Agenda packet — Costa Mesa City Council, February 7, 2023 (part 3 of 3)

Revenue bonds (23,110,000)
Premium on bonds (2,992,279)
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 (254,763)
Revenues relating to leases receivable are measurable but not available and, accordingly, are recorded as unavailable revenue in the governmental funds under the modified accrual basis of accounting. 23,110,000 Net position of governmental activities (2,992,275)$

COSTA MESA FINANCING AUTHORITY
Reconciliation of the Governmental Fund Balance Sheet
to the Statement of Net Position
June 30, 2022
See accompanying notes to financial statements.
7 464
2022 2021
REVENUES:

Other interest 4$ 7$
Lease payments 2,802,549 2,814,501
TOTAL REVENUES 2,802,553 2,814,508
EXPENDITURES:

Debt service:

Principal 1,740,000 1,675,000
Interest 1,062,550 1,139,550
TOTAL EXPENDITURES 2,802,550 2,814,550

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 3 (42)
NET CHANGE IN FUND BALANCE 3 (42)
FUND BALANCE AT BEGINNING OF YEAR 1 43 FUND BALANCE AT END OF YEAR 4$ 1$
Total
Governmental Fund

COSTA MESA FINANCING AUTHORITY
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Fund
Year Ended June 30, 2022
(With comparative totals for the year ended June 30, 2021) See accompanying notes to financial statements.
8 465
Net change in fund balances - total governmental fund 3$ Amounts reported for governmental activities in the Statement of Activities are different because:

The Statement of Net Position includes accrued interest on leases receivable.

The net change in accrued interest for the current period is reported on the Statement of Activities. 254,763
Repayment of long-term principal is an expenditures in the governmental and, thus, has the effect of reducing the fund balances because current funds resources have been used. For the Authority as a whole, however, the principal financial 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 1,740,000
Amortization of bond premium 147,767
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. (254,763)
Revenues relating to leases receivable that do not meet the "availability" criteria for revenue recognition and therefore are not reported as revenue in the funds. (1,740,000)
Change in net position of governmental activities 147,770$

COSTA MESA FINANCING AUTHORITY
Reconciliation of the Governmental Fund 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.
9 466

COSTA MESA 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 Financing Authority (the 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 (commencing with Section 6500) of Chapter 5 of Division 7 of Title of the Government Code of the State of California (the “JPA Act”).

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.

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.
10 467

COSTA MESA FINANCING AUTHORITY
Notes to the Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

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). 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. 11 468

COSTA MESA FINANCING AUTHORITY
Notes to the Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

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:
2017 Lease Revenue Bonds Fund - To account for the accumulation of resources for the payments of debt service for lease revenue bond principal and interest relating to the 2017 Lease Revenue Bonds.

D. Cash and Investments:

Investments are reported in the accompanying financial statements at fair value.

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. 12 469

COSTA MESA FINANCING AUTHORITY
Notes to the Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

E. N et Position:

Restricted 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. Unrestricted net position is the remaining balance of net position.

F. Deferred 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 (reven ue) until that time. The Authority reports unavailable le ase revenue as deferred inflows of resources in the governmental funds.

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:

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. Long Term Obligations:

In the government-wide financial statements, long term debt and other long term obligations are reported as liabilities in the statement of net position. Bond premiums and discounts, as well as prepaid insurance costs related to bond issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount.
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COSTA MESA FINANCING AUTHORITY
Notes to the Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

J. Use 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.

K. Fair Value Measurements:

Certain assets and liabilities are required to be reported at fair value. T he 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.

L. 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.
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COSTA MESA FINANCING AUTHORITY
Notes to the Basic Financial Statements
(Continued)

2. Cash and Investments:

Cash and investments at June 30, 20 22 are classified in the accompanying Statement of Net Position as follows:

Cash and investments with fiscal agent $ 4 Cash and investments held at June 30, 2022 consisted of the following:

Investments:

Money market mutual funds $ 4
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee 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 on the following page identifies the investment types that are generally authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Authority 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.

Maximum Maximum
Maximum Percentage Investment
Authorized Investments Maturity Allowed in One Issuer
United States Treasury Securities None N one None
Federal Agency Securities 1 year None N one
Banker’s Acceptances 30 days None
None
None
Commercial Paper 270 days None N one
Money Market Mutual Funds None N one 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 N one None
State Obligations None N one None
Pre-refunded Municipal Obligations None None None
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COSTA MESA FINANCING AUTHORITY
Notes to the Basic Financial Statements
(Continued)

2. Cash and Investments (Continued):

Information about the sensitivity of the fair values of the Authority’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 Authority’s investments by maturity:

Remaining Maturity (in Months)
12 Months 13 Months
Investment Type or Less or More Total
Money market mutual funds $ 4 $ - $ 4 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 Standard & Poor’s actual rating as of year end for each investment type:

Minimum Legal Rating
Investment Type Rating Total AAA
Money market mutual funds AAA $ 4 $ 4 Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in anyone issuer beyond that stipulated by the California Government Code. No investments in anyone issuer (other than mutual funds and external investment pools) represent 5% or more of total investments by reporting unit (governmental activities or major fund).

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 Authority deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. 16 473

COSTA MESA FINANCING AUTHORITY
Notes to the Basic Financial Statements
(Continued)

3. Long-Term Liabilities:

The following is a summary of changes in long-term liabilities of the Authority for the year ended June 30, 2022:
2017 Lease Revenue Bonds:

On October 1, 2017, the Authority issued $29,735,000 in 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 2.0% to 5.0%. As of June 30, 2022, the principal outstanding is $23,110,000 and the unamortized bond premium balance is $2,992,279.

The lease agreement requires the City to make lease payments to the Authority on each April 1 and October 1 preceding the debt service payment date, commencing April 1, 2018. Lease payments are paid by the City directly to the Trustee.

The Authority’s source of payment on the certificates will be from lease payments received from its lease with the City. This lease receivable has been recorded on the balance sheet of the related debt service fund. Unavailable revenue has been recorded in an equal amount in the fund financial statements because this lease revenue, although measurable, is not considered available to finance expenditures of the fiscal year reported upon. Lease revenues are pledged toward payment of these bonds. The amount of anticipated future lease payments is equal to the amount of future principal and interest installments due on the debt.

Future debt requirements for the 2017 Lease Revenue Bonds are as follows:

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$
Amount Amount Due
Balance at Balance at Due Within Beyond
July 1, 2021 Additions Reductions June 30, 2022 One Year One Year 2017 Lease Revenue
Bonds 24,850,000$ -$ (1,740,000)$ 23,110,000$ 1,830,000$ 21,280,000$ 2017 Bond Premium 3,140,046 - (147,767) 2,992,279 147,767 2,844,512 Total 27,990,046$ -$ (1,887,767)$ 26,102,279$ 1,977,767$ 24,124,512$ 17 474
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 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 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 entity’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.

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.
18 475

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
19 476

COSTA MESA HOUSING

AUTHORITY
(A Component Unit of the
City of Costa Mesa)
Financial Statements
Year ended June 30, 2022
Attachment 7
477

COSTA MESA HOUSING 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 Balance - Governmental Fund 8
Reconciliation of the Governmental Fund Statement of
Revenues, Expenditures and Changes in Fund Balance
to the Statement of Activities 9
Notes to Basic Financial Statements 10 - 28 Required Supplementary Information:

Schedule of Proportionate Share of the Net Pension Liability and Related Ratios 29 - 30 Schedule of Pension Plan Contributions 31 - 32
Schedule of Proportionate Share of OPEB Liability and Related Ratios 33 Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual 34
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 35 - 36 478
INDEPENDENT AUDITOR’S REPORT
Board of Directors
Costa Mesa Housing Authority
Costa Mesa, California
Report on the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and the major fund of the Costa Mesa Housing Authority (Authority), a component unit of the City of Costa Mesa, California, as of and for the year 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 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 opinions.

Emphasis of Matter
As described more fully in Note 1A, the basic 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 conformity with accounting principles generally accepted in the United States of America. Additionally, during the year ended June 30, 2022, the Authority implemented Governmental Accounting Standards Board (GASB) Statement No. 87 Leases. Our opinions are not modified with respect to this matter.

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.
1 479
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
Accounting principles generally accepted in the United States of America require that the schedule of proportionate share of the net pension liability and related ratios, the schedule of pension plan contributions, the schedule of proportionate share of the Other Post Employment Benefit liability and related ratios, and the schedule of revenues, expenditures and changes in fund balance - budget and actual, 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 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 2 480

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.

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.

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

3 481
2022 2021
ASSETS:

Cash and investments (Note 2) 3,448,364$ 3,389,539$ Cash and investments with fiscal agent (Note 2) 22,800 23,652 Due from other governments 546,140 513,081
Rent receivable 58,422 17,297
Interest receivable 6,096 4,940
Loans receivable, net of allowance (Note 3) 608,294 650,674 Lease receivable (Note 6) 1,512,830 -
Capital assets (Note 4):

Not depreciated 2,063,865 2,063,865
Being depreciated, net 2,307,060 2,471,850
TOTAL ASSETS 10,573,871 9,134,898
DEFERRED OUTFLOWS OF RESOURCES:

Pension related (Note 7) 265,290 321,582
OPEB related (Note 8) 138,680 131,732
TOTAL DEFERRED OUTFLOWS OF RESOURCES 403,970 453,314 LIABILITIES:

Accounts payable 777,638 839,142
Accrued liabilities 21,895 18,264
Deposits 22,215 26,592
Net pension liability (Note 7) 1,690,541 2,699,607
OPEB liability (Note 8) 690,181 718,412
TOTAL LIABILITIES 3,202,470 4,302,017
DEFERRED INFLOWS OF RESOURCES:

Lease related (Note 6) 1,506,105 -
Pension related (Note 7) 554,476 4,941
OPEB related (Note 8) 32,591 31,272
TOTAL DEFERRED INFLOWS OF RESOURCES 2,093,172 36,213 NET POSITION:

Investment in capital assets 4,370,925 4,535,715 Restricted for community programs 1,311,274 714,267 TOTAL NET POSITION 5,682,199$ 5,249,982$
Governmental Activities
Costa Mesa Housing Authority
Statement of Net Position
June 30, 2022
(With comparative totals for June 30, 2021)
See accompanying notes to financial statements.
4 482
Operating Capital
Charges Grants and Grants and
Expenses for ServicesContributionsContributions 2022 2021 Governmental Activities:

Community programs 3,691,441$ 338,732$ 1,761,899$ -$ (1,590,810)$ (2,754,534)$ Total governmental
activities 3,691,441$ 338,732$ 1,761,899$ -$ (1,590,810) (2,754,534) General revenues:

Repayment of Successor Agency advance 349,917 381,141 Investment income (loss) (68,124) (2,497)
Other income 27,406 41,466
Transfer from the City of Costa Mesa 1,713,828 1,790,836 Total general revenues and transfers 2,023,027 2,210,946 CHANGE IN NET POSITION 432,217 (543,588)
NET POSITION AT BEGINNING OF YEAR 5,249,982 5,793,570 NET POSITION AT END OF YEAR 5,682,199$ 5,249,982$
Program Revenues
Functions/Programs
Net (Expense) Revenue and
Changes in Net Position
Governmental Activities
Costa Mesa Housing 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.
5 483
2022 2021
ASSETS:

Cash and investments 3,448,364$ 3,389,539$
Cash and investments with fiscal agent 22,800 23,652 Due from other governments 546,140 513,081
Rent receivable 58,422 17,297
Interest receivable 6,096 4,940
Loans receivable, net of allowance 608,294 650,674 Lease receivable 1,512,830 -
TOTAL ASSETS 6,202,946$ 4,599,183$
LIABILITIES:

Accounts payable 777,638$ 839,142$
Accrued liabilities 21,895 18,264
Deposits payable 22,215 26,592
TOTAL LIABILITIES 821,748 883,998
DEFERRED INFLOWS OF RESOURCES:

Lease related 1,506,105
Unavailable revenue 251,833 -
TOTAL DEFERRED INFLOWS OF RESOURCES 1,757,938 -
FUND BALANCE:

Restricted for community programs 3,623,260 3,715,185 TOTAL FUND BALANCE 3,623,260 3,715,185
TOTAL LIABILITIES AND FUND BALANCE 6,202,946$ 4,599,183$ Costa Mesa Housing Authority
Balance Sheet
Governmental Fund
June 30, 2022
(with comparative totals for June 30, 2021)
See accompanying notes to financial statements.
6 484
Fund balance - total governmental fund 3,623,260$
Amounts reported for governmental activities in the Statement of Net Position are different because:

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

Capital assets 5,359,665
Accumulated depreciation (988,740)
Deferred Inflows of Resources
Certain unavailable revenues that do not provide current financial resources are reported as deferred inflows of resources in the funds. 251,833 Pension and OPEB Related Transactions
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 fund liabilities. All liabilities (both current and long-term) are reported in the Statement of Net Position. Also, deferred outflows of resources and deferred inflows of resources related to the long term liabilities do not provide current financial resources and are therefore not presented in the governmental funds:

Deferred outflows of resources related to pensions 265,290 Deferred outflows of resources related to OPEB 138,680
Deferred inflows of resources related to pensions (554,476) Deferred inflows of resources related to OPEB (32,591)
CalPERS pension liability (1,690,541)
OPEB liability (690,181)
Net position of governmental activities 5,682,199$
Costa Mesa Housing Authority
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position
June 30, 2022
See accompanying notes to financial statements.
7 485
2022 2021
REVENUES:

Rental income 338,732$ 396,753$
Repayment of Successor Agency advance 349,917 381,141 Intergovernmental 1,510,066 1,041,662
Investment income (loss) (68,124) (2,497)
Miscellaneous 27,406 41,466
TOTAL REVENUES 2,157,997 1,858,525
EXPENDITURES:

Current:

Community programs 3,963,750 3,574,792
TOTAL EXPENDITURES 3,963,750 3,574,792

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,805,753) (1,716,267)
OTHER FINANCING SOURCES:

Transfer from the City of Costa Mesa 1,713,828 1,790,836 Net change in fund balances (91,925) 74,569
FUND BALANCE - BEGINNING OF YEAR 3,715,185 3,640,616 FUND BALANCE - END OF YEAR 3,623,260$ 3,715,185$
(with comparative totals for June 30, 2021)
Statement of Revenues, Expenditures and Changes in Fund Balance Costa Mesa Housing Authority
Governmental Fund
Year ended June 30, 2022
See accompanying notes to financial statements.
8 486
Net change in fund balances - total governmental fund (91,925)$ Amounts reported for governmental activities in the Statement of Activities are different because:

Capital Related Items
Governmental funds report capital outlay as expenditures.

However, in the Statement of Activities, the cost of those assets are allocated over their estimated useful lives as depreciation expense. This is the amount of depreciation charged to the program in the Statement of Activities in the current period:

Depreciation expense (164,790)
Deferred Inflows of Resources
Certain unavailable revenues that do not provide current financial resources are reported as deferred inflow of resources in the funds. 251,833 Pension
Pension expense reported in the governmental funds includes the annual required contributions. In the Statement of Activities, pension expenses includes the change in the net pension liability, and related changes in pension amounts for deferred outflows of resources and deferred inflows of resources. 403,239
OPEB
OPEB expense reported in the governmental funds includes the annual required contributions. In the Statement of Activities, OPEB expense includes the change in the net pension liability, and related changes in OPEB amounts for deferred outflows of resources and deferred inflows of resources. 33,860 Change in net position of governmental activities 432,217$ Costa Mesa Housing 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.
9 487

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
Year ended June 30, 2022

1. Reporting Entity and Summary of Significant Accounting Policies:

The accounting policies of the Costa Mesa Housing Authority (Authority) conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting and financial reporting principles. The following is a summary of the Authority’s significant accounting policies:

A. Description of the Reporting Entity:

The Authority was established on January 17, 2012, pursuant to City Council Resolution No. 12-3. The primary purpose of the Authority is to promote affordable housing for families of low and moderate income within the City of Costa Mesa, California (City). Pursuant to Assembly Bill 1484, the housing assets and obligations of the former Redevelopment Agency’s Low and Moderate Income Housing Fund were transferred to the Authority. The Authority is an integral part of the reporting entity of the City. The fund of the Authority has been included within the scope of the basic financial statements of the City because the City Council exercises oversight responsibility over the operations of the Authority.

Only the fund 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. Fund Accounting:

The basic accounting and reporting entity is a “fund”. 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. The accounting records of the Authority are organized on the basis of funds. Currently, the Authority only utilizes one fund.

C. Basis of Accounting and Measurement Focus:

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

Government-wide Financial Statements
Government-wide financial statements display information about the Authority as a whole.

All activities of the Authority are classified as governmental activities. 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 nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33.

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 s tatement of activities to present the net cost of each program.

Amounts paid to acquire capital assets are capitalized in the government-wide financial statements, rather than reported as expenditures.

Governmental resources are allocated to and accounted for inthe individual fund based upon the purposes for which it is to be spent and the means by which spending activities are controlled.

Fund financial statements for the Authority’s governmental fund are presented after the government-wide financial statements. These statements display information about the governmental major fund individually and nonmajor funds in aggregate if applicable.

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

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). 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 only current assets and current liabilities 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 sheet in spite of their spending measurement focus.

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 indebtedness are recorded as other financing sources rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures.

D. 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.

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

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 Authority.
12 490

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

Pending Accounting Standards
GASB has issued the following pronouncements that have an effective date subsequent to June 30, 2022, which may impact the 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 Authority’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.

E. Cash and Investments:

Investments are reported in the accompanying financial statements at fair value. 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.

F. Leases:

The Authority is a lessor for leases as detailed in note 6. The Authority recognizes a lease receivable and a deferred inflow of resources in the financial statements.

At the commencement of the lease, the Authority 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. 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.
13 491

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

Key estimates and judgments include how the Authority determines the discount rate it uses to discount the expected lease receipts and payments to present value, lease term and lease receipts.
 The Authority uses the estimated cost of capital rate as the discount rate for leases.
 The lease term includes the noncancellable period of the lease.

The Authority 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.

G. Capital Assets:

Capital assets are recorded at historical cost at the time of purchase. Assets acquired from gifts or contributions are recorded at acquisition value on the date contributed. 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 used in operations are generally depreciated in the government-wide financial statements. It is the Authority’s policy not to depreciate assets in its first year of service. A full year of depreciation is charged at final year of asset life or upon disposal. Depreciation is charged as an expense against operations and accumulated depreciation is reported on the respective statement of net position. The range of lives used for computing depreciation for building improvements and structures is 10 to 20 years.

H. Net Position:

Net position of the Authority can be classified into three components - net investment in capital assets; restricted; and unrestricted. These classifications are defined as follows:

Net investment in capital assets - This component of net position consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of net investment in capital assets. Rather, that portion of the debt is included in the same net position component as the unspent proceeds.

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.

Unrestricted - This component of net position consists of net position that does not meet the definition of “net investment in capital assets” or “restricted”. The Authority has no unrestricted net position.
14 492

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

When both restricted and unrestricted resources are available for use, it is the Authority’s policy to use restricted resources first, then unrestricted resources as they are needed.

I. Deferred Outflows/Inflows of Resources:

In addition to assets, the statement of net position and the governmental fund 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 time. The Authority has two items that qualify for reporting in this category in the statement of net position. The items are deferred outflows related to pensions and OPEB.

In addition to liabilities, the statement of net position and the governmental fund 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 has three items that qualify for reporting in this category in the statement of net position. The items are deferred inflows related to pensions, OPEB and leases.

J. Fund Balance:

Fund balance classifications are defined as follows:

Nonspendable - This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Restricted - This classification includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers or through enabling legislation.

Committed - This classification includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority.

Assigned - This classification includes amounts to be used by the government for specific purposes but do not meet the criteria to be classified as restri cted or committed. In governmental funds, other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed.

Unassigned - The classifications include the residual balance for the government’s general fund and includes all spendable amounts not contained in other classifications. 15 493

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

It is the Authority’s policy that restricted resources will be applied first, followed by (in order of application) committed, assigned, and unassigned resources, in the absence of a formal policy adopted by the Board.

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

Valuation Date June 30, 2020
Measurement Date June 30, 2021
Measurement Period July 1, 2020 to June 30, 2021
L. Other Post Employment Benefits (OPEB):

For purposes of measuring the 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, 2020
Measurement Date June 30, 2021
Measurement Period July 1, 2020 to June 30, 2021
M. Use of Estimates:

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

1. Reporting Entity and Summary of Significant Accounting Policies (Continued):

N. 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.

2. Cash and Investments:

Equity in Cash and Investment Pool of the City of Costa Mesa The Authority does not have a separate bank account; however, the Authority’s cash and investments are maintained in an investment pool managed by the City. The Authority is a voluntary participant in that pool. This pool is governed by and under the regulatory oversight of the Investment Policy adopted by the City Council of the City. The Authority has not adopted an investment policy separate from t hat of the City. The fair value of the Authority’s investment in this pool is reported in the accompanying financial statements at amounts based upon the Authority’s pro-rata share of the fair value calculated by the City for the entire City portfolio. The balance available for withdrawal is based on the accounting records maintained by the City, which are recorded on an original cost basis. At June 30, 2022, the Authority had a total cash balance of $3,471,164, of which $3,448,364 was part of the City’s cash and investment pool and the remaining $22,800 was cash held with a fiscal agent for tenant deposits. 17 495

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

3. Loans Receivable:

Loans receivable as of June 30, 2022 were comprised of the following:

Amount
The first-time homebuyer program provides loans to first-time homebuyers for purchases of homes in the City of Costa Mesa. For loans made before 2007, loan repayments were deferred for 10 years and for loans made in 2007 and after, repayments of the loan are deferred for 30 years. $ 1,477,168
The single-family rehabilitation loan program provides loans to homeowners to make home improvements and repair code
violations. There were 3 loans made under this program in 2009. The loans do not pay interest and are not due until the property is sold.

142,500
The rental rehabilitation program is for deferred loans to owners of multi-family properties to make improvements and repair code violations. There are 3 remaining loans under this program and repayment is deferred until sale, transfer or default. Interest of 4 percent is due on these loans.

151,539
There are 3 loans made to underwrite land to a developer to build 3 single-family homes to be maintained in perpetuity for affordable housing. The Authority maintains enforceable covenants on the property. The loans are to be repaid only upon default of affordable housing covenants.

508,542
There are 2 loans made to eligible homebuyers under the Federal Neighborhood Stabilization Program (NSP) administered by the State of California. The NSP program consists of acquisition, rehabilitation, and subsequent sale of foreclosed homes. Borrowers met income and affordability qualifications set by the HUD HOME Program and California Community Redevelopment law. 181,250
Total loans receivable 2,460,999
Less allowance for doubtful accounts (1,852,705)
Loans receivable, net of allowance for doubtful accounts $ 608,294 18 496

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

4. Capital Assets:

The following is a summary of the capital asset activity for the year ended June 30, 2022:

Depreciation expense of $164,790 was charged to the community programs function on the Statement of Activities.

5. Repayment of Successor Agency Advance
In 2012, all California redevelopment agencies were dissolved, including the City of Costa Mesa Redevelopment agency. In the dissolution process, the State of California Department of Finance (DOF) disallowed a loan in the amount of $9,278,545 from the City’s General Fund to the former Redevelopment Agency as an enforceable obligation. Subsequently, the Department of Finance (DOF) Finding of Completion on May 24, 2013 allowed the placement of these loan agreements on the Recognized Obligation Payment Schedule (ROPS).

The City has adjusted the loan f or repayments and interest additions. The loan repayment, reported on the ROPS, is subject to DOF approval on an annual basis. As of June 30, 2022, the loan balance is estimated to be $3,102,030. The Housing Authority is entitled to receive 20% of the annual repayment. In the current fiscal year, the Housing Authority received $349,917 on this loan.

6. Lease Receivable
Land
On July 1, 1985, the City entered into a 55-year ground lease agreement with Costa Mesa Family Village for three parcels of land. The lease began in July 1985 and will end in October 2039. The lessees are 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 $91,290 of lease revenue during the fiscal year.

Balance at Balance at
July 1, 2021 Additions Deletions June 30, 2022
Capital assets not being depreciated:

Land 2,063,865$ -$ -$ 2,063,865$ Capital assets being depreciated:

Building improvements and structures 3,295,800 - - 3,295,800 Less accumulated depreciation/amortization:

Building improvements and structures (823,950) (164,790) - (988,740) Total capital assets being
depreciated, net 2,471,850 (164,790) - 2,307,060 Capital assets, net 4,535,715$ (164,790)$ -$ 4,370,925$ 19 497

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

7. Defined Benefit Pension Plan (CalPERS):

Plan Description
All qualified permanent and probationary Authority employees are eligible to participate in the City’s Miscellaneous Plan, an agent multiple-employer defined benefit pension plan, administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available r eports that include a f ull description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

For further details regarding this plan, including funding progress, refer to the City of Costa Mesa’s Annual Comprehensive Financial Report.

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. The cost of living adjustments are applied as specified by the Public Employees’ Retirement Law.

The Plan’s 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% Required employee contribution
rates 10.47% 7.00% 7.50%
Required employer contribution
rates 7.41% 9.88% 9.88%
Miscellaneous (Agent Multiple-Employer)
20 498

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

7. Defined Benefit Pension Plan (CalPERS) (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 achange 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 contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. For the year ended June 30, 2022, the Authority’s total contributions for the Miscellaneous Plan were $265,290.

Actuarial Methods and Assumptions Used to Determine Total Pension Liability The June 30, 2020 valuation was rolled forward to determine the June 30, 2021 total pension liability, based on the following actuarial methods assumptions:

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
Postretirement benefit
increase
The lessor of contract COLA or 2.50%
until Purchasing Power Protection
Allowance floor on purchasing power
applies, 2.50% thereafter
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 rate include 15 years of projected mortality improvement using le includes 15 years of mortality improvements 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 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members 21 499

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

7. Defined Benefit Pension Plan (CalPERS) (Continued):
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.

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

Asset Class1
Assumed asset
allocation
Real Return
Years 1 – 10 2
Real Return
Years 11+ 3
Public 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 CAFR, 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
22 500

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

7. Defined Benefit Pension Plan (CalPERS) (Continued):

The following table shows the Authority’s proportionate share of the net pension liability over the measurement period:

Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at: 6/30/2020 (VD) $ 7,852,083 $ 5,152,476 $ 2,699,607 Balance at: 6/30/2021 (MD) 7,369,056 5,678,515 1, 690,541 Net Changes during 2020-21 (483,027) 52 6,039 (1,009,066) The Authority’s net pension liability for the plan is measured as the proportionate share of the net pension liability. The net pension liability of the plan is measured as of June 30, 2021, and the total pension liability for the plan used to calculate the net pension liability was determined by an actuarial valuation of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. The Authority’s proportion of the net pension liability was based on a projection of the Authority’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined.

The Authority’s proportionate share of the net pension liability for the plan as of June 30, 2020 and 2021 was as follows:

Miscellaneous Plan
Proportion – June 30, 2020 2.608%
Proportion – June 30, 2021 2.396%
Change – Increase (Decrease) (0.212%)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage -point lower (6.15 percent) or 1 percentage-point higher (8.15 percent) than the current rate:

Discount
Rate – 1%
(6.15%)
Current
Discount Rate
(7.15%)
Discount
Rate + 1%
(8.15%)
Authority’s proportionate share of the Net
Pension Liability $2,622,483 $1, 690,541 $921,502
Amortization of Deferred Outflows and Deferred Inflows of Resources Under GASB 68, actuarial 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 inflows and deferred outflows to be recognized 23 501

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

7. Defined Benefit Pension Plan (CalPERS) (Continued):
in future pension expense. The amortization period differs depending on the source of the gain or loss:

Net difference between projected and
actual earnings on pension plan
investments
5 year straight-line amortization
All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all members
that are provided with pensions (active, inactive, and
retired) as of the beginning of the measurement
period
Pension Expense, and Deferred Outflows/Inflows of Resources Related to Pensions For the fiscal year ended June 30, 2022, the Authority recognized pension expense of $544,214.

At June 30, 2022, the Authority reported deferred outflows of resources and deferred inflows of resources related to the CalPERS pension as follows:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to the
measurement date $ 265,290 $ -
Differences between expected and actual
experience - ( 21,167)
Net difference between projected and
actual earnings on pension plan
investments -

(533,309)
Totals $ 265,290 $ (554,476)
The Authority reported $265,290 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2023. Other amounts reported as deferred inflows or outflows of resources related to pensions will be recognized as pension expense as follows:

Fiscal Year Ended
June 30:

Deferred
Outflows/(Inflows)
of Resources
2022 $ (151,949)
2023 (126,975)
2024 (128,321)
2025 (147,231)
2026 -
Thereafter -
24 502

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

7. Defined Benefit Pension Plan (CalPERS) (Continued):

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 of0.20%, 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.

8. Other Post-Employment Benefits (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 or more years 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.

Contributions
The contribution requirements of plan members and the Authority are established and may be amended by the City Council. The required contribution is made on a pay-as-you-go basis (i.e., as medical insurance premiums become due). Neither the City nor the Authority has established a trust for the purpose of holding assets accumulated for plan benefits. 25 503

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

8. Other Post-Employment Benefits (OPEB) (Continued):

Actuarial Methods and Assumptions Used to Determine Total OPEB Liability The Authority’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: 2.66% 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 trends based upon Pub-1010 Mortality tables and the most recent generational projection scale MP-2021.

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.

The following table shows the Authority’s proportionate share of the total OPEB liability over the measurement period ended June 30, 2021:

Increase (Decrease)
Total OPEB
Liability
Balance at: June 30, 2020 $ 718 ,412
Balance at: June 30, 2021 690,181
Net Changes during 2020-21 (28,231)
26 504

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

8. Other Post-Employment Benefits (OPEB) (Continued):

The Authority’s total OPEB liability for the plan is measured as the proportionate share of the plan’s total OPEB liability. The total OPEB liability of the plan is measured as of June 30, 2021, and the total OPEB liability for the plan used to calculate the net pension liability was determined by an actuarial valuation of June 30, 2021. The Authority’s proportion of the total OPEB liability was based on a projection of the Authority’s long -term share of contributions to the OPEB plan relative to the projected contributions of all participating employers, actuarially determined. The Authority’s proportionate share of the total OPEB liability for the plan as of June 30, 2021 and 2020 was as follows:

OPEB Plan
Proportion – June 30, 2020 1.142%
Proportion – June 30, 2021 1. 042%
Change – Increase (Decrease) (0.100%)
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the Plan as of the Measurement Date, calculated using the discount rate of 2.19 percent, as well as what the total OPEB liability would be if it were calculated using a discount rate that is 1 percentage-point lower (1.19 percent) or 1 percentage-point higher (3.19 percent) than the current rate:

Discount
Rate – 1%
(1.19%)
Current
Discount Rate
(2.19%)
Discount
Rate + 1%
(3.19%)
Authority’s proportionate share of the total
OPEB liability $801,569 $690,181 $601,503
The following presents the total OPEB liability, as well as what the total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage-point lower or 1 percentage-point higher than the current healthcare cost trend rates:
1% Decrease
(6.75% decreasing
to 4.50%)
Current Healthcare
Cost
Trend Rates
(5.75% decreasing
to 3.50%)
1% Increase
(7.75% decreasing to

5.50%)
Authority’s
proportionate share
of the total OPEB
liability $632,489 $ 690,181 $775 ,566
27 505

COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)

8. Other Post-Employment Benefits (OPEB) (Continued):

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2022, the Authority recognized OPEB income of $14,684. At June 30, 2022, the Authority reported deferred outflows of resources and deferred inflows of resources related to the OPEB plan as follows:

Deferred
Outflows
Deferred
Inflows
of Resources of Resources
OPEB contributions subsequent to
the measurement date $ 19,176 $ -
Differences between expected and
actual differences 12,393 (32,591)
Changes in assumptions 107,111 -
Totals $ 138,680 $ (32,591)
The Authority reported $19,176 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the total OPEB liability in the fiscal year ending June 30, 2023.

Other amounts reported as deferred inflows or outflows of resources related to pensions will be recognized as pension expense as follows:

Fiscal Year Ended
June 30:

Deferred
Outflows/(Inflows)
of Resources
2023 $ 16,573
2024 16, 573
2025 16, 573
2026 16, 573
2027 8, 384
Thereafter 12,237
28 506
Measurement date June 30 2014 2015 2016 2017
Plan's proportion of the net pension liability 0.703% 0.703% 0.703% 1.095% Plan's proportionate share of the net pension liability 536,746$ 561,947$ 632,922$ 1,095,223$ Plan's covered payroll 129,116$ 126,041$ 139,833$ 213,885$ Plan's proportionate share of the net pension liability as a percentage of covered payroll 415.71% 445.84% 452.63% 512.06% Plan's proportionate share of the fiduciary net position as a percentage of the Plan's total pension liability 69.49% 68.26% 64.94% 64.17% Plan's proportionate share of aggregate employer
contributions 36,704$ 42,575$ 45,855$ 75,706$
Notes to schedule:

Benefit changes:

Changes in assumptions:

In 2017, The accounting discount rate reduced from 7.65% to 7.15%.

None in 2019, 2020 and 2021.
* - Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.

GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administration expense.

Last Ten Fiscal Years*
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).

Costa Mesa Housing Authority
Required Supplementary Information
Schedule of Proportionate Share of the Net Pension Liability and Related Ratios CalPERS Miscellaneous Plan
In 2018, demographic assumptions and inflation were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. 29 507
2018 2019 2020 2021

0.831% 2.218% 2.608% 2.396%
783,393$ 2,221,033$ 2,699,607$ 1,690,541$
166,758$ 541,070$ 626,246$ 299,397$
469.78% 410.49% 431.08% 564.65%

66.53% 65.86% 65.62% 77.06%
76,921$ 219,059$ 267,302$ 265,290$
30 508
Fiscal year ended June 30 2015 2016 2017 2018
Contractually required contribution
(actuarially determined) 36,704$ 42,575$ 45,855$ 75,706$ Contributions in relation to the actuarially
determined contributions (36,704) (42,575) (45,855) (75,706) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 126,041$ 139,833$ 213,885$ 166,758$ Contributions as a percentage of covered payroll 29.12% 30.45% 21.44% 45.40%

Notes to schedule:

Valuation date 6/30/20126/30/20136/30/20146/30/2015
Methods and assumptions used to determine contribution rates:

Single and agent employers Entry Age Normal
Amortization method/period For 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. * -
Costa Mesa Housing Authority
Required Supplementary Information
Schedule of Pension Plan Contributions
CalPERS Miscellaneous Plan
Last Ten Fiscal Years*
Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.

Market Value of Assets. For details, see June 30, 2019
Funding Valuation Report.

7.00%, net of pension plan investment and
administrative expense; including inflation.

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.
31 509
2019 2020 2021 2022
76,921$ 219,059$ 267,302$ 265,290$
(76,921) (219,059) (267,302) (265,290)
-$ -$ -$ -$
541,070$ 627,898$ 299,397$ 634,611$

14.22% 34.89% 89.28% 41.80%
6/30/20166/30/20176/30/2018 6/30/2019
32 510
Measurement date June 30 2017 2018 2019 2020 2021
Plan's proportion of the total OPEB liability 0.391% 0.510% 1.065% 1.142% 1.042% Plan's proportionate share of the total OPEB liability 208,922$ 271,334$ 627,570$ 718,412$ 690,181$ Plan's covered payroll 160,415$ 221,304$ 466,770$ 521,271$ 556,337$

Plan's proportionate share of the OPEB liability
as a percentage of covered employee payroll 130.24% 122.61% 134.45% 137.82% 124.06% Plan's proportionate share of the fiduciary net position as a percentage of the Plan's total OPEB liability 0.00% 0.00% 0.00% 0.00% 0.00% Notes to schedule:

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%.

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.

Required Supplementary Information
Costa Mesa Housing Authority
Schedule of Proportionate Share of OPEB Liability and Related Ratios Last Ten Fiscal Years*
33 511
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
REVENUES:

Rental income 370,000$ 370,000$ 338,732$ (31,268)$ 396,753$ Repayment of Successor
Agency advance 381,141 381,141 349,917 (31,224) 381,141 Intergovernmental 1,528,581 1,528,581 1,510,066 (18,515) 1,041,662 Investment income (loss) 23,400 23,400 (68,124) (91,524) (2,497) Miscellaneous - - 27,406 27,406 41,466 TOTAL REVENUES 2,303,122 2,303,122 2,157,997 (145,125) 1,858,525 EXPENDITURES:

Current:

Community programs 4,060,211 5,616,215 3,963,750 1,652,465 3,574,792 TOTAL EXPENDITURES 4,060,211 5,616,215 3,963,750 1,652,465 3,574,792

EXCESS (DEFICIENCY) OF

REVENUES OVER (UNDER)
EXPENDITURES (1,757,089) (3,313,093) (1,805,753) 1,507,340 (1,716,267) Other financing sources:

Transfers from the City
of Costa Mesa 1,713,828 1,713,828 1,713,828 - 1,790,836 Net change in fund balance (43,261) (1,599,265) (91,925) 1,507,340 74,569 FUND BALANCE - BEGINNING OF YEAR 3,715,185 3,715,185 3,715,185 - 3,640,616 FUND BALANCE - END OF YEAR 3,671,924$ 2,115,920$ 3,623,260$ 1,507,340$ 3,715,185$ Costa Mesa Housing Authority
Year ended June 30, 2022
(With Comparative Data for Prior Year)
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Housing Authority Fund
Required Supplementary Information
34 512
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 Housing 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 Housing Authority (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.

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.

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

Irvine, California
December 30, 2022

36 514
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 1

COSTA MESA HOUSING AUTHORITY ANNUAL REPORT

AS HOUSING AUTHORITY AND AS HOUSING SUCCESSOR
FOR FISCAL YEAR 2021-2022 UNDER CALIFORNIA
HEALTH & SAFETY CODE SECTIONS 34176.1 AND 34328

This annual report (Report) of the Costa Mesa Housing Authority (Housing Authority) is prepared under the California Health and Safety Code (HSC), Division 24, Parts 1.8 and

1.85 (Dissolution Law), in particular Section 34176.1 as the housing successor, and under the California Housing Authorities Law, HSC Section 34200, et seq. (HAL), in particular Section 34328 as a housing authority. The Dissolution Law and HAL respectively require preparation of an annual r eport on the housing successor and the housing authority’s activities for the prior fiscal year. This Report details the Housing Authority ’s activities during Fiscal Year (FY) 2021-22 and is intended to satisfy the requirements under both HSC Sections 34176.1 and 34328. More specifically, this Report includes information required about the Low and Moderate Income Housing Asset Fund (LMIHAF) and other information under Section 34176.1(f).

This R eport is based on information prepared by City staff on behalf of the Housing Authority and data contained within the independent financial audit of the LMIHAF (Audit), which is prepared by Davis Farr LLP and accompanies this Report. The Audit is incorporated in the City of Costa Mesa’s Annual Comprehensive Financial Report (ACFR) for FY 2021-22. The City Council and the Housing Authority will review and file the Report in an open meeting in January 2023; upon their review and approval, this Report will be posted on the City’s website www.costamesaca.gov and thereafter appended to the City’s annual update report prepared under Section 65400 of the Government Code.

This Report conforms with and is organized into sections I through XIV, inclusive, under HSC Section 34176.1(f) of the Dissolution Law and Section 34328 of the HAL:

I. Amounts Received and Deposited Under 34191.4(b)(3)(A) . This section provides the total amount of funds paid to the City and the amount deposited into the LMIHAF representing 20% of repayments on the reinstated City/Agency loan per Section 34191.4.

The Department of Finance (D OF) approved a total of $1, 749,586 attributable to the reinstated City/Agency loan under Section 34191.4. The Successor Agency received $1,749,586 in FY 2021-22. Of the $1,749,586, $1,399,669 (representing 80% of $1, 749,586) was due to the City . The remaining balance was deposited into the LMIHAF upon receipt in May 2022, totaling $349,917 (representing 20% of $1,749,586).

II. Amount Deposited into LMIHAF. This section provides the total amount of funds deposited into the LMIHAF in FY 2021-22 and itemized by amounts listed on Recognized Obligation Payment Schedule (ROPS), amounts representing Section 34191.4 deposits, and other amounts deposited into the LMIHAF. • In FY 2021-22, the amount of $349,917 (representing 20% of $1,749,586) was deposited into the LMIHAF;
• $0 was held for items listed on the ROPS; and
• other deposits into the LMIHAF in FY 20 21-22 were: (1) $ 362,445 rental income, (2) $11,259 loan repayments, (3) $ 91,836 investment loss, and (4) 515
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 2 $6,945 in other reimbursements.

The cumulative total of all deposits into the LMIHAF was $638,730 during FY 2021-

22. III. Ending Balance of LMIHAF. This section provides a statement of the balance in the LMIHAF as of the close of FY 2021-22. Any amounts deposited for items listed on the ROPS and amounts representing Section 34191.4 deposits, must be distinguished from the other amounts deposited.

At the close of FY 2021-22 on June 30, 202 2, the ending balance in the LMIHAF was $3,780,628, of which $0 was held for items listed on the ROPS.

IV. Description of Expenditures from LMIHAF. This section provides a description of expenditures made from the LMIHAF during FY 2021-22. The expenditures are to be categorized among (A) administration for monitoring, preserving covenanted housing units; (B) homeless prevention and rapid rehousing services ; and (C) development of housing.

The table below lists and describes FY 2021-22 LMIHAF expenditures by category:

Monitoring
and
Administration
Expenditures
Costs for monitoring, enforcement, and preserving
long-term affordable housing covenants imposed by
the former Costa Mesa Redevelopment A gency
(Former Agency) or the Housing Authority, as
housing successor.

The maximum expe nditure for this category in FY
2021-22 is the greater of (a) 5% of the statutory value of (i) real property owned by the housing successor
and (ii) loans and grants receivable, or (b) $200,000
(plus allowed CPI adjustments).

Based on the valuation listed in Section V,
[lines 6+7 in that table=$4,979,221] for FY 2021-22,
the Housing Authority as housing successor was
authorized to spend up to $248,961 (i.e., 5% of
$4,979,221), but only expended $138,279.

$138,279
Homeless
Prevention
and Rapid
Rehousing
Services
Expenditures
Costs for homeless prevention and rapid rehousing
supportive services for individuals and families who
are homeless or would be homeless without this
assistance.

The housing successor was authorized to spend up
to $250,000 for this category in FY 202 1-22 and
spent $250,000.

250,000

516
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 3 Housing
Development
Expenditures
Costs for housing “development”, which term is
defined to inc lude: (a) new construction, (b)
acquisition and rehabilitation, (c) substantial
rehabilitation, (d) long- term affordability covenants
on multifamily units, and (e) preservation of assisted
affordable housing that is eligible for (i) prepayment, (ii)
termination, or (iii) for which the expiration of
rental restrictions is scheduled to occur within five
years.

The costs in this category represent the o perating
costs for a 30- apartment low and very low income
housing property , which the housing successor
intends to solicit proposals from housing providers
to purchase and extend affordability.

The 30 apartments within eight properties commonly
referred to as James /W. 18th Properties, were
acquired by the City and Housing Authority through
non-judicial foreclosure proceedings in FY 2015-
2016. This acquisition was made in order to
preserve the long-term affordable housing
covenants which were at risk of termination and
potential conversion to market housing.

The eight properties are owned by the Housing
Authority and continue to be operated as affordable
housing units for low and very low income
households/tenants by a profes sional p roperty
management company. The operating costs for the
property include staff salaries and benefits, utilities, supplies, repairs and maintenance, taxes, property
management fees, legal, and consulting costs. The
total amount spent in FY 2021-22 was $185,007.

185,007
Total FY 2021-22 LMIHAF Expenditures $573,286

V. Statutory Value of Assets Owned by Housing Successor. This section provides the statutory value of real property owned by the Housing Authority, as housing successor, the value of loans and grants receivables, and the sum of these two amounts.

Under Dissolution Law and for purposes of this Report, the “statutory value of real property” means the value of properties formerly held by the Former Agency as listed on the housing asset transfer schedule approved by the DOF under Section 34176(a)(2), the value of the properties transferred to the housing successor under Section 34181(f), and the purchase price of properties purchased by the Housing Authority. Further, the value of loans and grants receivable is included in these reported assets held in the LMIHAF.

The following table provides the statutory value of assets owned by the Housing 517
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 4 Authority as of the end of FY 2021-22:

VI. Description of Transfers. This section describes transfers, if any, to another housing successor made in previous fiscal year(s), including whether the funds are unencumbered and the status of projects, if any, for which the transferred LMIHAF will be used. The sole purpose of the transfers must be for development of transit priority projects, permanent supportive housing, regional homeless shelter s, housing for agricultural employees, or special needs housing.

The Housing Authority, as housing successor, did not make any LMIHAF transfers to other housing successor(s) under Section 34176.1(c)(2) during FY 2021-22.

VII. Project Descriptions. This section describes any project for which the Housing Authority, as housing successor, receives or holds property tax revenue under the ROPS and the status of that project.

The Housing Authority, as housing successor, does not receive or hold property tax revenue under a ROPS.

VIII. Status of Compliance with Section 33334.16. As and if applicable, this section provides a status update on compliance with Section 33334.16 for interests in real property acquired by the former redevelopment agency prior to February 1, 2012.

For interests in real property, if any, acquired on or after February 1, 2012, provide a status update on the project.

Section 34176.1 provides that Section 33334.16 does not apply to interests in real property acquired by the Housing Authority, as housing successor, on or after February 1, 2012.

W
ith respect to interests in real property acquired by the Former Agency prior to February 1, 2012, the time periods described in Section 33334.16 shall be deemed to have commenced on the date that the DOF approved the property as a housing asset in the LMIHAF; thus, as to real property acquired by the Former Agency, now held by the Housing Authority as housing successor, in the LMIHAF, the Housing Authority as housing successor, must initiate activities consistent with development (as the term is explained in Section IV and Section 34176.1(a)(3)(D)) of the real property for the purpose for which it was acquired within five years of the date the

1. Cash and Investments $3,448,364

2. Cash and Investments with Fiscal Agent 22,800

3. Interest Receivable 6,095

4. Rent Receivable 16,509

5. Accounts Receivable 291,913

6. 7. Value of Loans and Grants Receivable 608,296
Total Statutory Asset Value $8,764,902
Statutory Value of Real Property Owned by
the Housing Authority
As of June 30, 2022
End of FY 2021-22
4,370,925
518
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 5 DOF approved such property as a housing asset.

In this regard, the Housing Authority as housing successor, did not own any real property acquired for development (to be developed) as of dissolution on February 1, 2012 subject to this limitation so the five-year limitation of Section 33334.16 does not apply.

It is noted that the F ormer Agency held at dissolution, now the Housing Authority holds as landlord/ground lessor, the underlying fee interests in three Ground Leases with Costa Mesa Family Village, a California limited partnership, as tenant/ground lessee (affiliate of Shapell Properties) relating to the existing 72-unit multifamily affordable housing apartment development called Costa Mesa Family Village, located at 1924 and 1981 Wallace Avenue and 2015 Pomona Avenue. The three ground leases end/expire in 2039. Section 33334.16 does not apply to such ground leases and this existing affordable housing development as the subject property was not held for development; it is developed property.

IX. Description of Outstanding Obligations under Section 33413. This section describes outstanding inclusionary and replacement housing obligations, if any, under Section 33413 that remained outstanding prior to dissolution of the former redevelopment agency as of February 1, 2012, along with the Housing Authority’s progress, as housing s uccessor, in meeting those prior obligations, if any, of the former redevelopment agency and how the Housing Authority, as housing successor, plans to meet unmet obligations, if any.

Replacement Housing: Under the Former Agency’s last Implementation Plan in effect prior to dissolution (the 2010-2014 plan), the Former A gency’s replacement housing obligations, if any, under Section 33413(a) were transferred to the Housing Authority as housing successor ; however, the F ormer Agency had no outstanding replacement housing obligations as of dissolution on February 1, 2012.

Inclusionary/Production Housing. Under the F ormer Agency’s last Implementation Plan in effect prior to dissolution (the 2010- 2014 plan) , its inclusionary/production housing obligations, if any, under Section 33413(b) were transferred to the Housing Authority as housing successor ; however, the Former Agency had no outstanding inclusionary/production housing obligations as of dissolution on February 1, 2012.

Therefore, the Housing Authority, as housing successor, has no outstanding replacement or inclusionary/production housing obligations and thus no implementation obligation under Section 33413.

For information, the Former Agency’s Implementation Plan is posted on the City’s website at www.costamesaca.gov
.

X. Income Test. This section provides information required by Section 34176.1(a)(3)(B), or a description of expenditures by income category and restriction for the applicable five -year period, with the time period beginning January 1, 2014 and whether the statutory thresholds have been met. However, the income test is not required until year 2019.
519
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 6 The applicable provisions of Sections 34176.1(a)(3)(A)(B)(C) require that the Housing Authority, as housing successor, must require at least 30% of the LMIHAF to be expended for development of rental housing affordable to and occupied by households earning 30% or less of the Area Median Income (AMI). If the Housing Authority as housing successor, fail s to comply with the extremely-low income requirement in a five-year report ing period , then the provisions of Section 34176.1(B) will apply in each fiscal year following the latest fiscal year following the Report are expended for the development of housing occupied by e xtremely low income households until the housing successor demonstrates compliance with such requirement in a subsequent annual report.

FY 2018- 19 was the end of the initial five- year period under Section 34176.1(a)(3)(B). The Housing Authority’s next five-year report on compliance with Section 34176.1(a)(3)(A) is due in FY 2023-24.

XI. Senior Housing Test. This section provides the percentage of deed-restricted rental housing units restricted to seniors and assisted individually or jointly by the housing successor, its former redevelopment agency, and its host jurisdiction within the previous 10 years in relation to the aggregate number of units of deed- restricted rental housing assisted individually or jointly by the housing successor, its former redevelopment agency and its host jurisdiction within the same 10-year time period.

The housing successor is to calculate the percentage of units of deed-restricted rental housing restricted to seniors and assisted by the housing successor, the Former Agency and/or the City within the previous 10 years in relation to the aggregate number of units of deed-restricted rental housing assisted by the housing successor, the Former Agency, and/or City within the same time period. If this percentage exceeds 50%, then the housing successor cannot expend future LMIHAF funds to assist additional senior housing units until the Housing Authority as housing successor, or City assists and construction has commenced on a number of restricted rental units that is equal to 50% of the total amount of deed- restricted rental units.

As reported in the prior FY 2018-19 annual report, for the 10-year period of January 1, 2004 to January 1, 2014, 9.8% of the funds were expended on assistance to provide senior affordable housing units and 90.2% of the funds were expended on assistance to provide non-senior/family affordable housing units. In particular, 36 senior units with long-term 55-year affordability covenants were established during the previous 10-year period (specifically, the St. John’s Manor Project in 2006).

For the current 10-year period of January 1, 2014 to January 1, 2024 that includes the subject FY 2021-22, the Housing Authority expended no funds ($0) for senior housing thus far ; therefore 0% of funds were expended on development or assistance to develop senior housing units.

XII. Excess Surplus Test. This section provides the amount of excess surplus in the LMIHAF, if any, and the length of time that the housing successor has had excess surplus, and the housing successor’s plan for eliminating the excess surplus.

The term excess surplus is defined in Section 34176.1(d) as: “an unencumbered 520
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 7 amount in the LMIHAF account that exceeds the greater of one million dollars ($1,000,000) or the aggregate amount deposited into the account during the housing successor’s preceding four fiscal years, whichever is greater.” The table below provides the Excess Surplus test for the preceding four years. The LMIHAF does not have an excess surplus.

XIII. I nventory of Homeownership Units. This section provides a summary of covenanted homeownership units assisted by the former redevelopment agency or the housing successor that include equity sharing and repayment provisions, including: (A) number of units; (B) number of units lost to the portfolio in the last fiscal year and the reason for those losses; and (C) any funds returned to the housing successor due to losses or repayments.

This section provides an inventory of homeownership units assisted by the Former Agency and assumed by the Housing Authority as housing successor, that are subject to covenants or restrictions or to an adopted program that protects the Former Agency’s investment of moneys from the Low and Moderate Income Housing Fund per Section 33334.3(f).

Total homeownership inventory as of dissolution on February 1, 2012 (subparagraph (A) below) and inventory, losses, and repayments for the period from February 1, 2012 through June 30, 2022 (subparagraph (B) below) include:

(A) As of dissolution on February 1, 2012, the total number of homeownership units

LMIHAF LMIHAF
July 1, 2021 July 1, 2022
Opening Fund Balance $ 3,715,185 $ 3, 780,628
Less Unavailable Amounts:

Loans Receivable Net (650,674) ( 608,296) Accounts Receivable - ( 291,913) Encumbrances - - Available Housing
Successor Funds (A) 3,064,511 2,880,419
Limitation (Greater of $1,000,000 or four years deposits):

Aggregate Amount Deposited for last four years:
2021-22 N/A $ 638,730
2020-21 804,746 804,746
2019-20 770,962 770,962
2018-19 827,902 827,902
2017-18 687,292 N/ A
Total $ 3,090,902 $ 3, 042,340
Base Limitation $ 1,000,000 $ 1, 000,000
Greater Amount (B) $ 3,090,902 $ 3, 042,340
Excess/Surplus [(A)-(B)] $ - $ - 521
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 8 assisted by the F ormer Agency and had covenants and restrictions of rec ord was 41 units, which included loans and restricted single-family homes assisted by the Former Agency through its (1) First Time Homebuyer (FTHB) Program, (2) Single-Family Rehabilitation (SF Rehab) Program, (3) affordable housing projects with Habitat for Humanity of Orange County, and (4) Neighborhood Stabilization Program.

(B) The total number of homeownership units lost to the Housing Authority ’s portfolio as housing successor between February 1, 2012 through June 30, 2022, along with the reasons for those losses.

Total losses between February 1, 2012 and June 30, 2022: 30 units

Reasons for the units’ losses from the homeownership portfolio:

Principal Repayments: $756,408
Loan Impairment: $1,095,000
Foreclosure: $436,000

Funds returned to the Housing Authority as housing successor, as part of an adopted program that protects the Former Agency’s investment of moneys from the Low and Moderate Income Housing Fund, including loan principal, interest, and equity sharing payments between February 1, 2012 and June 30, 202 2:
$1,184,433

(C) The number of homeownership units lost to the Housing Authority’s portfolio as housing successor in FY 2021-22 and the reason for those losses.

There were no homeownership units lost to the Housing Authority’s portfolio as housing successor in FY 2021-22.

One owner made partial payments on homeownership loans . Principal and interest p ayments received totaled $ 11,259 and were deposited into the LMIHAF.

The funds returned to the Housing Authority as housing successor, as part of an adopted program that protects the Former Agency’s investment of moneys from Low and Moderate Income Housing Fund, included repayments of FTHB program loans. Total principal, interest, and equity sharing payments during FY 2021-22 was $11,259

(D) The Housing Authority as housing successor, has existing co nsulting agreements with: AmeriN ational Community Services, Inc., a Minnesota Corporation (dba AmeriNat) and Farmers State Bank of Hartland, a Minnesota corporation. The agreements are related to certain, but not all, aspects o f administration of the Former A gency’s SF Rehab and FTHB programs that provided second lien mortgages for homeownershi p units. The consulting services include assistance with oversight and administration of amortized loan payments, if any, due; with tracking and calculation of loan balances in the event of payoff; and, other administrative activities for these outstanding SF 522
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2021-2022 Page | 9 Rehab and FTHB loans.

In addition, the Housing Authority retains the services of Keyser Marston Associates, a professional housing economic consultant, and the Housing Authority legal counsels, City Attorney and Authority General Counsel Kimberly Hall Barlow of Jones & Mayer, and Celeste Brady of Stradling Yocca Carlson & Rauth (SYCR). Counsels assist staff in review ing legal issues related to outstanding SF Rehab and FTHB program loans, such as the refinancing of first lien mortgages consistent with SF Rehab and FTHB program refinancing criteria, repayments, impairment analyses, defaults, foreclosures, bankruptcies, renting out part of the home, short sale requests, and other issues that arise in the administration of the former Agency’s loan programs for ownership housing.

XIV. Additional Information: Housing Authority’s Activities for the preceding year (FY 2021-22) under HSC Section 34328.

Without repeating the infor mation presented above in this R eport, the Housing Authority:

(A) continued to monitor and enforce housing assets transferred from the Former Agency to the Housing Authority as housing successor , as well as other Housing Authority (non-housing successor) assets;

(B) continued property management and operation of the James/W.18 th
Properties. See Sections IV. And X. above for more detailed discussion about these properties.

(C) As housing successor under Section 34176.1(a)(2), the Housing Authority may expend up to $250,000 per fiscal year “for homeless prevention and rapid rehousing services for individuals and families who are homeless or would be homeless but for this assistance, including the provision of short -term or medium-term rental assistance, housing relocation, and stabilization services including housing search, mediation, or outreach to property owners, credit repair, security or utility deposits, utility payments, rental assistance for a final month at a location, moving cost assistance, and case management, or other appropriate activities for homelessness prevention and rapid rehousing of persons who have become homeless.” In this regard in FY 20 21-22 and as detailed in this Report, the Housing Authority’s LMIHAF provided partial funding for Community Outreach Workers who assertively work toward placing homeless individuals and families into temporary or permanent housing as it becomes available. Staff addresses the various needs represented by the local homeless population on a daily basis. Further, a part-time Management Analyst maintains the database that Community Outr each Workers and volunteers from varied community groups utilize to streamline their reporting and recordkeeping processes relative to placement of homeless individuals and families into housing.
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Costa Mesa City CouncilFebruary 7, 2023

Costa Mesa City Council
February 7, 2023