revenue Bonds that refinanced the PFA Series 2007 Certificates of Participation (COP) and provided partial funding for the Lion’s Park , Donald Dungan Library and Norma Hertzog Neighborhood Community Center projects.

Standard & Poor’s (S&P) rated the 2017 bonds AA+ upon initial issuance . On November 3, 2020, in the height of the pandemic, Standard & Poor’s reaffirmed the 2017 bonds’ AA+ long- term rating with a stable outlook. According to the final report, S&P “reviewed governance risks and consider them better than the sector standard becau se of the City's very strong management profile with strong financial policies and practices, and successful economic development efforts.”

The City continuously reviews existing debt for refunding possibilities to lower total debt service requirements. The City has also adopted a comprehensive set of debt policies covering all aspects of debt issuance in order to consolidate information for debt obligations and maintain or improve its excellent credit standing.

FINANCIAL REPORTING AWARDS

The Government Fi nance Officers Association (GFOA) has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021. This was the 24th consecutive year that the City has r eceived this prestigious award. In order to be awarded a Certificate of 272
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City of Costa Mesa
List of Principal Officials
June 30, 2022
Mayor
John Stephens
City Council
Andrea Marr
Manuel Chavez
Loren Gameros
Jeff Harlan
Don Harper
Arlis Reynolds
City Manager ------------------------------------- --Lori Ann Farrell Harrison Assistant City Manager----------------------------------------- --Susan Price City Attorney (Contract) ------------------------------------ Kimberly Barlow Development Services Director----------------------------------- Jennifer Le Finance Director --------------------------------------------------Carol Molina Information Technology Director -----------------------------------Steve Ely Parks and Community Services Director ----------------------- Jason Minter Public Services Director ------------------------------------ Raja Sethuraman Fire Chief -------------------------------------------------------- Dan Stefano Police Chief ------------------------------------------------- Ronald Lawrence 274
Visit our website at www.costamesaca.gov
Citizens of Costa Mesa
City Council
Mayor
and six Council Members
City Manager
Administration
City Clerk
Homelessness Services
Human Resources
Risk Management
City Attorney
Contracted
" 3 5 . 0

0.48"

0.02"
Council
Appointed
Committees
and Advisory
Councils
Parks, Arts and
Community
Services
Commission
Planning
Commission
$
Fire and Rescue
Administration
Emergency Medical
Fire Prevention
Community Risk Reduction
Information Technology
Administration
Programming
Operations
Development Services
Administration
Planning
Building Safety
Housing and Community Development
Finance
Administration
Accounting
Budgeting
Payroll
Parks and
Community Services
Administration
Recreation
Animal Services
Public Services
Administration
Engineering Services
Transportation Services
Maintenance Services
Police
Administration
Field Operations
911 Emergency Hotline
Support Services
City of Costa Mesa
Organization Chart
June 30, 2022
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275
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Costa Mesa
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
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INDEPENDENT AUDITOR’S REPORT

The Honorable Mayor and
Members of the City Council
of the City of Costa Mesa
Costa Mesa, California

Report on the Audit of the Financial Statements

Opinions

We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Costa Mesa (the City), as of and for the year June 30, 2022, 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, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2022, 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 Opinion

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 opinion.

Emphasis of Matter

During the year ended June 30, 2022, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 87: Leases. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements

The City’s 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.

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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 ability to continue as a going concern for one year after the date that the financial statements are issued.

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 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, 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, the pension and OPEB schedules, and the budgetary comparison schedules identified as Required Supplementary Information (RSI) in the accompanying table of contents be presented to supplement the basic 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 auditing standards generally accepted in the United States of America, which consisted of 2 278

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 schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and 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 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.

Report on Summarized Comparative Information

We have previously audited the City’s 2021 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated December 17, 2021. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2021 is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards , we have also issued our report dated December 30, 2022 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results 3 279

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, 2022
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MANAGEMENT’S DISCUSSION AND ANALYSIS

As management of the City of Costa Mesa (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2022. We encourage all readers to consider information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i–vi of this report.

FINANCIAL HIGHLIGHTS

 Assets and deferred outflows of resources of the City’s primary government exceeded its liabilities and deferred inflows of resources at the close of fiscal year 2022 by $51.6 million (net position). Of this amount, $225.7 million ( unrestricted net position deficit ) primarily resulted from implementations of Governmental Accounting Standards Board (GASB) Statement Nos. 68, 71 and 73 for pensions, and GASB Statement No. 75 for Postemployment Benefit Other than Pensions (OPEB). These statements established standards for measuring and recognizing liabilities for defined benefit plans.

 In the government-wide financial statements, total net position increased by $14.6 million from the prior fiscal year total of $37.1 million primarily due to an increase federal funding from the American Rescue Plan Act (ARPA).

 In the fund financial statements, the governmental funds reported a combined ending fund balance of $117.5 million, an increase of $8.1 million in comparison with the prior year total of $109.4 million.

 At the end of fiscal year 2022, the General Fund’s unassigned fund balance was $16.5 million or 11.8 percent of general fund expenditures of $140.1 million. Unassigned fund balance may be used to meet the government’s ongoing obligations.

 At June 30, 2022, the City reported $229.6 million in pension liabilities and $66.3 million in OPEB liabilities.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the basic financial statements which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains other required supplementary information in addition to the basic financial statements themselves.

Government-Wide Financial Statements

The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.

The statement of net position presents information on all assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with difference between assets/deferred outflows of resources and liabilities/deferred inflows of resources reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information to show how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows . 5 281
Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities) . Governmental activities include general government, protection of persons and property, community programs, public services, and interest on long-term debt. The City has no business-type activities or discretely presented component units.

The basic government-wide financial statements can be found on pages 16-17 of this report.

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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the City’s funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus 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. Such information may be useful in evaluating a government’s near- term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and statement of revenues, expenditures, and changes in fund balances provide reconciliations to facilitate this comparison between governmental funds and governmental activities.

The City maintains 26 individual governmental funds. Information is presented separately in the governmental funds balance sheet and statement of revenues, expenditures, and changes in fund balances for the General, Capital Improvements and Gas Tax funds, all of which are considered to be major funds. Data from the other 23 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report.

The City adopts an annual operating and capital budget for its General, Special Revenue, and Capital Projects funds. Budgetary comparison statements have been provided for these fund types to demonstrate compliance with the budget.

The basic governmental fund financial statements can be found on pages 19-24 of this report.

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Proprietary Funds

The City maintains one type of proprietary fund, internal service funds. Internal service funds are an accounting device used to accumulate and allocate costs internally among various City functions.

The City uses internal service funds to account for equipment replacement, self-insurance (workers’ compensation, general liability, unemployment), and information technology replacement functions. Because there are no business-type functions, they have been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as government-wide financial statements, only in more detail. Proprietary fund financial statements provide separate information for the Equipment Replacement, Self-Insurance, and Information Technology Replacement funds, all of which are considered to be nonmajor funds. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for each nonmajor internal service funds is provided in the form of combining statements in the supplementary schedules section of this report.

The basic proprietary fund financial statements can be found on pages 25-27 of this report.

Fiduciary Funds

Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because resources of these funds are not available to support the City’s own programs and services. The accounting method used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on page 28-29 of this report.

Notes to the Basic Financial Statements

The notes provide additional information that is essential to a full understanding of data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 30-75 of this report.

Other Information

In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City. Required supplementary information can be found on pages 76-96 of this report.

The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information section. Combined and individual fund statements and schedules can be found on pages 100-131 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

City assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $51.6 million at June 30, 2022, an increase of $14.6 million from 2021.

As in previous years, the City’s net position continued to reflect the impact from implementations of GASB Statements No. 68, 71 and 73 for pension and GASB 75 for OPEB, all of which account for the City’s defined benefit liabilities. The City’s total defined benefit liability is estimated at $297.7 million on the Statement of Net Position, a decrease of $79.8 million as compared to the prior year.

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Another significant portion of the City’s total net position reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less related outstanding debt used to acquire assets that are still in service. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

At the end of fiscal year 2021-22, the City continued to report positive balances in two out of three categories of net position for the government as a whole, as well as for its separate governmental activities. The unrestricted net position improved by $18.2 million, ending the fiscal year with a balance of $225.7 million primarily due to implementations of pension and OPEB accounting standards.

Percent
Increase/ Increase/
June 30, 2022 June 30, 2021 (Decrease) (Decrease)
ASSETS:

Current and other assets $192,540,139 $155,763,694 $ 36,776,445 23.61% 279,567,632 282,879,937 (3,312,305) -1.17%
Total assets 472,107,771 438,643,631 33,464,140 7.63% Deferred outflows of resources 56,137,273 52,911,235 3,226,038 6.10% LIABILITIES:

Current and other liabilities 33,026,449 15,215,718 17,810,731 117.05% Long-term liabilities 348,415,949 430,748,965 (82,333,016) -19.11% Total liabilities 381,442,398 445,964,683 (64,522,285) -14.47% Deferred inflows of resources 95,175,548 8,529,449 86,646,099 1015.85% NET POSITION:

Net investment in capital assets 249,096,798 255,443,158 (6,346,360) -2.48% Restricted 28,232,693 25,552,401 2,680,292 10.49% Unrestricted (225,702,393) (243,934,825) 18,232,432 -7.47% Total net position $ 51,627,098 $ 37,060,734 $ 14,566,364 39.30%

CONDENSED STATEMENT OF NET POSITION
Capital assets, net of
accumulated depreciation
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During the fiscal year 2021-22, the City’s total net position increased by $14.6 million.

2022 2021
REVENUES:

Program Revenues:

Charges for services 21,962,861 $ 17,113,465 $
Operating contributions and grants 14,404,940 32,519,129 Capital contributions and grants 5,528,637 8,267,623 General Revenues:

Taxes:

Property taxes 49,706,079 47,891,698
Sales and use taxes 77,165,533 63,738,411
Transient occupancy tax 8,366,278 4,282,802 Franchise taxes 5,318,541 4,895,574
Business tax 1,468,202 1,227,843
Other intergovernmental, unrestricted 130,289 84,182 Investment income (3,609,117) (80,831)
Miscellaneous 1,718,804 1,420,418
Total revenues 182,161,047 181,360,314
EXPENSES:

General Government 31,808,370 36,763,868
Protection of persons and property 98,324,072 88,643,852 Community programs 14,887,015 22,007,275
Public services 21,645,247 17,663,842
Interest on long-term debt 929,979 986,593 Total expenses 167,594,683 166,065,430
Change in net position 14,566,364 15,294,884 NET POSITION, BEGINNING OF YEAR 37,060,734 21,765,850 NET POSITION, END OF YEAR $ 51,627,098 $ 37,060,734

CHANGES IN NET POSITION
Governmental Activities
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Governmental Activities

Governmental activities increased the City’s net position by $14.6 million. The Coronavirus (COVID- 19) pandemic that started at the beginning of 2020 forced government agencies worldwide to issue business closure and shelter-at-home orders to protect life and safety. In fiscal year 2021-22, the City took a conservative approach as the effects of the pandemic started to subside, increasing staffing levels and returning local services to pre-pandemic levels in a strategic, yet controlled measure. This approach contributed to the increase of the net position. Key factors in the City’s net position included:

 Sales tax increased by $13.4 million or 21.1 percent. Costa Mesa is primarily based on retail commercial business, sales tax from which is the City’s largest revenue source. Sales tax revenues have recovered to pre-pandemic levels. Increased revenues are due to an increase in consumer demand and increased prices as a result of inflation.

 Operating contributions and grants decreased $18.1 million or 55.7 percent primarily due to the one-time CARES ACT federal stimulus funding received in the prior fiscal year; the second tranche of funding, although received in FY 2021-22, is not recognized until it is committed or spent.

 Transient occupancy tax increased by $4.1 million or 95.4 percent due to a significant increase in tourism and travel, as travel restrictions put in place during the pandemic were lifted.

 Investment income decreased by $3.5 million due to the GASB 31 adjustment.

 Overall expenses increased by $1.5 million or 0.92 percent from fiscal year 2020-21 as the City resumes its normal operating expenses after the global shut down experienced in the prior year due to the pandemic.

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS

As was noted earlier, the City uses fund accounting to ensure and demonstrate compliance with professional standards promulgated by oversight agencies and also due to finance-related legal requirements.

Governmental Funds

The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

As of the end of fiscal year 2021-22, the City’s governmental funds reported combined ending fund balance of $117.5 million, an increase of $8.1 million in comparison with the prior fiscal year fund balance of $109.4 million. Of this total amount:

 $0.5 million represents nonspendable fund balance which includes amounts that cannot be used because they are either not spendable in form or legally or contractually required to remain intact.

 $29.7 million represents restricted fund balance which includes amounts that can be spent only for specific purposes stipulated by external sources or through enabling legislation.

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 $25.1 million represents committed fund balance which includes amounts that can be used only for specific purposes determined by a formal action of the City Council. It includes legislation (City Council action) that can only be overturned by a subsequent council action requiring a voting consensus.

 $47.4 million represents assigned fund balance which includes amounts that are designated or expressed by the City Council for certain purposes but do not require formal actions like resolutions or ordinances. City Council, via resolution, delegated the authority to establish, modify, or rescind a fund balance assignment to the Finance Director.

 The remaining $14.7 million constitutes unassigned fund balance.

The General Fund is the primary operating fund of the City. At the end of fiscal year 2021-22, the General Fund’s fund balance increased by $4.3 million. While the total fund balance amounted to $57.8 million, the unassigned fund balance was $16.5 million. Key factors attributable to the increase in net position include:

 Sales tax revenues increased by $13.4 million or 21.1 percent from fiscal year 2020-21. This is due to increased consumer spending and prices as a result of inflation.

 Transient occupancy tax increased by $4.1 million or 95.4 percent due to increased travel and tourism.

 Property tax increased by $1.6 million or 3.3 percent.

 Overall, total revenues in the General Fund increased by $24.6 million or 17.4 percent.

 Community programs and public services expenditures increased by $3.9 million, or 27.0 percent, in total, as the City implemented measures to resume its normal operations after the shutdown impacts of COVID.

 Overall, total expenditures in the General Fund increased by $16.5 million or 13.4 percent over prior fiscal year.

Major Funds Other Than the General Fund

The Capital Improvements Fund had $21.9 million in fund balance at the end of the fiscal year which represents a net increase of $4.7 million or 27.2 percent from the prior fiscal year. The increase in fund balance is mainly attributed to Transfers in for various capital improvement projects as well as the true up of 5 percent of General Fund revenues towards capital projects per the City’s Capital Asset Needs Ordinance requirement.

The Government Grants Fund had a deficit fund balance of $1.1 million at the end of the fiscal year which represents a net decrease of $0.7 million or 154.1 percent from the prior fiscal year. The deficit and decrease in fund balance is due to grant expenditures not yet reimbursed.

The American Rescue Plan Act (ARPA) Fund had $50,329 in fund balance at the end of the fiscal year which had a fund balance of $0 in the prior fiscal year. The City expended all funding received in the prior fiscal year. Although the City received its second tranche of ARPA funds, the City has not expended or committed funds received in the current fiscal year; as per Generally Accepted Accounting Principles (GAAP) revenues cannot be recognized at this time. As a result, revenues recognized were due to interest earnings.

Proprietary Funds

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The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The City also utilizes Internal Service Funds, which are a propriety fund type.

The unrestricted net position of the Internal Service Funds at the end of the fiscal year was $20.2 million. Total net position increased by $6.9 million from the prior fiscal year. This was primarily due to a decrease in payables and increase in current assets for prepaid equipment and fleet purchases.

GENERAL FUND BUDGETARY HIGHLIGHTS

During fiscal year 2021-22 the actual revenues were $4.8 million or 2.8 percent lower than the final adjusted budget, however, actual revenues were higher than pre-pandemic levels. Year over year, sales tax revenue was $13.4 million higher than prior fiscal year. Charges for services revenue received increased by $2.1 million compared to prior fiscal year.

Actual expenditures were $3.1 million or 2.2 percent lower than originally estimated and final adjusted budget. The variance was due to a deference of debt service payments for Fire and Rescue Department vehicles and citywide vacancies.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

The City’s investment in capital assets for its governmental activities (the City has no business- type activities or discretely presented component units) as of June 30, 2022, amounted to $279.6 million net of accumulated depreciation and amortization. The investment in capital assets includes land, building improvements and structures, landscaping and sprinklers, machinery and equipment, intangible assets, park system and facilities, and road and storm drain infrastructure. The City’s investment in capital assets for the current fiscal year decreased by $3.3 million. Major infrastructure asset additions during fiscal year 2021-22 were citywide street rehabilitation for Hamilton Street and Santa Ana Avenue, Fairview Road Improvements, citywide alley improvements, and other ongoing capital projects. Other assets capitalized included vehicle replacements and a variety of equipment purchases. During the fiscal year, capital assets not being depreciated increased by $3.0 million and capital assets being depreciated increased by $3.4 million.

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Construction in progress as of June 30, 2022 totaled $11.4 million, $3.0 million higher than the previous fiscal year, and included some of the following projects with significant commitment balances:

Additional information on capital assets can be found in note 7 on pages 50-51 of this report.

Long-Term Debt

At year-end, the City had one outstanding bond issues: the Financing Authority 2017 Lease Revenue Bonds with an outstanding balance of $23.1 million. Additionally, the City had $24.6 million in other outstanding liabilities related to leases, loans, claims, and employee benefits.

Long-term liabilities had a net decrease of $2.5 million, primarily due to a decrease in the City’s outstanding liability claims.
2022 2021
Land $ 34,579,306 $ 34,579,306
Land rights related to streets 29,821,224 29,821,224 Construction in progress 11,423,851 8,437,088 Building improvements and structures 72,060,015 75,902,623 Machinery and equipment 11,358,371 12,037,596 Intangibles 334,106 466,741
Right-to-use-lease assets 1,169,092 - Park system and facilities 6,704,889 7,399,467 Infrastructure- roads 99,147,982 99,900,537 Infrastructure- storm drains 12,968,796 14,335,355 TOTALS $ 279,567,632 $ 282,879,937
Governmental Activities

CAPITAL ASSETS
(NET OF DEPRECIATION)

CONSTRUCTION PROJECT TOTAL BUDGET SPEND TO DATE

REMAINING

COMMITMENT
Land Management System 1,976,759 $ 836,575 $ 1,140,184 $ Fairview Road Improvement 405/Adams 1,176,150 60,298 1,115,852 SB Newport Blvd Improvements Mesa Victoria 1,965,652 34,765 1,930,887 Newport NB 22th Bristol SB Bristol Mesa 2,131,786 58,525 2,073,261 Adams Ave Improvement 2,278,862 - 2,278,862 Citywide Street Maintenance 11,026,508 9,077,780 1,948,728 Jack Hammett Field Upgrade 2,710,274 2,205,228 505,046 TOTALS 23,265,991 $ 12,273,171 $ 10,992,820 $

CONSTRUCTION COMMITMENTS
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Additional information on the City’s long-term debt can be found in notes 8 through 9 on pages 51- 56 of this report.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

During fiscal year 2021-22, the local economy continued to recover from the pandemic. The City took a conservative approach as the fiscal impacts of the pandemic started to subside. The City of Costa Mesa is experiencing an increase in its financial situation, attesting that the City is well positioned to continue to weather the fiscal impacts of the pandemic. For fiscal year 2022-23 the City is carefully restoring staffing and service levels cut at the height of the pandemic, while continuing to utilize federal stimulus funds.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the City’s finances for all who have an interest in the government’s funding streams and overall fiscal conditions. This report and other financial related information can be found on the City’s website www.costamesaca.gov. Questions concerning any information provided in this report or requests for additional financial information should contact:

 by mail: Finance Department, City of Costa Mesa, P.O. Box 1200, Costa Mesa, California, 92628-1200
 by e-mail: [email protected]
 by phone: (714) 754-5243
2022 2021
Bonds Payable 26,102,279 $ 28,200,046 $
Other Liabilities 24,565,203 24,960,460
TOTALS 50,667,482 $ 53,160,506 $

OUTSTANDING DEBT
Governmental Activities
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GOVERNMENT-WIDE FINANCIAL STATEMENTS

The Statement of Net Position and the Statement of Activities report information about the City as a whole and its activities. These statements include all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position using the accrual basis of accounting, which is similar to accounting used by most private-sector companies. All current year revenues and expenses are taken into account regardless of when cash is received or paid.

Statement of Net Position

The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference between assets/deferred outflows and liabilities/deferred inflows reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

Statement of Activities

The Statement of Activities presents information to show how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

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Governmental Activities
2022 2021
Assets:

Cash and investments (note 2) 157,463,831$ 127,921,427$ Cash and investments with fiscal agent (note 2) 460,281 978,262 Due from other governments 20,103,936 20,450,671
Accounts receivable 4,183,311 2,351,222
Interest receivable 382,959 312,024
Loans receivable, net (note 5) 608,294 650,674 Rent receivable 355,664 346,702
Leases receivable (note 6) 4,419,068 -
Inventories 339,236 202,311
Prepaid items 4,223,559 2,550,401
Capital assets (note 6):

Nondepreciable 75,824,381 72,837,618
Depreciable, net of accumulated depreciation 203,743,251 210,042,319 Total assets 472,107,771 438,643,631
Deferred outflows of resources:

Deferred outflows related to pensions (note 11) 42,824,533 41,380,794 Deferred outflows related to OPEB (note 14) 13,312,740 11,530,441 Total deferred outflows of resources 56,137,273 52,911,235 Liabilities:

Accounts payable 9,418,820 7,898,300
Accrued liabilities 3,721,368 3,876,294
Accrued interest payable 262,935 280,975
Retentions payable 517,407 474,229
Deposits payable 2,952,644 2,381,365
Unearned revenue 16,153,275 304,555
Long-term liabilities:

Portion due within one year (note 8) 7,258,181 9,234,500 Portion due beyond one year (note 8) 43,409,301 43,926,006 OPEB liability (note 14) 66,254,495 62,882,272
Police retirement 1% supplemental liability (note 12) 1,884,759 2,274,765 Net pension liability (note 11) 229,609,213 312,431,422 Total liabilities 381,442,398 445,964,683
Deferred inflows of resources:

Deferred inflows related to leases (note 6) 4,338,750 - Deferred inflows related to pensions (note 11) 87,708,150 5,792,266 Deferred inflows related to OPEB (note 14) 3,128,648 2,737,183 Total deferred inflows of resources 95,175,548 8,529,449 Net position:

Net investment in capital assets 249,096,798 255,443,158 Restricted for:

Protection of persons and property 1,333,365 1,329,350 Community programs 6,796,140 6,176,036
Public services 20,103,188 18,047,015
Unrestricted (225,702,393) (243,934,825)
Total net position 51,627,098$ 37,060,734$

CITY OF COSTA MESA, CALIFORNIA
Statement of Net Position
June 30, 2022
(With Comparative Data for Prior Year)
See notes to financial statements
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Program Revenue
Operating Capital
Charges for Contributions Contributions
Functions/programs Expenses Services and Grants and Grants 2022 2021 Governmental activities:

General government 31,808,370$ -$ 903,430$ -$ (30,904,940)$ (21,270,525)$ Protection of persons
and property 98,324,072 6,846,240 3,720,169 - (87,757,663) (76,375,978) Community programs 14,887,015 6,220,199 3,863,039 503,000 (4,300,777) (11,906,571) Public services 21,645,247 8,896,422 5,918,302 5,025,637 (1,804,886) 2,374,454 Interest on long-term debt 929,979 - - - (929,979) (986,593) Total governmental activities 167,594,683$ 21,962,861$ 14,404,940$ 5,528,637$ (125,698,245) (108,165,213) General revenues:

Taxes:

Property taxes 49,706,079 47,891,698
Sales and use taxes 77,165,533 63,738,411
Transient occupancy tax 8,366,278 4,282,802
Franchise taxes 5,318,541 4,895,574
Business tax 1,468,202 1,227,843
Other intergovernmental, unrestricted 130,289 84,182 Investment income (loss) (3,609,117) (80,831)
Miscellaneous 1,718,804 1,420,418
Total general revenues 140,264,609 123,460,097
Change in net position 14,566,364 15,294,884
Net position - beginning of year 37,060,734 21,765,850 Net position - end of year 51,627,098$ 37,060,734$
Changes in Net Position
Revenue and
Net (Expense)

CITY OF COSTA MESA, CALIFORNIA
Statement of Activities
Year ended June 30, 2022
(With Comparative Data for Prior Year)
See notes to financial statements
17 293

GOVERNMENTAL FUNDS
Major Governmental Funds

GENERAL FUND
The General Fund must be classified as a major fund in the accompanying fund financial statements and is used to account for all general revenues of the City not specifically levied or collected for some special purpose, and for expenditures related to the rendering of general services by the City. The General Fund is used to account for all resources not required to be accounted for in another fund.

SPECIAL REVENUE FUNDS

Government Grants
Established to account for receipt and disbursement of grant monies provided by Federal, State, and County governmental agencies for various programs.

American Rescue Plan Act (ARPA)
Established to account for the receipt and disbursement of grant monies under the American Rescue Plan Act.

CAPITAL PROJECTS FUNDS

Capital Improvements Fund
Established to account for the construction of capital facilities financed by the City’s General Fund and various governmental grants.

Nonmajor Governmental Funds

Nonmajor governmental funds constitute all other governmental funds which include eleven Special Revenue Funds, two Debt Service Funds and nine Capital Projects Funds.

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Government American Rescue
General Grants Plan Act
Cash and investments 49,277,928$ 2,346,624$ 13,404,673$ Cash and investments with fiscal agents - - - Due from other governments 15,152,189 1,064,881 - Accounts receivable, net 3,958,185 - - Interest receivable 183,295 10 13,706 Loans receivable, net - - - Leases receivables 2,906,238 - - Rent receivable 355,664 - - Due from other funds (note 3) 716,536 - - Inventories 99,047 - -
Prepaid items 504,500 - -
Total assets 73,153,582$ 3,411,515$ 13,418,379$ Accounts payable 4,756,254$ 728,930$ -$
Accrued liabilities 3,574,209 5,834 - Retentions payable - 184 - Deposits payable 2,915,429 - - Due to other funds (note 3) 43,770 - - Unearned revenue - 2,785,225 13,368,050 Total liabilities 11,289,662 3,520,173 13,368,050 Lease related 2,832,645 - -
Unavailable revenue 1,255,428 1,037,107 - Total deferred inflows of resources 4,088,073 1,037,107 - Non-spendable:

Prepaid items 504,500 - -
Inventories 99,047 - -
Restricted:

Pension and OPEB 3,061,154 - - Protection of persons and property - - - Community programs - - - Public services - - - Debt service - - -
Committed 25,125,000 - -
Assigned 12,469,067 - 50,329
Unassigned 16,517,079 (1,145,765) -
Total fund balances 57,775,847 (1,145,765) 50,329 Total liabilities, deferred inflows of
resources, and fund balances 73,153,582$ 3,411,515$ 13,418,379$ Special Revenue

CITY OF COSTA MESA, CALIFORNIA
Balance Sheet
Governmental Funds
June 30, 2022
(With Comparative Data for Prior Year)
Liabilities:

Deferred inflows of resources:

Fund balances (note 10):

Assets:

See notes to financial statements
19 295
Capital Projects Nonmajor
Capital Governmental
Improvements Funds 2022 2021
22,593,035$ 38,548,506$ 126,170,766$ 99,758,343$ - 460,281 460,281 978,262 35,624 3,851,242 20,103,936 20,450,671 - 225,126 4,183,311 2,351,222 44,092 81,886 322,989 269,589 - 608,294 608,294 650,674 - 1,512,830 4,419,068 - - - 355,664 346,702 - - 716,536 590,847 - - 99,047 70,717 - - 504,500 894,129 22,672,751$ 45,288,165$ 157,944,392$ 126,361,156$ 680,464$ 2,452,001$ 8,617,649$ 7,250,120$ 71 96,336 3,676,450 3,844,877 122,825 394,398 517,407 474,229 - 37,215 2,952,644 2,381,365 - 672,766 716,536 590,847 - - 16,153,275 304,555 803,360 3,652,716 32,633,961 14,845,993 - 1,506,105 4,338,750 - - 1,177,888 3,470,423 2,100,305 - 2,683,993 7,809,173 2,100,305 - - 504,500 894,129 - - 99,047 70,717 - - 3,061,154 1,778,220 - 1,293,762 1,293,762 1,329,138 - 5,480,097 5,480,097 5,655,880 - 19,863,022 19,863,022 17,651,961 - 4 4 563,401 - - 25,125,000 25,125,000 21,869,391 13,019,593 47,408,380 39,368,714 - (705,022) 14,666,292 16,977,698 21,869,391 38,951,456 117,501,258 109,414,858 22,672,751$ 45,288,165$ 157,944,392$ 126,361,156$ Totals
See notes to financial statements
20 296
Fund balances of governmental funds 117,501,258$
Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital Related Items
When capital assets (property, plant, equipment) for governmental activities are purchased or constructed, the cost of those assets are reported as expenditures in the governmental funds. However, the Statement of Net Position includes those capital assets among the assets of the City as a whole:

Cost of capital assets 650,508,570
Accumulated depreciation/amortization (378,895,606)
Long-Term Debt Transactions
Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities. All liabilities (both current and long-term) are reported in the Statement of Net Position:

Bonds payable (23,109,999)
Premium on bonds (2,992,279)
Loan payable (97,479)
Lease payable (1,197,414)
Employee benefits leave payable (5,584,307)
Accrued Interest
Accrued liabilities in the Statement of Net Position differ from the amount reported in governmental funds are due to accrued interest on outstanding debt payable. (262,935) Internal Service Funds
Internal Service Funds are used by management to charge the costs of certain activities to individual City funds. The assets and liabilities of the Internal Service Funds are included in governmental activities in the Statement of Net Position because they primarily service governmental activities of the City. 24,734,858 Deferred Inflows of Resources
Certain unavailable revenues that do not provide current financial resources are reported as deferred inflows of resources in the funds. 3,470,423 Pension and OPEB
Amounts regarding the pension plans and OPEB are as follows:

Deferred outflows of resources related to pensions 42,824,533 Deferred outflows of resources related to OPEB 13,312,740 Deferred inflows of resources related to pensions (87,708,150) Deferred inflows of resources related to OPEB (3,128,648) CalPERS pension liability (229,609,213)
OPEB liability (66,254,495)
Police 1% supplemental retirement liability (1,884,759) Net position of governmental activities 51,627,098$

CITY OF COSTA MESA, CALIFORNIA
Governmental Funds
Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2022
See notes to financial statements
21 297
Government American Rescue
General Grants Plan Act
Revenues:

Taxes 141,553,034$ -$ -$
Licenses and permits 7,331,252 - - Charges for services 6,964,934 - - Fines and forfeitures 1,170,795 - - Intergovernmental 4,529,091 897,489 - Investment income (loss) (1,246,827) 10 50,329 Rental income 4,042,324 - -
Miscellaneous 1,374,266 - -
Total revenues 165,718,869 897,499 50,329 Expenditures:

Current:

General government 32,980,352 - - Protection of persons and property 88,414,231 1,426,724 - Community programs 11,092,336 116,405 - Public services 7,338,883 115,699 -
Debt service:

Principal 217,231 - -
Interest and fiscal charges 27,137 - - Total expenditures 140,070,170 1,658,828 -
Excess (deficiency) of revenues
over (under) expenditures 25,648,699 (761,329) 50,329 Other financing sources (uses):

Transfer in (note 4) - 66,419 - Transfer out (note 4) (21,365,113) - - Total other financing sources (uses) (21,365,113) 66,419 - Net change in fund balances 4,283,586 (694,910) 50,329 Fund balances (deficit) at beginning of year 53,492,261 (450,855) - Fund balances (deficit) at end of year 57,775,847$ (1,145,765) 50,329$ Special Revenue

CITY OF COSTA MESA, CALIFORNIA
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances Year ended June 30, 2022
(With Comparative Data for Prior Year)
See notes to financial statements
22 298
Capital Projects Nonmajor
Capital Governmental
Improvements Funds 2022 2021
-$ 366,844$ 141,919,878$ 122,138,588$ - - 7,331,252 4,368,740 - 2,065,622 9,030,556 7,309,872 - 5,562 1,176,357 1,061,346 546,129 12,104,743 18,077,452 39,855,634 (603,855) (967,460) (2,767,803) (37,016) - 773,253 4,815,577 4,773,662 59,431 112,273 1,545,970 1,410,996 1,705 14,460,837 181,129,239 180,881,822 - 587,233 33,567,585 31,851,632 74,688 782,720 90,698,363 84,027,648 84,589 4,974,070 16,267,400 18,578,311 3,693,683 9,814,027 20,962,292 27,033,542 - 1,985,332 2,202,563 1,890,391 - 1,068,649 1,095,786 1,155,360 3,852,960 19,212,031 164,793,989 164,536,884 (3,851,255) (4,751,194) 16,335,250 16,344,938 8,533,467 4,516,377 13,116,263 26,619,517 - - (21,365,113) (35,851,711) 8,533,467 4,516,377 (8,248,850) (9,232,194) 4,682,212 (234,817) 8,086,400 7,112,744 17,187,179 39,186,273 109,414,858 102,302,114 21,869,391$ 38,951,456$ 117,501,258$ 109,414,858$ Totals
See notes to financial statements
23 299
Net changes in fund balances - total governmental funds 8,086,400$ Amounts reported for governmental activities in the Statement of Activities are different because:

Capital Related Items
When capital assets for governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of financial resources used, whereas net position decreases by the amount of depreciation expense charged for the year.

Capital outlay 9,632,422
Depreciation expense (14,919,773)
Long-Term Debt Transactions
Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Repayment of debt service is reported as an expenditure in governmental funds and, thus, has the effect of reducing fund balances because current financial resources have been used. For the City as a whole, however, the principal payments reduce the liabilities in the Statement of Net Position and do not result in an expense in the Statement of Activities.

Net changes in employee benefits leave payable 336,357
Principal payments - bonds 1,950,000
Principal payments - loans payable 15,392
Principal payments - lease payable 237,171
Amortization of bond premium 147,767
Pension and OPEB
Pension and OPEB expense reported in the governmental funds include the actual contributions. In the Statement of Activities, pension and OPEB expenses include the change in net pension and opeb liabilities and the related changes in pension and OPEB amounts for deferred outflows of resources and deferred inflows of resources. of resources and deferred inflows of resources.

Net change in pension liability 2,740,070
Net change in OPEB liability (1,981,389)
Accrued Interest
Recording of the current year change of accrued interest on outstanding debt payable. 18,040 Internal Service Funds
Internal Service Funds are used by management to charge the costs of certain activities to individual City funds. The adjustments for Internal Service Funds "close" those funds by charging additional amounts to participating governmental activities to completely cover the Internal Service Funds' costs for the year. 6,933,789 Deferred Inflows of Resources
Certain unavailable revenues that do not provide current financial resources are reported as deferred inflows of resources in the funds. 1,370,118 Change in net position of governmental activities 14,566,364$

CITY OF COSTA MESA, CALIFORNIA
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Year ended June 30, 2022
See notes to financial statements
24 300
2022 2021
Assets:

Current assets:

Cash and investments 31,293,065$ 28,163,084$
Interest receivable 59,970 42,435
Prepaid items 3,719,059 1,656,272
Inventories 240,189 131,594
Total current assets 35,312,283 29,993,385
Capital Assets:

Construction in progress 1,412,635 693,456
Motorized equipment 14,777,717 14,512,571
Other equipment 3,645,870 3,349,326
Accumulated depreciation (11,881,554) (11,141,146) Net capital assets 7,954,668 7,414,207
Total assets 43,266,951 37,407,592
Liabilities:

Current liabilities:

Accounts payable 801,171 648,180
Accrued liabilities 44,918 31,417
Notes payable 325,037 135,493
Claims payable 1,379,844 3,754,328
Total current liabilities 2,550,970 4,569,418
Long-term liabilities:

Notes payable 3,061,525 1,336,909
Claims payable 12,919,598 13,700,196
Total long-term liabilities 15,981,123 15,037,105 Total liabilities 18,532,093 19,606,523
Net Position:

Net investment in capital assets 4,568,106 7,414,207 Unrestricted 20,166,752 10,386,862
Total net position 24,734,858$ 17,801,069$
Governmental Activities -
Internal Service Funds

CITY OF COSTA MESA, CALIFORNIA
Proprietary Funds
Statement of Net Position
(With Comparative Data for Prior Year)
June 30, 2022
See notes to financial statements
25 301
2022 2021
Operating revenues:

Charges for services 7,472,134$ 7,525,179$
Total operating revenues 7,472,134 7,525,179
Operating expenses:

Allocated administrative costs 2,880,789 2,006,201 Depreciation 1,248,411 1,216,665
Fuel and repair parts 1,230,211 1,015,493
Materials and supplies 65,073 -
Claims and premiums 3,023,082 5,716,404
Total operating expenses 8,447,566 9,954,763
Operating income (loss) (975,432) (2,429,584)
Nonoperating revenues (expenses):

Investment income (loss) (841,310) (42,398)
Intergovernmental - 25,670
Other nonoperating revenue 503,000 186,238
Gain/(loss) on disposal of equipment (1,319) (163,258) Total nonoperating revenues (expenses) (339,629) 6,252 Income (loss) before transfers (1,315,061) (2,423,332) Transfers in (note 4) 8,248,850 9,232,194
Change in net position 6,933,789 6,808,862
Net position at beginning of year 17,801,069 10,992,207 Net position at end of year 24,734,858$ 17,801,069$
Internal Service Funds

CITY OF COSTA MESA, CALIFORNIA
Proprietary Funds
Statement of Revenues, Expenses, and Changes in Net Position Year ended June 30, 2022
Governmental Activities -
(With Comparative Data for Prior Year)
See notes to financial statements
26 302
2022 2021
Cash flows from operating activities:

Cash received from customers and user departments 7,472,134$ 7,531,206$ Cash payments to suppliers for goods and services (11,023,399) (5,437,822) Cash payments to employees for services (1,685,505) (1,597,124) Net cash provided by (used for) operating activities (5,236,770) 496,260 Cash flows from noncapital financing activities:

Cash received from other funds 8,248,850 9,232,194 Intergovernmental revenue received - 26,355 Net cash provided by (used for)
noncapital financing activities 8,248,850 9,258,549 Cash flows from capital and related financing activities:

Principal paid on capital debt (135,493) -
Proceeds from note payable 2,049,653 -
Proceeds from insurance settlement 503,000 -
Acquisition of capital assets (1,440,414) (1,216,361) Net cash provided by (used for) capital
and related financing activities 976,746 (1,216,361) Cash flows from investing activities:

Investment income (loss) (858,845) (9,952)
Net cash provided by (used for) investing activities (858,845) (9,952) Net increase (decrease) in cash and cash equivalents 3,129,981 8,528,496 Cash and cash equivalents at beginning of year 28,163,084 19,634,588 Cash and cash equivalents at end of year 31,293,065 $ 28,163,084 $ Reconciliation of operating income (loss) to net cash
provided by (used for) operating activities:

Operating income (loss) (975,432) $ (2,429,584)$
Adjustments to reconcile operating income (loss)
to net cash provided by (used for) operating activities:

Depreciation 1,248,411 1,216,665
(Increase) decrease in inventories (108,595) (35,612) (Increase) decrease in accounts receivable - 6,027 (Increase) decrease in prepaid items (2,062,787) (183,870) Increase (decrease) in accounts payable (196,786) 304,264 Increase (decrease) in accrued liabilities 13,501 18,842 Increase (decrease) in claims payable (3,155,082) 1,599,528 Net cash provided by (used for) operating activities (5,236,770)$ 496,260$ There were no noncash investing, capital and financing activities during fiscal years ended June 30, 2022.

Internal Service Funds
Governmental Activities -

CITY OF COSTA MESA, CALIFORNIA
Proprietary Funds
Statement of Cash Flows
Year ended June 30, 2022
(With Comparative Data for Prior Year)
See notes to financial statements
27 303
Successor Agency
to the City of
Costa Mesa
Redevelopment
Agency
Private Purpose Custodial
Trust Fund Fund
Assets:

Cash and cash investments (note 2) 1,399,669$ 1,169,918$ Total assets 1,399,669 1,169,918
Liabilities:

Accounts payable - 12,108
Loan from City (note 18) 3,102,031 -
Total liabilities 3,102,031 12,108
Net Position:

Restricted for:

Held in trust for Successor
Agency (1,702,362) -
Individuals, organizations and
other governments - 1,157,810
Total net position (1,702,362)$ 1,157,810$

CITY OF COSTA MESA, CALIFORNIA
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2022
(With Comparative Data for Prior Year)
See notes to financial statements
28 304
Successor Agency
to the City of
Costa Mesa
Redevelopment
Agency
Private Purpose Custodial
Trust Fund Fund
Additions:

Property tax 1,749,586$ -$
Assessments and fees - 541,038
Donations - 113,252
Total additions 1,749,586 654,290
Deductions:

Interest expense 60,183 -
Remittance to others - 139,852
Total deductions 60,183 139,852
Net increase (decrease) in
fiduciary net position 1,689,403 514,438
Net position at beginning of year (3,391,765) 643,372 Net position at end of year (1,702,362)$ Net position - beginning of year1,157,810$

CITY OF COSTA MESA, CALIFORNIA
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
Year ended June 30, 2022
(With Comparative Data for Prior Year)
See notes to financial statements
29 305

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies

The following is a summary of the significant accounting policies of the City of Costa Mesa, California (City):

(a) Description of Reporting Entity

The City of Costa Mesa was incorporated on June 29, 1953 as a general law city under the Government Code of the State of California. The City operates under a Council- Manager form of government. Among services provided by the City are the following:
public works, parks and recreation, planning, community development, fire, and law enforcement services.

As required by generally accepted accounting principles, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization’s governing body and the City is either able to impose its will on that organization, or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable if an organization is fiscally dependent upon the City (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City’s financial statements to be misleading or incomplete.

All of the City’s component units are considered to be blended component units.

Blended component units, although legally separate entities, are, in substance, part of the City’s operations and so data from these units are appropriately presented as funds of the primary government. The following organizations are considered to be component units of the City:

Costa Mesa Public Financing Authority

The Costa Mesa Public Financing Authority (Public Financing Authority) was established on August 20, 1990 for the purpose of financing public capital improvements. Even though it is legally separate, it is reported as if it were part of the City because the City Council also serves as the governing board of the Authority.

Transactions of the Public Financing Authority are reported in the Debt Service Fund.

Separate financial statements of the Public Financing Authority can be obtained at City Hall.

Costa Mesa Housing Authority

The Costa Mesa Housing Authority (Housing Authority) was created pursuant to the State of California Health and Safety Code, Section 34176(a). The Housing Authority promotes affordable housing for low and moderate income households within the City, administers the homeless outreach program and operates the bridge shelter for homeless individuals.
30 306

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

The Housing Authority is a separate entity primarily funded by housing loan repayments and transfers from the City.

City Council members, in separate session, serve as the governing board of the Housing Authority, and all accounting and administrative functions are performed by the City. Financial activity of the Housing Authority has been reported as if it were part of the City in the Housing Authority Special Revenue Fund. Separate financial statements of the Housing Authority can be obtained at City Hall.

Costa Mesa Financing Authority

The Costa Mesa Financing Authority (Financing Authority) was created by a joint powers agreement between the City of Costa Mesa (the City) and the Costa Mesa Housing Authority (the Housing Authority), dated August 1, 2017. It was created pursuant to Article 1 of Chapter 5 of Division 7 of Title of the Government Code of the State of California (the “JPA Act”). Transactions of the Financing Authority are reported in the Debt Service Fund. Separate financial statements of the Financing Authority can be obtained at City Hall.

(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 basic 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), as well as its discretely presented component units. The City has no business-type activities or 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.

31 307

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

Under the accrual basis of accounting , revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities and deferred inflows of resources resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33.

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 expenditures. Proceeds of long- term debt are recorded as a liability in the government-wide financial statements, rather than as other financing sources. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as expenditures.

Franchise fees and business license charges have been reported as general revenues because the fees are based on gross receipts, not charges for services.

Fund Financial Statements

The underlying account system of the City is organized and operated on the basis of separate funds. A fund is defined as an independent fiscal and accounting entity with a self-balancing set of accounts, recording resources, related liabilities, obligations, reserves, and equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. 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 nonmajor funds in the aggregate for governmental funds. Proprietary statements include financial information for internal service funds.

Fiduciary statements include financial information for agency and private purpose trust funds. Fiduciary funds of the City 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 . 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.

32 308

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

The City uses an availability period of 60 days for all governmental fund revenue, except for grant revenue which uses an availability period of 90 days.

Sales taxes, property taxes, franchise taxes, motor vehicle in lieu, transient occupancy taxes, grants, and interest associated with the current fiscal period are all considered to be susceptible 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 government.

Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed nonexchange 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 nonexchange 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 generally only current assets, current liabilities and deferred inflows of resources are 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.

Noncurrent portions of long-term receivables due to governmental funds are reported on the balance sheet in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered “available spendable resources,” since they do not represent fund balance.

Recognition of governmental fund type revenues represented by unavailable revenues are reported as deferred inflows of revenues.

Due to the nature of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities.

Since they do not affect net current assets, 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. Proceeds of long-term debt are recorded as other financing sources, rather than a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures. 33 309

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources.

Proprietary and Fiduciary Funds

The City’s internal service funds are proprietary funds. In the fund financial statements, proprietary and all fiduciary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when related goods or services are delivered.

In the fund financial statements, proprietary and all fiduciary funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on the Statement of Net Position. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with principal activity of the fund. Exchange transactions are those in which each party receives and gives us essentially equal values. Nonoperating revenues, such as investment income, gain or loss on sale of equipment and miscellaneous revenues result from nonexchange transactions or ancillary activities. Operating expenses for internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All expenses not meeting this definition are reported as nonoperating expenses. Amounts paid to acquire capital assets are capitalized as assets in the internal service fund financial statements, rather than being reported as expenses. Proceeds of long-term debt are recorded as liabilities in the internal service fund financial statements, rather than being reported as other financing sources. Amounts paid to reduce long-term indebtedness of the internal service fund are reported as reductions of the related liability, rather than as expenses. The City’s custodial funds are fiduciary funds and use the accrual basis of accounting.

(c) Property Tax Calendar

Property tax revenues are recognized in the fiscal year for which the taxes have been levied, provided this accrual meets the available criteria. “Available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The County of Orange collects property taxes for the City tax liens attached annually as of 12:01 a.m. on the first day in January preceding the fiscal year for which the taxes are levied. The tax levy covers the fiscal period July 1st to June 30th. All secured personal property taxes and one-half of the taxes on real property are due November 1st. The second installment is due February 1st. All taxes are delinquent if not paid as of December 10th and April 10th, respectively. Unsecured personal property taxes become due on the first of March each year and are delinquent if not paid as of August 31st.

34 310

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

(d) Fund Classifications

The City reports the following major governmental funds:

General Fund – The General Fund is the general operating fund of the City. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. Expenditures of this fund include the general operating expenditures and other costs, which are not paid through other funds.

Special Revenue Fund

Government Grants – Established to account for receipt and disbursement of grant monies provided by Federal, State, and County governmental agencies for various programs.

American Rescue Plan Act – Established to account for receipt and disbursement of ARPA monies received under the American Rescue Plan Act.

Capital Projects Fund

Capital Improvements Fund – This capital projects fund was established to account for construction of capital facilities financed by the City’s General Fund and various governmental grants.

The City’s fund structure also includes the following fund types:

Special Revenue Funds – The special revenue funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for a specified purpose.

Debt Service Funds – The debt service funds are used to account for the accumulation of resources for, and the payment of, long-term liabilities, interest, and related fiscal agent costs.

Capital Projects Funds – The capital projects funds are used to account for financial resources segregated for the acquisition and construction of major capital facilities (other than those financed by the proprietary funds).

Internal Service Funds – The internal service funds are used to finance and account for activities involved in rendering equipment replacement, self-insurance services, and information technology replacement to departments within the City. Costs of materials, equipment, and services used are accumulated in these funds and charged to the user departments as such goods are delivered or services rendered.

Private Purpose Trust Fund – The private-purpose trust fund accounts for the assets, liabilities, additions, and deductions made on behalf of the former Costa Mesa Redevelopment Agency.
35 311

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

Custodial Funds – The custodial funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations and other governments. The custodial funds are used to account for fees, assessments, seizures and donations for which the City is acting in an agent capacity.

(e) Cash and Investments

Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and fair value is determined through the use of models or other valuation methodologies including:
 Quoted prices for similar assets or liabilities in active markets;  Quoted prices for identical or similar assets or liabilities in markets that are inactive;
 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.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data.
(f) Cash Equivalents

For purposes of the statement of cash flows, cash equivalents are defined as short- term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Cash and cash equivalents include all investments with original purchase maturities of three months or less. Cash equivalents also represent the proprietary funds share in the cash and investment pool of the City.

36 312

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

The City pools idle cash from all funds in order to maximize income from investment activities. Investments are recorded on the City’s books at fair value (quoted market price or best available estimate thereof). Interest income on investments is allocated to individual funds on the basis of monthly cash and investment balances.

(g) Inventories

Inventories of materials and supplies are carried at cost on an average cost basis.

The City uses the consumption method of accounting for inventories.

(h) Prepaids
The City uses the consumption method to record prepaid items. (i) Leases

The City is a lessor and lessee for leases as detailed in notes 6 and 9. The City recognizes a lease receivable, a deferred inflow of resources, and a lease payable in the financial statements.

At the commencement of the lease, the City initially measures the lease receivable at the present value of payments expected to be received and paid during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received and the lease payable is reduced by the principal portion of lease payments made. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments include how the City determines the discount rate it uses to discount the expected lease receipts and payments to present value, lease term and lease receipts.

 The City uses the estimated cost of capital rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease.

The City monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

(j) New Accounting Pronouncements

Current Year Standards

GASB 87 - Leases. The implementation of this statement resulted in a recognition of a lease receivable, deferred inflow of resources, and a lease payable in the financial statements.
37 313

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

GASB 91 – Conduit Debt Obligations – The implementation of this statement did not result in financial impact to the City.

GASB 92 – Omnibus 2020 – Related to the implementation of GASB 87. The implementation of this statement resulted in a recognition of a lease receivable, deferred inflow of resources, and a lease payable in the financial statements.

GASB 93 – Replacement of Interbank Offered Rates - The implementation of this statement did not result in financial impact to the City.

Pending Accounting Standards

GASB has issued the following pronouncements that have an effective date subsequent to June 30, 2022, which may impact the City’s financial reporting requirements in the future. Unless otherwise noted, management has not determined what, if any, impact implementation of the following Statements may have on future financial statements.

GASB 94 – Public-Private and Private-Public Partnerships and Availability Payment Arrangements: Effective for the City’s fiscal year ending June 30, 2023.

GASB 96 – Subscription-Based Information Technology Arrangement: Effective for the year ending June 30, 2023.

GASB 99 – Omnibus 2022: Effective for the year ending June 30, 2023.

GASB 100 – Accounting Changes and Error Corrections: Effective for the year ending June 30, 2023.

GASB 101 – Compensated Absences: Effective for the year ending June 30, 2024.

(k) Capital Assets

Capital assets (including infrastructure) are recorded at historical cost at the time of purchase. Assets acquired from gifts or contributions are recorded at acquisition value on the date received. Generally, capital asset purchases in excess of $5,000 are capitalized if they have an expected useful life of two years or more.

Capital assets include public domain (infrastructure) capital assets consisting of certain improvements including roads, streets, sidewalks, medians, sewers, and storm drains. Public domain assets acquired prior to 1980 have been included in the accompanying financial statements.

38 314

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

Capital assets used in operations are depreciated or amortized over their estimated useful lives using the straight-line method in the government-wide financial statements and in the fund financial statements of proprietary funds. It is the City’s policy not to depreciate or amortize assets in its first year of service. A full year of depreciation or amortization is charged at final year of asset life or upon disposal.

Depreciation and amortization are charged as expenses against operations and accumulated depreciation and amortization are reported on the respective statement of net position.

The ranges of lives used for computing depreciation and amortization for each capital asset class are as follows:

Building improvements and structures 10-20 years Landscaping and sprinklers 35-40 years Automotive equipment 2-20 years Office furniture 5-20 years Office machines 3-20 years Other equipment 5-60 years Intangible assets 7-10 years Right-to-use assets 2-7 years Park system and facilities 10-25 years Infrastructure – roads 10-50 years Infrastructure – storm drains 50-100 years

(l) Deferred Outflows/Inflows of Resources

The statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred outflows of resources. This 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 (expenditure) until that time. The City has two items that qualify for reporting in this category. The items are deferred outflows related to pensions and OPEB.

The statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This financial statement element, deferred inflows of resources , represents an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has four types of items which qualify for reporting in this category. Three of the items are deferred inflows related to pensions, OPEB, and leases which are presented on the government-wide statement of net position. The fourth item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from accounts, taxes, grant and leases receivables. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

39 315

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

(m) Fund Balances

Fund balances are reported in the fund statements in the following classifications:

Nonspendable Fund Balance – This includes amounts that cannot be spent because they are either not spendable in form (such as inventory) or legally or contractually required to be maintained intact (such as endowments).

Restricted Fund Balance – This includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers, or through enabling legislation. If Council action limiting the use of funds is included in the same action (legislation) that created (enables) the funding source, then it is restricted.

Committed Fund Balance – This includes amounts that can be used only for specific purposes determined by formal action of a city ordinance by the Council. It includes legislation (Council action) that can only be overturned by new legislation requiring the same type of voting consensus that created the original action. Therefore, if Council action limiting the use of funds is separate from the action (legislation) that created (enables) the funding source, then it is committed, not restricted. For the purposes of establishing, modifying, and rescinding a committed fund balance, the City considers an ordinance more binding than a resolution or a minute action by City Council.

Assigned Fund Balance – This includes amounts that are designated or expressed by the Council, but does not require a formal action like a resolution or ordinance. The Council may delegate the ability to an employee or committee to assign uses of specific funds for specific purposes. In June 2011, the City Council passed Resolution 11-27, delegating authority to establish, modify, or rescind a fund balance assignment to the Finance Director.

Unassigned Fund Balance – This includes amounts that are the residual balance for the City’s general fund and includes all spendable amounts not contained in other classifications. In other funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned.

In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted fund balance to have been depleted before using any components of unrestricted fund balance. Further, when components of the unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance.

Unassigned fund balance is applied last.

(n) Employee Leave Benefits

Eligible employees accumulate up to 26.5 days of vacation each year, depending on 40 316

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

the employee’s bargaining unit and length of service, but may not carry over from one year to the next more than the equivalent of one to two (depends on Memorandum of Understanding or Salary Resolution) year’s vacation without prior approval of the respective department head and/or City Manager.

A liability is recorded for unused vacation and similar compensatory leave balances since the employees’ entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.

A liability is recorded for unused sick leave balances except for miscellaneous, confidential and Costa Mesa Police Association (CMPA) employee groups. The liability is recorded only to the extent that it is probable that the unused balances will result in termination payments. Unused sick leave is converted to CalPERS service credit at the time of retirement. The ability to liquidate leave balances is available to all employee groups with the exception of miscellaneous, confidential and CMPA employee groups, separations from which result in the forfeiture of the accrued sick leave benefit. Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely upon the occurrence of a future event (illness), which is outside the control of the City and the employee.

A current liability is accrued in the governmental funds for material leave benefits due on demand to governmental fund employees that have terminated prior to year-end.

All other amounts are only recorded in the government-wide financial statements.

These non-current amounts will be recorded as fund expenditures in the year in which they are paid or become due on demand to terminated employees.

(o) Claims and Judgments

The City records a liability for litigation, judgments, and claims when it is probable that an asset has been impaired or a liability has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated.

This liability is recorded in an internal service fund, which accounts for the City’s self-insurance activities.

(p) Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis. For the purpose, benefit payments (including refunds of employee contributions) are recognized when currently 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 41 317

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(1) Summary of Significant Accounting Policies (Continued)

information within certain defined timeframe. For this report, the following timeframes are used:

CalPERS Plans
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Measurement Period July 1, 2020 to June 30, 2021

Supplemental Plan
Valuation Date June 30, 2022
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022

(q) Other Post Employment Benefits (OPEB)

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense and information about the plan (OPEB Plan), have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.

Generally accepted accounting principles require that the reported results must pertain to liability information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2021
Measurement Period July 1, 2020 to June 30, 2021

(r) Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

(s) Prior Year Data

The information included in the accompanying financial statements for the prior year has been presented for comparison purposes only and does not represent a complete presentation in accordance with generally accepted accounting principles.

Certain minor reclassifications of prior year data have been made in order to enhance their comparability with current year figures.

42 318

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(2) Cash and Investments

Cash and investments are reported as follows:

Cash and investments at June 30, 2022 consisted of the following:

Investments Authorized by the California Government Code and the City of Costa Mesa’s Investment Policy

The table below identifies investment types that are authorized for the City by the California Government Code and investment policies of the City. 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, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Authorized Maximum Percentage Investment In
Investments Maturity* of Portfolio* One Issuer*
U.S. Treasury Securities 5 years None None
Federal Agency Securities 5 years None 35%
Municipal Securities 5 years None 5%
Banker’s Acceptances 180 days 40% 5%
Commercial Paper 270 days 25% 5%
Federally Insured Time Deposit 5 Years None None
Non-Negotiable Certificates of Deposit 5 years 20% 5%
Certificate of Deposit Placement Service 5 years 30% None Negotiable Certificates of Deposit 5 years 30% 5%
Repurchase Agreements 1 year 30% None
Medium-Term Corporate Notes 5 years 30% 5%
Money Market Mutual Funds N/A 20% 10%
Asset Backed Securities 5 years 20% 5%
County Pooled Investment Funds N/A 35% None
Local Agency Investment Fund N/A None None
Statement of Net Position:

Cash and Investments 157,463,831 $
Cash and Investments with Fiscal Agent 460,281
Statement of Fiduciary Net Position:

Cash and Investments 2,569,587
Total cash and investments 160,493,699 $
Petty cash on hand 58,046 $
Demand deposits 24,598,864
Investments 135,836,789
Total cash and investments 160,493,699 $
43 319

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(2) Cash and Investments (Continued)

* Based on state law requirements or investment policy requirements, whichever is more restrictive.

Investments Authorized by Debt Agreements

Investment of debt proceeds held by bond trustees 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.

Generally, the following investment types are authorized by the City’s debt agreements:

Authorized
Investments

Maximum
Maturity
Maximum
Percentage
Allowed
Maximum
Investment in
One Issuer
U.S. Treasury Securities None None None
Federal Agency Securities 1 year None None
Banker’s Acceptances 30 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds None None None
Investment Agreements None None None
Interest-Bearing Time Deposits 30 days None None
Repurchase Agreements 270 days None None
Local Agency Investment Fund None None None
State Obligations None None None
Pre-funded Municipal Obligations None None None

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 evenly 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 trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

44 320

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(2) Cash and Investments (Continued)

Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations

The City (including investments held by bond trustees) held no investments that were highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the information provided above).

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 below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type:

* not required to be rated

Investment Type
12 Months
Or Less
13 to 24
Months
25 to 60
Months Total
Federal Agency Securities 6,486,699$ 10,996,616$ 5,111,604$ 22,594,919$ State Investment Pool (LAIF) 74,017,208 - - 74,017,208 U.S. Treasury Securities - 8,081,009 10,515,230 18,596,239 Medium-Term Corporate Notes 2,250,715 5,720,861 5,357,183 13,328,759 Asset Backed Securities - 1,496,553 2,877,542 4,374,095 Money Market Mutual Funds 1,031,511 - - 1,031,511 PARS Section 115 Trust:

Pooled Balanced Index Plus 1,561,154 - - 1,561,154 Held by Trustee:

Money Market Mutual Funds 312,904 - - 312,904 Lehman Brothers Holdings
Inc. Bankruptcy 20,000 - - 20,000 Total 85,680,191$ 26,295,039$ 23,861,559$ 135,836,789$ Minimum Legal
Investment Type Rating AAA AA A Not Rated Total
Federal Agency Securities N/A -$ 22,594,919$ -$ -$ 22,594,919$ U.S. Treasury Securities* N/A - - - - 18,596,239 Medium-Term Corporate Notes A - 3,154,822 10,173,937 - 13,328,759 State Investment Pool (LAIF) N/A - - - 74,017,208 74,017,208 Asset Backed Securities AA 4,374,095 - - - 4,374,095 Money Market Mutual Funds AAA 1,031,511 - - - 1,031,511 PARS Section 115 Trust:

Pooled Balanced Index Plus N/A - - - 1,561,154 1,561,154 Held by Trustee:

Money Market Mutual Funds AAA 312,904 - - - 312,904 Lehman Brothers Holdings
Inc. Bankruptcy N/A - - - 20,000 20,000 Total 5,718,510$ 25,749,741$ 10,173,937$ 75,598,362$ 135,836,789$ 45 321

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(2) Cash and Investments (Continued)

GASB requires the disclosure of more than 5% total investments with a single issuer. At June 30, 2022, the City’s investment in the following single issuers exceeded 5%:

Issuer Investment Type Reported Amount Percentage
FNMA Federal Agency Securities $ 9,988,826 7%
FHLMC Federal Agency Securities 7,417,294 5%

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 the 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 market 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.

Investment in State Investment Pool

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro- rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

Investment in Public Agency Retirement Services

The City is a voluntary participant in the Public Agency Retirement Services (PARS). In 2021, the City funded an Internal Revenue Services Section 115 irrevocable trust with PARS for pension and OPEB benefits. The trust account allows more control and flexibility in investment allocations compared to the City’s portfolio which is restricted by State regulations to fixed income instruments. OPEB and Pension trust fund assets are held on behalf of the City by PARS. The City provides investment direction and determines the amount and timing of disbursements of PARS trust fund assets.

46 322

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(2) Cash and Investments (Continued)

Fair Value Measurements
The City’s investments in the Costa Mesa Community Facilities District Bonds and Lehman Brothers Holdings, Inc. Bankruptcy are valued based on cost and the City’s assumptions originated from market participant input, respectively. These investments are not traded on, and therefore, are categorized in Level 3. When valuing Level 3 securities, the inputs or methodology are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

Fair value measurements for the year ended June 30, 2022 are as follows:

(3) Interfund Receivables and Payables

Interfund receivable and payable balances at June 30, 2022 are as follows:

All receivables resulted from short term borrowing to cover negative cash balances.

Quoted
Prices
Level 1
Observable
Inputs
Level 2
Unobservable
Inputs
Level 3 Total
Federal Agency Securities -$ 22,594,919$ -$ 22,594,919$ U.S. Treasury Securities - 18,596,239 - 18,596,239 Medium Term Corporate Notes - 13,328,759 - 13,328,759 Asset Backed Securities - 4,374,095 - 4,374,095 Held by Trustee:

Lehman Brothers Holdings Inc.

Bankruptcy - - 20,000 20,000 Investments measured at Fair
Value -$ 58,894,012$ 20,000 $ 58,914,012 State Investment Pool (LAIF)* 74,017,208
Money Market Mutual Funds* 1,031,511
PARS Section 115 Trust:

Pooled Balanced Index Plus* 1,561,154
Held By Trustee:

Money Market Mutual Funds* 312,904
Total Investment Portfolio 135,836,789$
* Not subject to fair value categorization
Receivable Fund Amount
General Fund Nonmajor Governmental Funds 716,536$
Payable Fund
47 323

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(4) Transfers In and Out

Transfers in and out for the year ended June 30, 2022 are as follows:
(a) The General Fund transferred the following:

1. $66,419 to Government Grants for the Firefighter Grant;

2. $8,533,467 to the Capital Improvements Capital Projects Fund for capital improvement projects and transfer for 5% CAN Ordinance;

3. $2,802,549 to the Financing Authority Debt Service Fund for debt service payments;

4. $1,713,828 to the Housing Authority for subsidy of homeless program costs;

5. $1,800,000 to the Self-Insurance Fund for pending litigations; and

6. $6,448,850 to the Internal Service Funds for various equipment and vehicle purchases as well as true up 5% per CAN Ordinance.

(5) Loans Receivable

The City’s loans receivable at June 30, 2022 by loan programs are as follows:

Allowance for uncollectible accounts are established for various loans.

General Fund Loan to the Successor Agency

In years prior to 2013, the General Fund made loans in the amount of $9,278,545 to the Successor Agency (formerly the Redevelopment Agency of the City of Costa Mesa). Loan repayments are subject to approved annually by the State. As a result, an allowance for doubtful accounts has been recorded for the outstanding loan balance.

Loan receivable $ 3,102,031
Less allowance for doubtful accounts (3,102,031)
Loans receivable, net $ -
HOME Program 1,192,446$
Community Development Loan Program 183,695
Rental Rehabilitation Program 231,539
First Time Home Buyer Program 1,477,168
Single Family Rehabilitation Program 142,500
Neighborhood Stabilization Program 181,250
Other Programs 508,542
Total 3,917,140
Less allowance for uncollectible loans (3,308,846)
Loans receivable, net 608,294$
Transfers out Transfers in Total
General Fund Government Grants Fund 66,419 $ (a1) General Fund Capital Improvements Fund 8,533,467 (a2) General Fund Nonmajor Governmental Funds 4,516,377 (a3 to a4) General Fund Internal Service Funds 8,248,850 (a5 to a6) 21,365,113$
48 324

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(6) Leases Receivable

Land

On July 1, 1985, the City entered into a 55-year ground lease agreement with Costa Mesa Family Village for use of three parcels of City-owned land. The lease began in July 1985 and will end in October 2039. The lessee is required to make annual fixed payments ranging from $6,750 to $13,500 with an interest rate of 2.015%. As of June 30, 2022, the lease receivable is $1,512,830, and deferred inflows of resources is $1,506,105. The City recognized $84,555 of lease revenue and interest revenue of $23,445 during the fiscal year.

Buildings & Infrastructure

The City entered into 3 leases for use of building and infrastructure assets with lease terms of five years with the option to extend. The lessee is required to make annual fixed payments ranging from $27,376 to $42,083 with interest rates of 2.015%. As of June 30, 2022, the lease receivable is $2,906,238, and deferred inflows of resources is $2,832,645. The City recognized $362,276 of lease revenue and interest revenue of $64,710 during the fiscal year.

49 325

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(7) Capital Assets

A summary of changes in capital assets is as follows:

Depreciation expense is charged to the following functions for the year ended June 30, 2022:

Governmental activities:

General government $ 1,445,486
Protection of persons and property 3,253,363
Community programs 2,485,949
Public services 8,983,386

Total depreciation expense-governmental activities $16,168,184 Balance at Balance at
July 1, 2021* Additions Deletions June 30, 2022
Capital assets not being depreciated:

Land 34,579,306$ -$ -$ 34,579,306$ Land rights related to streets 29,821,224 - - 29,821,224 Construction in progress 8,437,088 9,777,904 (6,791,141) 11,423,851 Total capital assets not
being depreciated 72,837,618 9,777,904 (6,791,141) 75,824,381 Capital assets being depreciated/amortized:

Building improvements and structures 122,932,653 889,424 - 123,822,077 Landscaping and sprinklers 10,076,675 - - 10,076,675 Automotive equipment 14,810,433 840,049 (574,903) 15,075,579 Office furniture 941,352 13,234 - 954,586 Office machines 8,511,377 205,331 - 8,716,708 Other equipment 13,695,464 521,513 (8,006) 14,208,971 Intangible assets 1,646,881 22,462 - 1,669,343 Right-to-use lease assets 1,434,585 - - 1,434,585 Park system and facilities 19,634,609 225,904 - 19,860,513 Infrastructure - roads 296,554,610 5,783,514 (4,488,199) 297,849,925 Infrastructure - storm drains 100,851,449 - - 100,851,449 Total capital assets being
depreciated/amortized 591,090,088 8,501,431 (5,071,108) 594,520,411 Less accumulated depreciation/amortization:

Building improvements and structures (47,030,030) (4,732,032) - (51,762,062) Landscaping and sprinklers (9,442,977) (76,445) - (9,519,422) Automotive equipment (9,962,190) (875,906) 508,003 (10,330,093) Office furniture (608,301) (49,692) - (657,993) Office machines (7,641,131) (234,007) - (7,875,138) Other equipment (8,343,106) (956,402) 8,006 (9,291,502) Intangible assets (1,180,140) (155,097) - (1,335,237) Right-to-use lease assets - (265,493) - (265,493) Park system and facilities (12,235,142) (920,482) - (13,155,624) Infrastructure - roads (196,654,073) (6,536,069) 4,488,199 (198,701,943) Infrastructure - storm drains (86,516,094) (1,366,559) - (87,882,653) Total accumulated
depreciation/amortization (379,613,184) (16,168,184) 5,004,208 (390,777,160) Total capital assets being
depreciated/amortized, net 211,476,904 (7,666,753) (66,900) 203,743,251 Capital assets, net 284,314,522$ 2,111,151$ (6,858,041)$ 279,567,632$ 50 326

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(7) Capital Assets (Continued)

The City has active construction projects as of June 30, 2022. The significant projects include the following:
(8) Changes in Long-Term Liabilities

A summary of changes in long-term liabilities in primary government for the year ended June 30, 2022 is as follows:

Construction Project Total Budget Spent to Date
Remaining
Commitment
Land Management System 1,976,759$ 836,575$ 1,140,184$ Fairview Road Improvement
405/Adam 1,176,150 60,298 1,115,852
SB Newport Blvd Improvements
(Mesa/Victoria) 1,965,652 34,765 1,930,887 Newport Blvd NB 22th Bristol SB
Bristol Mesa 2,131,786 58,525 2,073,261 Adams Ave Improvement 2,278,862 - 2,278,862 Citywide Street Maintenance 11,026,508 9,077,780 1,948,728 Jack Hammett Sports Complex 2,710,274 2,205,228 505,046 Total 23,265,991$ 12,273,171$ 10,992,820$
Due
Balance at Balance at Within One
July 1, 2021* Additions Reductions June 30, 2022 Year
Bonds payable:

Public Financing Authority
2006 Revenue
Refunding Bonds 210,000 $ - $ (210,000)$ - $ - $ Financing Authority
2017 Lease Revenue
Bonds 24,850,000 - (1,740,000) 23,110,000 1,830,000 Unamortized premium 3,140,046 - (147,767) 2,992,279 147,767 Total bonds payable 28,200,046 - (2,097,767) 26,102,279 1,977,767 Other liabilities:

Lease payable - Facility 309,105 - (72,176) 236,929 75,501 Lease payable - Warehouse 1,068,577 - (129,663) 938,914 136,839 Lease payable - Office Trailer 56,903 - (35,332) 21,571 21,571 Loans payable 112,870 - (15,392) 97,478 15,391 Claims payable 17,454,524 100,282 (3,255,364) 14,299,442 1,379,844 Fire Truck Note payable 1,472,402 - (135,493) 1,336,909 137,978 Mobile Command Note
payable - 2,049,652 - 2,049,652 187,059 Employee leave
benefits payable 5,920,664 3,491,555 (3,827,911) 5,584,308 3,326,231 Total other liabilities 26,395,045 5,641,489 (7,471,331) 24,565,203 5,280,414 Total 54,595,091 $ 5,641,489 $ (9,569,098)$ 50,667,482 $ 7,258,181 $ *Balance at July 1, 2021 has been restated to include leases payable due to the implementation of GASB 87. 51 327

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(9) Long-Term Liabilities

Costa Mesa Financing Authority Bonds - 2017 Lease Revenue Bonds

On October 1, 2017, the Costa Mesa Financing Authority issued $29,735,000 of 2017 Lease Revenue Bonds to finance certain capital improvements of the City of Costa Mesa and to advance refund $16,765,000 of outstanding Costa Mesa Public Financing Authority 2007 Certificates of Participation (2007 Certificates). The bond issue also included a bond premium of $3,694,172. The bonds mature from October 1, 2018 through October 1, 2042 in annual installments ranging from $570,000 to $2,220,000. Interest is payable semi-annually on April 1 and October 1 of each year, commencing on April 1, 2018 at a rate ranging from 2% to 5%. As of June 30, 2022, the principal outstanding is $23,110,000 and the unamortized bond premium balance is $2,992,279.

Bond proceeds of $14,530,520 along with $2,302,225 of 2007 Certificates sinking fund monies, were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 2007 Certificates. As a result, the 2007 Certificates are considered to be defeased and the liability for those certificates have been removed from the government-wide Statement of Net Position.

The annual debt service requirements for the bonds as of June 30, 2022 are as follows:

Leases Payable

Community Service Facility

On July 1, 2012, the City entered into a 13-year lease agreement for the use of a community service facility. The total lease liability is $309,105 at 2.20% interest. As of June 30, 2022, the value of the lease liability is $236,929. The City is required to make annual payments ranging from $78,976 to $84,304. The value of the right-to- use asset is $309,105 and had an accumulated amortization of $77,276 as of June 30, 2022.

Year
Ending
June 30 Principal Interest Total
2023 1,830,000$ 973,300$ 2,803,300$
2024 1,920,000 879,550 2,799,550
2025 2,015,000 781,175 2,796,175
2026 2,115,000 677,925 2,792,925
2027 2,220,000 569,550 2,789,550
2028 - 2032 3,160,000 2,191,000 5,351,000
2033 - 2037 4,015,000 1,329,881 5,344,881
2038 - 2042 4,785,000 568,593 5,353,593
2043 1,050,000 17,063 1,067,063
Total 23,110,000$ 7,988,037$ 31,098,037$
52 328

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(9) Long-Term Liabilities (Continued)

The future principal and interest payments as of June 30, 2022, are as follows:

Warehouse

On May 17, 2021, the City entered into a seven year lease agreement for the use of a warehouse. The total lease liability is $1,068,577 at 2.015% interest. As of June 30, 2022, the value of the lease liability is $938,914. The City is required to make monthly principal and interest payments of $12,500. The value of the right-to-use asset is $1,068,577 and had an accumulated amortization of $152,652 as of June 30, 2022.

The future principal and interest payments as of June 30, 2022, are as follows:

Office Trailer

The City entered into a two year non-cancellable lease agreement for the use of a modular unit. The total lease liability is $56,903 at 2.015% interest. As of June 30, 2022, the value of the lease liability is $21,571. The City is required to make monthly principal and interest payments of $2,371. The value of the right-to-use asset is $56,903 and had an accumulated amortization of $35,565 as of June 30, 2022.

Year
Ending
June 30 Principal Interest Total
2023 75,501$ 5,212 $ 80,713 $
2024 78,938 3,551 82,489
2025 82,490 1,815 84,305
Total 236,929$ 10,578 $ 247,507 $
Year
Ending
June 30 Principal Interest Total
2023 136,839$ 17,661 $ 154,500 $
2024 144,297 14,835 159,132
2025 152,052 11,856 163,908
2026 160,099 8,717 168,816
2027 168,466 5,414 173,880
2028 177,161 1,939 179,100
Total 938,914$ 60,422 $ 999,336 $
53 329

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(9) Long-Term Liabilities (Continued)

The future principal and interest payments as of June 30, 2022, are as follows:

Loans Payable – SCE On-Bill Financing (OBF) Loans

During the year ended June 30, 2019, the City entered into loan agreements with Southern California Edison to finance certain street lighting projects. The total amount of the loans was $153,914. The loan’s term is ten years with monthly payments of $1,282. The loans bears no interest.

The annual debt service requirements for loans payable as of June 30, 2022 are as follows:

Firetruck Note Payable

On February 25, 2021, the City entered into a Master Lease – Purchase Agreement and financed the purchase of a Pierce Arrow XT Firetruck for $1,472,402. The note matures annually on March 5 th of each year with annual payments of $162,497. The note bears an interest rate of 1.8340% per annum.

Year
Ending
June 30 Principal Interest Total
2023 21,571$ 180 $ 21,751 $
Total 21,571$ 180 $ 21,751 $
Year
Ending
June 30 Principal Total
2023 15,391 $ 15,391 $
2024 15,391 15,391
2025 15,391 15,391
2026 15,391 15,391
2027 15,391 15,391
2028 - 2029 20,523 20,523
Total 97,478 $ 97,478 $
54 330

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(9) Long-Term Liabilities (Continued)

The annual debt service requirements for the note as of June 30, 2022 is as follows:

Mobile Command Center Note Payable

On January 7, 2022, the City entered into a Master Lease – Purchase Agreement and financed the purchase of a Mobile Command Center and a Pumping Engine for $2,049,652. The note matures annually on March 7 th of each year with annual payments of $228,360. The note bears an interest rate of 2.0150% per annum.

The annual debt service requirements for the note as of June 30, 2022 is as follows:

Year
Ending
June 30 Principal Interest Total
2023 137,978$ 24,519$ 162,497$
2024 140,509 21,988 162,497
2025 143,086 19,411 162,497
2026 145,710 16,787 162,497
2027 148,382 14,115 162,497
2028 - 2031 621,244 28,743 649,987
Total 1,336,909$ 125,563$ 1,462,472$
Year
Ending
June 30 Principal Interest Total
2023 187,059$ 41,301$ 228,360$
2024 190,829 37,531 228,360
2025 194,674 33,686 228,360
2026 198,596 29,763 228,359
2027 202,598 25,762 228,360
2028 - 2032 1,075,896 65,903 1,141,799 Total 2,049,652$ 233,946$ 2,283,598$
55 331

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(10) Fund Balances

Fund balance consisted of the following at June 30, 2022:

1. Restricted fund balances in the Public Services category consist of fund balances in the Gas Tax, Air Quality Improvement, Lions Park Capital Improvements, and Measure “M2” Construction funds. Revenues received in these funds are legally restricted for specific purposes, such as transportation and facility related capital projects.

2. The fund balance committed for declared disasters was adopted by Ordinance No. 91-20 and Municipal Code Section 2-206 to provide required funding as a result of a declared emergency by the City Council for an unanticipated but urgent event threatening the public health, safety and welfare of the City. Any fund balance utilized has to be replenished.

3. The fund balance committed for self-insurance was codified in the Ordinance No. 96-14 and City Municipal Code Section 2-154 to provide a self-insurance reserve to be used to pay actual losses not covered by insurance policies or insurance pools. Any fund balance utilized has to be replenished.

4. The fund balance committed for economic reserves was adopted by the City Council on March 3, 2015 as a part of the reserve goal plan. The City commits $1,500,000 each year toward economic reserve.

Government
American
Rescue Capital Non-Major
General Grants Plan Act Fund Improvements Funds
Nonspendable:

Prepaid items 504,500 $ - $ - $ - $ - $ Inventories 99,047 - - - - Restricted for:

Pension and OPEB 3,061,154 - - - - Protection of persons and property - - - - 1,293,762 Community programs - - - - 5,480,097 Public services (1) - - - - 19,863,022 Debt service - - - - 4 Committed for:

Declared disasters (2) 14,125,000 - - - - Self insurance (3) 2,000,000 - - - - Economic reserves (4) 9,000,000 - - - - Assigned for:

Compensated absences 5,584,308 - - - - Police Retirement 1% Supplemental 1,884,759 - - - - Workers compensation 1,000,000 - - - - Facilities reserve 2,000,000 - - - - Strategic plan projects 2,000,000 - - - - Protection of persons and property - - - - 635,684 Public services - - 50,329 21,869,391 12,383,909 Unassigned 16,517,079 (1,145,765) - - (705,022) Total Fund Balance 57,775,847 $ (1,145,765) $ 50,329 $ 21,869,391$ 38,951,456 $ Major Funds
56 332

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(10) Fund Balances (Continued)

The following funds had deficits at June 30, 2022:

Major Governmental Funds:

Special Revenue Funds:

Government Grants $(1,145,765)
Nonmajor Governmental Funds:

Special Revenue Funds:

Office of Traffic Safety (40,708)
Disaster Fund (664,963)
Arts Cultural Master Plan (66,848)
Fiduciary Fund:

Successor Agency to the City of Costa Mesa Redevelopment Agency Private Purpose Trust Fund (1,702,362)

(11) Defined Benefit Pension Plans

(a) General Information about the Pension Plans

Employees of the City are members of the California Public Employees’ Retirement System (CalPERS), the cost of which is paid by the City. The information below includes the aggregate total pension plan related items:

Below are descriptions of the retirement plans along with selected information regarding benefits, contributions, liabilities and actuarial assumptions.

Plan Descriptions

All qualified permanent and probationary employees are eligible to participate in the City’s separate Miscellaneous and Police Safety Plans, agent multiple-employer defined benefit pension plans and the Fire Safety cost sharing plans. The plans are administered by CalPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and City 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.

Miscellaneous Police Safety Fire Safety
1%
supplemental Total
Net pension liability (70,556,028)$ (97,290,121)$ (61,763,064)$ -$ (229,609,213)$ 1% supplemental liability - - - (1,884,759) (1,884,759) Deferred outflows of
resources - pension 11,072,097 12,048,233 19,704,203 - 42,824,533 Deferred inflows of
resources - pension (23,141,473) (23,625,352) (40,941,325) - (87,708,150) Pension expense (credit) 2,320,280 3,636,601 22,001,613 (185,561) 27,772,933 57 333

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

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. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least 5 years of service.

PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least 5 years of service. All members are eligible for non-duty disability benefits after 5 years of service.

The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death 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 at June 30, 2022, are summarized as follows:

Prior to On or After On or After
Hire Date March 11, 2012 March 11, 2012 January 1, 2013 Benefit formula 2.5% @55 2.0% @60 2% @62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 55 50 - 63 52 - 67
Monthly benefits, as a % of
eligible compensation 2.0% to 2.5% 1.092% to 2.418% 1.0% to 2.5% rates 10.469% 7% 7.50%
rates 7.41% 9.88% 9.88%
Required employee contribution
Required employer contribution
Miscellaneous (Agent Multiple-Employer)
58 334

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

Employees Covered

At the June 30, 2021 measurement date, the following employees were covered by each plan’s benefit terms:

Police Safety (Agent Multiple-Employer)
On or After On or After
Hire Date March 11, 2012 January 1, 2013
Benefit formula 3% @50 2.7% @57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50 50 - 57
Monthly benefits, as a % of
eligible compensation 3% 2.0% to 2.7%
rates 14% 12.75%
rates 15.51% 20.51%
Required employee contribution
Required employer contribution
Prior to On or After On or After
Hire Date December 30, 2012 December 30, 2012 January 1, 2013 Benefit formula 3.0% @50 2.0% @50 2.7% @57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 50 - 55 50 - 57
Monthly benefits, as a % of
eligible compensation 3% 2.0% to 2.7% 2.0% to 2.7%
rates 14% 9% 13%
rates 20.59% 18.19% 13.13%
Required employer contribution
Required employee contribution
Fire Safety (Cost Sharing Multiple-Employer)
Police Fire
Miscellaneous Safety Safety
Inactive employees or beneficiaries
currently receiving benefits 577 206 161 Inactive employees entitled to but
not yet receiving benefits 781 71 - Active employees 340 128 80
Total 1,698 405 241
59 335

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

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 CalPERS’ 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 employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy plan member contribution requirements as identified by the pension plan terms 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 Plan is measured as of June 30, 2021, based on an annual actuarial valuation as of June 30, 2020 and rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Methods and Assumptions Used to Determine Total Pension Liability

For the three CalPERS Plans, the June 30, 2020 valuation was rolled forward to determine the June 30, 2021 pension liability, based on the following actuarial methods and assumptions:

Valuation date June 30, 2020
Measurement date June 30, 2021
Actuarial cost method Entry-Age Normal in accordance with the requirements of GASB 68

Actuarial assumptions:

Discount rate 7.15%
Inflation 2.50%
Salary increases Varies by Entry Age and Service

Mortality Rate Table1

Derived using CalPERS Membership Data
for all Funds

Post Retirement Benefit
Increase
The lesser of contract COLA or 2.50%
until Purchasing Power Protection
Allowance Floor on Purchasing Power
applies, 2.50% thereafter

60 336

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

1 The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP 2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

Discount Rate

The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at the statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.

Therefore, the long term expected rate of return on plan on investment was applied to all periods of projected benefit payments to determine the total pension liability.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short- term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, except compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long- term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

61 337

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

The expected real rate of return by asset class are as followed:

Asset Class1

Assumed asset
allocation

Real Return
Years 1–102

Real Return
Years 11+3
Global Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% (0.92%)

1 In the system’s ACFR, Fixed Income is included Global Debt Securities; Liquidity is included in Short-term Investment; Inflation Assets are included both Global Equity Securities and Global Debt Securities.

2 An expected inflation of 2.00% used for this period
3 An expected inflation of 2.92% used for this period

Changes in Net Pension Liability

The changes in the net pension liability for the Miscellaneous (Agent Multiple-Employer) Plan, using the measurement date of June 30, 2021, are as follows:

Total Plan Net Position
Pension Fiduciary Liability
Liability Net Position (Asset)
Balance at June 30, 2020
(Valuation Date) 301,096,031$ 197,576,863$ 103,519,168$ Changes in the Year:

Service cost 4,114,686 - 4,114,686 Interest on the total pension liability 20,957,522 - 20,957,522 Differences between actual and
expected experience (1,467,232) - (1,467,232) Net plan to plan resource movement - - - Changes in assumptions - - - Contributions - employer - 10,097,843 (10,097,843) Contributions - employees - 2,062,454 (2,062,454) Net investment income - 44,605,186 (44,605,186) Administrative expenses - (197,367) 197,367 Benefit payments, including refunds
of employee contributions (17,147,887) (17,147,887) - Other Miscellaneous Income/(Expense) - - - Net Changes 6,457,089 39,420,229 (32,963,140) Balance at June 30, 2021
(Measurement Date) 307,553,120$ 236,997,092$ 70,556,028$ Increase (Decrease)
62 338

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

The changes in the net pension liability for the Police Safety (Agent-Multiple-Employer) Plan, using the measurement date of June 30, 2021, are as follows:

Proportionate Share of the Net Pension Liability for the Fire Safety Plan

As of June 30, 2022, the City reported net pension liabilities for its proportionate share of the net pension liability of the Fire Safety Plan as follows:

The City’s proportionate share of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined.

The City’s proportionate share of the net pension liability for this Plan as of the measurement dates of June 30, 2020 and 2021 was as follows:

Total Plan Net Position
Pension Fiduciary Liability
Liability Net Position (Asset)
Balance at June 30, 2020
(Valuation Date) 322,201,085$ 194,850,371$ 127,350,714$ Changes in the Year:

Service cost 4,811,521 - 4,811,521 Interest on the total pension liability 22,650,069 - 22,650,069 Differences between actual and
expected experience 503,266 - 503,266 Net plan to plan resource movement - - - Changes in assumptions - - - Contributions - employer - 11,583,086 (11,583,086) Contributions - employees - 2,166,528 (2,166,528) Net investment income - 44,470,479 (44,470,479) Administrative expenses - (194,644) 194,644 Benefit payments, including refunds
of employee contributions (16,651,882) (16,651,882) - Other Miscellaneous Income/(Expense) - - - Net Changes 11,312,974 41,373,567 (30,060,593) Balance at June 30, 2021
(Measurement Date) 333,514,059$ 236,223,938$ 97,290,121$ Increase (Decrease)
Proportionate
Share of Net
Pension Liability
Balance at: 6/30/2020 81,561,540$
Balance at: 6/30/2021 61,763,064
Net Changes during 2020-2021 (19,798,476)
Fire Safety
Proportion - June 30, 2020 1.22422%
Proportion - June 30, 2021 1.75989%
Change - Increase (Decrease) 0.53567%
63 339

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following presents the City’s net pension liability for each Plan, calculated using the Plan’s discount rate, 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:

Pension Plans Fiduciary Net Position

Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Amortization of Deferred Outflows and Inflows of Resources

Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Miscellaneous Police Safety Fire Safety
1% Decrease 6.15% 6.15% 6.15%
Net Pension Liability 109,451,295$ 142,290,283$ 90,813,408$ Current Discount Rate 7.15% 7.15% 7.15%
Net Pension Liability 70,556,028$ 97,290,121$ 61,763,064$ 1% Increase 8.15% 8.15% 8.15%
Net Pension Liability 38,459,595$ 60,458,777$ 37,901,794$ Net difference between projected and actual
earnings on pension plan investments

All other amounts
5 year straight-line amortization

Straight-line amortization over the
expected average remaining service
lifetime (EARSL) of all members that are
provided with benefits (active, inactive,
and retired) as of the beginning of the
measurement period

64 340

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension

At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 11,072,097$ -$ Differences between expected and actual experience - (883,435) Net differences between projected and actual
earnings on plan investments - (22,258,038) Total 11,072,097$ (23,141,473)$
Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 11,680,985$ -$ Differences between expected and actual experience 367,248 (1,306,677) Net differences between projected and actual
earnings on plan investments - (22,318,675) Total 12,048,233$ (23,625,352)$
Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 9,072,094$ -$ Differences between expected and actual experience 10,552,166 - Change in employer's proportion - (3,688,065) Net difference between projected and actual
earnings on plan investments - (36,760,896) Differences between employer's contributions and
change in employer's proportion 79,943 (492,364) Total 19,704,203$ (40,941,325)$
Miscellaneous
Police Safety
Fire Safety
65 341

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(11) Defined Benefit Pension Plans (Continued)

At June 30, 2022, deferred outflows of resources in the amounts of $11,072,097, $11,680,985 and $9,072,094 were related to contributions subsequent to the measurement date for the Miscellaneous, Police Safety and Fire Safety Plans, respectively. They will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2023.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Subsequent Events

On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%.

Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.

On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes.

This includes a reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modifications to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.

Fiscal Year
Ending
June 30 Miscellaneous Police Safety Fire Safety
2023 (6,341,713)$ (6,462,575)$ (5,536,777)$ 2024 (5,299,396) (5,404,750) (6,440,112) 2025 (5,355,561) (5,258,192) (8,216,241) 2026 (6,144,803) (6,132,587) (10,116,086) Thereafter - - - 66 342

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(12) Police 1% Supplemental Retirement Plan

(a) General Information about the Pension Plan

Plan Description

The plan was effective on July 1, 1993 for sworn members of the City of Costa Mesa Police Department. The plan was originally a 1% supplemental plan to the City’s 2%@50 benefit.

Under the Retirement Plan for Safety Employees of the City of Costa Mesa, the City joined CalPERS with 3%@50 Safety benefit as of December 31, 2000 and transferred active members to CalPERS. Employees who retired prior to July 1, 1999 were not transferred to CalPERS.

The Police 1% Supplemental Retirement Plan is a single employer defined benefit plan.

This Plan currently has only retired participants as all active employees were transferred to the CalPERS 3%@ 50 benefit plan. The number of participants at June 30, 2021 was 18.

The average monthly benefit being paid is $949.24. The retirement benefit is 1% of the highest 12-month earnings for credited services up to 25 years. Maximum benefit is 75% of the highest 12-month earnings for service retirement including all public plan pension benefits but not including Social Security. The 75% is proportionately reduced for less than 25 years of Costa Mesa Police Department service.

Contributions

The City has not adopted a funding policy for this supplemental retirement plan and accordingly plan benefits impact financial resources as benefits are paid.

(b) Pension Liability

The City’s pension liability for the Plan is measured as the total pension liability, as the pension plan has no fiduciary net position. The pension liability of the Plan is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2022. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

67 343

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(12) Police 1% Supplemental Retirement Plan

Actuarial Methods and Assumptions

The total pension liabilities in the June 30, 2022 actuarial valuations were determined using the following actuarial assumptions:

Measurement Date June 30, 2022
Actuarial Assumptions:

Discount Rate

3.75% per annum. This discount rate is the mid-point,
rounded to 5 basis points, of 3-20 year municipal bond
rate indices: S&P Municipal Bond 20 Year High Grade
Rate Index, Bond Buyer 20-Bond GO Index, Fidelity GO
AA 20 Year Bond Index.

Payroll Growth N/A; all participants have retired
Inflation Rate 2.75% per year

Cost Method

Entry Age Normal as a level percentage of payroll
Employer Funding Policy Pay-as-you-go
Census Data

Retirement
Disability/Turnover Rate
Mortality

Census information was provided by the Plan Sponsor
as of June 2022.

N/A; all participants have retired
Rates are based on the 2021 CalPERS Experience Study
for Public Agency Police as shown below:

Discount Rate

The discount rate used to measure the total pension liability was 3.75%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate.

Professional judgment on future contributions has been applied in those cases where contribution patterns deviate from the actuarially determined rates. Basted on those assumptions, the pension plan's fiduciary net position was projected to be depleted for current members during the fiscal year. Therefore, the long-term expected rate of return of 3.75%

Age Male Female Male Female
50 0.27% 0.20% 1.70% 1.44%
60 0.58% 0.46% 2.71% 1.96%
70 1.33% 1.00% 4.00% 2.91%
80 4.37% 3.40% 7.94% 6.11%
90 14.54% 11.09% 16.61% 14.40%
100 36.20% 31.58% 36.20% 31.58%
110 100.00% 100.00% 100.00% 100.00%
Healthy Retirees Non-Industrial Disabled Retirees
68 344

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(12) Police 1% Supplemental Retirement Plan (Continued)

was used to discount funded projected benefit payments to determine the total pension liability. The single effective discount rate was 3.75%.

The discount rate changed from 2.10% as of June 30, 2021 to 3.75% as of June 30, 2022 measurement date.

(c) Changes in the Pension Liability

Sensitivity of the Total Pension Liability to Changes in the Discount Rate

The following presents the total pension liability, calculated using the discount rate of

3.75%, as well as what the 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:

(d) Pension expenses and Deferred Outflows/Inflows of Resources Related to Pensions

For the fiscal year ended June 30, 2022, the City recognized pension expense of $185,561.

At June 30, 2022, the City did not report any deferred outflows/inflows of resources related to the Police 1% Supplemental Retirement Plan.

Balance at June 30, 2021 2,274,765$
Changes in the year:

Interest on the total pension liability 45,623
Differences between actual expected
and actual experience 101,666
Changes in assumptions (332,850)
Benefit payments, including refunds
of member contributions (204,445)
Net Changes (390,006)
Balance at June 30, 2022 1,884,759$
1% Decrease 2.75%
Net Pension Liability 2,012,865$
Current Discount Rate 3.75%
Net Pension Liability 1,884,759$
1% Increase 4.75%
Net Pension Liability 1,770,363$
69 345

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(13) Defined Contribution Plan

On January 1, 2000, the City adopted a Defined Contribution Plan (Plan) for part-time employees that work under 1,000 hours during the fiscal year and do not meet the eligibility requirements to be enrolled in the California Public Employee Retirement System (CalPERS).

The Plan is administered by the Public Agency Retirement Services (PARS). As of June 30, 2022, there were 143 active participants in the Plan. Both the City and employees are required to each contribute 3.75% of gross wages. The City’s contribution to the defined contribution plan for the year ended June 30, 2022 was $38,842.

(14) Other Post Employment Benefits Plan (OPEB)

Plan Description

The City administers a single-employer defined benefit plan, which provides medical insurance benefits to eligible retirees and their spouses in accordance with various labor agreements. The plan covers employees hired before January 1, 2004 who retire directly from the City with 10 years or more of City service. The City provides a contribution up to a percentage of the lesser of $500 per month or the premium for the most popular medical plan elected by the employees. The percentage varies by retirement date and years of City service. For employees hired on or after January 1, 2004, the City will only pay for the PEMHCA subsidy once they meet the definition of a retiree under CalPERS. The City provides retiree life insurance of $1,000 for the retiree and $500 for the retiree’s spouse.

Employees Covered

As of the June 30, 2021 measurement date, the following current and former employees were covered by the benefit terms under the Plan:

Active employees 561
Inactive employees or beneficiaries currently receiving benefits 427 Inactive employees entitled to but not yet receiving benefits - Total 988
70 346

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(14) Other Post Employment Benefits Plan (OPEB) (Continued)

Contributions

The contribution requirements of plan members and the City are established and may be amended by the City Council. The contribution required to be made under the City Council and labor agreement requirements is on a pay-as-you-go basis (i.e., as medical insurance premiums become due). For the fiscal year ended June 30, 2022, the City contributed $1,840,792 to the Plan. The City has not established a trust for the purpose of holding assets accumulated for plan benefits.

The City’s total OPEB liability was measured as of June 30, 2021 by an actuarial valuation based on the following actuarial methods and assumptions:

Discount Rate: 2.19% for accounting disclosure purposes. The rate is based on a yield for 20-year tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale). For the current valuation, the discount rate was selected from the range of indices as shown in the table below:

As of 06/30/21
Bond Buyer Go 20 – Municipal Bond Index 2.16%
S&P Municipal Bond 20-year High Grade
Rate Index

2.19%
Fidelity 20-year Go Municipal Bond Index 1.94%
Bond Index Range 1.94% - 2.19%
Actual Discount Rate Used 2.19%

Inflation Rate: 2.50% per year

Aggregate Payroll Increases: 2.75% per year. This assumption is used to amortize the unfunded actuarial accrued liability and to determine the Entry Age Normal actuarial liabilities.

Mortality Rate: Based on rates used in the most recent CalPERS pension valuation.

Turnover Rate: Assumption used to project terminations (voluntary and involuntary) prior to meeting minimum retirement eligibility for retiree health coverage. The rates represent the probability of termination in the next 12 months. The termination rates are based on those used in the most recent CalPERS pension valuation.

Retirement Rate: Annual retirement rates are based on those used in the most recent CalPERS pension valuation.

71 347

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(14) Other Post Employment Benefits Plan (OPEB) (Continued)

Changes in the Total OPEB Liability

The changes in the Plan’s total OPEB liability is as follows:

Sensitivity of the OPEB Liability to Changes in the Discount Rate

The following presents the City’s OPEB liability if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2022:

1% Decrease
(1.19%)
Current
Discount Rate
(2.19%)
1% Increase
(3.19%)
OPEB Liability $ 76,947,346 $ 66,254,495 $ 57,741,773

Sensitivity of the OPEB Liability to Changes in the Health Care Cost Trend Rates

The following presents the OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2022:

Recognition of Deferred Outflows and Deferred Inflows of Resources

Gains and losses related to changes in total OPEB liability are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs.

Current Healthcare Cost
1% Decrease Trend Rates 1% Increase
(5.75% decreasing to (6.75% decreasing to (7.75% decreasing to

3.50%) 4.50%) 5.50%)
OPEB Liability $60,716,376 $66,254,495 $74,451,162
Balance at June 30, 2021 62,882,272$
Changes recognized for the measurement period:

Service cost 1,469,582
Interest 1,675,650
Differences between expected and actual experience (894,275) Changes of assumptions 3,854,176
Contributions - employer -
Benefit payments (2,732,910)
Administrative expense -
Net Changes 3,372,223
Balance at June 30, 2022
(Measurement Date June 30, 2021) 66,254,495$
72 348

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(14) Other Post Employment Benefits Plan (OPEB) (Continued)

The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The initial amortization period for deferred inflows and deferred outflows is three years.

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB

For the fiscal year ended June 30, 2022, the City recognized OPEB expense of $4,736,147. At June 30, 2022, the City reported deferred outflows and inflows of resources related to OPEB from the following sources:

The $1,840,792 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2021 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2023.

Other amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows:

(15) Post Employment Benefits-RHS (Defined Contribution)

On January 1, 2004, the City adopted a new Retirement Health Savings Plan (RHS) for all full-time active employees. This benefit was ratified in the City’s contractual agreements (MOU) with the Costa Mesa Employees Association (CMCEA), Costa Mesa Police Association (CMPA), Costa Mesa Police Management Association (CMPMA), and the Costa Mesa Firefighters Association (CMFA). This post-employment medical benefit is to assist employees with their qualifying medical expenses or premiums upon retirement or separation from the City with no minimum age requirement. The RHS plan is a defined contribution plan for all full time employees at the City. Under this plan, the employee and the City each make a mandatory 1% of base pay contribution. If the employee separates from the City prior to the 10-year vesting period, the employee forfeits his or her share of the City’s contribution.

Deferred Deferred
Outflows Inflows
of Resources of Resources
OPEB contributions subsequent to measurement date 1,840,792$ -$ Differences between expected and actual differences 1,189,710 (3,128,648) Changes in assumptions 10,282,238 -
Total 13,312,740$ (3,128,648)$
Fiscal Year Ended
June 30:

Deferred
Outflows/(Inflows)
of Resources
2023 1,590,915$
2024 1,590,915
2025 1,590,915
2026 1,590,914
2027 804,828
Thereafter 1,174,813
73 349

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(15) Post Employment Benefits-RHS (Defined Contribution)

The City has no payment obligations once the employee separates from the City. Per a side letter agreement with employees, the RHS program was suspended starting November 7, 2010. For the CMPMA, effective July 2014, a 1% employee contribution is required to the plan, but no employer contribution is required. The City’s contribution to the defined contribution post retirement plan for the year ended June 30, 2022 was $0.

(16) Expenditures in Excess of Appropriations

Excess of expenditures over appropriations in individual funds at the function level (level of budgetary control) is as follows at June 30, 2022:

(17) Risk Management

For the fiscal year ended June 30, 2022, the City participated in the California Municipal Excess Liability (“CAMEL”) Program. The membership of CAMEL consists of 21 cities with similar interests and needs regarding liability insurance. The Board of Directors sets the premiums for each participant and each participant is represented on the Board. Premiums are based upon the losses incurred by each member and are not affected by losses incurred by other members.

In the Self-Insurance Workers’ Compensation/General Liability/Unemployment Internal Service Fund, the City has recorded liabilities of $15,982,611 for lawsuits and other claims arising in the ordinary course of business. The City is also self-insured for the first $2,000,000 of each claim arising for workers’ compensation and has purchased outside insurance coverage in excess of the $2,000,000 up to an unlimited maximum. The City is self-insured for the first $2,000,000 of each claim arising for general liability. The City has purchased outside insurance coverage in excess of the $2,000,000 up to a maximum of $25,000,000 per occurrence. For the past three years, claim payments have not exceeded the amount of applicable insurance coverage. The City has estimated losses for claims and judgments and has established liabilities of $9,746,369 for workers’ compensation and $6,236,242 for general liability. Losses for claims incurred but not reported are recorded when the probable amount of loss can be reasonably estimated. These amounts represent estimates of amounts to be paid for reported claims and incurred but not yet reported claims based upon past experience, modified for current trends and information. While the ultimate amount of losses incurred through June 30, 2022 is dependent on future developments, based upon information from the City 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.

Function Expenditures Appropriations Excess
Major Fund:

General Fund Protection of persons
and property 88,413,582 85,792,240 2,621,342
Debt service 244,368 - 244,368
Special Revenue Funds: Protection of persons
Supplemental Law and property 277,824 277,372 452 Enforcement Services Fund
74 350

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2022

(17) Risk Management (Continued)

The City is contingently liable for additional losses not reported in the accompanying financial statements in the range of approximately $25,000 to $2,000,000 for which the likelihood of an unfavorable outcome is only reasonably possible, as determined by legal counsel.

Changes in claims payable for the past two fiscal years are as follows:

(18) Legislation and Litigation Affecting the Successor Agency

As of February 1, 2012, California redevelopment agencies were dissolved. The Successor Agency to the Costa Mesa Redevelopment Agency (Successor Agency) succeeded to the former Costa Mesa Redevelopment Agency (former Agency) and administers the enforceable obligations, including a $9,278,545 loan from the City’s General Fund to the former agency.

The Department of Finance has approved the Successor Agency to reinstate this loan on its Report Obligation Payment Schedule (ROPS).

The City has adjusted the loan for principal/interest additions and principal repayments from the annual ROPS as approved by the Department of Finance. As of June 30, 2022, the Successor Agency’s loan payable balance was $3,102,031.

A summary of changes in long-term liabilities in the Successor Agency for the year ended June 30, 2022 is as follows:

Portion Due
Balance Balance at Within One
July 1, 2021 Additions Reductions June 30, 2022 Year
Loans Payable 4,916,327$ - $ (1,814,296)$ 3,102,031 $ 1,749,586 $ Total 4,916,327$ - $ (1,814,296)$ 3,102,031 $ 1,749,586 $ Fiscal Year
Beginning
Balance
Claims
Incurred and
Changes in
Estimates
Claim
Payments Ending Balance
2020-21 15,854,996$ 3,705,942 $ (2,106,414) $ 17,454,524 $ 2021-22 17,454,524 100,282 (3,255,364) 14,299,442 75 351
Measurement date June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 Total pension liability:

Service cost 3,366,560$ 3,187,235$ 3,269,125$ 3,659,618$ Interest on total pension liability 17,792,384 18,262,096 18,633,944 18,996,998 Difference between expected and
actual experience - (2,016,112) (2,818,846) (1,038,444) Changes in assumptions - (4,399,842) - 15,484,252 Benefit payments, including refunds
of employee contributions (12,853,585) (13,476,175) (14,145,202) (14,720,378)

Net Change in Total Pension Liability 8,305,359 1,557,202 4,939,021 22,382,046 Total pension liability - beginning of year 241,975,291 250,280,650 251,837,852 256,776,873 Total pension liability - End of Year (a) 250,280,650$ 251,837,852$ 256,776,873$ 279,158,919$ Plan Fiduciary Net Position:

Contributions - employer 4,903,142$ 5,768,827$ 6,226,072$ 6,712,045$ Contributions - employees 2,137,933 1,978,052 1,966,557 1,936,240 Net investment income 26,075,603 3,881,685 897,287 18,711,484 Benefit payments (12,853,585) (13,476,175) (14,145,205) (14,720,378) Plan to plan resource movement - 13,634 3,064 - Administrative expense - (193,604) (104,766) (246,188) Other miscellaneous income (expense) - - - - Net change in plan fiduciary net position 20,263,093 (2,027,581) (5,156,991) 12,393,203 Plan fiduciary net position - beginning of year 153,666,841 173,929,934 171,902,353 166,745,362 Plan fiduciary net position - end of year (b) 173,929,934$ 171,902,353 $ 166,745,362 $ 179,138,565 $ Net pension liability - ending (a)-(b) 76,350,716 $ 79,935,499 $ 90,031,511 $ 100,020,354 $ Net position - beginning of year
Plan fiduciary net position as a percentage of
the total pension liability 69.49% 68.26% 64.94% 64.17% Covered payroll 18,366,435$ 17,928,997$ 19,890,931$ 19,532,886$ Net pension liability as a percentage of
covered payroll 415.71% 445.84% 452.63% 512.06%
Notes to schedule:

Benefit changes:

The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2019 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Changes in assumptions:
* - Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.

None in 2021, 2020, or 2019. In 2018, demographic assumptions and inflation were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. In 2017, The accounting discount rate reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.50% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expenses). In 2014, amounts reported were based on the 7.50% discount rate.

CITY OF COSTA MESA, CALIFORNIA
Schedule of Changes in the Net Pension Liability and Related Ratios Miscellaneous Plan
Last Ten Fiscal Years*
76 352
June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 3,528,896$ 3,828,540$ 4,081,002$ 4,114,686$ 19,188,563 19,990,625 20,506,212 20,957,522 (3,837,320) 4,152,146 (324,784) (1,467,232) (1,071,584) - - - (15,285,935) (16,317,568) (16,501,681) (17,147,887) 2,522,620 11,653,743 7,760,749 6,457,089 279,158,919 281,681,539 293,335,282 301,096,031 281,681,539$ 293,335,282$ 301,096,031$ 307,553,120$ 7,300,573$ 8,320,570$ 9,336,852$ 10,097,843$ 1,906,040 2,055,169 2,205,872 2,062,454 15,161,548 11,863,211 9,609,644 44,605,186 (15,285,935) (16,317,568) (16,501,681) (17,147,887) (1,077) - - - (279,147) (133,740) (272,363) (197,367) (530,105) 435 - - 8,271,897 5,788,077 4,378,324 39,420,229 179,138,565 187,410,462 193,198,539 197,576,863 187,410,462$ 193,198,539 $ 197,576,863 $ 236,997,092 $ 94,271,077$ 100,136,743 $ 103,519,168 $ 70,556,028 $

66.53% 65.86% 65.62% 77.06%
20,067,193$ 24,394,495$ 24,012,483$ 26,206,105$ 469.78% 410.49% 431.11% 269.24%
77 353
Fiscal year ended June 30, 2015June 30, 2016June 30, 2017 June 30, 2018 Actuarially determined contribution 5,221,083$ 6,056,123$ 6,522,784$ 6,913,866$ Contributions in relation to the actuarially
determined contributions (5,221,083) (6,056,123) (6,522,784) (6,913,866) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 17,928,997$ 19,890,931$ 19,532,886$ 20,067,193$ Contributions as a percentage of covered payroll 29.12% 30.45% 33.39% 34.45%

Notes to schedule:

Valuation date for June 30, 2022 6/30/2019
Methods and assumptions used to determine contribution rates:

Single and agent employers
Amortization method/period
Asset valuation method
Inflation
Salary increases
Payroll growth
Investment rate of return
Retirement age
Mortality
Other information:

For changes to previous year’s information, refer to past GASB 68 reports.

Net position - beginning of year
* - Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.

The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

Entry Age Normal
For details, see June 30, 2019 Funding Valuation Report.

Fair Value of Assets. For details, see June 30, 2019 Funding Valuation Report.

2.50%
Varies by Entry Age and Service

2.75%

CITY OF COSTA MESA, CALIFORNIA
Miscellaneous Plan
Schedule of Contributions
Last Ten Fiscal Years*

7.00%, net of pension plan investment and administrative expense; includes inflation.
78 354
June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 9,256,492$ 9,876,401$ 10,249,971$ 11,072,097$ (9,256,492) (9,876,401) (10,249,971) (11,072,097) -$ -$ -$ -$
24,394,495$ 24,012,483$ 26,206,105$ 26,486,277$

37.95% 41.13% 39.11% 41.80%
79 355
Measurement date June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 Total pension liability:

Service cost 4,675,505$ 4,048,034$ 4,011,055$ 4,475,641$ Interest on total pension liability 17,563,332 18,452,568 19,519,447 20,072,034 Difference between expected and
actual experience - 1,744,508 4,436,634 (2,148,051) Changes in assumptions - (4,744,823) - 17,608,748 Benefit payments, including refunds of
employee contributions (11,159,179) (12,625,831) (13,319,431) (13,984,335)

Net Change in Total Pension Liability 11,079,658 6,874,456 14,647,705 26,024,037 Total pension liability - beginning of year 237,419,600 248,499,258 255,373,714 270,021,419 Total pension liability - end of year (a) 248,499,258$ 255,373,714$ 270,021,419$ 296,045,456$ Plan fiduciary net position:

Contributions - employer 5,066,147$ 5,228,944$ 5,992,098$ 7,592,902$ Contributions - employees 2,204,590 2,191,295 1,988,684 2,012,546 Net investment income 24,794,991 3,618,253 825,770 17,309,154 Benefit payments (11,159,179) (12,625,831) (13,319,431) (13,984,335) Plan to plan resource movement - - 72 - Administrative expense - (182,933) (98,993) (233,009) Other miscellaneous income (expense) - - - - Net change in plan fiduciary net position 20,906,549 (1,770,272) (4,611,800) 12,697,258 Plan fiduciary net Position -beginning of year 143,294,304 164,200,853 162,430,581 157,818,781 Plan fiduciary new position - end of year (b) 164,200,853$ 162,430,581$ 157,818,781$ 170,516,039$ Net pension liability - ending (a)-(b) 84,298,405$ 92,943,133$ 112,202,638$ 125,529,417$ Plan fiduciary net position as a percentage
of the total pension liability 66.08% 63.61% 58.45% 57.60% Covered payroll 14,884,359$ 13,714,558$ 14,161,162$ 14,696,132$ Net pension liability as a percentage of
covered payroll 566.36% 677.70% 792.33% 854.17%
Notes to schedule:

Benefit changes:

The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2017 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Credit (a.k.a. Golden Handshakes).

Changes in assumptions:
* - Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.

None in 2021, 2020, or 2019. In 2018, demographic assumptions and inflation were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. In 2017, The accounting discount rate reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.50% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expenses). In 2014, amounts reported were based on the 7.50% discount rate.

CITY OF COSTA MESA, CALIFORNIA
Schedule of Changes in the Net Pension Liability and Related Ratios Police Safety Plan
Last Ten Fiscal Years*
80 356
June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 4,653,580$ 4,959,915$ 4,912,766$ 4,811,521$ 20,611,486 21,235,614 21,872,003 22,650,069 (1,494,789) (2,112,152) (1,729,542) 503,266 (1,540,347) - - - (14,129,155) (15,024,883) (16,058,867) (16,651,882) 8,100,775 9,058,494 8,996,360 11,312,974 296,045,456 304,146,231 313,204,725 322,201,085 304,146,231$ 313,204,725$ 322,201,085$ 333,514,059$
8,263,652$ 9,471,893$ 10,608,592$ 11,583,086$ 2,120,029 2,222,313 2,285,323 2,166,528 14,402,562 11,872,172 9,465,284 44,470,479 (14,129,155) (15,024,883) (16,058,867) (16,651,882) 222 - - - (265,711) (128,739) (266,185) (194,644) (504,590) 420 - - 9,887,009 8,413,176 6,034,147 41,373,567 170,516,039 180,403,048 188,816,224 194,850,371 180,403,048$ 188,816,224$ 194,850,371$ 236,223,938$
123,743,183$ 124,388,501$ 127,350,714$ 97,290,121$

59.31% 60.29% 60.47% 70.83%
14,529,255$ 17,534,445$ 16,175,525$ 15,883,165$ 851.68% 709.40% 787.30% 612.54%
81 357
Fiscal year ended June 30, 2015June 30, 2016June 30, 2017June 30, 2018 Actuarially determined contribution 5,237,595$ 5,994,277$ 7,592,899$ 8,098,773$ Contributions in relation to the actuarially
determined contributions (5,237,595) (5,994,277) (7,592,899) (8,098,773) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 13,714,558$ 14,161,162$ 14,696,132$ 14,529,255$ Contributions as a percentage of covered payroll 38.19% 42.33% 51.67% 55.74%

Notes to schedule:

Valuation date for June 30, 2022 6/30/2019
Methods and assumptions used to determine contribution rates:

Actuarial Cost Method
Amortization method/period
Asset valuation method
Inflation 2.50%
Salary increases Varies by Entry Age and Service
Payroll growth 2.75%
Investment rate of return
Retirement age
Mortality
Other information:

For changes to previous year’s information, refer to past GASB 68 reports. * -

CITY OF COSTA MESA, CALIFORNIA
Last Ten Fiscal Years*
Police Safety Plan
Schedule of Contributions
Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.

Entry Age Normal
The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP- 2016 published by the Society of Actuaries.

The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

7.00%, net of pension plan investment and administrative expense; includes inflation.

Fair Value of Assets. For details, see June 30, 2019 Funding Valuation Report.

For details, see June 30, 2019 Funding Valuation Report. 82 358
June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 10,894,754$ 11,174,155$ 11,803,904$ 11,680,985$
(10,894,754) (11,174,155) (11,803,904) (11,680,985) -$ -$ -$ -$
17,534,445$ 16,175,525$ 15,883,165$ 17,075,363$

62.13% 69.08% 74.32% 68.41%
83 359
Measurement date June 30, 2014June 30, 2015June 30, 2016 Plan's proportion of the net pension
liability 0.86630% 0.85980% 0.78750%
Plan's proportionate share of the net
pension liability 53,906,245$ 59,018,969$ 68,144,130$ Plan's covered payroll 9,348,967$ 8,616,507$ 9,235,056$ Plan's proportionate share of the
net pension liability as a percentage
of covered payroll 576.60% 684.95% 737.89%
Plan's proportionate share of the
fiduciary net position as a percentage
of the Plan's total pension liability 70.20% 78.40% 74.06% Plan's proportionate share of aggregate
employer contributions 4,567,080$ 4,600,229$ 4,087,020$ Notes to schedule:

Benefit changes:

Changes in assumptions:
* - Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.

CITY OF COSTA MESA, CALIFORNIA
Schedule of Proportionate Share of the Net Pension Liability Fire Safety Plan
Last Ten Fiscal Years*
None in 2021, 2020, or 2019. In 2018, demographic assumptions and inflation were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. In 2017, The accounting discount rate reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.50% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expenses). In 2014, amounts reported were based on the 7.50% discount rate.

The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2017 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Credit (a.k.a. Golden Handshakes).
84 360
June 30, 2017 June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021

0.75976% 0.78122% 0.75901% 0.74962% 0.67861%
75,347,795$ 75,280,246$ 77,775,545$ 81,561,540$ 61,763,064$ 9,116,708$ 9,057,608$ 9,614,585$ 9,034,047$ 9,203,544$ 826.48% 831.13% 808.93% 902.82% 671.08%

71.74% 73.39% 73.37% 73.12% 71.38%
5,040,152$ 5,855,909$ 6,865,279$ 7,555,475$ 9,072,094$ 85 361
Fiscal year ended June 30, 2015June 30, 2016June 30, 2017June 30, 2018 Contractually required contribution
(actuarially determined) 3,877,163$ 3,286,280$ 3,598,782$ 5,040,152$ Contributions in relation to the actuarially
determined contributions (4,603,714) (3,786,280) (3,598,782) (5,040,152) Contribution deficiency (excess) (726,551)$ (500,000)$ -$ -$ Covered payroll 8,616,507$ 9,235,056$ 9,116,708$ 9,057,608$ Contributions as a percentage
of covered payroll 53.43% 41.00% 39.47% 55.65%
Notes to schedule:

Valuation date for June 30, 2022 6/30/2019
Methods and assumptions used to determine contribution rates:

Actuarial Cost Method Entry Age Normal
Amortization method/periodFor details, see June 30, 2019 Funding Valuation Report.

Asset valuation method
Inflation 2.50%
Salary increases Varies by Entry Age and Service
Payroll growth 2.75%
Investment rate of return
Retirement age
Mortality
Other information:

For changes to previous year’s information, refer to past GASB 68 reports. * -
Last Ten Fiscal Years*
Fire Safety Plan
Schedule of Contributions

CITY OF COSTA MESA, CALIFORNIA
Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.

Fair Value of Assets. For details, see June 30, 2019 Funding Valuation Report.

7.00%, net of pension plan investment and administrative expense; includes inflation.

The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre- retirement and Post-retirement mortality rates include period from 1997 to 2015. Pre-retirement and Post-retirement
mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

The probabilities of Retirement are based on the 2017
CalPERS Experience Study for the period from 1997 to 2015. 86 362
June 30, 2019June 30, 2020June 30, 2021June 30, 2022
5,855,909$ 6,865,279$ 7,555,477$ 9,072,094$ (5,855,909) (6,865,279) (7,555,477) (9,072,094) -$ -$ -$ -$
9,614,585$ 9,034,047$ 9,203,544$ 9,845,473$

60.91% 75.99% 82.09% 92.14%
87 363
Measurement date June 30, 2016June 30, 2017June 30, 2018 Total pension liability:

Interest on total pension liability 80,950$ 77,214$ 82,454$ Difference between expected and actual experience (19) - (9,704) Changes in assumptions - (107,900) (18,938) Benefit payments, including refunds of
employee contributions (211,287) (208,260) (205,233)

Net change in Total Pension Liability (130,356) (238,946) (151,421) Total pension liability - beginning of year 2,897,028 2,766,672 2,527,726 Total pension liability - end of year (a) 2,766,672$ 2,527,726$ 2,376,305$ Plan fiduciary net position as a percentage of the
total pension liability 0.00% 0.00% 0.00%
Covered - employee payroll N/A N/A N/A
Net pension liability as a percentage of
covered payroll N/A N/A N/A
Notes:

Last Ten Fiscal Years*
POLICE 1% SUPPLEMENTAL RETIREMENT PLAN

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

CITY OF COSTA MESA, CALIFORNIA
The discount rate changed from 3.50% as of June 30, 2018 to 3.15% as of June 30, 2019 measurement date.

The discount rate changed from 3.15% as of June 30, 2019 to 2.45% as of June 30, 2020 measurement date.

The discount rate changed from 2.45% as of June 30, 2020 to 2.10% as of June 30, 2021 measurement date.
* - Fiscal year 2016 was the first year of implementation, therefore only seven years are shown.

There are no assets accumulated in a trust that meets the criteria of GASB codification P22.101 or P52.101 to pay related benefits for the pension plan.

The discount rate changed from 2.10% as of June 30, 2021 to 3.75% as of June 30, 2022 measurement date.
88 364
June 30, 2019June 30, 2020June 30, 2021June 30, 2022
79,579$ 69,134$ 55,426$ 45,623$ - 80,298 - 101,666 46,602 122,873 59,262 (332,850) (205,233) (205,036) (204,445) (204,445) (79,052) 67,269 (89,757) (390,006) 2,376,305 2,297,253 2,364,522 2,274,765 2,297,253$ 2,364,522$ 2,274,765$ 1,884,759$

0.00% 0.00% 0.00% 0.00%

N/A N/A N/A N/A

N/A N/A N/A N/A
89 365
Measurement date June 30, 2017 June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 Total OPEB liability
Service cost 1,229,918$ 1,098,145$ 1,110,733$ 1,145,090$ 1,469,582$ Interest on the total OPEB liability 1,622,474 1,812,069 1,852,821 2,060,874 1,675,650 Actual and expected experience difference - - 2,081,994 (3,128,209) (894,275) Changes in assumptions (3,959,316) (670,841) 3,420,614 6,606,929 3,854,176 Benefit payments (2,318,709) (2,469,425) (2,751,358) (2,719,892) (2,732,910) Net change in total OPEB liability (3,425,633) (230,052) 5,714,804 3,964,792 3,372,223 Total OPEB liability - beginning 56,858,361 53,432,728 53,202,676 58,917,480 62,882,272 Total OPEB liability - ending 53,432,728$ 53,202,676$ 58,917,480$ 62,882,272$ 66,254,495$ Plan fiduciary net position as a percentage
of the total OPEB liability 0.00% 0.00% 0.00% 0.00% 0.00% Covered - employee payroll1 41,026,788$ 43,392,898 $ 43,828,141 $ 45,645,442 $ 48,101,217 $ OPEB liability as a percentage of
covered-employee payroll1 130.24% 122.61% 134.43% 137.76% 137.74% Notes to schedule:
1 - OPEB benefits are not based on employee payroll.

In Fiscal Year 2021 the City created a trust that meets the criteria of GASB codification P22.101 or P52.101 to pay related benefits for the OPEB plan. The funds are in a pooled account - balanced index. As of June 30, 2022 the market value of the investments held in the trust was $1,561,154 and is reflected as a contribution subsequent to the measurement date as of Fiscal Year 2022.

Changes in assumptions. The discount rate as of the June 30, 2016 measurement date was 2.85%. The discount rate as of the June 30, 2017 measurement date was 3.40%. The discount rate as of the June 30, 2018 measurement date was 3.50%. The discount rate as of the June 30, 2019 measurement date was 3.51%. The discount rate as of the June 30, 2020 measurement date was 2.66%. The discount rate as of the June 30, 2021 measurement date was 2.19%.

Historical information is required only for measurement periods for which GASB 75 is applicable.

Future years' information will be displayed up to 10 years as information becomes available. * - Fiscal year 2018 was the first year of implementation, therefore only five years are shown.

Last Ten Fiscal Years*
Schedule of Changes in Total OPEB Liability and Related Ratios

CITY OF COSTA MESA, CALIFORNIA
90 366

GENERAL FUND

The General Fund is used to account for all general revenues of the City not specifically levied or collected for special purposes, and for expenditures related to the provision of general services by the City. The General Fund is used to account for all resources not required to be accounted for in another fund.

GOVERNMENT GRANTS FUND

The Government Grants Fund is used to account for receipt and disbursement of grant monies provided by Federal, State, and County governmental agencies for various programs.

AMERICAN RESCUE PLAN ACT Fund (ARPA)
The ARPA Fund is used to account for the receipt and disbursement of grant monies under the American Rescue Plan Act.

91 367
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Revenues:

Taxes:

Sales tax 59,938,452$ 79,523,566$ 77,312,838$ (2,210,728)$ 63,834,761$ Property tax 49,552,799 49,324,153 49,087,175 (236,978) 47,502,237 Transient occupancy tax 5,569,330 8,323,300 8,366,278 42,978 4,282,802 Franchise tax 5,183,043 5,285,167 5,318,541 33,374 4,895,574 Business license tax 928,160 928,160 919,491 (8,669) 901,604 Marijuana business tax 2,000,000 690,000 548,711 (141,289) 326,239 Total taxes 123,171,784 144,074,346 141,553,034 (2,521,312) 121,743,217 Licenses and permits 5,343,662 7,849,542 7,331,252 (518,290) 4,368,740 Fines and forfeitures 1,401,089 1,200,545 1,170,795 (29,750) 1,055,886 Intergovernmental:

Motor vehicle in-lieu 85,000 110,000 130,289 20,289 84,182 Prop 172 1,088,281 1,711,000 1,467,173 (243,827) 1,151,953 Advances repayment 1,464,562 1,524,562 1,524,562 - 1,581,124 Grants and other reimbursements 190,523 1,287,358 1,407,067 119,709 1,280,562 Total intergovernmental 2,828,366 4,632,920 4,529,091 (103,829) 4,097,821 Charges for services 6,393,390 8,087,107 6,964,934 (1,122,173) 4,897,671 Rental 4,283,522 4,098,530 4,042,324 (56,206) 4,112,442 Investment income (loss) 600,000 (691,026) (1,246,827) (555,801) (67,681) Miscellaneous 600,247 1,305,650 1,374,266 68,616 859,000 Total revenues 144,622,060 170,557,614 165,718,869 (4,838,745) 141,067,096 Expenditures:

Current:

General government:

City council 891,341 891,341 867,913 23,428 644,710 City manager:

Administration 4,439,899 4,439,899 3,796,264 643,635 3,600,414 City clerk 965,645 1,000,895 936,966 63,929 917,491 Personnel services 1,643,223 1,674,986 1,481,900 193,086 1,252,768 Risk management services 336,948 337,248 362,648 (25,400) 298,024 City attorney 1,000,000 1,000,000 958,775 41,225 968,030 Financial services 4,750,218 4,607,709 3,799,043 808,666 3,578,773 Information technology 4,523,856 4,523,355 4,092,844 430,511 3,760,161 Facilities and equipment
maintenance 12,181,731 12,427,833 12,151,003 276,830 10,905,348 Non-departmental 6,489,827 6,318,733 4,532,996 1,785,737 3,183,528 Total general government 37,222,688 37,221,999 32,980,352 4,241,647 29,109,247

CITY OF COSTA MESA, CALIFORNIA
General Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
See notes to required supplementary information
92 368
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Protection of persons and property:

Police protection 51,507,415 51,830,760 53,409,112 (1,578,352) 48,905,954 Fire protection 30,142,203 31,117,622 32,298,528 (1,180,906) 29,042,308 Building and safety 2,891,056 2,843,858 2,706,591 137,267 1,944,663 Total protection of persons
and property 84,540,674 85,792,240 88,414,231 (2,621,991) 79,892,925 Community programs:

Community recreation 7,664,502 7,719,131 6,288,274 1,430,857 4,004,633 Planning 2,225,031 1,986,119 2,135,517 (149,398) 1,750,901 Community improvement 1,670,352 1,823,749 1,592,410 231,339 1,077,268 Development services
administration 996,125 1,100,209 1,076,135 24,074 808,778 Total community programs 12,556,010 12,629,208 11,092,336 1,536,872 7,641,580 Public services:

Administration 2,111,966 2,235,259 2,171,885 63,374 1,967,042 Engineering 2,584,692 2,262,492 2,097,776 164,716 2,151,377 Transportation 3,082,211 3,018,318 3,069,222 (50,904) 2,755,522 Total public services 7,778,869 7,516,069 7,338,883 177,186 6,873,941 Debt Service:

Principal - - 217,231 (217,231) 15,391 Interest and fiscal charges - - 27,137 (27,137) - Total debt service - - 244,368 (244,368) 15,391 Total expenditures 142,098,241 143,159,516 140,070,170 3,089,346 123,533,084 Excess (deficiency) of revenues
over (under) expenditures 2,523,819 27,398,098 25,648,699 (1,749,399) 17,534,012 Other financing sources (uses):

Transfers in 6,561,529 8,061,529 - (8,061,529) 9,173,146 Transfers out (8,980,936) (18,436,238) (21,365,113) (2,928,875) (26,678,565) Total other financing sources (uses) (2,419,407) (10,374,709) (21,365,113) (10,990,404) (17,505,419) Net change in fund balance 104,412 17,023,389 4,283,586 (12,739,803) 28,593 Fund balance at beginning of year 53,492,261 53,492,261 53,492,261 - 53,463,668 Fund balance at end of year 53,596,673 $ 70,515,650 $ 57,775,847 $ (12,739,803) $ 53,492,261 $

CITY OF COSTA MESA, CALIFORNIA
General Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the fiscal year ended June 30, 2022
(With Comparative Data for Prior Year)
(continued)
See notes to required supplementary information
93 369
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Revenues:

Intergovernmental 329,813$ 1,877,059$ 897,489$ (979,570)$ 4,015,354$ Investment income (loss) 500 500 10 (490) 5,887 Total revenues 330,313 1,877,559 897,499 (980,060) 4,021,241 Expenditures:

Current:

Protection of persons and property 577,333 2,288,692 1,426,724 861,968 619,643 Community programs - 773,406 116,405 657,001 2,930,251 Public services - 871,791 115,699 756,092 985,617 Total expenditures 577,333 3,933,889 1,658,828 2,275,061 4,535,511 Excess (deficiency) of revenues
over (under) expenditures (247,020) (2,056,330) (761,329) 1,295,001 (514,270) Other financing sources (uses):

Transfer in - 66,419 66,419 - - Total other financing sources (uses) - 66,419 66,419 - - Net change in fund balance (247,020) (1,989,911) (694,910) 1,295,001 (514,270) Fund balance (deficit) at beginning of year (450,855) (450,855) (450,855) - 63,415 Fund balance (deficit) at end of year (697,875) $ (2,440,766) $ (1,145,765) $ 1,295,001 $ (450,855) $

CITY OF COSTA MESA, CALIFORNIA
Government Grants Fund - Major Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
See notes to required supplementary information
94 370
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Revenues:

Intergovernmental 13,240,757$ 13,240,757$ -$ (13,240,757)$ 13,113,464$ Investment income (loss) - - 50,329 50,329 381 Total revenues 13,240,757 13,240,757 50,329 (13,190,428) 13,113,845 Expenditures:

Current:

General government - - - - 1,988,022 Protection of persons and property - - - - 1,735,514 Community programs - - - - 134,315 Public services - - - - 82,848 Total expenditures - - - - 3,940,699 Excess (deficiency) of revenues
over (under) expenditures 13,240,757 13,240,757 50,329 (13,190,428) 9,173,146 Other financing sources (uses):

Transfer out (860,649) (860,649) - 860,649 (9,173,146) Total other financing sources (uses) (860,649) (860,649) - 860,649 (9,173,146) Net change in fund balance 12,380,108 12,380,108 50,329 (12,329,779) - Fund balance at beginning of year - - - - - Fund balance at end of year 12,380,108 $ 12,380,108 $ 50,329 $ (12,329,779) $ - $

CITY OF COSTA MESA, CALIFORNIA
American Resuce Plan Act Fund - Major Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
See notes to required supplementary information
95 371

CITY OF COSTA MESA, CALIFORNIA
Notes to Required Supplementary Information
Year ended June 30, 2022

(1) Budgetary Data

Annual budgets are legally adopted or amended for all governmental funds on a basis consistent with generally accepted accounting principles, except for the following funds for which annual budgets were not adopted or amended:

Special Revenue Funds:

Disaster Fund
Debt Service Funds:

Financing Authority Debt Service Fund
Public Financing Authority Debt Service Fund

The City Council adopts an annual budget submitted by the City Manager prior to the beginning of each new fiscal year. Public hearings are conducted prior to budget adoption by the Council. Supplemental appropriations, when required during the period, are also approved by the City Council. Interfunctional budget adjustments are approved by the City Manager. Expenditures may not legally exceed appropriations at the department functional level. At fiscal year-end all operating budget appropriations lapse. 96 372

MAJOR AND NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

Special Revenue Funds are used to account for revenue derived from specific taxes or other earmarked revenues sources (other than expendable trust or for major capital projects) that are restricted by law or administrative action to expenditures for specified purposes.

The following funds have been classified as nonmajor governmental funds in the accompanying fund financial statements:

Gas Tax Fund
Established to account for the receipt and disbursement of funds required to be used for construction and maintenance of the City’s road network system. Financing is provided by the City’s share of State gasoline taxes, including allocations from the Highway Users Tax Account (HUTA) and the Road Maintenance and Rehabilitation Account (RMRA).

HOME Program Fund
Established to account for the receipt and disbursement of funds received under the Federal Home Investment Partnership Program of the Department of Housing and Urban Development. These revenues must be expended for acquisition, rehabilitation, and new construction of rental housing.

Air Quality Improvement Fund
Established to account for the receipt and disbursement of the City’s share of funds received under Health & Safety Code 44223 (AB 2766) to finance mobile source air pollution reduction programs consistent with the California Clean Air Act of 1988.

Community Development Fund
This fund accounts for the receipt and disbursement of the Department of Housing and Urban Development grants. These revenues must be expended to accomplish one of the following objectives: elimination of slum or blighted areas to benefit low and moderate income persons, or to meet certain urgent community development needs.

Supplemental Law Enforcement Services Fund (SLESF)
Established to account for the receipt and disbursement of funds received under the State Citizen’s Option for Public Safety (COPS) Program allocated pursuant to Government Code Section 30061 enacted by Assembly Bill 3229, Chapter 134 of the 1996 Statutes. These COPS/SLESF funds are allocated based on population and can only be spent for “front line municipal police services” as per Government Code Section 30061(c)(2).

Rental Rehabilitation Program Fund
Established to account for the receipt and disbursement of grants received from the Department of Housing and Urban Development under Section 17 of the U.S. Housing Act of 1937. These revenues must be expended to provide assistance to rehabilitate primarily privately-owned residential rental property.

Narcotics Forfeiture Fund
Established to account for the receipt and disbursement of narcotic forfeitures received from County, State, and Federal agencies pursuant to Section 11470 of State Health and Safety Code and Federal Statute 21USC Section 881.

Local Law Enforcement Block Grant Fund
Established to account for the receipt and disbursement of Federal grant monies provided by the 1998 Appropriations Act, Public Law 105-119. These funds are restricted for projects utilized to reduce crime and improve public safety.
97 373

Office of Traffic Safety Fund
Established to account for the receipt and disbursement of Federal grant monies received through the State Office of Traffic Safety. These funds are restricted for operations utilized to enhance traffic safety and to reduce drunk driving within the City.

Housing Authority Fund
Established pursuant to the California Health and Safety Code, Section 34176(a). The Housing Authority serves two distinct functions: Low and Moderate Income Housing Asset Fund (LMIHAF) and homeless program. The LMIHAF is to promote affordable housing for families of low and moderate income within the City. The homeless program is to provide temporary assistance including housing to homeless individuals.

Disaster Fund
Established to account for receipt and disbursement of Federal and State grant monies received for COVID-19 mitigation and relief efforts.

CAPITAL PROJECTS FUNDS

Capital Projects Funds are established to account for financial resources segregated for acquisition and construction of major capital facilities (other than those financed by proprietary funds).

The following have been classified as a major fund in the accompanying government-wide financial statements:

Capital Improvements Fund
Established to account for construction of capital facilities funded by the City’s General Fund and various governmental grants.

The following have been classified as nonmajor funds in the accompanying fund financial statements:

Measure “M2” Fund
Established to account for the receipt and expenditure of the 2006 voter-approved one-half percent sales tax for local transportation improvements. Measure M2 is a 30-year extension of the earlier Measure M program.

Parking Districts Fund
Established under the Vehicle Parking District Law of 1943 to provide vehicle facilities in the downtown area. Funding is provided through specific property tax levies.

Golf Course Improvements Fund
Established to account the receipt and disbursement of funds for Costa Mesa Country Club capital improvements. Funding is provided by the receipt of two and one-half percent of monthly gross receipts of green and tournament fees.

Park Development Fund
Established to account for the receipt and disbursement of funds for development and maintenance of the City’s park system. Funding is provided by fees charged to residential and commercial developers.

Drainage Fees Fund
Established to account for the receipt and disbursement of funds for construction and maintenance of the City’s drainage system. Funding is provided by fees charged to residential and commercial developers.
98 374

Traffic Impact Fees Fund
Established to account for the receipt and disbursement of funds for transportation improvements Citywide. Funding is provided by fees charged to residential and commercial developers.

Fire System Development Fees Fund
Established to account for receipt and disbursement of development impact fees established by Ordinance 89-1 for future construction of fire protection facilities and equipment for the north Costa Mesa area.

Jack Hammett Sports Complex Fund
Establish to account for receipt and disbursement of funds related to on-going maintenance of Jack Hammett Sports Complex. Funding is provided by the facility’s rental income.

Lions Park Capital Improvements Fund
Established to account for the receipt and disbursement of funds for construction of a new library and renovation of the existing library into a neighborhood community center. Project funding is partially provided by bond proceeds with the remaining balance provided by the Capital Improvements Fund.

DEBT SERVICE FUNDS

Debt Service Funds are used to account for accumulated resources for and payment of general long- term debt.

The following have been classified as nonmajor funds in the accompanying fund financial statements:

Public Financing Authority Debt Service Fund
To accumulate monies for payment of the 2006 Revenue Refunding bonds. The 2006 Revenue Refunding bonds refunded the 1991 Local Agency Revenues Bonds that provided monies for the purchase of the Costa Mesa Community Facilities 1991 Special Tax Bonds.

Financing Authority Debt Service Fund
To accumulate monies for the payment of the 2017 Lease Revenue Bonds. The 2017 Lease Revenue bonds refunded the Public Financing Authority 2007 Certificates of Participation and provided partial funding for the Lion’s Park Project.

99 375
Supplemental
Air Law Rental
Gas HOME Quality Community Enforcement Rehabilitation
Tax Program Improvement Development Services Program
Assets:

Cash and investments 14,301,555$ 1,485,202$ 418,601$ 41,605$ 26,964$ 274,070$ Cash and investments with fiscal agents - - - - - - Due from other governments 601,923 27,101 - 104,099 - - Accounts receivable, net - - - - - - Interest receivable 29,684 3,096 923 78 - 573 Loans receivable, net - - - - - - Leases receivable - - - - - - Total assets 14,933,162 $ 1,515,399 $ 419,524 $ 145,782 $ 26,964 $ 274,643 $ Liabilities:

Accounts payable 168,955 $ - $ 36,614$ 38,100 $ - $ - $ Accrued liabilities 15,845 906 - 12,878 9,075 - Retentions payable 56,268 - - - - - Deposits payable - - - - - - Due to other funds - - - - - - Total liabilities 241,068 906 36,614 50,978 9,075 - Deferred Inflows of Resources:

Lease related - - - - - - Unavailable revenues 38,340 27,103 - - - - Total deferred inflows of resources 38,340 27,103 - - - - Fund Balances:

Restricted for:

Protection of persons or property - - - - 17,889 - Community programs - 1,487,390 - 94,804 - 274,643 Public services 14,653,754 - 382,910 - - - Debt service - - - - - - Assigned for:

Protection of persons and property - - - - - - Public services - - - - - - Unassigned - - - - - - Total fund balances (deficit) 14,653,754 1,487,390 382,910 94,804 17,889 274,643 Total liabilities, deferred inflows
of resources, and fund balances 14,933,162$ 1,515,399 $ 419,524 $ 145,782 $ 26,964 $ 274,643 $

CITY OF COSTA MESA, CALIFORNIA
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2022
(With Comparative Data for Prior Year)
Special Revenue
100
376
Local Law
Enforcement Office of
Narcotics Block Traffic Housing Disaster
Forfeiture Grant Safety Authority Fund
1,681,681$ 33,536$ -$ 3,448,364$ -$
- - - 22,800 - - - 39,603 546,140 306,283 - - - 58,422 - 3,427 70 - 6,096 - - - - 608,294 - - - - 1,512,830 - 1,685,108$ 33,606 $ 39,603 $ 6,202,946$ 306,283 $ 442,841$ - $ 375 $ 777,638$ 5,635 $ - - 5,567 21,895 20,679 - - - - - - - - 22,215 - - - 34,117 - 638,649 442,841 - 40,059 821,748 664,963 - - - 1,506,105 - - - 39,603 251,833 306,283 - - 39,603 1,757,938 306,283 1,242,267 33,606 - - - - - - 3,623,260 - - - - - - - - - - - - - - - - - - - - - - - (40,059) - (664,963) 1,242,267 33,606 (40,059) 3,623,260 (664,963) 1,685,108$ 33,606 $ 39,603 $ 6,202,946$ 306,283 $ Special Revenue
101
377
Parking Golf Course Park Drainage
Measure "M2" DistrictsImprovementsDevelopment Fees
Assets:

Cash and investments 3,372,000$ 135,775$ 521,474$ 4,145,886$ 2,243,503$ Cash and investments with fiscal agents 124,577 - - - - Due from other governments 2,226,082 11 - - - Accounts receivable, net - - 15,908 - - Interest receivable 9,039 284 1,075 9,344 4,766 Loans receivable, net - - - - - Leases receivable - - - - - Total assets 5,731,698 $ 136,070 $ 538,457 $ 4,155,230 $ 2,248,269 $ Liabilities:

Accounts payable 475,356 $ - $ - $ 465,654$ 6,048 $ Accrued liabilities 9,491 - - - - Retentions payable 230,326 - - 74,139 - Deposits payable - - - - - Due to other funds - - - - - Total liabilities 715,173 - - 539,793 6,048 Deferred Inflows of Resources:

Lease related - - - - - Unavailable revenues 514,726 - - - - Total deferred inflows of resources 514,726 - - - - Fund Balances:

Restricted for:

Protection of persons or property - - - - - Community programs - - - - - Public services 4,501,799 - - - - Debt service - - - - - Assigned for:

Protection of persons and property - - - - - Public services - 136,070 538,457 3,615,437 2,242,221 Unassigned - - - - - Total fund balances (deficit) 4,501,799 136,070 538,457 3,615,437 2,242,221 Total liabilities, deferred inflows
of resources, and fund balances 5,731,698$ 136,070 $ 538,457 $ 4,155,230 $ 2,248,269 $ (With Comparative Data for Prior Year)

CITY OF COSTA MESA, CALIFORNIA
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2022
(Continued)
Capital Projects
102
378
Fire SystemJack HammettLions Park Public
Traffic Development Sports Capital Financing Financing
Impact Fees Fees ComplexImprovementsAuthority Authority 2022 2021 5,681,131$ 634,358$ 91,166$ 11,635$ -$ -$ 38,548,506$ 38,864,324$ - - - 312,900 - 4 460,281 978,262 - - - - - - 3,851,242 2,567,794 46 - 150,750 - - - 225,126 133,725 11,890 1,326 191 24 - - 81,886 75,399 - - - - - - 608,294 650,674 - - - - - - 1,512,830 - 5,693,067$ 635,684 $ 242,107 $ 324,559 $ - $ 4 $ 45,288,165$ 43,270,178 $ 34,785$ - $ - $ - $ - $ - $ 2,452,001$ 2,789,935 $ - - - - - - 96,336 52,368 515 - 33,150 - - - 394,398 369,792 - - 15,000 - - - 37,215 41,592 - - - - - - 672,766 122,148 35,300 - 48,150 - - - 3,652,716 3,375,835 - - - - - - 1,506,105 - - - - - - - 1,177,888 708,070 - - - - - - 2,683,993 708,070 - - - - - - 1,293,762 1,329,138 - - - - - - 5,480,097 5,655,880 - - - 324,559 - - 19,863,022 17,651,961 - - - - - 4 4 563,401 - 635,684 - - - - 635,684 651,541 5,657,767 - 193,957 - - - 12,383,909 13,334,565 - - - - - - (705,022) (213) 5,657,767 635,684 193,957 324,559 - 4 38,951,456 39,186,273 5,693,067$ 635,684 $ 242,107 $ 324,559 $ - $ 4 $ 45,288,165$ 43,270,178 $ Totals
Debt ServiceCapital Projects
103
379
Supplemental
Air Law Rental
Gax HOME Quality Community Enforcement Rehabilitation
Tax Program Improvement Development Services Program
Revenues:

Taxes -$ -$ -$ -$ -$ -$ Charges for services - - - - - - Fines and forfeitures - - - - - - Intergovernmental 4,937,524 16,639 108,658 594,255 279,630 - Investment income (loss) (363,514) (37,271) (9,893) 152 (694) (6,851) Rental income - - - - - - Miscellaneous 32,358 45,009 - 7,500 - - Total revenues 4,606,368 24,377 98,765 601,907 278,936 (6,851) Expenditures:

Current:

General government - - - - - - Protection of persons and property - - - - 277,824 - Community programs - 109,036 - 594,255 - - Public services 3,505,880 - 218,184 - - - Debt service:

Principal - - - - - - Interest - - - - - - Total expenditures 3,505,880 109,036 218,184 594,255 277,824 - Excess (deficiency) of revenues
over (under) expenditures 1,100,488 (84,659) (119,419) 7,652 1,112 (6,851) Other financing sources (uses):

Transfer in - - - - - - Transfer out - - - - - - Total other financing
sources (uses) - - - - - - Net change in fund balances 1,100,488 (84,659) (119,419) 7,652 1,112 (6,851) Fund balances (deficit) at beginning
of the year 13,553,266 1,572,049 502,329 87,152 16,777 281,494 Fund balances (deficit) at end of year 14,653,754$ 1,487,390$ 382,910$ 94,804$ 17,889$ 274,643$

CITY OF COSTA MESA, CALIFORNIA
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Year ended June 30, 2022
(With Comparative Data for Prior Year)
Special Revenue
104
380
Local Law
Enforcement Office of
Narcotics Block Traffic Housing Disaster
Forfeiture Grant Safety Authority Fund
-$ -$ -$ 349,917$ -$ - - - - - 5,562 - - - - - - 130,022 1,510,066 107,876 (41,213) (837) - (68,124) - - - - 338,732 - - - - 27,406 - (35,651) (837) 130,022 2,157,997 107,876 - - - - 239,182 - - 169,868 - 335,028 - - - 3,963,750 100,214 - - - - 62,339 - - - - 35,332 - - - - 744 - - 169,868 3,963,750 772,839 (35,651) (837) (39,846) (1,805,753) (664,963) - - - 1,713,828 - - - - - - - - - 1,713,828 - (35,651) (837) (39,846) (91,925) (664,963) 1,277,918 34,443 (213) 3,715,185 - 1,242,267$ 33,606$ (40,059)$ 3,623,260$ (664,963)$ Special Revenue
105
381
Parking Golf Course Park Drainage Traffic
Measure "M2" Districts Improvements Development Fees Impact Fees Revenues:

Taxes -$ 16,927$ -$ -$ -$ -$ Charges for services - - - 1,278,940 348,736 437,946 Fines and forfeitures - - - - - - Intergovernmental 4,420,073 - - - - - Investment income (loss) (105,712) (3,453) (13,547) (100,791) (57,057) (143,171) Rental income - - 163,021 - - - Miscellaneous - - - - - - Total revenues 4,314,361 13,474 149,474 1,178,149 291,679 294,775 Expenditures:

Current:

General government - - - - - - Protection of persons and property - - - - - - Community programs - - - 206,815 - - Public services 3,084,199 - - 2,007,353 145,850 127,222 Debt service:

Principal - - - - - - Interest - - - - - - Total expenditures 3,084,199 - - 2,214,168 145,850 127,222 Excess (deficiency) of revenues
over (under) expenditures 1,230,162 13,474 149,474 (1,036,019) 145,829 167,553 Other financing sources (uses):

Transfer in - - - - - - Transfer out - - - - - - Total other financing
sources (uses) - - - - - - Net change in fund balances 1,230,162 13,474 149,474 (1,036,019) 145,829 167,553 Fund balances (deficit) at beginning
of the year 3,271,637 122,596 388,983 4,651,456 2,096,392 5,490,214 Fund balances (deficit) at end of year 4,501,799$ 136,070$ 538,457$ 3,615,437$ 2,242,221$ 5,657,767$ (With Comparative Data for Prior Year)

CITY OF COSTA MESA, CALIFORNIA
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Year ended June 30, 2022
(Continued)
Capital Projects
106
382
Fire System Jack Hammett Lions Park Public
Development Sports Capital Financing Financing
Fees Complex Improvements Authority Authority 2022 2021 -$ -$ -$ -$ -$ 366,844$ 395,371$ - - - - - 2,065,622 2,412,201 - - - - - 5,562 5,460 - - - - - 12,104,743 13,580,579 (15,857) 533 (170) 6 4 (967,460) 26,141 - 271,500 - - - 773,253 661,220 - - - - - 112,273 268,195 (15,857) 272,033 (170) 6 4 14,460,837 17,349,167 - - - 348,051 - 587,233 754,363 - - - - - 782,720 1,622,248 - - - - - 4,974,070 7,857,923 - 663,000 - - - 9,814,027 11,844,120 - - - 210,000 1,740,000 1,985,332 1,875,000 - - - 5,355 1,062,550 1,068,649 1,155,360 - 663,000 - 563,406 2,802,550 19,212,031 25,109,014 (15,857) (390,967) (170) (563,400) (2,802,546) (4,751,194) (7,759,847) - - - - 2,802,549 4,516,377 9,658,445 - - - - - - - - - - - 2,802,549 4,516,377 9,658,445 (15,857) (390,967) (170) (563,400) 3 (234,817) 1,898,598 651,541 584,924 324,729 563,400 1 39,186,273 37,287,675 635,684$ 193,957$ 324,559$ -$ 4$ 38,951,456$ 39,186,273$ Totals
Debt ServiceCapital Projects
107
383
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 5,219,123$ 4,937,524$ (281,599)$ 4,640,209$ Investment income (loss) 55,000 (363,514) (418,514) (11,307) Miscellaneous - 32,358 32,358 71,583 Total revenues 5,274,123 4,606,368 (667,755) 4,700,485 Expenditures:

Current:

Public services 17,011,136 3,505,880 13,505,256 2,925,039 Total expenditures 17,011,136 3,505,880 13,505,256 2,925,039 Excess (deficiency) of revenues
over (under) expenditures (11,737,013) 1,100,488 12,837,501 1,775,446 Net change in fund balance (11,737,013) 1,100,488 12,837,501 1,775,446 Fund balance at beginning of year 13,553,266 13,553,266 - 11,777,820 Fund balance at end of year 1,816,253 $ 14,653,754 $ 12,837,501 $ 13,553,266 $

CITY OF COSTA MESA, CALIFORNIA
Gas Tax Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
108
384
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 501,749$ 16,639$ (485,110)$ 41,261$ Investment income (loss) 30,000 (37,271) (67,271) 903 Miscellaneous 20,000 45,009 25,009 46,325 Total revenues 551,749 24,377 (527,372) 88,489 Expenditures:

Current:

Community programs 701,298 109,036 592,262 193,092 Total expenditures 701,298 109,036 592,262 193,092 Excess (deficiency) of revenues
over (under) expenditures (149,549) (84,659) 64,890 (104,603) Net change in fund balance (149,549) (84,659) 64,890 (104,603) Fund balance at beginning of year 1,572,049 1,572,049 - 1,676,652 Fund balance at end of year 1,422,500 $ 1,487,390 $ 64,890 $ 1,572,049$

CITY OF COSTA MESA, CALIFORNIA
HOME Program Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
109
385
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 146,900$ 108,658$ (38,242)$ 272,415$ Investment income (loss) 3,005 (9,893) (12,898) (1,404) Total revenues 149,905 98,765 (51,140) 271,011 Expenditures:

Current:

Public services 606,421 218,184 388,237 137,450 Total expenditures 606,421 218,184 388,237 137,450 Excess (deficiency) of revenues
over (under) expenditures (456,516) (119,419) 337,097 133,561 Net change in fund balance (456,516) (119,419) 337,097 133,561 Fund balance at beginning of year 502,329 502,329 - 368,768 Fund balance at end of year 45,813 $ 382,910 $ 337,097 $ 502,329 $

CITY OF COSTA MESA, CALIFORNIA
Air Quality Improvement Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
110
386
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 1,121,215$ 594,255$ (526,960)$ 1,895,058$ Investment income - 152 152 - Miscellaneous - 7,500 7,500 - Total revenues 1,121,215 601,907 (519,308) 1,895,058 Expenditures:

Current:

Community programs 1,972,470 594,255 1,378,215 1,845,791 Total expenditures 1,972,470 594,255 1,378,215 1,845,791 Excess (deficiency) of revenues
over (under) expenditures (851,255) 7,652 858,907 49,267 Net change in fund balance (851,255) 7,652 858,907 49,267 Fund balance at beginning of year 87,152 87,152 - 37,885 Fund balance (deficit) at end of year (764,103)$ 94,804 $ 858,907 $ 87,152 $

CITY OF COSTA MESA, CALIFORNIA
Community Development Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
111
387
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 265,965$ 279,630$ 13,665$ 273,945$ Investment income (loss) - (694) (694) 62 Total revenues 265,965 278,936 12,971 274,007 Expenditures:

Current:

Protection of persons and property 277,372 277,824 (452) 268,637 Total expenditures 277,372 277,824 (452) 268,637 Excess (deficiency) of revenues
over (under) expenditures (11,407) 1,112 12,519 5,370 Net change in fund balance (11,407) 1,112 12,519 5,370 Fund balance at beginning of year 16,777 16,777 - 11,407 Fund balance at end of year 5,370 $ 17,889 $ 12,519 $ 16,777 $

CITY OF COSTA MESA, CALIFORNIA
Supplemental Law Enforcement Services Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
112
388
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) 1,000$ (6,851)$ (7,851)$ 19$ Total revenues 1,000 (6,851) (7,851) 19 Expenditures:

Current:

Community programs 80,000 - 80,000 - Total expenditures 80,000 - 80,000 - Excess (deficiency) of revenues
over (under) expenditures (79,000) (6,851) 72,149 19 Net change in fund balance (79,000) (6,851) 72,149 19 Fund balance at beginning of year 281,494 281,494 - 281,475 Fund balance at end of year 202,494 $ 274,643 $ 72,149 $ 281,494 $

CITY OF COSTA MESA, CALIFORNIA
Rental Rehabilitation Program Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
113
389
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Fines and forfeitures -$ 5,562$ 5,562$ 5,460$ Investment income (loss) 1,000 (41,213) (42,213) 415 Total revenues 1,000 (35,651) (36,651) 5,875 Expenditures:

Current:

Protection of persons and property 468,250 - 468,250 129,039 Total expenditures 468,250 - 468,250 129,039 Excess (deficiency) of revenues
over (under) expenditures (467,250) (35,651) 431,599 (123,164) Net change in fund balance (467,250) (35,651) 431,599 (123,164) Fund balance at beginning of year 1,277,918 1,277,918 - 1,401,082 Fund balance at end of year 810,668 $ 1,242,267 $ 431,599 $ 1,277,918 $

CITY OF COSTA MESA, CALIFORNIA
Narcotics Forfeiture Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
114
390
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) -$ (837)$ (837)$ 1$ Total revenues - (837) (837) 1 Excess (deficiency) of revenues
over (under) expenditures - (837) (837) 1 Net change in fund balance - (837) (837) 1 Fund balance at beginning of year 34,443 34,443 - 34,442 Fund balance at end of year 34,443 $ 33,606 $ (837) $ 34,443 $

CITY OF COSTA MESA, CALIFORNIA
Local Law Enforcement Block Grant Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
115
391
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 250,875$ 130,022$ (120,853)$ 273,383$ Total revenues 250,875 130,022 (120,853) 273,383 Expenditures:

Current:

Protection of persons and property 250,875 169,868 81,007 270,456 Total expenditures 250,875 169,868 81,007 270,456 Excess (deficiency) of revenues
over (under) expenditures - (39,846) (39,846) 2,927 Fund balance (deficit) at beginning of year (213) (213) - (3,140) Fund balance (deficit) at end of year (213) $ (40,059)$ (39,846) $ (213) $

CITY OF COSTA MESA, CALIFORNIA
Office of Traffic Safety Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
116
392
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Taxes 381,141$ 349,917$ (31,224)$ 381,141$ Intergovernmental 1,528,581 1,510,066 (18,515) 1,041,662 Investment income (loss) 23,400 (68,124) (91,524) (2,497) Rental income 370,000 338,732 (31,268) 396,753 Miscellaneous - 27,406 27,406 41,466 Total revenues 2,303,122 2,157,997 (145,125) 1,858,525 Expenditures:

Current:

Community programs 5,616,215 3,963,750 1,652,465 3,574,792 Total expenditures 5,616,215 3,963,750 1,652,465 3,574,792 Excess (deficiency) of revenues
over (under) expenditures (3,313,093) (1,805,753) 1,507,340 (1,716,267) Other financing sources (uses):

Transfers in 1,713,828 1,713,828 - 1,790,836 Total other financing
sources (uses) 1,713,828 1,713,828 - 1,790,836 Net change in fund balance (1,599,265) (91,925) 1,507,340 74,569 Fund balance at beginning of year 3,715,185 3,715,185 - 3,640,616 Fund balance at end of year 2,115,920 $ 3,623,260 $ 1,507,340 $ 3,715,185 $

CITY OF COSTA MESA, CALIFORNIA
Housing Authority Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
117
393
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental -$ 546,129$ 546,129$ 5,048,416$ Investment income (loss) 60,000 (603,855) (663,855) (1,744) Miscellaneous - 59,431 59,431 283,801 Total revenues 60,000 1,705 (58,295) 5,330,473 Expenditures:

Current:

General government 251,359 - 251,359 - Protection of persons and property 5,519,644 74,688 5,444,956 157,318 Community programs 92,962 84,589 8,373 14,242 Public services 14,506,432 3,693,683 10,812,749 7,247,016 Total expenditures 20,370,397 3,852,960 16,517,437 7,418,576 Excess (deficiency) of revenues
over (under) expenditures (20,310,397) (3,851,255) 16,459,142 (2,088,103) Other financing sources (uses):

Transfers in 9,195,505 8,533,467 (662,038) 7,787,926 Total other financing sources (uses) 9,195,505 8,533,467 (662,038) 7,787,926 Net change in fund balance (11,114,892) 4,682,212 15,797,104 5,699,823 Fund balance at beginning of year 17,187,179 17,187,179 - 11,487,356 Fund balance at end of year 6,072,287 $ 21,869,391 $ 15,797,104 $ 17,187,179 $

CITY OF COSTA MESA, CALIFORNIA
Capital Improvements Fund - Major Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
118
394
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 4,269,909$ 4,420,073$ 150,164$ 2,820,336$ Investment income (loss) 40,000 (105,712) (145,712) 19,408 Total revenues 4,309,909 4,314,361 4,452 2,839,744 Expenditures:

Current:

Public services 9,428,531 3,084,199 6,344,332 4,862,070 Total expenditures 9,428,531 3,084,199 6,344,332 4,862,070 Excess (deficiency) of revenues
over (under) expenditures (5,118,622) 1,230,162 6,348,784 (2,022,326) Net change in fund balance (5,118,622) 1,230,162 6,348,784 (2,022,326) Fund balance at beginning of year 3,271,637 3,271,637 - 5,293,963 Fund balance (deficit) at end of year (1,846,985)$ 4,501,799 $ 6,348,784 $ 3,271,637 $

CITY OF COSTA MESA, CALIFORNIA
Measure "M2" Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
119
395
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Taxes 15,811$ 16,927$ 1,116$ 14,230$ Investment income (loss) 700 (3,453) (4,153) (77) Total revenues 16,511 13,474 (3,037) 14,153 Excess (deficiency) of revenues
over (under) expenditures 16,511 13,474 (3,037) 14,153 Net change in fund balance 16,511 13,474 (3,037) 14,153 Fund balance at beginning of year 122,596 122,596 - 108,443 Fund balance at end of year 139,107 $ 136,070 $ (3,037) $ 122,596 $

CITY OF COSTA MESA, CALIFORNIA
Parking Districts Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
120
396
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) 1,500$ (13,547)$ (15,047)$ (434)$ Rental income 110,000 163,021 53,021 163,716 Total revenues 111,500 149,474 37,974 163,282 Expenditures:

Current:

Public services 265,000 - 265,000 49,820 Total expenditures 265,000 - 265,000 49,820 Excess (deficiency) of revenues
over (under) expenditures (153,500) 149,474 302,974 113,462 Net change in fund balance (153,500) 149,474 302,974 113,462 Fund balance at beginning of year 388,983 388,983 - 275,521 Fund balance at end of year 235,483 $ 538,457 $ 302,974 $ 388,983 $

CITY OF COSTA MESA, CALIFORNIA
Golf Course Improvements Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
121
397
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Charges for services 708,869$ 1,278,940$ 570,071$ 766,372$ Investment income (loss) 50,000 (100,791) (150,791) 8,022 Miscellaneous - - - 106,966 Total revenues 758,869 1,178,149 419,280 881,360 Expenditures:

Current:

Community programs 507,380 206,815 300,565 229,921 Public services 4,781,907 2,007,353 2,774,554 1,523,234 Total expenditures 5,289,287 2,214,168 3,075,119 1,753,155 Excess (deficiency) of revenues
over (under) expenditures (4,530,418) (1,036,019) 3,494,399 (871,795) Net change in fund balance (4,530,418) (1,036,019) 3,494,399 (871,795) Fund balance at beginning of year 4,651,456 4,651,456 - 5,523,251 Fund balance at end of year 121,038 $ 3,615,437 $ 3,494,399 $ 4,651,456 $

CITY OF COSTA MESA, CALIFORNIA
Park Development Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
122
398
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Charges for services 426,411$ 348,736$ (77,675)$ 433,329$ Investment income (loss) 20,000 (57,057) (77,057) 2,101 Total revenues 446,411 291,679 (154,732) 435,430 Expenditures:

Current:

Public services 2,465,863 145,850 2,320,013 593,407 Total expenditures 2,465,863 145,850 2,320,013 593,407 Excess (deficiency) of revenues
over (under) expenditures (2,019,452) 145,829 2,165,281 (157,977) Net change in fund balance (2,019,452) 145,829 2,165,281 (157,977) Fund balance at beginning of year 2,096,392 2,096,392 - 2,254,369 Fund balance at end of year 76,940 $ 2,242,221$ 2,165,281 $ 2,096,392 $

CITY OF COSTA MESA, CALIFORNIA
Drainage Fees Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
123
399
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Charges for services 200,000$ 437,946$ 237,946$ 1,212,500$ Investment income (loss) 30,000 (143,171) (173,171) (9,495) Miscellaneous - - - 1,855 Total revenues 230,000 294,775 64,775 1,204,860 Expenditures:

Current:

Public services 2,749,116 127,222 2,621,894 404,706 Total expenditures 2,749,116 127,222 2,621,894 404,706 Excess (deficiency) of revenues
over (under) expenditures (2,519,116) 167,553 2,686,669 800,154 Net change in fund balance (2,519,116) 167,553 2,686,669 800,154 Fund balance at beginning of year 5,490,214 5,490,214 - 4,690,060 Fund balance at end of year 2,971,098 $ 5,657,767 $ 2,686,669 $ 5,490,214 $

CITY OF COSTA MESA, CALIFORNIA
Traffic Impact Fees Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
124
400
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Charges for services -$ -$ -$ -$ Investment income (loss) 700 (15,857) (16,557) 44 Total revenues 700 (15,857) (16,557) 44 Net change in fund balance 700 (15,857) (16,557) 44 Fund balance at beginning of year 651,541 651,541 - 651,497 Fund balance at end of year 652,241 $ 635,684 $ (16,557) $ 651,541 $

CITY OF COSTA MESA, CALIFORNIA
Fire System Development Fees Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
125
401
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income 3,000$ 533$ (2,467)$ 34$ Rental income 150,750 271,500 120,750 100,751 Total revenues 153,750 272,033 118,283 100,785 Expenditures:

Current:

Public services 663,000 663,000 - - Total expenditures 663,000 663,000 - - Excess (deficiency) of revenues
over (under) expenditures (509,250) (390,967) 118,283 100,785 Net change in fund balance (509,250) (390,967) 118,283 100,785 Fund balance at beginning of year 584,924 584,924 - 484,139 Fund balance at end of year 75,674 $ 193,957 $ 118,283 $ 584,924 $

CITY OF COSTA MESA, CALIFORNIA
Jack Hammett Sports Complex Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
126
402
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) 1,000$ (170)$ (1,170)$ 1,639$ Total revenues 1,000 (170) (1,170) 1,639 Expenditures:

Current:

Public services 2,193,200 - 2,193,200 - Total expenditures 2,193,200 - 2,193,200 - Excess (deficiency) of revenues
over (under) expenditures (2,192,200) (170) 2,192,030 1,639 Net change in fund balance (2,192,200) (170) 2,192,030 1,639 Fund balance at beginning of year 324,729 324,729 - 323,090 Fund balance (deficit) at end of year (1,867,471)$ 324,559 $ 2,192,030 $ 324,729 $

CITY OF COSTA MESA, CALIFORNIA
Lions Park Capital Improvements Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
127
403

INTERNAL SERVICE FUNDS

Internal Service Funds are used to account for the financing of goods and services provided by one City department to another City department on a cost-reimbursement basis.

Equipment Replacement Fund
Established to account for all motorized equipment used by City departments.

Self Insurance Fund – Workers’ Compensation/General Liability/Unemployment Established to account for receipt and disbursement of funds used to pay worker’s compensation, general liability, and unemployment premiums and claims filed against the City.

Information Technology Replacement Fund
Established to provide funds for future replacements and upgrades to City computer equipment, systems, and supporting infrastructure.
128
404
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
ReplacementUnemploymentReplacement 2022 2021
Assets:

Current assets:

Cash and investments 7,235,650$ 15,950,600$ 8,106,815$ 31,293,065$ 28,163,084$ Interest receivable 11,500 31,903 16,567 59,970 42,435 Prepaid items 3,522,055 197,004 - 3,719,059 1,656,272 Inventories 240,189 - - 240,189 131,594 Total current assets 11,009,394 16,179,507 8,123,382 35,312,283 29,993,385 Capital assets:

Construction in progress - - 1,412,635 1,412,635 693,456 Motorized equipment 14,777,717 - - 14,777,717 14,512,571 Other equipment 3,458,071 - 187,799 3,645,870 3,349,326 Accumulated depreciation (11,780,142) - (101,412) (11,881,554) (11,141,146) Net capital assets 6,455,646 - 1,499,022 7,954,668 7,414,207 Total assets 17,465,040 16,179,507 9,622,404 43,266,951 37,407,592 Liabilities:

Current liabilities:

Accounts payable 336,010 81,165 383,996 801,171 648,180 Accrued liabilities 32,157 11,615 1,146 44,918 31,417 Notes payable 325,037 - - 325,037 135,493 Claims payable - 1,379,844 - 1,379,844 3,754,328 Total current liabilities 693,204 1,472,624 385,142 2,550,970 4,569,418 Long-term liabilities:

Notes payable 3,061,525 - - 3,061,525 1,336,909 Claims payable - 12,919,598 - 12,919,598 13,700,196 Total long-term liabilities 3,061,525 12,919,598 - 15,981,123 15,037,105 Total liabilities 3,754,729 14,392,222 385,142 18,532,093 19,606,523 Net Position:

Net investment in capital assets 3,069,084 - 1,499,022 4,568,106 7,414,207 Unrestricted (deficit) 10,641,227 1,787,285 7,738,240 20,166,752 10,386,862 Total net position (deficit) 13,710,311$ 1,787,285$ 9,237,262$ 24,734,858$ 17,801,069$ Totals

CITY OF COSTA MESA, CALIFORNIA
Internal Service Funds
Combining Statement of Net Position
June 30, 2022
(With Comparative Data for Prior Year)
129
405
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
ReplacementUnemploymentReplacement 2022 2021
Operating revenues:

Charges for services 2,629,810$ 4,842,324$ -$ 7,472,134$ 7,525,179$ Total operating revenues 2,629,810 4,842,324 - 7,472,134 7,525,179 Operating expenses:

Allocated administrative costs 1,171,325 758,504 950,960 2,880,789 2,006,201 Depreciation 1,214,607 - 33,804 1,248,411 1,216,665 Fuel and repair parts 1,230,211 - - 1,230,211 1,015,493 Materials and supplies - - 65,073 65,073 - Claims and premiums - 3,023,082 - 3,023,082 5,716,404 Total operating expenses 3,616,143 3,781,586 1,049,837 8,447,566 9,954,763 Operating income (loss) (986,333) 1,060,738 (1,049,837) (975,432) (2,429,584) Nonoperating revenues (expenses):

Investment income (loss) (202,457) (423,934) (214,919) (841,310) (42,398) Intergovernmental - - - - 25,670 Other nonoperating revenue 500,000 3,000 - 503,000 186,238 Gain (loss) on disposal of equipment (1,319) - - (1,319) (163,258) Total nonoperating revenues (expenses) 296,224 (420,934) (214,919) (339,629) 6,252 Income (loss) before transfers (690,109) 639,804 (1,264,756) (1,315,061) (2,423,332) Transfers in 3,567,549 1,800,000 2,881,301 8,248,850 9,232,194 Change in net position 2,877,440 2,439,804 1,616,545 6,933,789 6,808,862 Net position (deficit) at beginning of year 10,832,871 (652,519) 7,620,717 17,801,069 10,992,207 Net position (deficit) at end of year 13,710,311 $ 1,787,285 $ 9,237,262 $ 24,734,858 $ 17,801,069 $ Totals

CITY OF COSTA MESA, CALIFORNIA
Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position Year ended June 30, 2022
(With Comparative Data for Prior Year)
130
406
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
ReplacementUnemploymentReplacement 2022 2021
Cash flows from operating activities:

Cash received from customers and user departments 2,629,810$ 4,842,324$ -$ 7,472,134$ 7,531,206$ Cash payments to suppliers for goods and services (3,511,883) (6,494,748) (1,016,768) (11,023,399) (5,437,822) Cash payments to employees for services (1,162,819) (522,686) - (1,685,505) (1,597,124) Net cash provided by (used for) operating activities (2,044,892) (2,175,110) (1,016,768) (5,236,770) 496,260 Cash flows from noncapital financing activities:

Cash received from other funds 3,567,549 1,800,000 2,881,301 8,248,850 9,232,194 Intergovernmental revenue received - - - - 26,355 Net cash provided by (used for)
noncapital financing activities 3,567,549 1,800,000 2,881,301 8,248,850 9,258,549 Cash flows from capital and related financing activities:

Principal paid on capital debt (135,493) - - (135,493) - Proceeds from note payable 2,049,653 - - 2,049,653 - Proceeds from insurance settlement 500,000 3,000 - 503,000 - Acquisition of capital assets (1,071,012) - (369,402) (1,440,414) (1,216,361) Net cash provided by (used for) capital
and related financing activities 1,343,148 3,000 (369,402) 976,746 (1,216,361) Cash flows from investing activities:

Investment income (loss) (207,927) (430,962) (219,956) (858,845) (9,952) Net cash provided by (used for) investing activities (207,927) (430,962) (219,956) (858,845) (9,952) Net increase (decrease) in cash and cash equivalents 2,657,878 (803,072) 1,275,175 3,129,981 8,528,496 Cash and cash equivalents at beginning of year 4,577,772 16,753,672 6,831,640 28,163,084 19,634,588 Cash and cash equivalents at end of year 7,235,650 $ 15,950,600 $ 8,106,815 $ 31,293,065 $ 28,163,084 $ Reconciliation of operating income (loss) to net cash
provided by (used for) operating activities:

Operating income (loss) (986,333) $ 1,060,738 $ (1,049,837) $ (975,432) $ (2,429,584)$ Adjustments to reconcile operating income (loss)
to net cash provided by (used for) operating activities:

Depreciation 1,214,607 - 33,804 1,248,411 1,216,665 (Increase) decrease in accounts receivable - - - - 6,027 (Increase) decrease in prepaid items (2,049,653) (13,134) - (2,062,787) (183,870) (Increase) decrease in inventories (108,595) - - (108,595) (35,612) Increase (decrease) in accounts payable (123,424) (73,362) - (196,786) 304,264 Increase (decrease) in accrued liabilities 8,506 5,730 (735) 13,501 18,842 Increase (decrease) in claims payable - (3,155,082) - (3,155,082) 1,599,528 Net cash provided by (used for) operating activities (2,044,892)$ (2,175,110)$ (1,016,768)$ (5,236,770)$ 496,260$ Totals

CITY OF COSTA MESA, CALIFORNIA
Internal Service Funds
Combining Statement of Cash Flows
Year ended June 30, 2022
(With Comparative Data for Prior Year)
131
407

STATISTICAL SECTION
This part of the City’s annual comprehensive financial report presents detailed information as a context for understanding what information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health.

FINANCIAL TRENDS TABLES 1 - 4
These schedules contain financial trend information to help the reader understand how the government’s financial performance and well- being have changed over time.

REVENUE CAPACITY TABLES 5 - 12
These schedules contain revenue information to help the reader assess the government’s most significant local revenue source.

DEBT CAPACITY TABLES 13 - 15
These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future.

DEMOGRAPHIC AND ECONOMIC INFORMATION TABLES 16 - 17
These schedules offer demographic and economic indicators to help the reader understand the environment within which the
government’s financial activities take place.

OPERATING INFORMATION TABLES 18 - 20
These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs.
132
408
TABLE 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Governmental Activities
Net investment in capital assets 204,884,524$ 211,291,261$ 211,133,458$ 216,195,466$ 219,280,752$ 235,177,233$ 248,255,931$ 248,815,081$ 255,443,158$ 249,096,798$ Restricted
Protection of Persons and
Property 2,329,840 1,441,906 552,573 1,022,546 217,303 150,169 872,898 1,628,892 1,329,350 1,333,365 Community programs 8,713,244 9,622,339 8,892,751 12,793,475 9,588,998 3,767,377 6,162,341 5,687,227 6,176,036 6,796,140 Public services 26,485,938 21,642,345 17,660,289 15,495,090 20,253,747 13,625,826 14,845,159 17,051,750 18,047,015 20,103,188 Unrestricted 43,798,620 51,403,839 (170,836,260) (159,357,224) (161,805,274) (224,657,548) (241,478,263) (251,417,100) (243,934,825) (225,702,393) Total governmental activities
net position 286,212,166$ 295,401,690$ 67,402,811$ 86,149,353$ 87,535,526$ 28,063,057$ 28,658,066$ 21,765,850$ 37,060,734$ 51,627,098$ Source: Government-Wide Financial Statements

NET POSITION BY COMPONENT

LAST TEN FISCAL YEARS
(accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
133
409
TABLE 2
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Expenses
Governmental Activities:

General government 22,655,452$ 23,396,581$ 25,225,607$ 24,631,010$ 28,474,037$ 31,695,402$ 34,008,731$ 32,124,703$ 36,763,868$ 31,808,370$ Protection of persons and
property 63,383,715 62,634,432 64,184,047 63,956,413 70,786,483 86,777,544 86,440,751 96,625,585 88,643,852 98,324,072 Community programs 6,519,916 6,784,867 10,189,480 4,639,743 12,069,675 10,126,755 16,363,506 17,285,898 22,007,275 14,887,015 Public services 20,508,217 22,768,197 21,549,681 22,498,495 21,415,061 20,062,183 27,937,004 16,269,612 17,663,842 21,645,247 Redevelopment - - - - - - - - - - Interest on long-term debt 1,726,008 1,273,152 1,210,723 1,081,605 974,233 1,082,361 1,138,694 1,083,190 986,593 929,979 Total primary government
expenses 114,793,308 116,857,229 122,359,538 116,807,266 133,719,489 149,744,245 165,888,686 163,388,988 166,065,430 167,594,683 Program Revenues
Governmental Activities:

Charges for services:

Protection of persons and
property 2,739,881 2,338,910 2,299,476 2,707,819 2,819,809 3,805,473 7,267,233 7,461,872 5,497,350 6,846,240 Community programs 5,856,107 6,229,677 7,498,348 8,232,995 7,577,878 9,536,570 8,207,122 4,816,413 5,243,843 6,220,199 Public services 2,646,611 2,680,625 3,089,801 3,721,366 3,232,506 5,046,984 6,179,653 7,096,062 6,372,272 8,896,422 Operating grants and
contributions 8,443,327 8,534,673 8,562,955 4,907,815 4,487,089 7,727,382 9,339,283 10,576,719 32,519,129 14,404,940 Capital grants and
contributions 5,140,960 6,148,876 5,143,592 3,370,260 7,114,471 4,755,573 9,142,040 6,251,484 8,267,623 5,528,637 Total primary government
revenues 24,826,886 25,932,761 26,594,172 22,940,255 25,231,753 30,871,982 40,135,331 36,202,550 57,900,217 41,896,438 Total primary government
net expense (89,966,422)$ (90,924,468)$ (95,765,366)$ (93,867,011)$ (108,487,736)$ (118,872,263)$ (125,753,355)$ (127,186,438)$ (108,165,213)$ (125,698,245)$ General Revenues and Other
Changes in Net Position
Governmental Activities:

Taxes:

Property taxes 23,192,755$ 22,984,093$ 24,139,297$ 26,168,612$ 37,925,385$ 40,373,351$ 43,226,688$ 45,548,585$ 47,891,698$ 49,706,079$ Sales and use taxes 46,743,795 50,329,310 52,117,128 58,524,162 57,591,889 56,971,636 62,689,811 55,866,831 63,738,411 77,165,533 Transient occupancy tax 7,257,695 7,676,090 7,995,154 8,622,505 8,924,854 8,819,617 8,595,417 6,587,224 4,282,802 8,366,278 Franchise taxes 4,818,972 4,891,465 4,885,925 5,060,402 4,593,631 4,965,515 5,042,551 4,822,964 4,895,574 5,318,541 Business tax 917,633 916,285 954,408 973,521 918,928 919,450 1,093,154 1,663,100 1,227,843 1,468,202 Other intergovernmental
unrestricted 8,814,644 9,229,059 5,660,305 11,209,989 51,340 60,031 55,343 91,674 84,182 130,289 Investment income (loss) 640,159 1,772,900 1,692,528 1,871,216 496,650 256,438 4,264,987 4,075,623 (80,831) (3,609,117) Miscellaneous 181,943 495,154 949,533 913,351 1,333,610 1,903,266 1,380,413 1,638,221 1,420,418 1,718,804 Settlements 1,452,623 121,971 - - - - - - - - Extraordinary items:

Gain on transfer of assets
to Successor Agency - - - - - - - - - - (Loss) on advance
to Successor Agency (11,888,159) - - - - - - - - - Total primary government 82,132,060 98,416,327 98,394,278 113,343,758 111,836,287 114,269,304 126,348,364 120,294,222 123,460,097 140,264,609 Change in Net Position (7,834,362)$ 7,491,859$ 2,628,912$ 19,476,747$ 3,348,551$ (4,602,959)$ 595,009$ (6,892,216)$ 15,294,884$ 14,566,364$ Source: Government-Wide Financial Statements
Fiscal Years

CHANGES IN NET POSITION

LAST TEN FISCAL YEARS
(accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
134
410
TABLE 3
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General fund
Nonspendable 3,137,794$ 3,430,104$ 4,165,795$ 2,486,085$ 2,253,843$ 2,038,518$ 280,195$ 362,189$ 964,846$ 603,547$ Restricted - - - - - - - - 1,778,220 3,061,154 Committed 16,125,000 16,125,000 16,125,000 16,125,000 16,125,000 16,125,000 23,625,000 25,125,000 25,125,000 25,125,000 Assisgned 10,131,615 10,016,092 11,325,819 13,820,663 13,819,088 13,730,832 8,940,072 9,151,062 8,195,429 12,469,067 Unassigned 16,252,032 20,629,130 22,199,337 32,040,713 30,867,198 23,329,730 20,451,232 18,825,417 17,428,766 16,517,079 Total general fund 45,646,441$ 50,200,326$ 53,815,951$ 64,472,461$ 63,065,129$ 55,224,080$ 53,296,499$ 53,463,668$ 53,492,261$ 57,775,847$ All other governmental funds
Nonspendable -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Restricted 29,302,059 25,097,114 20,914,771 19,309,083 28,056,898 30,108,463 21,753,832 25,676,330 25,200,380 26,636,885 Committed - - - - - - - - - - Assisgned 9,162,682 11,741,220 19,147,805 23,738,380 27,619,480 25,415,708 24,337,823 25,474,636 31,173,285 34,939,313 Unassigned (2,892,237) (2,288,538) (368,083) (139,064) (248,979) (6,353) (9,453) (2,312,520) (451,068) (1,850,787) Total all other governmental funds 35,572,504$ 34,549,796$ 39,694,493$ 42,908,399$ 55,427,399$ 55,517,818$ 46,082,202$ 48,838,446$ 55,922,597$ 59,725,411$ Source: Fund Financial Statements

FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
135
411
TABLE 4
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenues
Taxes 82,930,849$ 86,797,242$ 90,091,915$ 99,349,202$ 99,464,729$ 110,884,896$ 123,969,423$ 114,463,599$ 122,138,588$ 141,919,878$ Licenses and permits 1,997,057 2,085,348 2,313,296 2,983,081 2,933,305 3,837,564 5,104,022 5,496,049 4,368,740 7,331,252 Fines and forfeits 4,483,240 3,614,144 1,367,190 1,609,134 1,352,682 1,612,230 2,468,993 2,067,884 1,061,346 1,176,357 Intergovernmental 19,213,168 21,769,293 22,010,125 17,612,288 23,205,265 10,558,481 16,646,740 15,006,292 39,855,634 18,077,452 Charges for services 4,320,932 4,721,191 6,117,030 6,668,445 5,909,112 9,553,421 9,990,454 9,489,827 7,309,872 9,030,556 Rental 2,987,055 3,021,585 3,113,662 3,336,053 3,289,222 3,404,676 3,479,527 3,566,255 4,773,662 4,815,577 Investment income (loss) 533,469 1,712,058 1,771,527 1,775,765 420,561 244,606 3,616,606 3,394,398 (37,016) (2,767,803) Return on equity 2,551,815 - - - - - - - - - Settlements 1,452,623 121,971 - - - - - - - - Miscellaneous 892,970 1,177,245 2,206,428 1,679,917 2,170,215 2,081,739 3,226,941 2,161,633 1,410,996 1,545,970 Total revenues 121,363,178 125,020,077 128,991,173 135,013,885 138,745,091 142,177,613 168,502,706 155,645,937 180,881,822 181,129,239 Expenditures
General government 21,982,783 23,893,450 24,699,226 25,102,067 26,518,266 29,048,355 29,219,530 30,808,182 31,851,632 33,567,585 Protection of persons and
property 60,468,091 64,047,209 61,096,404 64,426,376 66,141,703 70,198,327 78,762,212 82,939,180 84,027,648 90,698,363 Community programs 6,166,791 6,442,241 8,821,298 8,019,356 9,410,168 10,888,393 13,265,742 14,297,137 18,578,311 16,267,400 Public services 16,781,751 22,863,385 21,860,252 19,836,633 21,680,495 42,305,565 50,429,478 20,506,675 27,033,542 20,962,292 Redevelopment - - - - - - - - - - Debt service:

Principal 3,872,050 2,450,000 2,540,000 2,650,000 2,755,000 4,070,000 1,795,261 1,815,392 1,890,391 2,202,563 Interest 1,741,101 1,296,111 1,213,671 1,109,037 992,383 1,041,853 1,298,315 1,230,958 1,155,360 1,095,786 Bond issuance costs - - - - - 344,858 - - - - Payment to refunded
bond escrow agent - - - - - 2,302,225 - - - - Total expenditures 111,012,567 120,992,396 120,230,851 121,143,469 127,498,015 160,199,576 174,770,538 151,597,524 164,536,884 164,793,989 Excess of revenues over
(under) expenditures 10,350,611 4,027,681 8,760,322 13,870,416 11,247,076 (18,021,963) (6,267,832) 4,048,413 16,344,938 16,335,250 Other financing sources
(uses):

Transfers in 6,212,460 8,597,756 14,253,945 12,852,940 16,058,019 12,370,819 15,899,228 10,811,227 26,619,517 13,116,263 Transfers out (6,212,460) (9,094,260) (14,253,945) (12,852,940) (19,658,019) (18,063,009) (21,148,507) (11,936,227) (35,851,711) (21,365,113) Extraordinary gain (loss) (11,888,159) - - - - - - - - - Issuance of debt - - - - - 29,735,000 153,914 - - - Premium on debt issue - - - - - 3,694,172 - - - - Payment to bond
escrow agent - - - - - (14,530,520) - - - - Bond proceeds - - - - - - - - - - Total other financing
sources (uses) (11,888,159) (496,504) - - (3,600,000) 13,206,462 (5,095,365) (1,125,000) (9,232,194) (8,248,850) Net change in fund
balances (1,537,548)$ 3,531,177$ 8,760,322$ 13,870,416$ 7,647,076$ (4,815,501)$ (11,363,197)$ 2,923,413$ 7,112,744$ 8,086,400$ Debt service as a percentage
of noncapital expenditures 5.40% 3.44% 3.37% 3.38% 3.18% 5.64% 2.21% 2.19% 2.10% 2.27% Source: Fund Financial Statements

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
136
412
TABLE 5
Transient Proposition
Fiscal Years Sales Property Occupancy Franchise Business 172 Total 2013 45,830,107 23,192,755 7,257,695 4,818,972 917,633 913,688 82,930,850 2014 49,264,634 22,984,093 7,676,090 4,891,465 916,285 1,064,676 86,797,243 2015 51,115,064 24,139,297 7,995,154 4,885,926 954,408 1,002,064 90,091,914 2016 57,593,561 26,168,612 8,622,505 5,060,402 973,521 930,601 99,349,202 2017 56,556,867 27,435,427 8,924,854 4,593,631 918,928 1,035,022 99,464,729 2018 54,656,183 40,458,402 8,819,617 4,965,515 919,450 1,065,729 110,884,896 2019 64,902,009 42,873,901 8,595,417 5,042,551 1,093,154 1,126,008 123,633,040 2020 55,866,831 45,548,585 6,587,224 4,822,964 1,663,100 1,102,506 115,591,210 2021 63,738,411 47,891,698 4,282,802 4,895,574 1,227,843 1,151,953 123,188,281 2022 77,165,533 49,706,079 8,366,278 5,318,541 1,468,199 1,467,173 143,491,803 Source: Required Supplementary Information

CITY OF COSTA MESA, CALIFORNIA

TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
137
413
TABLE 6
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Apparel stores 604,936$ 681,348$ 715,097$ 727,073$ 754,197$ 714,478$ 814,593$ 835,594$ 569,776$ 1,031,162$ General merchandise 591,832 599,163 615,702 618,702 582,500 565,635 534,747 512,500 315,884 515,117 Food stores 94,377 87,225 88,872 103,225 90,941 88,385 90,178 91,470 92,557 91,147 Eating and drinking
establishments 387,667 421,830 443,384 469,465 496,041 515,683 535,744 556,504 405,696 589,711 Building materials 150,604 180,198 193,248 205,343 224,225 236,497 242,750 251,846 251,117 314,137 Auto dealers and supplies 613,669 670,976 753,804 858,187 924,641 1,006,804 1,153,396 1,230,062 1,149,598 1,380,887 Service stations 269,067 263,352 245,432 215,707 190,969 200,170 235,572 232,911 161,495 242,199 Other retail stores 961,488 972,383 1,025,424 1,047,009 1,050,063 1,116,930 1,178,337 1,165,897 943,056 1,320,071 All other outlets 839,005 914,501 1,015,134 1,112,851 1,206,829 1,157,415 1,269,997 1,402,675 1,447,700 1,697,098 4,512,645$ 4,790,976$ 5,096,097$ 5,357,562$ 5,520,406$ 5,601,997$ 6,055,314$ 6,279,459$ 5,336,879$ 7,181,529$ City direct sales tax rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Source: State of California Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office and the HdL Companies Calendar Years

TAXABLE SALES BY CATEGORY

LAST TEN CALENDAR YEARS
(in thousands of dollars)

CITY OF COSTA MESA, CALIFORNIA
138
414
TABLE 7
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Category Sales Rank Sales Sales Rank Sales
All other outlets 1,697,098$ 1 23.63% 839,005$ 2 18.59% Auto dealers and supplies 1,380,887 2 19.23% 613,669$ 3 13.60% Other retail stores 1,320,071 3 18.38% 961,488$ 1 21.31% Apparel stores 1,031,162 4 14.36% 604,936$ 5 13.41% Eating and drinking establishments 589,711 5 8.21% 387,667$ 6 8.59% General merchandise 515,117 6 7.17% 591,832$ 4 13.11% Building materials 314,137 7 4.37% 150,604$ 8 3.34% Service stations 242,199 8 3.37% 269,067$ 7 5.96% Food stores 91,147 9 1.27% 94,377$ 9 2.09% Source: State of California Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office and the HdL Companies

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL SALES TAX REMITTERS BY CATEGORY

CURRENT YEAR AND NINE YEARS AGO
2021 2012
139
415
TABLE 8
City Orange State of Total
Local County California Sales Tax
Fiscal Years Rate Rate Rate Rate
2013 1.00 0.50 6.50 8.00 2014 1.00 0.50 6.50 8.00 2015 1.00 0.50 6.50 8.00 2016 1.00 0.50 6.50 8.00 2017 1.25 0.50 6.00 7.75 2018 1.25 0.50 6.00 7.75 2019 1.25 0.50 6.00 7.75 2020 1.25 0.50 6.00 7.75 2021 1.25 0.50 6.00 7.75 2022 1.25 0.50 6.00 7.75 Source: State of California Board of Equalization

CITY OF COSTA MESA, CALIFORNIA

DIRECT AND OVERLAPPING SALES TAX RATES

LAST TEN FISCAL YEARS
140
416
TABLE 9
Fiscal Year Taxes Levied Collected for
Ended for the Percentage Subsequent Percentage
June 30, Fiscal Year Amount of Levy Years (2) Amount of Levy (1) 2013 21,112,082 20,599,679 97.57% 382,281 20,981,960 99.38% 2014 22,178,464 21,732,926 97.99% 285,325 22,018,251 99.28% 2015 23,405,838 22,897,171 97.83% 242,634 23,139,805 98.86% 2016 24,960,369 24,222,713 97.04% 227,104 24,449,817 97.95% 2017 26,330,538 25,640,344 97.38% 216,963 25,857,308 98.20% 2018 27,825,846 27,272,459 98.01% 198,624 27,471,083 98.73% 2019 29,820,941 29,186,740 97.87% 196,710 29,383,450 98.53% 2020 31,300,931 30,714,805 98.13% 214,204 30,929,009 98.81% 2021 32,769,949 32,203,394 98.27% 294,030 32,497,424 99.17% 2022 33,917,865 33,032,650 97.39% 298,304 33,330,954 98.27% (1) The Percentage of Levy may exceed 100% if the amounts collected for subsequent years exceed the delinquency. (2) The County of Orange only makes this data available by collection year. Data by levy year is not available.

Source: Orange County Assessor 2021/2022 Combined Tax Rolls

CITY OF COSTA MESA, CALIFORNIA
Fiscal Year of the Levy Total Collections to Date
Collected within the

PROPERTY TAX LEVIES AND COLLECTIONS

LAST TEN FISCAL YEARS
141
417
TABLE 10
Total Taxable Estimated Taxable Assessed
Residential Commercial Industial Miscellaneous Assessed Total Direct Actual Taxable Value as a Percentage Fiscal Years Property Property Property Property Value Tax Rate Value (1) of Actual Taxable Value 2013 8,704,306,093 3,479,681,880 1,122,815,201 1,070,250,329 14,377,053,503 0.17288% 14,377,053,503 100.00% 2014 9,101,889,466 3,566,114,710 1,117,794,289 1,140,508,581 14,926,307,046 0.15040% 14,926,307,046 100.00% 2015 9,745,389,688 3,633,678,888 1,126,437,386 1,206,217,946 15,711,723,908 0.15035% 15,711,723,908 100.00% 2016 10,456,976,124 3,766,616,981 1,190,970,066 1,118,171,362 16,532,734,533 0.15038% 16,532,734,533 100.00% 2017 11,033,602,522 3,918,807,590 1,336,961,702 1,180,683,099 17,470,054,913 0.15014% 17,470,054,913 100.00% 2018 11,685,011,850 4,096,390,455 1,500,236,782 1,222,877,713 18,504,516,800 0.15009% 18,504,516,800 100.00% 2019 12,557,043,739 4,473,583,090 1,646,413,988 1,223,132,784 19,900,173,601 0.15002% 19,900,173,601 100.00% 2020 13,389,240,208 4,687,990,535 1,744,806,502 1,290,509,110 21,112,546,355 0.14848% 21,112,546,355 100.00% 2021 14,143,690,438 4,858,631,950 1,822,103,130 1,295,199,231 22,119,624,749 0.14856% 22,119,624,749 100.00% 2022 14,753,436,539 4,866,777,961 1,875,392,912 1,244,087,188 22,739,694,600 0.14824% 22,739,694,600 100.00% (1) In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1%, based upon the assessed vaule of the property being taxed. Each year, the assessed value of property may be increased by an inflation factor (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction or at the purchase price (market value) 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. Therefore, the estimated actual taxable value equals the total taxable assessed value.

Source: HdL Coren & Cone, Orange County Assessor 2012/2013 - 2021/2022 Combined Tax Rolls.

CITY OF COSTA MESA, CALIFORNIA

ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
142
418
TABLE 11
Total County of School Special
Basic Redevelopment Redevelopment Direct Orange District Districts Fiscal Year Rate Debt Service (2) Program Rate (1) Debt Debt Debt 2013 0.14879 - - 0.17288 0.36649 0.48300 0.00535 2014 0.14879 - - 0.15040 0.36649 0.48300 0.00535 2015 0.14879 - - 0.15035 0.36649 0.48300 0.00515 2016 0.14879 - - 0.15038 0.36649 0.48300 0.00515 2017 0.14879 - - 0.15014 0.36649 0.48300 0.00515 2018 0.14879 - - 0.15009 0.36649 0.48300 0.00515 2019 0.14879 - - 0.15002 0.36649 0.48300 0.00515 2020 0.14879 - - 0.14848 0.36649 0.48300 0.00515 2021 0.14879 - - 0.14856 0.36649 0.48300 0.00515 2022 0.14879 - - 0.14824 0.36649 0.48300 0.00515 (1) Per the Government Finance Officers Association, the definition of "total direct rate" is as follows:
"The weighted average of all individual rates applied by the government preparing the statistical section" The "total direct rate" for the City of Costa Mesa is a weighted average derived by dividing total City revenue by taxable assessed value.
(2) As of February 1, 2012, the Successor Agency to the former Costa Mesa Redevelopment Agency is responsible for the outstanding Redevelopment debt.

Source: HdL Coren & Cone, Orange County Assessor 2012/2013 - 2021/2022 Combined Tax Rolls.

City Direct Rates Overlapping Rates

CITY OF COSTA MESA, CALIFORNIA

DIRECT AND OVERLAPPING PROPERTY TAX RATES

LAST TEN FISCAL YEARS
143
419
TABLE 12
Percentage Percentage
of Total City of Total City
Property Property Property Property
Tax Tax Tax Tax
Taxpayer Revenue Rank Revenue Revenue Rank Revenue
The Irvine Company LLC 731,189$ 1 1.86% 322,678$ 1.30% Trust Costa Mesa Courtyards LLC 575,242 2 1.46% 399,345 1.61% Triangle Center LLC 562,796 3 1.43%
Behringer Harvard Pacifica Project 528,679 4 1.34% South Coast Plaza 514,634 5 1.31% 402,934 1.62% 1901 Newport LLC Royal Street 425,033 6 1.08% 313,203 1.26% PR II MCC South Coast Property Owner 397,617 7 1.01% United Dominion Realty LP 314,529 8 0.80% 201,691 0.81% Automobile CLUB of Southern CA 255,994 9 0.65% 203,229 0.82% Advanced Group 248,984 10 0.63%
WWG TSQ Owner LLC 249,351 1.00%
Marjack LLC Irvine Company LLC 217,091 0.87%
RREEF America Reit II Corporation 380,517 1.53% Casden Lakes LP 180,141 0.72%
Total 4,554,697$ 11.56% 2,870,180$ 11.55%
Source: HdL Coren & Cone, Orange County Assessor 2021/2022 & 2012/2013 Combined Tax Rolls.

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL PROPERTY TAX PAYERS

CURRENT YEAR AND NINE YEARS AGO
2021-2022 2012-2013
144
420
TABLE 13
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General bonded debt outstanding
General oligation bonds -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Redevelopment bonds (1) - - - - - - - - - - Total -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Percentage of taxable
assessed value 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% Per capita -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Less: Amounts set aside to
repay general debt - - - - - - - - - - Total net debt applicable to
debt limit - - - - - - - - - - Legal debt limit
(3.75% of Assessed Value) 585,780,638 607,508,126 637,377,201 669,713,004 705,606,516 743,516,945 796,252,660 842,737,426 881,515,407 907,985,504 Legal debt margin 585,780,638 607,508,126 637,377,201 669,713,004 705,606,516 743,516,945 796,252,660 842,737,426 881,515,407 907,985,504 Legal debt margin as a
percentage of the debt limit 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% (1) As of February 1, 2012, the Successor Agency to the former Costa Mesa Redevelopment Agency is responsible for the outstanding Redevelopment debt.

Source: City of Costa Mesa Finance Department and Orange County Assessor 2021/2022 combined tax rolls

FISCAL YEARS

CITY OF COSTA MESA, CALIFORNIA

RATIO OF GENERAL BONDED DEBT OUTSTANDING AND LEGAL DEBT MARGIN

LAST TEN FISCAL YEARS
145
421
TABLE 14
Percentage
Fiscal Year of Total Certificates Lease Total Percentage Ended Redevelopment Taxable Per Revenue of Loan Purchase Primary of Personal Per June 30, Bond (1) Assessed Value Capita Bonds (2) Participation Payable Financing Government Income Capita 2012 3,615,000 0.0256% 8.43 10,490,000 25,140,000 - 1,057,907 40,302,907 1.11% 1,224.86 2013 - 0.0000% - 8,140,000 23,875,000 - 611,729 32,626,729 0.89% 999.53 2014 - 0.0000% - 7,005,000 22,560,000 - 415,395 29,980,395 0.79% 886.84 2015 - 0.0000% - 5,830,000 21,195,000 - - 27,025,000 0.73% 832.10 2016 - 0.0000% - 4,600,000 19,775,000 - - 24,375,000 0.64% 732.66 2017 - 0.0000% - 3,325,000 18,295,000 - - 21,620,000 0.57% 649.85 2018 - 0.0000% - 34,103,345 - - - 34,103,345 0.77% 991.21 2019 - 0.0000% - 32,170,580 - 143,653 - 32,314,233 0.78% 906.39 2020 - 0.0000% - 30,222,813 - 128,261 - 30,351,074 0.69% 788.54 2021 - 0.0000% - 28,200,046 - 112,870 1,472,402 29,785,318 0.64% 721.65 2022 - 0.0000% - 26,102,279 - 97,479 1,336,909 27,536,667 0.55% 613.11 (1) As of February 1, 2012, the Successor Agency to the former Costa Mesa Redevelopment Agency is responsible for the outstanding Redevelopment debt. (2) Amount includes the unamortized Bond Premium.

Source: City of Costa Mesa Finance Department

CITY OF COSTA MESA, CALIFORNIA

RATIOS OF OUTSTANDING DEBT BY TYPE

LAST TEN FISCAL YEARS
Other Governmental Activities DebtGeneral Bonded Debt
146
422
TABLE 15
Estimated
Share of
Estimated Direct and
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable (2) Debt
Overlapping Debt
Newport Mesa Unified School District 232,782,840$ 26.219% 61,033,333$ Coast Community College District 945,799,424 13.302% 125,810,239 Santa Ana Unified School District 339,341,119 3.317% 11,255,945 Rancho Santiago Community College District 196,772,728 1.442% 2,837,463 Rancho Santiago Community College District SFID No. 1 162,125,000 2.695% 4,369,269 Metropolitan Water District 4,052,114 3.340% 135,341 Total Overlapping Debt 1,880,873,225 205,441,590 City Direct Debt
Costa Mesa Public Financing Authority 2006 Revenue Refunding Bonds/ Costa Mesa Community Facilities District No. 91-1 -$ 100% -$ City of Costa Mesa General Fund Obligations (1) 26,102,279 100% 26,102,279 Loan Payable 97,478 100% 97,478
Total Direct Debt 26,199,757 26,199,757
Total Direct and Overlapping Debt 231,641,347$
(1) See Note 8 in Finance Statement for more information about the City's direct debt. The amount included the unamortized Bond Premium $2,992,279
(2) Overlapping governments are those that coincide with the geographic boundaries of the city. The percentage of overlapping debt applicable is estimated by using taxable assessed values. Applicable percentages were estimated by determining the portion of another governmental unit’s taxable assessed value that is within the city’s boundaries and dividing it by each unit’s total taxable assessed value.

Source: HdL Coren & Cone, Orange County Assessor and Auditor Combined 2021/22 Lien Data Tax Rolls.

AS OF JUNE 30, 2022

DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

CITY OF COSTA MESA, CALIFORNIA
147
423
TABLE 16
Personal
Income Per Capita Orange County
(thousands Personal Median School Unemployment
Year Population (2)
of dollars) Income (1)
Age
(1) Enrollment (3) Rate (4)
2013 111,358 3,711,117 33,326 33 21,944 6.10% 2014 111,846 3,650,877 32,642 34 21,683 5.20% 2015 111,835 3,780,694 33,806 34 21,540 4.30% 2016 114,603 3,722,083 32,478 34 21,392 4.40% 2017 114,044 3,794,132 33,269 34 20,801 3.80% 2018 115,296 3,966,839 34,406 35 20,853 3.30% 2019 115,830 4,129,505 35,651 35 20,316 3.00% 2020 114,778 4,417,883 38,490 35 20,008 13.60% 2021 112,780 4,654,963 41,274 35 20,173 6.50% 2022 111,394 5,003,062 44,913 36 17,962 5.40% Source: (1) - City of Costa Mesa Finance Department / and The HdL Companies (2) - California State Department of Finance
(3) - Newport-Mesa Unified School District.
(4) - State of California Employment Development Department as of June 30th each year.

CITY OF COSTA MESA, CALIFORNIA

DEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN CALENDAR YEARS
148
424
TABLE 17
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment EPL Intermediate, Inc. 3,998 1 6.23%
Experian Information Solutions, Inc. 3,700 2 5.76% 3,700 5.73% Coast Community College District 2,900 3 4.52% 2,900 4.49% Orange Coast College 1,900 4 2.96% 1,900 2.94% Automobile Club of Southern California 1,200 5 1.87% Deloitte & Touche LLP 700 7 1.09%
Anduril Industries 650 7 1.01%
Vans 550 8 0.86%
Sure Haven, Inc. 550 9 0.86%
Vanguard University 319 10 0.50%
Source: City of Costa Mesa Department of Economic Development, Dunn & Bradstreet, State of California Employment Development Department

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL EMPLOYERS

CURRENT YEAR AND NINE YEARS AGO
2021-2022 2012-2013
149
425
TABLE 18
Function/Program 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General Government
Number of residents served via
public services programs 1,500 1,000 1,500 785 750 700 700 700 700 1,042 Accounts payable checks issued 9,561 9,506 9,764 9,182 9,031 8,734 8,857 8,604 7,269 7,079 Total printshop photocopies produced 1,554,927 1,691,606 1,806,965 1,619,784 1,749,460 1,996,486 1,699,007 1,116,892 1,250,000 1,250,000 Protection of persons and property
Police protection
Emergency calls 1,160 1,180 1,330 N/A 1,000 1,029 882 876 847 1,027 Calls responded to within 5 minutes 80% 82% 77% N/A 66% 72% 75% 72% 76% 96% Assigned theft cases 1,900 1,000 400 900 1,200 N/A N/A N/A N/A 2,171 Percentage of theft cases cleared 25% 40% 40% 40% 60% 74% 64% 52% 31% 59% Assigned burglary cases 1,460 800 350 400 200 N/A N/A N/A N/A 897 Percentage of burglary cases
cleared 25% 40% 40% 40% 70% 69% 64% 50% 38% 54%
Case and arrest reports processed 21,921 18,133 15,128 14,584 19,310 19,319 18,382 19,079 18,794 22,135 Fire protection
Number of calls for service 10,000 11,300 11,100 12,955 12,721 12,936 10,572 10,637 10,073 11,249 Fire related responses 200 218 214 238 271 218 261 245 246 222 Emergency medical aid responses 7,000 7,818 7,250 9,366 9,374 9,603 9,639 9,454 8,960 10,055 Community Programs
Number of program participants at
the Downtown Recreation Center 42,411 31,018 31,521 33,446 34,939 38,247 42,000 28,000 21,150 21,150 Over-the-counter plan checks
reviewed within five working days 338 337 225 240 240 522 630 630 630 N/A Inspection requests with 24 hours 14,345 17,460 22,560 29,100 31,040 29,585 29,100 18,966 28,012 35,000 Complaint response within two
working days 90% 90% 90% 90% 90% 90% 90% 90% 90% 100%
Public services
Number of trees trimmed annually 7,882 8,140 7,700 7,750 6,250 6,250 6,250 8,750 5,291 3,317 Number of catch basins cleaned
annually 1,165 1,165 1,165 1,165 1,115 1,100 1,100 1,165 1,165 1,165 Source: City of Costa Mesa Finance Department
Fiscal Years

CITY OF COSTA MESA, CALIFORNIA

OPERATING INDICATORS BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
150
426
TABLE 19
Function/Program 2013 (1) 2014 2015 (2) 2016 2017 2018 2019 2020 2021 2022 General Government
City council 6.0 6.0 6.0 6.0 6.0 6.0 8.0 10.5 10.5 10.5 City Manager's office 22.00 29.75 38.41 33.30 37.59 39.74 41.60 36.48 37.00 37.88 Financial services 27.21 27.21 20.21 21.71 21.50 22.25 22.50 22.00 23.00 23.00 Information technology - - 10.50 12.50 12.94 13.16 12.16 13.70 15.50 17.50 Administrative services - - - - - - - - - - Development services 27.59 27.00 37.25 43.50 46.23 45.95 44.80 48.79 51.64 52.64 Park and community
services - - 53.43 70.70 74.00 80.54 87.23 96.71 95.67 96.73 Protection of persons and property
Police protection 235.60 237.68 236.41 232.63 234.46 235.60 233.76 235.17 235.86 236.36 Fire protection 95.44 95.75 84.75 87.25 87.50 94.00 94.00 95.00 96.25 97.25 Public services 114.99 124.43 83.37 81.77 84.82 77.47 72.05 76.70 76.50 80.00 528.83 547.82 570.33 589.36 605.04 614.71 616.10 635.05 641.92 651.86 (1) City's Administrative Services Department was reorganized. Divisions previously allocated to that department such as Human Resources, Central Services, and Risk Management were combined with the City Manager's Office and the Information Technology Division was combined with the Finance Department. In addition, the Recreation division was combined with Public Service Department. (2) The Information Technology was separated from the Finance Department. and Park & Community Services Department was separated from Public Service Department.

Source: City of Costa Mesa Finance Department

CITY OF COSTA MESA, CALIFORNIA

FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
151
427
TABLE 20
Function/Program 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Police
Stations/substations 2 2 2 2 2 2 2 2 2 2 Fire
Fire stations 6 6 6 6 6 6 6 6 6 6 Other public works
Streets (lane miles) 525.0 529.0 529.0 529.0 529.0 535.6 535.6 535.6 540.0 522.0 Streetlights 6,674 6,674 6,674 6,674 6,674 6,674 6,881 6,869 6,869 6,882 Traffic signals 123 123 124 124 124 125 126 127 128 131 Parks and recreation
Acres of open space 1,957 1,957 1,957 1,957 1,957 1,957 1,957 2,067 2,067 2,067 Park sites 30 30 31 31 31 31 31 32 32 30 Baseball/softball diamonds 5 5 6 6 6 6 6 6 6 6 Soccer/football fields 10 10 10 10 10 10 10 6 6 6 Community centers 3 3 4 4 3 3 3 4 4 3 Wastewater (miles)
Sanitary sewers 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 Storm sewers 45.5 45.5 45.5 45.5 45.5 45.5 45.5 45.5 64.7 45.5 Source: City of Costa Mesa Finance Department
Fiscal Years

CITY OF COSTA MESA, CALIFORNIA

CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
152
428
In
dependent Auditor’s Report on Internal Control Over Financial Reporting a
nd on Compliance and Other Matters Based on an Audit of the Air Quality Imp
rovement Special Revenue Fund Performed
in
Accordance with Government Auditing Standards
The
Honorable Mayor and City Council
City of Costa Mesa, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the City of Costa Mesa, California (the City) including the Air Quality Improvement Special Revenue Fund (the Fund) of the City, as of and for the year ended June 30, 2022, 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, 2022.

Internal Control over Financial Reporting
In planning and performing our audit of the Fund’s 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 may exist that have not been identified.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s Fund 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 financial statements. Such provisions include those provisions of laws and regulations identified in Assembly Bill 2766 Chapter 1705 [Health and Safety Code Sections 44220 through 44247] (the Guide).

Attachment 2
429
However, providing an opinion o
n 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
Au
diting Standards
.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal

control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards
and the Guide in considering the City’s internal
control and compliance. Accordingly, this communication is not suitable for any other purpose.

Irvine, California

December

30 ,
202
2 430
The Honorable Mayor and City Council
City of Costa Mesa, California
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Costa Mesa (“City”) as of and for the year ended June 30, 2022, and have issued our report thereon dated December 30, 2022. Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated April 11, 2022, our responsibility, as described by professional standards, is to form and express opinion s 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 in our letter to you dated May 17, 2022.

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.

We identified self-review threats to independence as a result of non- attest services provided. Those non-attest services included recording journal entries detected during the audit process and preparing the financial statements. To mitigate the risk, management has compared the draft financial statements and footnotes to the underlying accounting records to verify accuracy and has reviewed a disclosure checklist to ensure footnotes are complete and accurate.

Attachment 3
431
Significant Risks Identified
We have identified the following significant risks:
 Implementation of the new lease accounting standard. We reviewed the City’s inventory of leases and selected a sample of lease agreements to test the calculations of the lease transactions. We ensured the City’s lease disclosure footnotes were accurate and complete in accordance with the new standard.
 Compliance with Federal Grant Requirements. We reviewed the City’s schedule of federal expenses and selected major programs to test for compliance with federal grant requirements.

Qualitative Aspects of the Entity’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. As described in Notes 6 and 9 to the financial statements, the City changed accounting policies related to leases by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 87, Leases, in the fiscal year 2022. 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 include:
 Management’s estimate of amounts recorded as claims and liabilities is based on management’s reliance on a third-party claims administrator. We evaluated the key factors and assumptions used to develop the amounts by the third-party claims administrator and determined that it is reasonable in relation to the financial statements taken as a whole.
 Management’s estimate of transactions related to net pension and OPEB liabilities based on actuarial information. We evaluated the key factors and assumptions used to develop the amounts by the actuary and determined that it is reasonable in relation to the financial statements taken as a whole.

We evaluated the key factors and assumptions used to develop the estimates and determined that it is 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 financial statements were:
 The disclosure of investment fair value in note 2 to the financial statements 432
 The disclosure of pensions in note 11 to the financial statements  The disclosure of OPEB in note 14 to the financial statements.

The financial statement disclosures are neutral, consistent, and clear.

Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.

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 unusual transactions noted 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. 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. Management has determined that the effects of the following uncorrected adjustment is immaterial, both individually and in the aggregate, to the financial statements as a whole: 1) an entry to reduce a loan receivable for the Housing Authority and 2) an entry to increase general liability claims payable.

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. There were material entries recorded to 1) capitalize construction in progress for completed projects, 2) to record unavailable revenue for receivables not received within the availability period for the Housing Authority, 3) to reduce claims liability due to excess of self- insurance retention amounts, and 4) to segregate revenue and expenditures for fiduciary funds.

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 certain written representations from management in a letter dated December 30, 2022.
433
Management’s 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 the 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.

Irvine, California
December 30, 2022
434
INDEPENDENT ACCOUNTANT’S REPORT
The Honorable Mayor and City Council
City of Costa Mesa, California
We have performed the procedures enumerated below on the City of Costa Mesa, California (City) appropriations limit worksheets for compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution for the year ended June 30, 2022. The City is responsible for compliance with Section 1.5 of Article XIIIB of the California Constitution.

The City has agreed to and acknowledged that these procedures are appropriate to meet the intended purpose of evaluating compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution and the League of California Cities publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines for the year ended June 30, 2022. T his report may not be suitable for any other purpose. T he procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and the associated findings are as follows:

1. We obtained the worksheets referred to above and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote.

Results: No exceptions were noted as a result of our procedures.

2. We recalculated the mathematical computations reflected in the City’s worksheets.

Results: No exceptions were noted as a result of our procedures.

3. We compared the current year information used to determine the current year limit and agreed it to worksheets prepared by the City and to information provided by the State Department of Finance.

Results: No exceptions were noted as a result of our procedures.

4. We compared the amount of the prior year appropriations limit presented in the worksheets to the amount adopted by the City Council for the prior year.

Results: No exceptions were noted as a result of our procedures.

Attachment 4
435
The Honorable Mayor and City Council
City of Costa Mesa, California
Page Two
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively on the worksheets referred to above. A ccordingly, we do not express such an opinion or conclusion. H ad we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of the Management of the City of Costa Mesa, California and is not intended to be, and should not be, used by anyone other than the specified party.

Irvine, California
December 30, 2022
436

COSTA MESA PUBLIC

FINANCING AUTHORITY
(A Component Unit of the
City of Costa Mesa)
Financial Statements
Year Ended June 30, 2022
Attachment 5
437

COSTA MESA PUBLIC FINANCING AUTHORITY
Table of Contents
Year Ended June 30, 2022
Page
Number
Independent Auditor’s Report 1 - 3
Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position 4
Statement of Activities 5
Fund Financial Statements:

Balance Sheet - Governmental Funds 6
Reconciliation of the Governmental Funds Balance
Sheet to the Statement of Net Position 7
Statement of Revenues, Expenditures and Changes in
Fund Balances - Governmental Funds 8
Reconciliation of the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balances
to the Statement of Activities 9
Notes to the Basic Financial Statements 10 - 15
Independent Auditor’s 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 16 - 17 438
INDEPENDENT AUDITOR’S REPORT
Board of Directors
Costa Mesa Public Financing Authority
Costa Mesa, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and the major fund of the Costa Mesa Public Financing Authority (the Authority), a component unit of the City of Costa Mesa, California, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the Authority’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 and the major fund of the Authority, as of June 30, 2022, and the respective changes in financial position 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 Authority 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 opinion.

Emphasis of a Matter
As described more fully in Note 1A, the basic component unit financial statements present only the Authority and are not intended to present fairly the financial position and results of operations of the City of Costa Mesa, California in accordance with accounting principles generally accepted in the United States of America.

Responsibilities of Management for the Financial Statements The Authority’s 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.
1 439
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 Authority’s ability to continue as a going concern for one year after the date that the financial statements are issued.

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 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, 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 Authority’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 Authority’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
Management has not presented the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information. 2 440

Report on Summarized Comparative Information

We have previously audited the Authority’s 2021 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated December 17, 2021. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2021 is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 30, 2022, on our consideration of the Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 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 Authority’s internal control over financial reporting and compliance.

Irvine, California
December 30, 2022

3 441
2022 2021
ASSETS:

Cash and investments with fiscal agent -$ 563,400$ TOTAL ASSETS - 563,400
LIABILITIES:

Interest payable - 4,463
Noncurrent liabilities:

Due within one year - 210,000
TOTAL LIABILITIES - 214,463
NET POSITION:

Restricted for debt service - 348,937 TOTAL NET POSITION -$ 348,937$
June 30, 2022

COSTA MESA PUBLIC FINANCING AUTHORITY
Statement of Net Position
(With comparative totals for June 30, 2021)
Governmental Activities
See accompanying notes to financial statements.
4 442
Charges Operating Capital
for Grants and Grants and
Expenses Services ContributionsContributions 2022 2021
Governmental Activities:

Interest on
Long-term debt 892$ -$ -$ -$ (892)$ (11,560)$ Transfer to City of
Costa Mesa 348,051 - - - (348,051) (5,162) Total governmental
activities 348,943$ -$ -$ -$ (348,943) (16,722) General revenues:

Investment income 6 18,700
Total general revenues 6 18,700
Changes in net position (348,937) 1,978

NET POSITION AT
BEGINNING OF YEAR 348,937 346,959
NET POSITION AT END OF YEAR -$ 348,937$

COSTA MESA PUBLIC FINANCING AUTHORITY
Statement of Activities
June 30, 2022
Program Revenues
Functions/Programs
(With comparative totals for the year ended June 30, 2021) Net (Expenses) Revenues
See accompanying notes to financial statements.
5 443
2021 2020
ASSETS
Cash and investments with fiscal agent -$ 563,400$ TOTAL ASSETS -$ 563,400$

FUND BALANCES
Restricted for debt service -$ 563,400$
TOTAL FUND BALANCES -$ 563,400$
Total
Governmental Funds

COSTA MESA PUBLIC FINANCING AUTHORITY
Balance Sheet
Governmental Funds
June 30, 2022
(With comparative totals for June 30, 2021)
See accompanying notes to financial statements.
6 444
Fund balances for governmental funds -$
Amounts reported for governmental activities in the Statement of Net Position are different because:

Long-term liabilities applicable to the Authority's governmental activities are not due and payable in the current period and, accordingly, are not reported as governmental fund liabilities.

All liabilities (both current and long-term) are reported in the Statement of Net Position.

Revenue bonds -
Accrued interest payable for the current portion of interest due on long-term debt has not been reported in the governmental funds.

Interest payable - revenue bonds -
Net position of governmental activities -$

COSTA MESA PUBLIC FINANCING AUTHORITY
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position
June 30, 2022
See accompanying notes to financial statements.
7 445
2022 2021

REVENUES
Interest from bonds -$ 18,675$
Other interest 6 25
TOTAL REVENUES 6 18,700

EXPENDITURES
Debt service:

Principal 210,000 200,000
Interest 5,355 15,810
TOTAL EXPENDITURES 215,355 215,810

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES (215,349) (197,110)

OTHER FINANCING SOURCES (USES)
Transfer to City of Costa Mesa (348,051) (5,162) TOTAL OTHER FINANCING SOURCES (USES) (348,051) (5,162) NET CHANGE IN FUND BALANCE (563,400) (202,272) FUND BALANCES AT BEGINNING OF YEAR 563,400 765,672 FUND BALANCES AT END OF YEAR -$ 563,400$ Total
Governmental Funds

COSTA MESA PUBLIC FINANCING AUTHORITY
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
Year Ended June 30, 2022
(With comparative totals for the year ended June 30, 2021) See accompanying notes to financial statements.
8 446
Net change in fund balances - total governmental funds (563,400)$ Amounts reported for governmental activities in the Statement of Activities are different because:

Repayment of long-term principal is an expenditure in the governmental funds and, thus, has the effect of reducing the fund balances because current financial resources have been used. For the Authority as a whole, however, the principal payments reduce the liabilities in the Statement of Net Position and do not result in an expense in the Statement of Activities.

Debt service principal - revenue bonds 210,000
The Statement of Net Position includes accrued interest on long-term debt.

The net change in accrued interest for the current period is reported on the Statement of Activities. 4,463
Change in net position of governmental activities (348,937)$

COSTA MESA PUBLIC FINANCING AUTHORITY
Reconciliation of the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balances
to the Statement of Activities
Year ended June 30, 2022
See accompanying notes to financial statements.
9 447

COSTA MESA PUBLIC FINANCING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022

1. Reporting Entity and Summary of Significant Accounting Policies:

A. Description of the Reporting Entity:

The Costa Mesa Public Financing Authority (the Authority) was created by a joint powers agreement between the City of Costa Mesa (the City) and the former Costa Mesa Redevelopment Agency (the Agency), dated August 20, 1990. It was created pursuant to Articles 1 through 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California in accordance with the provisions of t he Mello-Roos Local Bond Pooling Act of 1985. The Authority was created for the purpose of providing financing for capital improvements, acquisition of capital improvements, and the purchase of local obligations.

Article 4 authorizes the Authority to borrow money for the purpose of financing the acquisition of capital improvements and to lease capital improvements to the City.

The Authority is an integral part of the reporting entity of the City. The financial activity of the Authority has been included within the scope of the basic financial statements of the City because the City Council of the City of Costa Mesa is the governing board over the operations of the Authority. Only the financial activity of the Authority is included herein, therefore, these financial statements do not purport to represent the financial position or results of operations of the City.

B. Basis of Accounting and Measurement Focus:

The basic financial statements of the Authority are composed of the following:
 Government-wide financial statements
 Fund financial statements
 Notes to the basic 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), as well as its discretely presented component units. The Authority has no business-type activities or discretely presented component units.

Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Measurement focus indicates the type of resources being measured. 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 expenditures 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. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of Governmental Accounting Standards Board (GASB) Statement No. 33. 10 448

COSTA MESA PUBLIC FINANCING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

Program revenues include charges for services 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 expenditures. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as other financing sources. Amounts paid to reduce long-term indebtedness of the reporting government are reported as reductions of the related liabilities, rather than as expenditures.

When both restricted and unrestricted resources are combined, expenses are considered to be paid first from restricted resources, and then from unrestricted resources.

Fund Financial Statements
The underlying accounting system of the Authority 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 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 funds are presented after the government-wide financial statements. These statements display information about major funds individually and other governmental funds in the aggregate for governmental funds. Fiduciary statements include financial information for fiduciary funds and similar component units. Fiduciary funds primarily represent assets held by the Authority in a custodial capacity for other individuals or organizations. The Authority has no fiduciary funds.

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 fund balances. 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 Authority uses a sixty-day availability period.

Unavailable revenues are reported as deferred inflows of resources in the governmental funds.

Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided).
11 449

COSTA MESA PUBLIC FINANCING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

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, 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 balances. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Noncurrent portions of long-term receivables due to governmental funds are reported on the balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered “available spendable resources,” since they do not represent available fund balance. Recognition of governmental fund type revenues represented by noncurrent receivables are reported as unavailable revenues. Noncurrent portions of other long-term receivables are offset by deferred inflows of resources - unavailable revenue.

Because of the spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, 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 an other financing sources rather than as fund liabilities. Amounts paid to reduce long-term indebtedness are reported as fund expenditures.

C. Activities in Major Fund:

The following debt service fund is presented as a major fund in the accompanying basic financial statements:

Revenue Refunding Bonds 2006 Series A Fund - To account for the accumulation of resources for the payment of debt service for bond principal and interest relating to the 2006 Series A Revenue Refunding Bonds.
12 450

COSTA MESA PUBLIC FINANCING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

D. Cash and Investments:

Investments are reported in the financial statements at fair value. The Authority does not have any applicable cash and investments.

Fair value 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. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments.

E. N et Position:

Net position of the Authority is restricted. This component of net position consists of constraints placed on net position use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.

F. D eferred Outflow/Inflows of Resources:

In addition to assets, the statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until that. The Authority does not have any applicable deferred outflows of resources.

In addition to liabilities, the statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The Authority does not have any applicable deferred inflows of resources.

G. Budgetary Reporting:

Formal budgetary integration is not employed for the Authority because effective control is alternatively achieved through the debt indenture provisions.

H. Fund Equity:

The fund balances are reported in the fund statements in the following classification:
13 451

COSTA MESA PUBLIC FINANCING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

Restricted Fund Balance - this includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers, or through enabling legislation. If the Board action limiting the use of funds is included in the same action (legislation) that created (enables) the funding source, then it is restricted.

I. U se of Estimates:

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

J. Fair Value Measurements:

Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:

Level 1 -Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and fair value is determined through the use of models or other valuation methodologies including:
 Quoted prices for similar assets or liabilities in active markets;  Quoted prices for identical or similar assets or liabilities in markets that are inactive;  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.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the Authority’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the Authority’s own data. 14 452

COSTA MESA PUBLIC FINANCING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

K. Prior Year Data :

Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Authority’s prior year financial statements, from which this selected financial data was derived.

2. Long Term Liabilities:

The following is a summary of changes in long-term liabilities of the Authority for the year ended June 30, 2022:

Series 2006A Revenue Refunding Bonds:

On June 1, 2006, the Authority issued $2,365,000 of Revenue Refunding Bonds, Series 2006A, that were to advance refund the outstanding amount of 1991 Lease Revenue Bonds issued on November 1, 1991. The bonds were issued to provide monies to enable the Authority to acquire the City of Costa Mesa Community Facilities District 91-1 (Plaza Tower Public Improvements).

The $2,365,000 Revenue Refunding Bonds consist of $1,955,000 of serial bonds and $410,000 of term bonds. The serial bonds mature from August 1, 2007 through August 1, 2019 in annual installments ranging from $120,000 to $190,000. The term bonds mature from August 1, 2020 through August 1, 2021 in annual installments ranging from $200,000 to $210,000.

Interest is payable semi-annually on February 1 and August 1 of each year, commencing on February 1, 2007 at rates ranging from 3.85% to 5.10%.

The City has no principal balance outstanding at June 30, 2022.

Due in
Balance Balance Due Within More Than
July 1, 2021 Additions Reductions June 30, 2022 One Year One Year Series 2006A
Refunding Bonds 210,000$ -$ (210,000)$ -$ -$ -$ 15 453
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
Board of Directors
Costa Mesa Public Financing Authority
Costa Mesa, 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, financial statements of the governmental activities and the major fund of the Costa Mesa Public Financing Authority (the Authority), as of and for the year ended June 30, 2022, and the related notes to the basic financial statements, which collectively comprise of the Authority’s basic financial statements, and have issued our report thereon dated December 30, 2022.

Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Authority’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 Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of Authority’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 Authority’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a d eficiency, 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 may exist that have not been identified. 16 454

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Authority’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 financial statements. 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 Authority’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 Authority’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Irvine, California
December 30, 2022

17 455

COSTA MESA

FINANCING AUTHORITY
(A Component Unit of the
City of Costa Mesa)
Financial Statements
Year Ended June 30, 2022
Attachment 6
456

COSTA MESA FINANCING AUTHORITY
Table of Contents
Year Ended June 30, 2022
Page
Number
Independent Auditor’s Report 1 - 3
Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position 4
Statement of Activities 5
Fund Financial Statements:

Balance Sheet - Governmental Fund 6
Reconciliation of the Governmental Fund Balance
Sheet to the Statement of Net Position 7
Statement of Revenues, Expenditures and Changes in
Fund Balances - Governmental Fund 8
Reconciliation of the Governmental Fund Statement of
Revenues, Expenditures and Changes in Fund Balances
to the Statement of Activities 9
Notes to the Basic Financial Statements 10 - 17
Independent Auditor’s 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 18 - 19 457
INDEPENDENT AUDITOR’S REPORT
Board of Directors
Costa Mesa Financing Authority
Costa Mesa, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the governmental activities and the major fund of the Costa Mesa Financing Authority (the Authority), a component unit of the City of Costa Mesa, California, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the Authority’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 and the major fund of the Authority, as of June 30, 2022, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion
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 Authority 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 opinion.

Emphasis of a Matter
As described more fully in Note 1A, the basic component unit financial statements present only the Authority and are not intended to present fairly the financial position and results of operations of the City of Costa Mesa, California in accordance with accounting principles generally accepted in the United States of America.

Responsibilities of Management for the Financial Statements The Authority’s 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.
1 458
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 Authority’s ability to continue as a going concern for one year after the date that the financial statements are issued.

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 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, 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 Authority’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 Authority’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
Management has not presented the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information. 2 459

Report on Summarized Comparative Information

We have previously audited the Authority’s 2021 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated December 17, 2021. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2021 is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 30, 2022, on our consideration of the Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 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 Authority’s internal control over financial reporting and compliance.

Irvine, California
December 30, 2022

3 460
2022 2021
ASSETS:

Cash and investments with fiscal agent (Note 2) 4$ 1$ Lease interest receivable 254,763 276,512
Leases receivable (Note 3) 23,110,000 24,850,000
TOTAL ASSETS 23,364,767 25,126,513
LIABILITIES:

Interest payable 254,763 276,512
Noncurrent liabilities:

Due within one year (Note 3) 1,977,767 1,887,767
Due in more than one year (Note 3) 24,124,512 26,102,279 TOTAL LIABILITIES 26,357,042 28,266,558
NET POSITION:

Restricted for debt service 4 1
Unrestricted (2,992,279) (3,140,046)
TOTAL NET POSITION (2,992,275)$ (3,140,045)$
Governmental Activities

COSTA MESA FINANCING AUTHORITY
Statement of Net Position
June 30, 2022
(With comparative totals for June 30, 2021)
See accompanying notes to financial statements.
4 461
Charges Operating Capital
for Grants and Grants and
Expenses Services ContributionsContributions 2022 2021
Governmental Activities:

Interest on Long-term debt 914,783$ - - - (914,783)$ (991,783) Total governmental
activities 914,783$ - - - (914,783) (991,783) General revenues:

Investment income 1,062,553 1,139,508
Total general revenues 1,062,553 1,139,508
Changes in net position 147,770 147,725

NET POSITION AT
BEGINNING OF YEAR (3,140,045) (3,287,770)
NET POSITION AT END OF YEAR (2,992,275)$ (3,140,045) Program Revenues
Functions/Programs
Net (Expenses) Revenues

COSTA MESA FINANCING AUTHORITY
Statement of Activities
Year Ended June 30, 2022
(With comparative totals for the year ended June 30, 2021) See accompanying notes to financial statements.
5 462
2022 2021
ASSETS:

Cash and investments with fiscal agent 4$ 1$ Leases receivable 23,110,000 24,850,000
TOTAL ASSETS 23,110,004$ 24,850,001$
DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE:

DEFERRED INFLOWS OF RESOURCES:

Unavailable lease revenue 23,110,000$ 24,850,000$
TOTAL DEFERRED INFLOW OF RESOURCES 23,110,000 24,850,000 FUND BALANCE:

Restricted for debt service 4 1
TOTAL FUND BALANCE 4 1

TOTAL DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCE 23,110,004$ 24,850,001$
Government Fund
Total

COSTA MESA FINANCING AUTHORITY
Balance Sheet
Governmental Fund
June 30, 2022
(With comparative totals for June 30, 2021)
See accompanying notes to financial statements.
6 463
Fund balances for governmental fund 4$
Amounts reported for governmental activities in the Statement of Net Position are different because:

Accrued interest receivable for the current portion of interest due on lease payments has not been reported in the governmental funds.

Interest receivable 254,763
Long-term liabilities applicable to the Authority's governmental activities are not due and payable in the current period and, accordingly, are not reported as governmental fund liabilities. All liabilities (both current and long-term) are reported in the Statement of Net Position.