1. FY 2022-23 Annual Comprehensive Financial Report — Costa Mesa City Council, February 20, 2024

City Of Costa Mesa, California
FISCAL

YEAR ENDED
JUNE 30, 2023
Annual
Comprehensive
Financial
Report
ATTACHMENT 1

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TY OF COSTA MESA, CALIFORNIA
Annual
Comprehensive
Financial Report
Year

ended June 30, 20
2 3

Prepared

b
y
: Finance
Department

www
.costamesaca.gov

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Annual
Compr
e
hensive
Financial Report

Year ended June 30, 20
2 3

TABLE

CONTENTS

Page

INTRODUCTORY SECTION:

Letter of Transmittal

List of Principal Officials

v
i
i
i

Organizational Chart

GFOA Certificate of
Achievement for Excellence in Financial Reporting

FINANCIAL SECTION:

Independent Auditor
’
s Report

1 Management’s Discussion and Analysis (Required Supplementary

Information)

5 Basic Financial Statements:

Government
-
wide Financial Statements:

Statement of Net Position

1 6

Statement of Activities

1 7

Fund Financial Statements:

Governmental Funds:

Balance Sheet

1 9

Reconciliation of the Balance Sheet to the Statement of

Net Position

2 1

Statement of
Revenues, Expenditures and Changes in Fund

Balances

2 2

Reconciliation of the Statement of Revenues, Expenditures

and Changes in Fund Balances to the Statement of Activities

2 4

Proprietary Funds:

Statement of Net Position

2 5

Statement of Revenues, Expenses and Changes in Net Position

2 6

Statement of Cash Flows

2 7

Fiduciary Funds:

Statement of
Fiduciary
Net Position

2 8

Statement of Changes in
Fiduciary
Net Position

2 9

Notes to the Basic Financial Statements

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Annual
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TABLE OF CONTENTS, (CONTINUED)

Page

Required Supplementary Information:

Miscellaneous Plan:

Schedule of
Changes in the Net Pension Liability and Related Ratios

7 6

Schedule of Contributions

7 8

Police Safety Plan:

Schedule of Changes in the Net Pension Liability and Related Ratios

80 Schedule of Contributions

82 Fire Safety Plan:

Schedule of Proportionate Share of the Net Pension Liability

8 4

Schedule of Contributions

8 6

Police 1% Supplemental Retirement Plan:

Schedule of Changes in the Net Pension Liability and Related Ratios

8 8

Other Post
-
Employment Benefit Plan:

Schedule of Changes in OPEB Liability and Related Ratios

90 Schedule of Revenues, Expenditures and Changes in Fund

Balances
–

Budget and Actual:

General Fund

9 3

Government Grants

Fund

9 5

Gas Tax Fund

9 6

American Rescue Plan Act

Fund

9 7

Notes to Required Supplementary Information

9 8

Supplementary Schedules:

Nonmajor Governmental Funds:

Combining Balance Sheet

10 2

Combining Statement of Revenues, Expenditures and

Changes in Fund Balances

10 6

Schedule of Revenues, Expenditures and Changes in Fund

Balances
–

Budget and Actual:

Nonmajor

Special Revenue Funds
:

HOME Program Fund

1 10

Air Quality Improvement Fund

1 1
1 Community Development Fund

11 2

Supplemental Law Enforcement Services Fund

1 1
3 Rental Rehabilitation Fund

11 4

Narcotics Forfeiture Fund

1 1
5 Local Law Enforcement Block Grant Fund

11 6

Office of Traffic Safety Fund

11 7

Housing Authority Fund

11 8

Major
and

N
onmajor
C
apital
P
rojects
F
unds:

Capital Improvements

1 1
9 Measure “M2” Fund

1 20

Parking Districts Fund

1 2
1 Golf Course

Improvements

Fund

1 2
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TABLE OF CONTENTS, (CONTINUED)

Page

Park Development

Fund

1 2
3 Drainage Fees Fund

1 2
4 Traffic
Impact Fees Fund

1 2
5 Fire System Development Fees Fund

1 2
6 Jack Hammett Sports Complex Fund

1 2
7 Lions Park
Capital Improvements

Fund

1 2
8 Internal Service Funds:

Combining Statement of Net Position

1 30

Combining Statement of Revenues,
Expenses and Changes in

Net Position

1 3
1 Combining Statement of Cash Flows

1 3
2 STATISTICAL SECTION:

Table

Net Position by Component
–

Last Ten Fiscal Years

1 1
3 4

Changes in Net Position
–

Last Ten Fiscal Years

2 13
5 Fund Balances of
Governmental Funds
–

Last Ten Fiscal Years

3 1
3 6

Changes in Fund Balance of Governmental Funds
–

Last Ten Fiscal Years

4 1
3 7

Tax Revenues by Source, Governmental Funds
–

Last Ten Fiscal Years

5 1
3 8

Taxable Sales by Category
–

Last Ten Calendar Years

6 1
3 9

Principal Sales Tax Remitters by Category
–

Current Year and Nine Years Ago
7 1
40 Direct and Overlapping Sales Tax Rates
–

Last Ten Fiscal Years

8 1
4 1

Property Tax Levies and Collections
–

Last Ten Fiscal Years

9 1
4 2

Assessed Value and Estimated Actual Value of

Taxable Property
–

Last Ten Fiscal Years

10 1
4 3

Direct and Overlapping Property Tax Rates
–

Last Ten Fiscal Years

11 1
4 4

Principal Property Taxpayers
–

Current Year and Nine Years Ago

12 1
4 5

Ratio of General Bonded Debt Outstanding

and Legal Debt Margin
–

Last Ten Fiscal Years

13 1
4 6

Ratio
s

of Outstanding Debt by Type
-

Last Ten Fiscal Years

14 1
4 7

Direct and Overlapping Governmental Activities Debt

15 1
4 8

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Annual
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Financial Report

Year ended June 30, 20
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TABLE

CONTENTS,

(CONTINUED)

Table

Page

Demographic and Economic Statistics
–

Last Ten Calendar Years

16 1
4 9

Principal Employers
-

Current Year and Nine Years Ago

17 1
50 Operating Indicators by Function/Program
–

Last Ten Fiscal Years

18 1
5 1

Full Time Equivalent City Government Employees by

Function/Program
–

Last Ten Fiscal Years

19 1
5 2

Capital Asset Statistics by Function/Program
–

Last Ten Fiscal Years

20 1
5 3

INTRODUCTORY SECTION

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

INTRODUCTORY SECTION
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CITY OF COSTA MESA

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

FROM THE OFFICE OF THE FINANCE DIRECTOR —CITY TREASURER

December 21, 2023

Honorable Mayor and Councilmembers:

The Annual Comprehensive Financial Report (ACFR) of the City of Costa Mesa ( the City) for the fiscal year ended June 30, 2023, is hereby submitted. These statements have been prepared in conformity with generally accepted accounting p rinciples (GAAP) and audited in accordance with generally accepted auditing standards by an independent public accounting firm of licensed certified public accountants.

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

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

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

The City’s financial statements for the fiscal year ended June 30, 2023, have been audited by Davis Farr LLP, an independent public accounting firm of licensed certified public accountants.

The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for th e fiscal year ended June 30, 202 3, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and , evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 2023, are fair ly presented in conformity with GAAP. The independent auditor’s report is pre sented as the first component in the financial section of this report.

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

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

PROFILE OF THE GOVERNMENT

The City, incorporated in 1953, has an est imated population of 111,183 and a land area of

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

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

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

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

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

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

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

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

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

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

ECONOMIC CONDITION

During fiscal year 2022 -23, the City continued to demonstrate resilience and strength economically. The City’s local economy has fared better than both the nation and State of California based primarily on the strength of a strong retail base, local busine sses, and the diverse types of industries located within the City.

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Financial results at the end of the fiscal year, along with positive key economic indicators such as unemployment rates, taxable sales, and assessed property values, are indicative of the recent robust improvement to the local economy.

In fiscal year 2022 -23, General Fund revenue, not including transfers, increased by $ 11.9 million or 7.2 percent. This is primarily due to a strong housing market and retail sector.

Home sales activity remained relatively strong in spite of rising interest rates. This was apparent in the increase in the City’s median sales price on single family homes, which increased $185,000 over last year for a median of $1.3 million or 17% increase. Additionally, the City’s overall property assessed valuation increased from added developments and improvements to properties that were prudent during the pandemic . Property tax revenue increased by $4.4 million, or 8.9 percent, over the prior fiscal year as a result. Pent up demand for in-person retail and restaurant visits resulted in a significant increase to sales tax revenue.

Costa Mesa is home to the renowned luxury retail center South Coast Plaza, Metro Pointe, and a variety of brick and mortar st ores. Strong job numbers and low unemployment rates allowed consumption spending, thus sales tax revenue increased by $2.5 million or 3.28 percent.

A recovery in the travel industry also contributed to the increase in general fund revenues. A notable shift from consumer spending to experiences, travel, and leisure, coupled with increases in room rates resulted in an increase of transient occupancy tax (TOT) revenue by $1.5 million to $9.8 million, or 17.5 percent over the prior fiscal year. TOT revenue not only fully rebounded but also surpassed pre -pandemic levels, signaling a recovery in the tourism sector.

General Fund expenditures increased by $9.8 million or 7.0 percent compared to the pri or year. The increase includes growth in the annual required CalPERS contributions and the restoration of staffing to pre -pandemic levels. For fiscal year 202 2-23, the General Fund ended with a net operating positive of $6.4 million including the transfers to the Internal Services Funds for the City’s Capital, Technology, and Equipment Funds; Financing Authority Debt Service Fund for debt service payments; and the Housing Authority for homeless services programs costs. Operating transfers out from the General Fund increased by $5.1 million over the prior fiscal year. The transfers were to fund various capital projects, partial cost of a fire apparatus, and the Housing Element and Visioning Plan. After the net of other financing uses, the General Fund ended w ith an increase of $1.3 million to its fund balance for fiscal year 2022-23.

Fiscal year 2022-23 wasn't without economic headwinds. Record inflation caused by supply chain problems and pandemic -related economic monetary policy, continued to plague the economy. Gas prices reached over $6.30 a gallon and the Federal Reserve Board continued to raise the Federal Funds Rate, which in turn raised the mortgage lending rates to levels not seen since 2000.

The outlook for fiscal year 2023-24 is a subdued one. Growth in the economy is expected to slow. The City is very cautiously expecting a stable outlook for the local economy. The City enjoys a strong, diverse local economy, well -funded emergency reserves, and a solid commitment to delivering top quality services to the community.

MAJOR AND FUTURE DEVELOPMENT INITIATIVES

Major Developments (completed):

Halcyon House (former Symphony Apartments located at 595 Anton Blvd.) – The five-story project consisting of 393 luxury apartment units and retail shops at the corner of Anton Boulevard and Avenue of the Arts was approved in 2015. Construction of Building A was completed in 2022 and Building B was completed early 2023.

Anduril Headquarters (1375 Sunflower Street- former LA Times) – The master plan for the 665,000 square foot office project was approved in August 2017. Construction for the campus is projected to be completed at the end of 2023. The City has worked with Anduril to develop a phased construction and operation plan that has allowed Anduril to occupy the completed buildings onsite. Anduril has been operating onsite since 2021.

Audi Dealership Expansion (1275 Bristol Street) – The site contains an existing two -story, 46,880-square-foot building occupied by automotive dealership (Audi Fletcher Jones). The two-story building addition includes additional ground-level service area (13 bays) and parts storage on the first level and indoor vehicle inventory display and offices on the second level.

In addition, electrical service upgrades for the building addition, as well as additional electric vehicle (EV) charging stations are proposed. The project was completed in 2023.

LUX Apartments (2277 Harbor Boulevard) – The p roject consists of 200 apartment units, including 9 very low-income units. The project was completed in 2023.

Major Developments (approved/under construction):

Project Homekey (Motel 6 site – 2274 Newport Boulevard) – The Motel 6 property located at 2274 Newport Blvd involves the acquisition and two-phase adaptive re-use of an 88-unit motel into permanent housing. All units will be converted to 300-square-foot studio apartments with new kitchenettes, countertops, flooring, paint, fixtures, appliances, and furniture. Additional common areas for residents will include a new outdoor patio, smoking area, dog run, and community garden to encourage social interaction among residents. Pedestrian access at Newport Blvd will b e enhanced, encouraging residents to walk to nearby community and commercial amenities. Aesthetic improvements will include building façade enhancements, public art, and substantial upgrades to existing landscaped areas. This project will be developed in two phases. Phase I will be completed by Winter 2023 and includes conversion of 40 units into housing for individuals earning 30% or less than the Area Median Income, 30 of which are permanent supportive housing units serving homeless veterans and 10 of which are set aside for homeless individuals who meet the Mental Health Services Act (MHSA) eligibility criteria. Construction of Phase II will involve conversion of the remaining units and will commence once funding resources are identified.

Vanguard University (55 Fair Drive) – The university has an approved master plan to replace some of the existing buildings with more modern facilities, provide additional student housing, and replace some surface parking with a parking structure. This amendment reflec ts long range plans for the university and will take several years to complete. The 42,687 square foot 2-story student center is complete. Construction of the perimeter improvements along Fair Drive and Newport Boulevard including new fencing and freestand ing sign have also been completed. Construction continues for the Freed Center, a new 61,006 -square-foot gymnasium and events center which will consist of a multipurpose gymnasium and athletic facility with additional student facilities, anticipated to be completed in 2024.

Avenue of the Arts Hotel Expansion (3350 Avenue of the Arts) – The project is a hotel expansion of an existing 4 diamond hotel in North Costa Mesa. The new master plan includes an expanded parking structure, a new restaurant and hotel lobby, and six levels of 150 new v
hotel rooms. Minor changes have been approved in 2023 to modify the design. C onstruction is anticipated to begin in 2024.

The Plant (765- 767 Baker Street and 2972 Century Place ) – This project consists of the proposed renovation of three existing commercial buildings (containing the former Car Mart and Plant Stand) totaling 19,100 square feet, for retail and restaurant uses surrounding a central courtyard area. In addition, new buildings are proposed consisting of two greenhouse structures which will contain food stall uses, and a four -story mixed use building with 48 residential units, 14 live/work units, and 2,570 square feet of workshop/maker office space above a two-level parking structure containing 170 parking spac es. Additionally, 39 on -site open parking spaces and 34 open parking spaces accessible from Century Place are proposed, for a total of 243 proposed parking spaces. This project was approved by the City Council September 2019.

One Metro West (1683 Sunflow er Avenue) – The project is a mixed -use development that consists of residential, specialty retail, creative office, and recreational uses. The Project is proposed to include up to 1,057 dwelling units (anticipated to be rental units), 25,000 square feet of commercial creative office, 6,000 square feet of specialty retail, and 1.5-acres of public open space. All existing buildings, structures, parking areas, drive aisles, and hardscape/landscape improvements are proposed to be demolished. The proposed development includes three multi-family residential structures with a maximum building height of seven stories; one stand -alone office building up to four stories in height; tenant -serving commercial retail space integrated into one of the residential structure s; open space; landscaping; streetscape improvements; and a Class-I bike trail system on Sunflower Avenue providing access to the Santa Ana River Trail. The proposed Project is subject to Measure Y, as codified in Article 22, Chapter IX of Title 13 (Zoning) of the Costa Mesa Municipal Code. The project was approved by City Council in 2021 through a development agreement .

Commencement of the development is yet to be determined.

Future Development (under review):

Senior Housing Project at Senior Center (Jamboree Housing ENA – 695 West 19th Street) – In 2020 the City Council approved an Exclusive Negotiating Agreement (ENA) to partner with Jamboree Housing Corporation in determining the feasibility, and potential terms, for the right to acquire a long-term leasehold interest in an approximately 0.90-acre portion of the parking lot at the Senior Center property to develop a senior housing project. The conceptual density study plans envision the potential for 60 senior affordable dwelling units (59 plus one manager unit). An application for an Urban Master Plan Screening for the proposed project was submitted with ongoing discussions with the applicant as the City reviews and process the application.

Hive Live (3333 Susan Street) – A General Plan Screening application was processed for Hive Live - The proposed development (“Hive Live”) involves a General Plan Amendment, Zone Change, Specific Plan Amendment, a Development Agreement, Zone Change, and a Tentative Parcel Map. The proposed development is comprised of residential uses and a small resident- serving commercial component. The proposed project is anticipated to be constructed and occupied in three phases. The proposed site plan includes three multifamily residential buildings with integrated parking structures with a total of 1,050 rental units with a proposed site density is 74 dwelling units per acre. Three “wrap” parking structures are proposed with a minimum parking ratio of 1.5 parkin g spaces per unit and would be built in phases concurrently with the residential component of the project. In addition, an approximate 2,500- square-foot resident-serving retail component is proposed on the ground floor.

Fairview Developmental Center – Specific Plan (2501 Harbor) – Fairview Developmental Center (FDC) is a 109-acre property owned by the State of California located at 2501 Harbor in the City of Costa Mesa. The site was developed and previously operated by the State as a residence for developmentally disabled persons, but is now largely vacant. The site has been vi
the subject of discussion between various agencies over the years as to its future potential use and disposition. In anticipation of State’s disposition, the City’s Housing Element included this site as a housing opportunity site that may accommodate an estimated 2,300 housing units. It also included a “program” or future action calling for the City to continue to coordinate with the State to define future uses including establishment of a Specific Plan to allow for residential development at the site consistent with the Housing Element. In December 2022, State and City entered into an agreement to plan for the future reuse of the site pursuant to Senate Bill 188 (Government Code Section 14670.31), which outlines the general terms under which the State of California, through the Department of General Services and the Department of Developmental Services, will collaborate with the City to determine the future of the FDC site. This Gover nment Code Section sets forth the State’s goals and requirements for the disposition of the property and a land use planning process to be conducted by the City for the future use of the property and allocates $3.5 million in funding for that intended purpose.

In Summer of 2023, the City retained PlaceWorks for consultant services to assist in the community outreach efforts, drafting of the Specific Plan (SP) and General Plan Amendment (GPA), and completion of the environmental review process. The FDC - SP will be the basis for all future development applications on the site. Community outreach was initiated in Fall of 2023 and will continue throughout the planning process.

DEBT ADMINISTRATION

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

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

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

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

FINANCIAL REPORTING AWARDS

The Government Finance Officers Association (GFOA) has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022. This was the 25th consecutive year that the City has r eceived this prestigious award. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, the City must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must also satisfy both GAAP and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our June 30, 2023 Annual Comprehensive Financial Report continues to meet the Certificate of Achievement program requirements and it will be submitted to the GFOA to determine its eligibility for another award.

City of Costa Mesa
List of Principal Officials

June 30, 2023

Mayor
John Stephens

City Council
Jeff Harlan
Manuel Chavez
Loren Gameros
Don Harper
Andrea Marr
Arlis Reynolds

City Manager -------------------------------------- --Lori Ann Farrell Harrison City Attorney (Contract) ------------------------------------ Kimberly Barlow Assistant City Manager ---------------------------------------------- --Vacant Deputy City Manager------------------------------------------- --Alma Reyes Development Services Director ----------------------------------- Jennifer Le Finance Director -------------------------------------------------- Carol Molina Information Technology Director ----------------------------------- Steve Ely Parks and Community Services Director ----------------------- Jason Minter Public Services Director ------------------------------------ Raja Sethuraman Fire Chief --------------------------------------------------------- Dan Stefano Police Chief -------------------------------------------------- Ronald Lawrence viii
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/64 /39 /45 /44 /37 /i255/67/60/45 /34 /31 /48 /39 /33 /36 /38 /68 /69 /69 /i255 /63/46/45/34 /53 /45 /36 /43 /32 /i255 /57 /33 /48 /44 /39 /36 /45 /49 /42 /60 /60 /33 /34 /48 /i255 /49 /45 /34 /59 /39 /43 /45 /38 /51 /36 /39/46/31/44 /i255 /49 /45 /34 /59 /39 /43 /45 /38 /19 /13 /70 /15 /1 /14 /i255/71/8/17 /21 /6
/51 /37/46/39/36 /39 /38 /48 /34 /31 /48 /39 /33 /36
/63 /36 /53 /39 /36 /45 /45 /34 /39 /36 /53 /i255 /49 /45 /34 /59 /39 /43 /45 /38 /72 /34 /31 /36 /38 /60 /33 /34 /48 /31 /48 /39 /33 /36 /i255 /49 /45 /34 /59 /39 /43 /45 /38 /30/31/39 /36 /48 /45 /36 /31 /36 /43 /45 /i255 /49 /45 /34 /59 /39 /43 /45 /38 /51 /37/46/39/36 /39 /38 /48 /34 /31 /48 /39 /33 /36
/41/39/48 /32 /i255/41/44/45 /34 /66
/41/33/36 /38 /48 /39 /48 /42 /45 /36 /48 /i255 /49 /45 /34 /59 /39 /43 /45 /38 /57 /33/46/45/44 /45 /38 /38 /36 /45 /38 /38 /i255 /49 /45 /34 /59 /39 /43 /45 /38 /57 /42/46/31/36 /i255 /65 /45 /38 /33 /42 /34 /43 /45 /38 /65 /39 /38 /66 /i255/30/31/36 /31 /53 /45/46/45/36 /48 City of Costa Mesa
Organization Chart
June 30, 2023
ix
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Costa Mesa
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
x
INDEPENDENTAUDITOR’S REPORT

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT

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

Report on the Audit of the Financial Statements

Opinions

We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Costa Mesa (the City), as of and for the year June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter

During the year ended June 30, 2023, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 96: Subscription-Based Information Technology Arrangements. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements

The City’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

1 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for one year after the date that the financial statements are issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

 Exercise professional judgment and maintain professional skepticism throughout the audit.
 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the pension and OPEB schedules, and the budgetary comparison schedules identified as Required Supplementary Information (RSI) in the accompanying table of contents be presented to supplement the basic financial statements.

Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of 2 inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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

Other Information

Management is responsible for the other information included in the Annual Comprehensive Financial Report. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Report on Summarized Comparative Information

We have previously audited the City’s 2022 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated December 30, 2022. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2022 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 21, 2023 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results 3 of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Irvine, California
December 21, 2023
4 MANAGEMENT’S DISCUSSIONAND ANALYSIS

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
MANAGEMENT’S DISCUSSION AND ANAL YSIS
MANAGEMENT’S DISCUSSION AND ANALYSIS

As management of the City of Costa Mesa (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial acti vities for the fiscal year ended June 30, 2023. We encourage all readers to consider information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i–vii of this report.

FINANCIAL HIGHLIGHTS

▪ Assets and deferred outflows of resources of the City ’s primary government exceeded its liabilities and deferred inflows of resources at the close of fiscal year 2023 by $110.9 (net position). Of this amount , $166.2 million (unrestricted net position deficit) primarily resulted from implementations of Governmental Accounting Standards Board (GASB) Statement No s. 68, 71 and 73 for pensions , and GASB Statement No. 75 for Postemployment Benefit Other than Pensions (OPEB). These statements established standards for measuring and recognizing liabilities for defined benefit plans.

▪ In the government-wide financial statements, total net position increased by $59.3 million from the prior fiscal year total of $51.6 million.

▪ In the fund financial statements, the governmental funds reported a combined ending fund balance of $139.9 million, an increase of $22.4 million in comparison with the prior year total of $117.5 million.

▪ At the end of fiscal year 2023, the General Fund’s unassigned fund balance was $15.6 million or 10.4 percent of general fund expenditures of $149.8 million. Unassigned fund balance may be used to meet the government’s ongoing obligations.

▪ At June 30, 202 3, the City reported $332.4 million in pension liabilit ies and $52.4 million in OPEB liabilities.

OVERVIEW OF THE FINANCIAL STATEMENTS

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

Government-Wide Financial Statements

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

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

The statement of activities presents information to show how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows .

Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). 5 Both government-wide financial statements distinguish fun ctions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities) . G overnmental acti vities include general government, p rotection of persons and property, community programs, public services, and interest on long-term debt. The City has no business-type activities or discretely presented component units.

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

Fund Financial Statements

A fund is a grouping of related accounts used to maintain control over resources that have been segregated for spe cific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with fina nce-related legal requirements. All of the City’s funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds

Governmental funds are used to account for essentially the same functions reported as governmental activities in the govern ment-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near - term financing requirements.

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

The City maintains 28 individual governmental funds. Information is presented separately in the governmental funds balance sheet and statement of revenues, expenditures, and changes in fu nd balances for the General, Capital Improvements and Gas Tax funds, all of which are considered to be major funds. Data from the other 25 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non major governmental funds is provided in the form of combining statements elsewhere in this report.

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

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

6 Proprietary Funds

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

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

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

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

Fiduciary Funds

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

Notes to the Basic Financial Statements

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

Other Information

In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City. Required supplementary information can be found on pages 76-98 of this report.

The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information section. Combined and individual fund statements and schedu les can be found on pages 102-128 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

City assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $110.9 million at June 30, 2023, an increase of $59.3 million from 2022.

As in previous years, the City’s net position continue d to reflect the impact from implementations of GASB Statements No. 68, 71 and 73 for pension and GASB 75 for OPEB, all of which account for the City’s defined benefit liabilities. The City’s total defined benefit liability is estimated at $386.5 million on the Statement of Net Position, an increase of $88.8 million as compared to the prior year.

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

At the end of fiscal year 2022-23, the City continued to report positive balances in two out of three categories of net position for the government as a whole, as well as for its separate governmental activities. The unrestricted net position improved by $ 59.6 million, ending the fiscal year with a balance of $ 166.2 million primarily due to implementations of pension and OPEB accounting standards.

Percent
Increase/ Increase/
June 30, 2023 June 30, 2022 (Decrease) (Decrease)
ASSETS:

Current and other assets $217,770,841 $192,540,139 $ 25,230,702 13.10% 287,317,473 279,567,632 7,749,841 2.77%
Total assets 505,088,314 472,107,771 32,980,543 6.99% Deferred outflows of resources 107,892,710 56,137,273 51,755,437 92.19% LIABILITIES:

Current and other liabilities 33,622,613 33,026,449 596,164 1.81% Long-term liabilities 436,113,296 348,415,949 87,697,347 25.17% Total liabilities 469,735,909 381,442,398 88,293,511 23.15% Deferred inflows of resources 32,300,324 95,175,548 (62,875,224) -66.06% NET POSITION:

Net investment in capital assets 258,068,790 249,096,798 8,971,992 3.60% Restricted 19,027,696 28,232,693 (9,204,997) -32.60% Unrestricted (166,151,695) (225,702,393) 59,550,698 -26.38% Total net position $ 110,944,791 $ 51,627,098 $ 59,317,693 114.90%

CONDENSED STATEMENT OF NET POSITION
Capital assets, net of
accumulated depreciation
8 During the fiscal year 2022-23, the City’s total net position increased by $59.3 million.

2023 2022
REVENUES:

Program Revenues:

Charges for services 22,541,044$ 21,962,861$
Operating contributions and grants 19,907,594 14,404,940 Capital contributions and grants 3,905,958 5,528,637 General Revenues:

Taxes:

General Government 32,152,691 31,808,370
Protection of persons and property 76,378,672 98,324,072 Community programs 21,097,340 14,887,015
Public services 13,379,020 21,645,247
Interest on long-term debt 962,189 929,979 Total expenses 143,969,912 167,594,683
Change in net position 59,317,693 14,566,364 NET POSITION, BEGINNING OF YEAR 51,627,098 37,060,734 NET POSITION, END OF YEAR $ 110,944,791 $ 51,627,098

CHANGES IN NET POSITION
Governmental Activities
9 Governmental Activities

During the current year, net position for governmental activities increased $59.3 million from the prior fiscal year ending balance of $51.6 million . Total revenues of $203.3 million were more than expenses and net transfers of $144.0 million. Key factors in the City’s net position included:

▪ Property tax revenue increased by $4.1 million or 8.2 percent. The increase is due to a strong housing market, despite rising interest rates, increase in the City’s single-family homes median sales price, and an increase in overall property assessed valuations from new developments and improvements to properties.

▪ Sales tax increased by $2.7 million or 3.5 percent. Costa Mesa is primarily based on retail commercial business, sales tax from which is the City’s largest revenue source. Sales tax revenues have exceeded pre-pandemic levels. Increased revenues are due to an increase in demand of consumer goods and restaurant visits, and increased prices as a result of inflation.

▪ Operating contributions and grants increased by $5.5 million or 38.2 percent primarily due to one-time American Rescue Plan Act federal stimulus funding received in fiscal year 2021- 22, however, revenue was not recognized because they were unspent in the prior fiscal year.

The City was able to recognize $4.8 million in FY 2022-23.

▪ Transient occupancy tax increased by $1.5 million or 17.5 percent due to an increase in room rates and a shift from consumer spending to experiences, travel, and leisure.

▪ Investment income increased by $5.4 million due to the GASB 31 adjustment.

▪ Overall expenses decreased by $23.6 million or 14.1 percent from fiscal year 2021-22 due to the GASB 68 adjustment.

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS

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

Governmental Funds

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

As of the end of fiscal year 2022-23, the City’s governmental funds reported combined ending fund balance of $139.9 million, an increase of $22.4 million in comparison with the prior fiscal year fund balance of $117.5 million. Of this total amount:

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

▪ $38.4 million represents restricted fund balance which includes amounts that can be spent only for specific purposes stipulated by external sources or through enabling legislation.

10 ▪ $25.1 million represents committed fund balance which includes amounts that can be used only for specific purposes determined by a formal action of the City Council. It includes legislation (City Council action) that can only be overturned by a subsequent council action requiring a voting consensus.

▪ $59.3 million represents assigned fund balance which includes amounts that are designated or expressed by the City Council for certain purposes but do not require formal actions like resolutions or ordinances. City Council, via resolution, delegated the authority to establish, modify, or rescind a fund balance assignment to the Finance Director.

▪ The remaining $17.3 million constitutes unassigned fund balance.

The General Fund is the primary operating fund of the City. At the end of fiscal year 2022-23, the General Fund’s fund balance increased by $1.3 million. While the total fund balance amounted to $59.0 million, the unassigned fund balance was $ 15.6 million. Key factors attributable to the increase in net position include:

▪ Property tax increased by $ 4.4 million or 8.9 percent due to a strong housing market and an increase in overall property assessed valuations.

▪ Sales tax revenues increased by $2.5 million or 3.3 percent from fiscal year 2021-22. This is due to strong job numbers and low unemployment rates which allowed consumption spending to remain solid.

▪ Transient occupancy tax increased by $1.5 million or 17.5 percent due to increased room rates and a steady increase in travel and tourism.

▪ Overall, total revenues in the General Fund increased by $11.9 million or 7.2 percent.

▪ General government and protection of persons and property expenditures increased by $7.6 million in total. As the City implemented measures to resume its normal operations after the shutdown impacts of COVID.

▪ Overall, total expenditures in the General Fund increased by $9.8 million or 7.0 percent over prior fiscal year.

Major Funds Other Than the General Fund

The Capital Improvements Fund had $31.5 million in fund balance at the end of the fisca l year which represents a net increase of $9.7 million or 44.2 percent from the prior fiscal year. The increase in fund balance is mainly attributed to transfers in for various capital improvement projects as well as the true up of 5 percent of General Fund revenues towards capital projects per the City’s Capital Asset Needs Ordinance requirement.

The Government Grants Fund had a fund balance of $0.3 million at the end of the fiscal year which represents a net increase of $1.4 million or 122.9 percent from the prior fiscal year. The increase in fund balance is due to reimbursed grant expenditures incurred in the prior year.

The Gas Tax Fund had a fund balance of $17.6 million at the end of the fiscal year which represents a net increase of $ 2.9 million or 19.8 percent from the prior fiscal year. Gas Tax revenues in the current year were $5.5 million compared to $2.6 million in expenditures.

The American Rescue Plan Act (ARPA) Fund had $258,379 in fund balance at the end of the fiscal year which had a fund balance of $ 50,329 in the prior fiscal year. The increase is due to interest earnings.
11 Proprietary Funds

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

The unrestricted net position of the Internal Service Funds at the end of the fiscal year was $25.3 million. Total net position increased by $8.4 million from the prior fiscal year . The increase in net position is mainly attributed to transfers in for IT infrastructure project s and the self -insurance fund, as well as the true up of 1.5 percent of General Fund revenues to fund the City’s technology needs.

GENERAL FUND BUDGETARY HIGHLIGHTS

During fiscal year 2022-23 the actual revenues were $1.4 million or 0.8 percent higher than the final amended budget. Year over year, sales tax and property tax revenue were $2.5 million and $4.4 million, respectively, higher than prior fiscal year . Additionally, transient occupancy tax and charges for services revenue received increased by $ 1.5 million and $1.9 million, respectively, compared to prior fiscal year.

Actual expenditures were $ 0.6 million or 0.4 percent lower than originally estimated and final adjusted budget.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

The City’s investment in capital assets for its governmental activities (the City has no business - type activities or discretely presented component units) as of June 30, 2023, amounted to $279.8 million net of accumulated depreciation and amortization. The investment in capital assets includes land, building improvements and structures, landscaping and sprinklers, machinery and equipment, intangible assets, park system and facilities, and road and storm drain infrastructur e. The City’s investment in capital assets for the current fiscal year increased by $7.6 million. Major infrastructure asset additions during fiscal year 2022-23 were City Hall Elevator Modernization, Jack Hammett Field Upgrade, Wilson Street Improvement, Bristol Street Storm Drain Diversion Project, various building maintenance projects, various street rehabilitation projects, and other ongoing capital projects. Other assets capitalized included vehicle replacements and a variety of equipment purchases. During the fiscal year, capital assets not being depreciated increased by $7.7 million and capital assets being depreciated or amortized increased by $15.9 million. 12 Construction in progress as of June 30, 202 3 totaled $19.1 million, $7.7 million higher than the previous fiscal year. Generally, as the notice of completion (NOC) is filed on each project, the costs associated with each project will be deleted from the construction in progress capital asset category and added to the appropriate capital asset category in the year the NOC is filed. Construction in progress include some of the following projects with significant commitment balances:

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

Long-Term Debt

At year-end, the City had one outstanding bond issues: the Financing Authority 2017 Lease Revenue Bonds with an outstanding balance of $21.3 million. Additionally, the City had $25.5 million in other outstanding liabilities related to leases, loans, claims, and employee benefits.

Long-term liabilities had a net decrease of $1.3 million, primarily due to a decrease in the City’s outstanding liability claims and employee leave benefits. 2023 2022*
Land $ 34,579,306 $ 34,579,306
Land rights related to streets 29,821,224 29,821,224 Construction in progress 19,137,403 11,423,851 Building improvements and structures 68,072,806 72,060,015 Machinery and equipment 18,357,725 11,358,371 Intangibles 226,556 334,106
Right-to-use-assets 1,014,403 1,362,246 Park system and facilities 9,216,778 6,704,889 Infrastructure- roads 94,574,275 99,147,982 Infrastructure- storm drains 12,316,997 12,968,796 TOTALS $ 287,317,473 $ 279,760,786
Governmental Activities

CAPITAL ASSETS
(NET OF DEPRECIATION)
* Balance was restated to include subscription assets added due to the implementation of GASB 96

CONSTRUCTION PROJECT TOTAL BUDGET SPEND TO DATE

REMAINING

COMMITMENT
Range Remodel/Update 2,448,550 1,444,287 1,004,263 Fairview Road Improvement 405/Adams 1,176,150 94,496 1,081,654 SB Newport Blvd Improvements Mesa Victoria 1,965,652 97,058 1,868,594 Newport NB 22th Bristol SB Bristol Mesa 2,131,786 94,186 2,037,600 Adams Ave Improvement 2,278,862 - 2,278,862 Jack Hammett Sports Complex 2,776,652 2,361,037 415,615 Ketchum-Libolt Park Expansion 1,297,520 6,940 1,290,580 Wilson Street Improvement 1,830,168 1,400,653 429,515 Fire Station #2 2,150,000 33,935 2,116,065 Fire Station #4 5,100,000 - 5,100,000 TOTALS 23,155,340$ 5,532,592$ 17,622,748$

CONSTRUCTION COMMITMENTS
13 Additional information on the City’s long-term debt can be found in notes 8 through 9 on pages 52- 57 of this report.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

During fiscal year 2022-23, the local economy recovered from the pandemic. The City showcased economic resilience, surpassing national and state trends due to robust retail, local businesses, and diverse industries , and strong financial management . Positive indicators like reduced unemployment, increased taxable sales, and higher property values marked significant local economic growth. Looking ahead to fiscal year 2023-24, the city anticipates a slowdown in economic growth, exercising cautious optimism for stability. Supported by a strong economy, robust reserves, and a commitment to quality service delivery, Costa Mesa prepares to navigate the anticipated economic challenges.

REQUESTS FOR INFORMATION

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

• by mail: Finance Department, City of Costa Mesa, P.O. Box 1200, Cos ta Mesa, California, 92628-1200
• by e-mail: [email protected]
• by phone: (714) 754-5243
2023 2022*
Bonds Payable 24,124,512$ 26,102,279$
Other Liabilities 25,483,202 24,756,616
TOTALS 49,607,714$ 50,858,895$

OUTSTANDING DEBT
Governmental Activities
* Balance was restated to include subscription assets added due to the implementation of GASB 96
14 GOVERNMENT-WIDEFINANCIAL STATEMENTS

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

GOVERNMENT-WIDE FINANCIAL STATEMENTS

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

Statement of Net Position

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

Statement of Activities

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

15 Governmental Activities
2023 2022
Assets:

Cash and investments (note 2) 183,666,852$ 157,463,831$ Cash and investments with fiscal agent (note 2) 481,295 460,281 Due from other governments 20,441,133 20,103,936
Accounts receivable 4,495,977 4,183,311
Interest receivable 878,395 382,959
Loans receivable, net (note 5) 496,321 608,294 Rent receivable 372,809 355,664
Leases receivable (note 6) 3,953,933 4,419,068
Inventories 234,360 339,236
Prepaid items 2,749,766 4,223,559
Capital assets (note 7):

Nondepreciable 83,537,933 75,824,381
Depreciable, net of accumulated depreciation 203,779,540 203,743,251 Total assets 505,088,314 472,107,771
Deferred outflows of resources:

Deferred outflows related to pensions (note 11) 96,668,625 42,824,533 Deferred outflows related to OPEB (note 14) 11,224,085 13,312,740 Total deferred outflows of resources 107,892,710 56,137,273 Liabilities:

Accounts payable 7,081,402 9,418,820
Accrued liabilities 4,490,817 3,721,368
Accrued interest payable 251,727 262,935
Retentions payable 546,815 517,407
Deposits payable 3,254,566 2,952,644
Unearned revenue 17,997,286 16,153,275
Long-term liabilities:

Portion due within one year (note 8) 7,710,029 7,258,181 Portion due beyond one year (note 8) 41,897,685 43,409,301 OPEB liability (note 14) 52,376,993 66,254,495
Police retirement 1% supplemental liability (note 12) 1,737,346 1,884,759 Net pension liability (note 11) 332,391,243 229,609,213 Total liabilities 469,735,909 381,442,398
Deferred inflows of resources:

Deferred inflows related to leases (note 6) 3,811,601 4,338,750 Deferred inflows related to pensions (note 11) 12,271,830 87,708,150 Deferred inflows related to OPEB (note 14) 16,216,893 3,128,648 Total deferred inflows of resources 32,300,324 95,175,548 Net position:

Net investment in capital assets 258,068,790 249,096,798 Restricted for:

Protection of persons and property 1,672,814 1,333,365 Community programs 10,118,512 6,796,140
Public services 7,236,370 20,103,188
Unrestricted (166,151,695) (225,702,393)
Total net position 110,944,791$ 51,627,098$

CITY OF COSTA MESA, CALIFORNIA
Statement of Net Position
June 30, 2023
(With Comparative Data for Prior Year)
See notes to financial statements
16 Program Revenue
Operating Capital
Charges for Contributions Contributions
Functions/programs Expenses Services and Grants and Grants 2023 2022 Governmental activities:

General government 34,980,361$ -$ 306,283$ -$ (34,674,078)$ (30,904,940)$ Protection of persons
and property 73,222,044 8,548,513 9,721,551 - (54,951,980) (87,757,663) Community programs 21,336,759 5,440,973 3,936,078 - (11,959,708) (4,300,777) Public services 13,468,557 8,551,558 5,943,681 3,905,958 4,932,640 (1,804,886) Interest on long-term debt 962,189 - - - (962,189) (929,979) Total governmental activities 143,969,910$ 22,541,044$ 19,907,593$ 3,905,958$ (97,615,315) (125,698,245) General revenues:

Taxes:

Property taxes 53,806,587 49,706,079
Sales and use taxes 79,851,289 77,165,533
Transient occupancy tax 9,830,790 8,366,278
Franchise taxes 6,094,232 5,318,541
Business tax 1,907,551 1,468,202
Other intergovernmental, unrestricted 275,292 130,289 Investment income (loss) 1,821,815 (3,609,117)
Miscellaneous 3,345,452 1,718,804
Total general revenues 156,933,008 140,264,609
Change in net position 59,317,693 14,566,364
Net position - beginning of year 51,627,098 37,060,734 Net position - end of year 110,944,791$ 51,627,098$
Changes in Net Position
Revenue and
Net (Expense)

CITY OF COSTA MESA, CALIFORNIA
Statement of Activities
Year ended June 30, 2023
(With Comparative Data for Prior Year)
See notes to financial statements
17 FUND FINANCIALSTATEMENTS

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

FUND FINANCIAL STATEMENTS

GOVERNMENTAL FUNDS
Major Governmental Funds

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

SPECIAL REVENUE FUNDS

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

Gas Tax Fund
Established to account for the receipt and disbursement of funds required to be used for construction and maintenance of the City’s road network system. Financing is provided by the City’s share of State gasoline taxes, including allocations from the Highway Users Tax Account (HUTA) and the Road Maintenance and Rehabilitation Account (RMRA).

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

CAPITAL PROJECTS FUNDS

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

Nonmajor Governmental Funds

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

18 Government
General Grants Gas Tax
Cash and investments 49,067,828$ 9,402,572$ 17,175,492$ Cash and investments with fiscal agents - - - Due from other governments 16,739,461 185,515 689,813 Accounts receivable, net 3,961,743 - - Interest receivable 737,245 6 20,796 Loans receivable, net 257 - - Leases receivables 2,519,207 - - Rent receivable 372,809 - - Due from other funds (note 3) 54,037 - - Inventories 85,157 - -
Prepaid items 373,530 - -
Total assets 73,911,274$ 9,588,093 17,886,101 Accounts payable 4,290,768$ 117,400$ 171,837$ Accrued liabilities 4,252,010 7,843 24,094 Retentions payable - - 85,516 Deposits payable 3,215,658 - - Due to other funds (note 3) - - - Unearned revenue - 9,200,000 - Total liabilities 11,758,436 9,325,243 281,447 Lease related 2,396,776 - -
Unavailable revenue 719,108 - 48,300 Total deferred inflows of resources 3,115,884 - 48,300 Non-spendable:

Prepaid items 373,530 - -
Inventories 85,157 - -
Restricted:

Pension and OPEB 3,178,229 - - Protection of persons and property - 262,850 - Community programs - - - Public services - - 17,556,354 Debt service - - -
Committed 25,125,000 - -
Assigned 13,946,622 - -
Unassigned 16,328,416 - -
Total fund balances 59,036,954 262,850 17,556,354 Total liabilities, deferred inflows of
resources, and fund balances 73,911,274$ 9,588,093$ 17,886,101$

CITY OF COSTA MESA, CALIFORNIA
Balance Sheet
Governmental Funds
June 30, 2023
(With Comparative Data for Prior Year)
Special Revenue
Liabilities:

Deferred inflows of resources:

Fund balances (note 10):

Assets:

See notes to financial statements
19 Special Revenue Capital Projects Nonmajor
American Rescue Capital Governmental
Plan Act Improvements Funds 2023 2022
8,811,314$ 32,291,970$ 29,107,646$ 145,856,822$ 126,170,766$ - - 481,295 481,295 460,281 - 73,503 2,752,841 20,441,133 20,103,936 - - 534,234 4,495,977 4,183,311 12,259 30,745 33,752 834,803 322,989 - - 496,064 496,321 608,294 - - 1,434,726 3,953,933 4,419,068 - - - 372,809 355,664 - - - 54,037 716,536 - - - 85,157 99,047 - - - 373,530 504,500 8,823,573 32,396,218 34,840,558 177,445,817$ 157,944,392$ -$ 730,883$ 645,080$ 5,955,968$ 8,617,649$ - 86 73,524 4,357,557 3,676,450 - 127,227 334,072 546,815 517,407 - - 38,908 3,254,566 2,952,644 - - 54,037 54,037 716,536 8,565,194 - 232,092 17,997,286 16,153,275 8,565,194 858,196 1,377,713 32,166,229 32,633,961 - - 1,414,825 3,811,601 4,338,750 - - 799,939 1,567,347 3,470,423 - - 2,214,764 5,378,948 7,809,173 - - - 373,530 504,500 - - - 85,157 99,047 - - - 3,178,229 3,061,154 258,379 - 1,376,549 1,897,778 1,293,762 - - 9,179,963 9,179,963 5,480,097 - - 6,580,177 24,136,531 19,863,022 - - 7,278 7,278 4 - - - 25,125,000 25,125,000 - 31,538,022 13,142,420 58,627,064 47,408,380 - - 961,694 17,290,110 14,666,292 258,379 31,538,022 31,248,081 139,900,640 117,501,258 8,823,573$ 32,396,218$ 34,840,558$ 177,445,817$ 157,944,392$ Totals
See notes to financial statements
20 Fund balances of governmental funds 139,900,640$
Amounts reported for governmental activities in the Statement of Net Position are different because:

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

Cost of capital assets 669,468,362
Accumulated depreciation/amortization (394,292,476)
Long-Term Debt Transactions
Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities. All liabilities (both current and long-term) are reported in the Statement of Net Position:

Bonds payable (21,279,999)
Premium on bonds (2,844,512)
Loan payable (82,086)
Leases payable (963,502)
Subscription payble (98,348)
Employee benefits leave payable (6,209,276)
Accrued Interest
Accrued liabilities in the Statement of Net Position differ from the amount reported in governmental funds are due to accrued interest on outstanding debt payable. (251,727) Internal Service Funds
Internal Service Funds are used by management to charge the costs of certain activities to individual City funds. The assets and liabilities of the Internal Service Funds are included in governmental activities in the Statement of Net Position because they primarily service governmental activities of the City. 33,131,963 Deferred Inflows of Resources
Certain unavailable revenues that do not provide current financial resources are reported as deferred inflows of resources in the funds. 1,567,347 Pension and OPEB
Amounts regarding the pension plans and OPEB are as follows:

Deferred outflows of resources related to pensions 96,668,625 Deferred outflows of resources related to OPEB 11,224,085 Deferred inflows of resources related to pensions (12,271,830) Deferred inflows of resources related to OPEB (16,216,893) CalPERS pension liability (332,391,243)
OPEB liability (52,376,993)
Police 1% supplemental retirement liability (1,737,346) Net position of governmental activities 110,944,791$

CITY OF COSTA MESA, CALIFORNIA
Governmental Funds
Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2023
See notes to financial statements
21 Government
General Grants Gas Tax
Revenues:

Taxes 151,126,811$ -$ -$
Licenses and permits 6,342,557 - - Charges for services 8,886,692 - - Fines and forfeitures 1,190,281 - - Intergovernmental 4,175,205 2,169,633 5,357,007 Investment income (loss) 640,980 32,753 162,210 Rental income 3,995,450 - -
Miscellaneous 1,282,572 - -
Total revenues 177,640,548 2,202,386 5,519,217 Expenditures:

Current:

General government 36,593,171 13,536 - Protection of persons and property 92,162,287 538,168 - Community programs 12,771,313 130,723 - Public services 7,948,741 111,344 2,616,617 Debt service:

Principal 342,370 - -
Interest and fiscal charges 26,564 - - Total expenditures 149,844,446 793,771 2,616,617 Excess (deficiency) of revenues
over (under) expenditures 27,796,102 1,408,615 2,902,600 Other financing sources (uses):

Transfer in (note 4) - - - Transfer out (note 4) (26,534,995) - - Total other financing sources (uses) (26,534,995) - - Net change in fund balances 1,261,107 1,408,615 2,902,600 Fund balances (deficit) at beginning of year 57,775,847 (1,145,765) 14,653,754 Fund balances at end of year 59,036,954$ 262,850$ 17,556,354$ Special Revenue
Governmental Funds

CITY OF COSTA MESA, CALIFORNIA
Year ended June 30, 2023
(With Comparative Data for Prior Year)
Statement of Revenues, Expenditures, and Changes in Fund Balances See notes to financial statements
22 Special Revenue Capital Projects Nonmajor
American Rescue Capital Governmental
Plan Act Improvements Funds 2023 2022
-$ -$ 357,364$ 151,484,175$ 141,919,878$ - - - 6,342,557 7,331,252 - - 1,268,832 10,155,524 9,030,556 - - 76,487 1,266,768 1,176,357 4,802,856 190,599 9,558,795 26,254,095 18,077,452 208,050 216,228 256,379 1,516,600 (2,767,803) - - 726,933 4,722,383 4,815,577 - 64,585 268,280 1,615,437 1,545,970 5,010,906 471,412 12,513,070 203,357,539 181,129,239 - - 12,564 36,619,271 33,567,585 2,915,000 1,275,395 826,415 97,717,265 90,698,363 - 40,505 6,692,394 19,634,935 16,267,400 - 2,969,206 3,957,882 17,603,790 20,962,292 - - 1,830,000 2,172,370 2,202,563 - - 973,300 999,864 1,095,786 2,915,000 4,285,106 14,292,555 174,747,495 164,793,989 2,095,906 (3,813,694) (1,779,485) 28,610,044 16,335,250 - 13,482,325 8,729,864 22,212,189 13,116,263 (1,887,856) - - (28,422,851) (21,365,113) (1,887,856) 13,482,325 8,729,864 (6,210,662) (8,248,850) 208,050 9,668,631 6,950,379 22,399,382 8,086,400 50,329 21,869,391 24,297,702 117,501,258 109,414,858 258,379$ 31,538,022$ 31,248,081$ 139,900,640$ 117,501,258$ Totals
See notes to financial statements
23 Net changes in fund balances - total governmental funds 22,399,382$ Amounts reported for governmental activities in the Statement of Activities are different because:

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

Capital outlay 18,768,379
Depreciation expense (15,396,870)
Long-Term Debt Transactions
Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Repayment of debt service is reported as an expenditure in governmental funds and, thus, has the effect of reducing fund balances because current financial resources have been used. For the City as a whole, however, the principal payments reduce the liabilities in the Statement of Net Position and do not result in an expense in the Statement of Activities.

Net changes in employee benefits leave payable (624,969) Principal payments - bonds 1,830,000
Principal payments - loans payable 15,392
Principal payments - lease payable 233,912
Principal payments - subscription payable 93,066
Amortization of bond premium 147,767
Pension and OPEB
Pension and OPEB expense reported in the governmental funds include the actual contributions. In the Statement of Activities, pension and OPEB expenses include the change in net pension and opeb liabilities and the related changes in pension and OPEB amounts for deferred outflows of resources and deferred inflows of resources. of resources and deferred inflows of resources.

Net change in pension liability 26,645,795
Net change in OPEB liability (1,299,398)
Accrued Interest
Recording of the current year change of accrued interest on outstanding debt payable. 11,208 Internal Service Funds
Internal Service Funds are used by management to charge the costs of certain activities to individual City funds. The adjustments for Internal Service Funds "close" those funds by charging additional amounts to participating governmental activities to completely cover the Internal Service Funds' costs for the year. 8,397,105 Deferred Inflows of Resources
Certain unavailable revenues that do not provide current financial resources are reported as deferred inflows of resources in the funds. (1,903,077) Change in net position of governmental activities 59,317,692$

CITY OF COSTA MESA, CALIFORNIA
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Year ended June 30, 2023
See notes to financial statements
24 2023 2022
Assets:

Current assets:

Cash and investments 37,810,030$ 31,293,065$
Interest receivable 43,592 59,970
Prepaid items 2,376,236 3,719,059
Inventories 149,203 240,189
Total current assets 40,379,061 35,312,283
Capital Assets:

Construction in progress 1,932,537 1,412,635
Motorized equipment 18,802,993 14,777,717
Other equipment 3,901,560 3,645,870
Accumulated depreciation (12,495,503) (11,881,554) Net capital assets 12,141,587 7,954,668
Total assets 52,520,648 43,266,951
Liabilities:

Current liabilities:

Accounts payable 1,125,434 801,171
Accrued liabilities 133,260 44,918
Notes payable 564,329 325,037
Claims payable 1,134,946 1,379,844
Total current liabilities 2,957,969 2,550,970
Long-term liabilities:

Notes payable 3,738,263 3,061,525
Claims payable 12,692,453 12,919,598
Total long-term liabilities 16,430,716 15,981,123 Total liabilities 19,388,685 18,532,093
Net Position:

Net investment in capital assets 7,838,995 4,568,106 Unrestricted 25,292,968 20,166,752
Total net position 33,131,963$ 24,734,858$
Governmental Activities -
Internal Service Funds

CITY OF COSTA MESA, CALIFORNIA
Proprietary Funds
Statement of Net Position
(With Comparative Data for Prior Year)
June 30, 2023
See notes to financial statements
25 2023 2022
Operating revenues:

Charges for services 10,284,896$ 7,472,134$
Total operating revenues 10,284,896 7,472,134
Operating expenses:

Allocated administrative costs 3,961,064 2,854,592 Depreciation 1,120,805 1,248,411
Fuel and repair parts 1,050,894 1,230,211
Materials and supplies 71,077 65,073
Claims and premiums 3,589,183 3,023,082
Total operating expenses 9,793,023 8,421,369
Operating income (loss) 491,873 (949,235)
Nonoperating revenues (expenses):

Investment income (loss) 305,212 (841,310)
Intergovernmental 159,985 -
Other nonoperating revenue 1,367,944 503,000
Interest expense (121,301) (26,197)
Gain/(loss) on disposal of equipment (17,270) (1,319) Total nonoperating revenues (expenses) 1,694,570 (365,826) Income (loss) before transfers 2,186,443 (1,315,061) Transfers in (note 4) 6,210,662 8,248,850
Change in net position 8,397,105 6,933,789
Net position at beginning of year 24,734,858 17,801,069 Net position at end of year 33,131,963$ 24,734,858$
Internal Service Funds

CITY OF COSTA MESA, CALIFORNIA
Proprietary Funds
Statement of Revenues, Expenses, and Changes in Net Position Year ended June 30, 2023
Governmental Activities -
(With Comparative Data for Prior Year)
See notes to financial statements
26 2023 2022
Cash flows from operating activities:

Cash received from customers and user departments 10,284,896$ 7,472,134$ Cash payments to suppliers for goods and services (6,308,170) (11,023,399) Cash payments to employees for services (2,286,589) (1,685,505) Net cash provided by (used for) operating activities 1,690,137 (5,236,770) Cash flows from noncapital financing activities:

Cash received from other funds 6,210,662 8,248,850 Intergovernmental revenue received 159,985 -
Net cash provided by (used for)
noncapital financing activities 6,370,647 8,248,850 Cash flows from capital and related financing activities:

Principal paid on capital debt (325,038) (135,493) Interest paid on capital debt (121,301) -
Proceeds from note payable 1,241,068 2,049,653
Proceeds from insurance settlement 1,367,944 503,000 Proceeds from sale of capital assets 67,960 - Acquisition of capital assets (4,096,041) (1,440,414) Net cash provided by (used for) capital
and related financing activities (1,865,408) 976,746 Cash flows from investing activities:

Investment income (loss) 321,589 (858,845)
Net cash provided by (used for) investing activities 321,589 (858,845) Net increase (decrease) in cash and cash equivalents 6,516,965 3,129,981 Cash and cash equivalents at beginning of year 31,293,065 28,163,084 Cash and cash equivalents at end of year 37,810,030 $ 31,293,065 $ Reconciliation of operating income (loss) to net cash
provided by (used for) operating activities:

Operating income (loss) 491,873 $ (975,432) $
Adjustments to reconcile operating income (loss)
to net cash provided by (used for) operating activities:

Depreciation 1,120,805 1,248,411
(Increase) decrease in inventories 90,986 (108,595) (Increase) decrease in prepaid items (45,022) (2,062,787) Increase (decrease) in accounts payable 415,196 (196,786) Increase (decrease) in accrued liabilities 88,342 13,501 Increase (decrease) in claims payable (472,043) (3,155,082) Net cash provided by (used for) operating activities 1,690,137$ (5,236,770)$ There were no noncash investing, capital and financing activities during fiscal years ended June 30, 2023.

Internal Service Funds
Governmental Activities -

CITY OF COSTA MESA, CALIFORNIA
Proprietary Funds
Statement of Cash Flows
Year ended June 30, 2023
(With Comparative Data for Prior Year)
See notes to financial statements
27 Successor Agency
to the City of
Costa Mesa
Redevelopment
Agency
Private Purpose Custodial
Trust Fund Fund
Assets:

Cash and cash investments (note 2) 1,368,045$ 637,722$ Accounts receivable - 46
Total assets 1,368,045 637,768
Liabilities:

Loan from City - current (note 18) 1,368,045 - Total liabilities 1,368,045 -
Net Position:

Restricted for:

Individuals, organizations and
other governments - 637,768
Total net position -$ 637,768$

CITY OF COSTA MESA, CALIFORNIA
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2023
(With Comparative Data for Prior Year)
See notes to financial statements
28 Successor Agency
to the City of
Costa Mesa
Redevelopment
Agency
Private Purpose Custodial
Trust Fund Fund
Additions:

Property tax 1,710,056$ -$
Assessments and fees - 34,555
Donations - 167,078
Total additions 1,710,056 201,633
Deductions:

Interest expense 7,695 -
Remittance to others - 721,675
Total deductions 7,695 721,675
Change in net position 1,702,361 (520,042)
Net position at beginning of year (1,702,361) 1,157,810 Net position at end of year -$ 637,768$

CITY OF COSTA MESA, CALIFORNIA
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
Year ended June 30, 2023
(With Comparative Data for Prior Year)
See notes to financial statements
29 NOTES TO THEFINANCIAL STATEMENTS

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies

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

(a) Description of Reporting Entity

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

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

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

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

Costa Mesa Public Financing Authority

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

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

Costa Mesa Housing Authority

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

30 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

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

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

Costa Mesa Financing Authority

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

(b) Basis of Accounting and Measurement Focus

The basic financial statements of the City are composed of the following:

 Government-wide financial statements
 Fund financial statements
 Notes to the basic financial statements

Government-wide Financial Statements

Government-wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business-type activities of the primary government (including its blended component units), as well as its discretely presented component units. The City has no business-type activities or discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the City.

Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting . Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements.

31 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

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

Program revenues include charges for services, special assessments, and payments made by parties outside of the reporting government’s citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the Statement of Activities to present the net cost of each program.

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

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

Fund Financial Statements

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

Fiduciary statements include financial information for agency and private purpose trust funds. Fiduciary funds of the City represent assets held by the City in a custodial capacity for other individuals or organizations.

Governmental Funds

In the fund financial statements, governmental funds are presented using the modified accrual basis of accounting . Revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period.

32 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

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

Sales taxes, property taxes, franchise taxes, motor vehicle in lieu, transient occupancy taxes, grants, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period. Other revenue items are considered to be measurable and available when cash is received by the government.

Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed nonexchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government- mandated and voluntary nonexchange transactions are recognized as revenues when all applicable eligibility requirements have been met.

In the fund financial statements, governmental funds are presented using the current financial resources measurement focus . This means that generally only current assets, current liabilities and deferred inflows of resources are included on their balance sheets. The reported fund balance is considered to be a measure of “available spendable resources.” Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

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

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

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

Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. Proceeds of long-term debt are recorded as other financing sources, rather than a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures. 33 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

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

Proprietary and Fiduciary Funds

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

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

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

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

34 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

(d) Fund Classifications

The City reports the following major governmental funds:

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

Special Revenue Fund

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

Gas Tax - Established to account for the receipt and disbursement of funds required to be used for construction and maintenance of the City’s road network system.

Financing is provided by the City’s share of State gasoline taxes, including allocations from the Highway Users Tax Account (HUTA) and the Road Maintenance and Rehabilitation Account (RMRA).

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

Capital Projects Fund

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

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

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

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

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

Internal Service Funds – The internal service funds are used to finance and account for activities involved in rendering equipment replacement, self-insurance services, and information technology replacement to departments within the City. Costs of 35 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

materials, equipment, and services used are accumulated in these funds and charged to the user departments as such goods are delivered or services rendered.

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

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

(e) Cash and Investments

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

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

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

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

For purposes of the statement of cash flows, cash equivalents are defined as short- term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in 36 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

value because of changes in interest rates. Cash and cash equivalents include all investments with original purchase maturities of three months or less. Cash equivalents also represent the proprietary funds share in the cash and investment pool of the City.

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

(g) Inventories

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

The City uses the consumption method of accounting for inventories.

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

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

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

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

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

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

37 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued) (j) Subscription-Based Information (IT) Arrangements

The City is a participant in subscription-based IT arrangements as detailed in note 9.

The City recognizes a subscription-based IT payable and right to use IT assets in the financial statements. At the commencement of the arrangement, the City initially measures the payable at the present value of payments expected to be paid during the arrangement term. Subsequently, the payable is reduced by the principal portion of payments made. The right to use assets are initially measured at the initial amount of the subscription-based IT payable. Subsequently, the right to use assets are amortized over the life of the arrangement term.
(k) Capital Assets

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

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

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

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

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

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

38 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

(l) Deferred Outflows/Inflows of Resources

The statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred outflows of resources. This financial statement element, deferred outflows of resources , represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expenditure) until that time. The City has two items that qualify for reporting in this category. The items are deferred outflows related to pensions and OPEB.

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

(m) Fund Balances

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

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

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

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

Assigned Fund Balance – This includes amounts that are designated or expressed by the Council, but does not require a formal action like a resolution or ordinance. The Council may delegate the ability to an employee or committee to assign uses of 39 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

specific funds for specific purposes. In June 2011, the City Council passed Resolution 11-27, delegating authority to establish, modify, or rescind a fund balance assignment to the Finance Director.

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

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

Unassigned fund balance is applied last.

(n) Employee Leave Benefits

Eligible employees accumulate up to 26.5 days of vacation each year, depending on the employee’s bargaining unit and length of service, but may not carry over from one year to the next more than the equivalent of one to two (depends on Memorandum of Understanding or Salary Resolution) year’s vacation without prior approval of the respective department head and/or City Manager.

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

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

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

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

These non-current amounts will be recorded as fund expenditures in the year in which they are paid or become due on demand to terminated employees. 40 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

(o) Claims and Judgments

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

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

(p) Pensions

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

Investments are reported at fair value.

GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframe. For this report, the following timeframes are used:

CalPERS Plans
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022

Supplemental Plan
Valuation Date June 30, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 to June 30, 2023

(q) Other Post Employment Benefits (OPEB)

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

41 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(1) Summary of Significant Accounting Policies (Continued)

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

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

(r) Use of Estimates

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

(s) Prior Year Data

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

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

(t) Implementation of New GASB Pronouncement

Governmental Accounting Standards Board has issued Statement No. 96, Subscription-based Information Technology Arrangements (SBITAs) . This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter.

Early application is encouraged. Assets and liabilities resulting from SBITAs should be recognized and measured using the facts and circumstances that existed at the beginning of the fiscal year in which this Statement is implemented.

42 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(2) Cash and Investments

Cash and investments are reported as follows:

Cash and investments at June 30, 2023 consisted of the following:

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

The table below identifies investment types that are authorized for the City by the California Government Code and investment policies of the City. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy Statement of Net Position:

Cash and Investments 183,666,852$
Cash and Investments with Fiscal Agent 481,295
Statement of Fiduciary Net Position:

Cash and Investments 2,005,767
Total cash and investments 186,153,914$
Petty cash on hand 52,200$
Demand deposits 49,979,016
Investments 136,122,698
Total cash and investments 186,153,914$
Authorized Maximum Percentage Investment In
Investments Maturity* of Portfolio* One Issuer*
U.S. Treasury Securities 5 years None None
Federal Agency Securities 5 years None 35%
Municipal Securities 5 years None 5%
Banker’s Acceptances 180 days 40% 5%
Commercial Paper 270 days 25% 5%
Federally Insured Time Deposit 5 Years None None
Non-Negotiable Certificates of Deposit 5 years 20% 5%
Certificate of Deposit Placement Service 5 years 30% None Negotiable Certificates of Deposit 5 years 30% 5%
Repurchase Agreements 1 year 30% None
Medium-Term Corporate Notes 5 years 30% 5%
Money Market Mutual Funds N/A 20% 10%
Asset Backed Securities 5 years 20% 5%
County Pooled Investment Funds N/A 35% None
Local Agency Investment Fund N/A None None
Supranational Securities 5 years 15% 5%
43 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(2) Cash and Investments (Continued)

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

Investments Authorized by Debt Agreements

Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

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

Authorized
Investments

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

Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments, and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

44 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(2) Cash and Investments (Continued)
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations

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

Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type:

* not required to be rated

Investment Type
12 Months
Or Less
13 to 24
Months
25 to 60
Months Total
Federal Agency Securities 5,398,016$ 5,456,886$ 7,044,408$ 17,899,310$ State Investment Pool (LAIF) 73,862,125 - - 73,862,125 U.S. Treasury Securities 1,096,787 5,383,540 14,477,633 20,957,960 Medium-Term Corporate Notes 2,427,245 2,246,210 10,488,313 15,161,768 Asset Backed Securities - 744,504 3,809,437 4,553,941 Money Market Mutual Funds 1,672,883 - - 1,672,883 PARS Section 115 Trust:

Pooled Balanced Index Plus 1,678,229 - - 1,678,229 Held by Trustee:

Money Market Mutual Funds 328,982 - - 328,982 Lehman Brothers Holdings
Inc. Bankruptcy 7,500 - - 7,500 Total 86,471,767$ 13,831,140$ 35,819,791$ 136,122,698$ Minimum Legal
Investment Type Rating AAA AA A Not Rated Total
Federal Agency Securities N/A -$ 17,899,310$ -$ -$ 17,899,310$ U.S. Treasury Securities* N/A - - - 20,957,960 20,957,960 Medium-Term Corporate Notes A - 2,234,106 12,927,662 - 15,161,768 State Investment Pool (LAIF) N/A - - - 73,862,125 73,862,125 Asset Backed Securities AA 4,553,941 - - - 4,553,941 Money Market Mutual Funds AAA 1,672,883 - - - 1,672,883 PARS Section 115 Trust:

Pooled Balanced Index Plus N/A - - - 1,678,229 1,678,229 Held by Trustee:

Money Market Mutual Funds AAA 328,982 - - - 328,982 Lehman Brothers Holdings
Inc. Bankruptcy N/A - - - 7,500 7,500 Total 6,555,806$ 20,133,416$ 12,927,662$ 96,505,814$ 136,122,698$ 45 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(2) Cash and Investments (Continued)

GASB requires the disclosure of more than 5% total investments with a single issuer. At June 30, 2023, the City’s investment in the following single issuers exceeded 5%:

Issuer Investment Type Reported Amount Percentage
FNMA Federal Agency Securities $ 7,979,470 6%

Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits:

The California Government Code requires that a financial institution secure deposits made by the state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit).

The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

Investment in State Investment Pool

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

Investment in Public Agency Retirement Services

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

46 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(2) Cash and Investments (Continued)

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

Fair value measurements for the year ended June 30, 2023 are as follows:

(3) Interfund Receivables and Payables

Interfund receivable and payable balances at June 30, 2023 are as follows:

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

Quoted
Prices
Level 1
Observable
Inputs
Level 2
Unobservable
Inputs
Level 3 Total
Federal Agency Securities -$ 17,899,310$ -$ 17,899,310$ U.S. Treasury Securities - 20,957,960 - 20,957,960 Medium Term Corporate Notes - 15,161,768 - 15,161,768 Asset Backed Securities - 4,553,941 - 4,553,941 Held by Trustee:

Lehman Brothers Holdings Inc.

Bankruptcy - - 7,500 7,500 Investments measured at Fair
Value -$ 58,572,979$ 7,500 $ 58,580,479 State Investment Pool (LAIF)* 73,862,125
Money Market Mutual Funds* 1,672,883
PARS Section 115 Trust:

Pooled Balanced Index Plus* 1,678,229
Held By Trustee:

Money Market Mutual Funds* 328,982
Total Investment Portfolio 136,122,698$
* Not subject to fair value categorization
Receivable Fund Amount
General Fund Nonmajor Governmental Funds 54,037$
Payable Fund
47 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

Transfers In and Out(4)

Transfers in and out for the year ended June 30, 2023 are as follows:

(5)

Allowance for uncollectible accounts are established for various loans.

HOME Program 1,152,446$
Community Development Loan Program 183,695
Rental Rehabilitation Program 234,518
First Time Home Buyer Program 1,522,685
Single Family Rehabilitation Program 142,500
Neighborhood Stabilization Program 115,250
Other Programs 508,799
Total 3,859,893
Less allowance for uncollectible loans (3,363,572)
Loans receivable, net 496,321$
Transfers out Transfers in Total
13,482,325Capital Improvements FundGeneral Fund $ (a1) 6,842,008Nonmajor Governmental FundsGeneral Fund (a2 to a3) 6,210,662Internal Service FundsGeneral Fund (a4) 1,887,856Nonmajor Governmental FundsARPA Fund (b1 to b2) 28,422,851$
48 (a) The General Fund transferred the following:

1. $9,382,325 to the Capital Improvements Capital Projects Fund for capital improvement projects and transfer for 5% CAN Ordinance;

2. $1,638,708 to the Housing Authority for subsidy of homeless program costs , $2,400,000 to the Housing Authority for Element and Visioning; and

3. $2,803,300 to the Financing Authority Debt Service Fund for debt service payments;

4. $6,210,662 to the Internal Service Funds for various equipment and vehicle purchases as well as true up 1.5% per Information Technology Needs Ordinance. (b) The American Rescue Plan Act fund transferred the following:

1. $1,250,000 to the Housing Authority for the rental assistance program and administration for the program; and

2. $637,856 to the Disaster Fund for COVID-19 and winter storm expenditures.

Loans Receivable
The City’s loans receivable at June 30, 2023 by loan programs are as follows:

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(5) Loans Receivable (Continued)

General Fund Loan to the Successor Agency

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

Loan receivable $ 1,368,045
Less allowance for doubtful accounts (1,368,045)
Loans receivable, net $ -

(6) Leases Receivable

Land

On July 1, 1985, the City entered into a 55-year ground lease agreement with Costa Mesa Family Village for use of three parcels of City-owned land. The lease began in July 1985 and will end in October 2039. The lessee is required to make annual fixed payments ranging from $6,750 to $13,500 with an interest rate of 2.015%. As of June 30, 2023, the lease receivable is $1,434,726, and deferred inflows of resources is $1,414,825. The City recognized $108,000 of lease revenue and interest revenue of $29,896 during the fiscal year.

Buildings & Infrastructure

The City entered into 3 leases for use of building and infrastructure assets with lease terms of five years with the option to extend. The lessee is required to make annual fixed payments ranging from $27,376 to $42,083 with interest rates of 2.015%. As of June 30, 2023, the lease receivable is $2,519,207, and deferred inflows of resources is $2,396,776. The City recognized $441,850 of lease revenue and interest revenue of $54,818 during the fiscal year.

49 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(7) Capital Assets

A summary of changes in capital assets is as follows:

Balance at Balance at
July 1, 2022* Additions Deletions June 30, 2023
Capital assets not being depreciated:

Land 34,579,306$ -$ -$ 34,579,306$ Land rights related to streets 29,821,224 - - 29,821,224 Construction in progress 11,423,851 14,651,970 (6,938,418) 19,137,403 Total capital assets not
being depreciated 75,824,381 14,651,970 (6,938,418) 83,537,933 Capital assets being depreciated/amortized:

Building improvements and structures 123,822,077 772,109 - 124,594,186 Landscaping and sprinklers 10,076,675 - - 10,076,675 Automotive equipment 15,075,579 4,617,360 (592,085) 19,100,854 Office furniture 954,586 - - 954,586 Office machines 8,716,708 - - 8,716,708 Other equipment 14,208,971 4,527,058 - 18,736,029 Intangible assets 1,669,343 45,000 - 1,714,343 Right-to-use lease assets 1,434,585 - - 1,434,585 Right-to-use subscription assets 193,154 - - 193,154 Park system and facilities 19,860,513 3,432,371 - 23,292,884 Infrastructure - roads 297,849,925 2,337,379 - 300,187,304 Infrastructure - storm drains 100,851,449 714,760 - 101,566,209 Total capital assets being
depreciated/amortized 594,713,565 16,446,037 (592,085) 610,567,517 Less accumulated depreciation/amortization:

Building improvements and structures (51,762,062) (4,759,318) - (56,521,380) Landscaping and sprinklers (9,519,422) (74,709) - (9,594,131) Automotive equipment (10,330,093) (708,923) 506,857 (10,532,159) Office furniture (657,993) (51,015) - (709,008) Office machines (7,875,138) (251,517) - (8,126,655) Other equipment (9,291,502) (973,672) - (10,265,174) Intangible assets (1,335,237) (152,550) - (1,487,787) Right-to-use lease assets (265,493) (251,266) - (516,759) Right-to-use subscription assets - (96,577) (96,577) Park system and facilities (13,155,624) (920,482) - (14,076,106) Infrastructure - roads (198,701,943) (6,911,086) - (205,613,029) Infrastructure - storm drains (87,882,653) (1,366,559) - (89,249,212) Total accumulated
depreciation/amortization (390,777,160) (16,517,674) 506,857 (406,787,977) Total capital assets being
depreciated/amortized, net 203,936,405 (71,637) (85,228) 203,779,540 Capital assets, net 279,760,786$ 14,580,333$ (7,023,646)$ 287,317,473$ * Balance at July 1, 2022 was restated to include subscription assets added due to the implementation of GASB 96.
50 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(7) Capital Assets (Continued)

Depreciation expense is charged to the following functions for the year ended June 30, 2023:

Governmental activities:

General government $ 1,551,587
Protection of persons and property 3,276,211
Community programs 2,475,296
Public services 9,214,580

Total depreciation expense-governmental activities $16,517,674

The City has active construction projects as of June 30, 2023. The significant projects include the following:

Construction Project Total Budget Spent to Date
Remaining
Commitment
Range Remodel/Update 2,448,550$ 1,444,287$ 1,004,263 Fairview Road Improvement
405/Adam 1,176,150 94,496 1,081,654
SB Newport Blvd Improvements
(Mesa/Victoria) 1,965,652 97,058 1,868,594 Newport Blvd NB 22th Bristol SB
Bristol Mesa 2,131,786 94,186 2,037,600 Adams Ave Improvement 2,278,862 - 2,278,862 Ketchum-Libolt Park Expansion 1,297,520 6,940 1,290,580 Jack Hammett Sports Complex 2,776,652 2,361,037 415,615 Wilson Street Improvement 1,830,168 1,400,653 429,515 Fire Station #2 2,150,000 33,935 2,116,065 Fire Station #4 5,100,000 - 5,100,000 Total 23,155,340$ 5,532,592$ 17,622,748$
51 (8)

Long-Term Liabilities(9)

Costa Mesa Financing Authority Bonds - 2017 Lease Revenue Bonds

On October 1, 2017, the Costa Mesa Financing Authority issued $29,735,000 of 2017 Lease Revenue Bonds to finance certain capital improvements of the City of Costa Mesa and to advance refund $16,765,000 of outstanding Costa Mesa Public Financing Authority 2007 Certificates of Participation (2007 Certificates). The bond issue also included a bond premium of $3,694,172. The bonds mature from October 1, 2018 through October 1, 2042 in annual installments ranging from $570,000 to $2,220,000. Interest is payable semi-annually on April 1 and October 1 of each year, commencing on April 1, 2018 at a rate ranging from 2% to 5%. As of June 30, 2023, the principal outstanding is $21,280,000 and the unamortized bond premium balance is $2,844,512.

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

Due
Balance at Balance at Within One
July 1, 2022* Additions Reductions June 30, 2023 Year
23,110,000$ -$ (1,830,000)$ 21,280,000$ 1,920,000$ 2,992,279 - (147,767) 2,844,512 147,767 26,102,279 - (1,977,767) 24,124,512 2,067,767 236,929 - (75,502) 161,427 78,939 938,914 - (136,839) 802,075 144,297 21,571 - (21,571) - - 97,478 - (15,392) 82,086 15,391 191,414 - (93,066) 98,348 94,773 14,299,442 1,602,104 (2,074,148) 13,827,398 1,134,946 1,336,909 - (137,978) 1,198,931 140,509 2,049,652 - (187,059) 1,862,593 190,829 - 400,000 - 400,000 74,727 - 841,068 - 841,068 158,264 -
5,584,307 5,198,635 (4,573,666) 6,209,276 3,609,587 24,756,616 8,041,807 (7,315,221) 25,483,202 5,642,262 50,858,895$ 8,041,807$ (9,292,988)$ 49,607,714$ 7,710,029$ *Balance at July 1, 2022 has been restated to include leases payable due to the implementation of GASB 96. 52 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023
Changes in Long-Term Liabilities
A summary of changes in long-term liabilities in primary government for the year ended June 30, 2023 is as follows:

Bonds payable:

Financing Authority
2017 Lease Revenue
Bonds
Unamortized premium
Total bonds payable
Other liabilities:

Lease payable - Facility
Lease payable - Warehouse
Lease payable - Office Trailer
Loans payable
SBITA payable - Microsoft
Claims payable
Fire Truck Note payable
Mobile Command and Fire
Pumper Note payable
Police Armored Vehicle
Finance Lease
Ambulances Finance Lease
Employee leave
benefits payable
Total other liabilities
Total

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(9) Long-Term Liabilities (Continued)

The annual debt service requirements for the bonds as of June 30, 2023 are as follows:

Leases Payable

Community Service Facility

On July 1, 2012, the City entered into a 13-year lease agreement for the use of a community service facility. The total lease liability is $309,105 at 2.20% interest. As of June 30, 2023, the value of the lease liability is $161,427. The City is required to make annual payments ranging from $78,976 to $84,304. The value of the right-to- use asset is $309,105 and had an accumulated amortization of $154,553 as of June 30, 2023.

The future principal and interest payments as of June 30, 2023, are as follows:

Warehouse

On May 17, 2021, the City entered into a seven-year lease agreement for the use of a warehouse. The total lease liability is $1,068,577 at 2.015% interest. As of June 30, 2023, the value of the lease liability is $802,075. The City is required to make monthly principal and interest payments of $12,500. The value of the right-to-use asset is $1,068,577 and had an accumulated amortization of $305,304 as of June 30, 2023.

Year
Ending
June 30 Principal Interest Total
2024 78,939$ 3,551$ 82,490$
2025 82,488 1,815 84,303
Total 161,427$ 5,366 $ 166,793 $
Year
Ending
June 30 Principal Interest Total
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 570,000 499,800 1,069,800
2029 - 2033 3,320,000 2,029,000 5,349,000 2034 - 2038 4,185,000 1,166,531 5,351,531 2039 - 2043 4,935,000 411,206 5,346,206 Total 21,280,000$ 7,014,737 $ 28,294,737 $
Lease Revenue
53 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(9) Long-Term Liabilities (Continued)

The future principal and interest payments as of June 30, 2023, are as follows:

Subscription-Based Information Technology Arrangements (SBITAs)

Microsoft – Software One

On September 1, 2021, the City entered into a three-year subscription-based IT arrangement for the use of software. The total lease liability is $191,414 at 1.834% interest. As of June 30, 2023, the value of the SBITA liability is $98,348. The City is required to make annual payments of $96,577. The value of the right-to-use asset is $193,154 and had an accumulated amortization of $96,577 as of June 30, 2023.

The future principal and interest payments as of June 30, 2023 are as follows:

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

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

Year
Ending
June 30 Principal Interest Total
2024 144,297$ 14,835 $ 159,132 $
2025 152,052 11,856 163,908
2026 160,099 8,717 168,816
2027 168,466 5,414 173,880
2028 177,161 1,939 179,100
Total 802,075$ 42,761 $ 844,836 $
Year
Ending
June 30 Principal Interest Total
2024 94,773$ 14,835 $ 111,412 $
2025 3,575 66 3,641
Total 98,348$ 14,901 $ 115,053 $
54 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

Long-Term Liabilities (Continued)(9)

The annual debt service requirements for loans payable as of June 30, 2023 are as follows:

Firetruck Note Payable

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

The annual debt service requirements for the note as of June 30, 2023 is as follows:

Year
Ending
June 30 Principal Interest Total
140,5092024 21,988 $ 162,497 $ $
143,0862025 19,411 162,497
145,7102026 16,787 162,497
148,3822027 14,115 162,497
151,1032028 11,394 162,497
470,1412029 - 2031 17,349 487,490
1,198,931Total $ 101,044 $ 1,299,975 $
Year
Ending
June 30 Principal Total
2024 15,391$ 15,391$
2025 15,391 15,391
2026 15,391 15,391
2027 15,391 15,391
2028 15,391 15,391
2029 5,131 5,131
Total 82,086$ 82,086$
55 Mobile Command Center and Fire Pumper Note Payable
On January 7, 2022, the City entered into a Master Lease – Purchase Agreement and financed the purchase of a Mobile Command Center and a Fire Pumping Engine for $2,049,652. The note matures annually on March 7th of each year with annual payments of $228,360. The note bears an interest rate of 2.0150% per annum.

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

Long-Term Liabilities (Continued)(9)

The annual debt service requirements for the note as of June 30, 2023 is as follows:

Ambulances Note Payable

On August 16, 2022, the City entered in a Master Lease – Purchase Agreement and financed the purchase of four CCL150 Type III Ambulances for $841,068. The lease payment is due annually on September 16th of each year with annual payments of $186,645. The note bears an interest rate of 3.670% per annum.

Year
Ending
June 30 Principal Interest Total
190,8292024 37,531 $ 228,360 $ $
194,6742025 33,686 228,360
198,5962026 29,763 228,359
2027 202,598 25,762 228,360
206,6812028 21,679 228,360
869,2152029 - 2032 44,224 913,439
1,862,593Total $ 192,645 $ 2,055,238 $
Year
Ending
June 30 Principal Interest Total
74,7272024 13,640 $ 88,367 $ $
77,2752025 11,092 88,367
79,9102026 8,457 88,367
82,6352027 5,732 88,367
85,4532028 2,913 88,366
400,000Total $ 41,834 $ 441,834 $
56 Police Armored Vehicle Note Payable
On August 15, 2022, the City entered in a Master Lease – Purchase Agreement and financed the purchase of a Police Bearcat Vehicle for $400,000. The lease payment is due annually on August 17th of each year with annual payments of $88,367. The note bears an interest rate of 3.410% per annum.

The annual debt service requirements for the finance lease as of June 30, 2023 is as follows:

CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(9) Long-Term Liabilities (Continued)

The annual debt service requirements for the finance lease as of June 30, 2023 is as follows:

(10) Fund Balances

Fund balance consisted of the following at June 30, 2023:

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

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

Year
Ending
June 30 Principal Interest Total
2024 158,264 $ 28,381 $ 186,645 $
2025 161,586 25,059 186,645
2026 167,516 19,129 186,645
2027 173,664 12,981 186,645
2028 180,038 6,605 186,643
Total 841,068 $ 92,155 $ 933,223 $
Government Gas Tax
American
Rescue Capital Non-Major
General Grants Fund Plan Act Fund Improvements Funds
Nonspendable:

Prepaid items 373,530 $ - $ - $ - $ - $ - $ Inventories 85,157 - - - - - Restricted for:

Pension and OPEB 3,178,229 - - - - - Protection of persons and property - 262,850 - 258,379 - 1,376,549 Community programs - - - - - 9,179,963 Public services (1) - - 17,556,354 - - 6,580,177 Debt service - - - - - 7,278 Committed for:

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

Compensated absences 6,209,276 - - - - - Police Retirement 1% Supplemental 1,737,346 - - - - - Workers compensation 2,000,000 - - - - - Facilities reserve 2,000,000 - - - - - Strategic plan projects 2,000,000 - - - - - Protection of persons and property - - - - - 642,253 Public services - - - 31,538,022 12,500,167 Unassigned 16,328,416 - - - - 961,694 Total Fund Balance 59,036,954 $ 262,850 $ 17,556,354$ 258,379 $ 31,538,022$ 31,248,081 $ Major Funds
57 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(10) Fund Balances (Continued)

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

The following funds had deficits at June 30, 2023:

Nonmajor Governmental Funds:

Special Revenue Funds:

Office of Traffic Safety $ (7,895)

(11) Defined Benefit Pension Plans

(a) General Information about the Pension Plans

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

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

Plan Descriptions

All qualified permanent and probationary employees are eligible to participate in the City’s separate Miscellaneous and Police Safety Plans, agent multiple-employer defined benefit pension plans and the Fire Safety cost sharing plans. The plans are administered by CalPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Miscellaneous Police Safety Fire Safety
1%
Supplemental Total
Net pension liability (107,568,266)$ (136,537,780) $ (88,285,197) $ - $ (332,391,243)$ 1% supplemental liability - - - (1,737,346) (1,737,346) Deferred outflows of
resources - pension 27,659,249 33,038,702 35,970,674 - 96,668,625 Deferred inflows of
resources - pension (1,612,741) (3,807,714) (6,851,375) - (12,271,830) Pension expense (credit) 10,839,863 11,611,651 14,762,195 50,952 37,264,661 58 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

Benefits Provided

CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least 5 years of service.

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

The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit.

Safety members can receive a special death benefit if the member dies while actively employed and the death is job-related. Fire members may receive the alternate death benefit in lieu of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:

Prior to On or After On or After
Hire Date March 11, 2012 March 11, 2012 January 1, 2013 Benefit formula 2.5% @55 2.0% @60 2% @62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 55 50 - 63 52 - 67
Monthly benefits, as a % of
eligible compensation 2.0% to 2.5% 1.092% to 2.418% 1.0% to 2.5% rates 10.469% 7% 7.50%
rates 7.29% 9.76% 9.76%
Miscellaneous (Agent Multiple-Employer)
Required employee contribution
Required employer contribution
59 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

Employees Covered

At the June 30, 2022 measurement date, the following employees were covered by each plan’s benefit terms:

Police Fire
Miscellaneous Safety Safety
Inactive employees or beneficiaries
currently receiving benefits 597 209 132 Inactive employees entitled to but
not yet receiving benefits 794 69 30 Active employees 330 135 82
Total 1,721 413 244
Police Safety (Agent Multiple-Employer)
On or After On or After
Hire Date March 11, 2012 January 1, 2013
Benefit formula 3% @50 2.7% @57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50 50 - 57
Monthly benefits, as a % of
eligible compensation 3% 2.0% to 2.7%
rates 14% 12.75%
rates 15.13% 20.13%
Required employee contribution
Required employer contribution
Prior to On or After On or After
Hire Date December 30, 2012 December 30, 2012 January 1, 2013 Benefit formula 3.0% @50 2.0% @50 2.7% @57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 50 - 55 50 - 57
Monthly benefits, as a % of
eligible compensation 3% 2.0% to 2.7% 2.0% to 2.7%
rates 14% 9% 13%
rates 20.64% 18.17% 12.78%
Fire Safety (Cost Sharing Multiple-Employer)
Required employer contribution
Required employee contribution
60 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

Contributions

Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy plan member contribution requirements as identified by the pension plan terms are classified as plan member contributions.

(b) Net Pension Liability

The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each Plan is measured as of June 30, 2022, based on an annual actuarial valuation as of June 30, 2021 and rolled forward to June 30, 2022 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Methods and Assumptions Used to Determine Total Pension Liability

For the three CalPERS Plans, the June 30, 2021 valuation was rolled forward to determine the June 30, 2022 pension liability, based on the following actuarial methods and assumptions:

Valuation date June 30, 2021
Measurement date June 30, 2022
Actuarial cost method Entry-Age Normal in accordance with the requirements of GASB 68

Actuarial assumptions:

Discount rate 6.90%
Inflation 2.30%
Salary increases Varies by Entry Age and Service

Mortality Rate Table1

Derived using CalPERS Membership Data
for all Funds

Post Retirement Benefit
Increase
The lesser of contract COLA or 2.30%
until Purchasing Power Protection
Allowance Floor on Purchasing Power
applies, 2.30% thereafter

61 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

1 The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.

Discount Rate

The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at 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. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points.

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

Asset Class1

Assumed asset
allocation

Real Return
Years 1–101,2
Global Equity – Cap-weighted 30.00% 4.54%
Global Equity – Non-Cap-weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High Yield 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)

1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study. 62 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

Changes in Net Pension Liability

The changes in the net pension liability for the Miscellaneous (Agent Multiple-Employer) Plan, using the measurement date of June 30, 2022, are as follows:

Total Plan Net Position
Pension Fiduciary Liability
Liability Net Position (Asset)
Balance at June 30, 2021
(Valuation Date) 307,553,120 $ 236,997,092 $ 70,556,028 $ Changes in the Year:

Service cost 4,524,340 - 4,524,340 Interest on the total pension liability 21,200,745 - 21,200,745 Differences between actual and
expected experience (2,514,720) - (2,514,720) Net plan to plan resource movement - - - Changes in assumptions 9,049,210 - 9,049,210 Contributions - employer - 10,995,829 (10,995,829) Contributions - employees - 2,265,758 (2,265,758) Net investment income - (17,866,615) 17,866,615 Administrative expenses - (147,635) 147,635 Benefit payments, including refunds
of employee contributions (18,185,189) (18,185,189) - Other Miscellaneous Income/(Expense) - - - Net Changes 14,074,386 (22,937,852) 37,012,238 Balance at June 30, 2022
(Measurement Date) 321,627,506$ 214,059,240$ 107,568,266$ Increase (Decrease)
63 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

The changes in the net pension liability for the Police Safety (Agent-Multiple-Employer) Plan, using the measurement date of June 30, 2022, are as follows:

Proportionate Share of the Net Pension Liability for the Fire Safety Plan

As of June 30, 2023, the City reported net pension liabilities for its proportionate share of the net pension liability of the Fire Safety Plan as follows:

The City’s proportionate share of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined.

Proportionate
Share of Net
Pension Liability
Balance at: 6/30/2021 61,763,064$
Balance at: 6/30/2022 88,285,197
Net Changes during 2021-2022 26,522,133
Total Plan Net Position
Pension Fiduciary Liability
Liability Net Position (Asset)
Balance at June 30, 2021
(Valuation Date) 333,514,059 $ 236,223,938 $ 97,290,121 $ Changes in the Year:

Service cost 5,458,052 - 5,458,052 Interest on the total pension liability 23,094,674 - 23,094,674 Differences between actual and
expected experience (4,554,440) - (4,554,440) Net plan to plan resource movement - - - Changes in assumptions 11,831,923 - 11,831,923 Contributions - employer - 12,366,023 (12,366,023) Contributions - employees - 2,367,983 (2,367,983) Net investment income - (18,004,303) 18,004,303 Administrative expenses - (147,153) 147,153 Benefit payments, including refunds
of employee contributions (17,630,306) (17,630,306) - Other Miscellaneous Income/(Expense) - - - Net Changes 18,199,903 (21,047,756) 39,247,659 Balance at June 30, 2022
(Measurement Date) 351,713,962$ 215,176,182$ 136,537,780$ Increase (Decrease)
64 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

The City’s proportionate share of the net pension liability for this Plan as of the measurement dates of June 30, 2021 and 2022 was as follows:

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following presents the City’s net pension liability for each Plan, calculated using the Plan’s discount rate, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Pension Plans Fiduciary Net Position

Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Amortization of Deferred Outflows and Inflows of Resources

Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Net difference between projected and actual
earnings on pension plan investments

All other amounts
5 year straight-line amortization

Straight-line amortization over the
expected average remaining service
lifetime (EARSL) of all members that are
provided with benefits (active, inactive,
and retired) as of the beginning of the
measurement period
Fire Safety
Proportion - June 30, 2021 1.75989%
Proportion - June 30, 2022 1.28479%
Change - Increase (Decrease) -0.47510%
Miscellaneous Police Safety Fire Safety
1% Decrease 5.90% 5.90% 5.90%
Net Pension Liability 149,250,945$ 185,020,659$ 119,129,981$ Current Discount Rate 6.90% 6.90% 6.90%
Net Pension Liability 107,568,266$ 136,537,780$ 88,285,197$ 1% Increase 7.90% 7.90% 7.90%
Net Pension Liability 73,312,204$ 97,018,452$ 63,076,553$ 65 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension

At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 11,953,509 $ - $ - (1,612,741)
5,114,771 -
10,590,969 -
Total 27,659,249 $ (1,612,741) $
Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 13,172,096 $ - $ Differences between expected and actual experience 231,230 (3,807,714) Change in assumptions 8,946,088 -
Net differences between projected and actual
earnings on plan investments 10,689,288 -
Total 33,038,702 $ (3,807,714) $
Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 9,408,864 $ - $ Differences between expected and actual experience 3,653,804 (958,708) Change in assumptions 8,901,820 -
Change in employer's proportion - (5,582,660) Net difference between projected and actual
earnings on plan investments 13,941,467 -
Differences between employer's contributions and
change in employer's proportion 64,719 (310,007) Total 35,970,674 $ (6,851,375) $
Miscellaneous
Police Safety
Fire Safety
Differences between expected and actual experience
Change in assumptions
Net differences between projected and actual
earnings on plan investments
66 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(11) Defined Benefit Pension Plans (Continued)

At June 30, 2023, deferred outflows of resources in the amounts of $11,953,509, $13,172,096 and $9,408,864 were related to contributions subsequent to the measurement date for the Miscellaneous, Police Safety and Fire Safety Plans, respectively. They will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2024.

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

(12) Police 1% Supplemental Retirement Plan

(a) General Information about the Pension Plan

Plan Description

The plan was effective on July 1, 1993 for sworn members of the City of Costa Mesa Police Department. The plan was originally a 1% supplemental plan to the City’s 2%@50 benefit.

Under the Retirement Plan for Safety Employees of the City of Costa Mesa, the City joined CalPERS with 3%@50 Safety benefit as of December 31, 2000 and transferred active members to CalPERS. Employees who retired prior to July 1, 1999 were not transferred to CalPERS.

The Police 1% Supplemental Retirement Plan is a single employer defined benefit plan.

This Plan currently has only retired participants as all active employees were transferred to the CalPERS 3%@ 50 benefit plan. The number of participants at June 30, 2023 was 18.

The average monthly benefit being paid is $949.24. The retirement benefit is 1% of the highest 12-month earnings for credited services up to 25 years. Maximum benefit is 75% of the highest 12-month earnings for service retirement including all public plan pension benefits but not including Social Security. The 75% is proportionately reduced for less than 25 years of Costa Mesa Police Department service.

Contributions

The City has not adopted a funding policy for this supplemental retirement plan and accordingly plan benefits impact financial resources as benefits are paid. As such, there are no assets accumulated in a trust for the plan.

(b) Pension Liability

The City’s pension liability for the Plan is measured as the total pension liability, as the pension plan has no fiduciary net position. The pension liability of the Plan is measured Fiscal Year
Ending
June 30 Miscellaneous Police Safety Fire Safety
2024 4,341,524$ 3,208,229 $ 5,048,313 $
2025 2,296,603 3,354,787 3,899,630
2026 655,035 2,480,392 2,258,019
2027 6,799,837 7,015,484 8,504,473
Thereafter - - - 67 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(12) Police 1% Supplemental Retirement Plan (Continued)

as of June 30, 2023, using an annual actuarial valuation as of June 30, 2023. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Methods and Assumptions

The total pension liabilities in the June 30, 2023 actuarial valuations were determined using the following actuarial assumptions:

Measurement Date June 30, 2023
Actuarial Assumptions:

Discount Rate

3.90% per annum. This discount rate is the mid-point,
rounded to 5 basis points, of 3-20 year municipal bond
rate indices: S&P Municipal Bond 20 Year High Grade
Rate Index, Bond Buyer 20-Bond GO Index, Fidelity GO
AA 20 Year Bond Index.

Payroll Growth N/A; all participants have retired
Inflation Rate 2.75% per year

Cost Method

Entry Age Normal as a level percentage of payroll
Employer Funding Policy Pay-as-you-go
Census Data

Retirement
Disability/Turnover Rate
Mortality

Census information was provided by the Plan Sponsor
as of June 2022.

N/A; all participants have retired
Rates are based on the 2021 CalPERS Experience Study
for Public Agency Police as shown below:

Discount Rate

The discount rate used to measure the total pension liability was 3.90%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate.

Professional judgment on future contributions has been applied in those cases where contribution patterns deviate from the actuarially determined rates. Basted on those Age Male Female Male Female
50 0.27% 0.20% 1.70% 1.44%
60 0.58% 0.46% 2.71% 1.96%
70 1.33% 1.00% 4.00% 2.91%
80 4.37% 3.40% 7.94% 6.11%
90 14.54% 11.09% 16.61% 14.40%
100 36.20% 31.58% 36.20% 31.58%
110 100.00% 100.00% 100.00% 100.00%
Healthy Retirees Non-Industrial Disabled Retirees
68 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(12) Police 1% Supplemental Retirement Plan (Continued)

assumptions, the pension plan's fiduciary net position was projected to be depleted for current members during the fiscal year. Therefore, the long-term expected rate of return of 3.90% was used to discount funded projected benefit payments to determine the total pension liability. The single effective discount rate was 3.90%.

The discount rate changed from 3.75% as of June 30, 2022 to 3.90% as of June 30, 2023 measurement date.

Sensitivity of the Total Pension Liability to Changes in the Discount Rate

The following presents the total pension liability, calculated using the discount rate of

3.90%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Supplemental Plan
1% Decrease 2.90%
Net Pension Liability 1,849,240$
Current Discount Rate 3.90%
Net Pension Liability 1,737,346$
1% Increase 4.90%
Net Pension Liability 1,637,002$
Balance at June 30, 2022 1,884,759 $
Changes in the year:

Interest on the total pension liability 66,959
Differences between actual expected
and actual experience -
Changes in assumptions (16,007)
Benefit payments, including refunds
of member contributions (198,365)
Net Changes (147,413)
Balance at June 30, 2023 1,737,346 $
69 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(12) Police 1% Supplemental Retirement Plan (Continued)

(d) Pension expenses and Deferred Outflows/Inflows of Resources Related to Pensions

For the fiscal year ended June 30, 2023, the City recognized pension expense of $50,952.

At June 30, 2023, the City did not report any deferred outflows/inflows of resources related to the Police 1% Supplemental Retirement Plan.

(13) Defined Contribution Plan

On January 1, 2000, the City adopted a Defined Contribution Plan (Plan) for part-time employees that work under 1,000 hours during the fiscal year and do not meet the eligibility requirements to be enrolled in the California Public Employee Retirement System (CalPERS).

The Plan is administered by the Public Agency Retirement Services (PARS). As of June 30, 2023, there were 75 active participants in the Plan. Both the City and employees are required to each contribute 3.75% of gross wages. The City’s contribution to the defined contribution plan for the year ended June 30, 2023 was $35,848.

(14) Other Post Employment Benefits Plan (OPEB)

Plan Description

The City administers a single-employer defined benefit plan, which provides medical insurance benefits to eligible retirees and their spouses in accordance with various labor agreements. The plan covers employees hired before January 1, 2004 who retire directly from the City with 10 years or more of City service. The City provides a contribution up to a percentage of the lesser of $500 per month or the premium for the most popular medical plan elected by the employees. The percentage varies by retirement date and years of City service. For employees hired on or after January 1, 2004, the City will only pay for the PEMHCA subsidy once they meet the definition of a retiree under CalPERS. The City provides retiree life insurance of $1,000 for the retiree and $500 for the retiree’s spouse.

Employees Covered

As of the June 30, 2022 measurement date, the following current and former employees were covered by the benefit terms under the Plan:

Active employees 580
Inactive employees or beneficiaries currently receiving benefits 430 Inactive employees entitled to but not yet receiving benefits - Total 1,010
70 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(14) Other Post Employment Benefits Plan (OPEB) (Continued)

Contributions

The contribution requirements of plan members and the City are established and may be amended by the City Council. The contribution required to be made under the City Council and labor agreement requirements is on a pay-as-you-go basis (i.e., as medical insurance premiums become due). For the fiscal year ended June 30, 2023, the City contributed $1,845,862 to the Plan. The City has not established a trust for the purpose of holding assets accumulated for plan benefits.

The City’s total OPEB liability was measured as of June 30, 2022 by an actuarial valuation based on the following actuarial methods and assumptions:

Discount Rate: 4.09% 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 06/30/22
Bond Buyer Go 20 – Municipal Bond Index 3.54%
S&P Municipal Bond 20-year High Grade
Rate Index

4.09%
Fidelity 20-year Go Municipal Bond Index 3.69%
Bond Index Range 3.54% - 4.09%
Actual Discount Rate Used 4.09%

Inflation Rate: 2.50% per year

Aggregate Payroll Increases: 2.75% per year. This assumption is used to amortize the unfunded actuarial accrued liability and to determine the Entry Age Normal actuarial liabilities.

Mortality Rate: Based on rates used in the most recent CalPERS pension valuation.

Turnover Rate: Assumption used to project terminations (voluntary and involuntary) prior to meeting minimum retirement eligibility for retiree health coverage. The rates represent the probability of termination in the next 12 months. The termination rates are based on those used in the most recent CalPERS pension valuation.

Retirement Rate: Annual retirement rates are based on those used in the most recent CalPERS pension valuation.

71 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(14) Other Post Employment Benefits Plan (OPEB) (Continued)

Changes in the Total OPEB Liability

The changes in the Plan’s total OPEB liability is as follows:

Sensitivity of the OPEB Liability to Changes in the Discount Rate

The following presents the City’s OPEB liability if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2023:

1% Decrease
(3.09%)
Current
Discount Rate
(4.09%)
1% Increase
(5.09%)
OPEB Liability $ 59,517,860 $ 52,376,993 $ 46,538,016

Sensitivity of the OPEB Liability to Changes in the Health Care Cost Trend Rates

The following presents the OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2023:

Recognition of Deferred Outflows and Deferred Inflows of Resources

Gains and losses related to changes in total OPEB liability are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs.

Balance at June 30, 2022 66,254,495 $
Changes recognized for the measurement period:

Service cost 2,123,135
Interest 1,470,020
Differences between expected and actual experience (480,791) Changes of assumptions (14,469,369)
Contributions - employer -
Benefit payments (2,520,497)
Administrative expense -
Net Changes (13,877,502)
Balance at June 30, 2023
(Measurement Date June 30, 2022) 52,376,993$
Current Healthcare Cost
1% Decrease Trend Rates 1% Increase
(5.75% decreasing to (6.75% decreasing to (7.75% decreasing to

3.50%) 4.50%) 5.50%)
OPEB Liability $48,378,923 $52,376,993 $58,014,193
72 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(14) Other Post Employment Benefits Plan (OPEB) (Continued)

The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The initial amortization period for deferred inflows and deferred outflows is three years.

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB

For the fiscal year ended June 30, 2023, the City recognized OPEB expense of $3,824,965. At June 30, 2023, the City reported deferred outflows and inflows of resources related to OPEB from the following sources:

The $1,845,862 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2022 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2024.

Other amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows:

(15) Post Employment Benefits-RHS (Defined Contribution)

On January 1, 2004, the City adopted a new Retirement Health Savings Plan (RHS) for all full-time active employees. This benefit was ratified in the City’s contractual agreements (MOU) with the Costa Mesa Employees Association (CMCEA), Costa Mesa Police Association (CMPA), Costa Mesa Police Management Association (CMPMA), and the Costa Mesa Firefighters Association (CMFA). This post-employment medical benefit is to assist employees with their qualifying medical expenses or premiums upon retirement or separation from the City with no minimum age requirement. The RHS plan is a defined contribution plan for all full time employees at the City. Under this plan, the employee and the City each make a mandatory 1% of base pay contribution. If the employee separates from the City prior to the 10-year vesting period, the employee forfeits his or her share of the City’s contribution.

Deferred Deferred
Outflows Inflows
of Resources of Resources
OPEB contributions subsequent to measurement date 1,845,862$ - $ Differences between expected and actual differences 892,282 (3,062,921) Changes in assumptions 8,485,941 (13,153,972)
Total 11,224,085 $ (16,216,893) $
Fiscal Year
Ended June 30:

Deferred
Outflows/(Inflows)
of Resources
2024 231,810$
2025 231,810
2026 231,809
2027 (554,277)
2028 (554,277)
Thereafter (6,425,545)
73 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(15) Post Employment Benefits-RHS (Defined Contribution)

The City has no payment obligations once the employee separates from the City. Per a side letter agreement with employees, the RHS program was suspended starting November 7, 2010. For the CMPMA, effective July 2014, a 1% employee contribution is required to the plan, but no employer contribution is required. The City’s contribution to the defined contribution post retirement plan for the year ended June 30, 2023 was $0.

(16) Expenditures in Excess of Appropriations

Excess of expenditures over appropriations in individual funds at the function level (level of budgetary control) is as follows at June 30, 2023:

(17) Risk Management

For the fiscal year ended June 30, 2023, the City participated in the California Municipal Excess Liability (“CAMEL”) Program. The membership of CAMEL consists of 21 cities with similar interests and needs regarding liability insurance. The Board of Directors sets the premiums for each participant and each participant is represented on the Board. Premiums are based upon the losses incurred by each member and are not affected by losses incurred by other members.

In the Self-Insurance Workers’ Compensation/General Liability/Unemployment Internal Service Fund, the City has recorded liabilities of $13,827,398 for lawsuits and other claims arising in the ordinary course of business. The City is also self-insured for the first $2,000,000 of each claim arising for workers’ compensation and has purchased outside insurance coverage in excess of the $2,000,000 up to an unlimited maximum. The City is self-insured for the first $2,000,000 of each claim arising for general liability. The City has purchased outside insurance coverage in excess of the $2,000,000 up to a maximum of $25,000,000 per occurrence. For the past three years, claim payments have not exceeded the amount of applicable insurance coverage. The City has estimated losses for claims and judgments and has established liabilities of $8,350,610 for workers’ compensation and $5,476,788 for general liability. Losses for claims incurred but not reported are recorded when the probable amount of loss can be reasonably estimated. These amounts represent estimates of amounts to be paid for reported claims and incurred but not yet reported claims based upon past experience, modified for current trends and information. While the ultimate amount of losses incurred through June 30, 2023 is dependent on future developments, based upon information from the City Attorney, the City’s claims administrators and others involved with the administration of the programs, City management believes the accrual is adequate to cover such losses.

Function Expenditures Appropriations Excess
Major Fund:

General Fund
Protection of persons
and property 92,162,287 92,495,292 (333,005)
Public services 7,948,741 7,771,588 177,153
Transfers out 26,534,995 26,023,249 511,746
Special Revenue Funds:

Office of Traffic Safety Protection of persons
and property 226,977 265,000 (38,023)
Park Development Fund Public services 596,217 1,815,715 (1,219,498) 74 CITY OF COSTA MESA, CALIFORNIA
Notes to the Basic Financial Statements
Year ended June 30, 2023

(17) Risk Management (Continued)

The City is contingently liable for additional losses not reported in the accompanying financial statements in the range of approximately $25,000 to $2,000,000 for which the likelihood of an unfavorable outcome is only reasonably possible, as determined by legal counsel.

Changes in claims payable for the past two fiscal years are as follows:

(18) Legislation and Litigation Affecting the Successor Agency

As of February 1, 2012, California redevelopment agencies were dissolved. The Successor Agency to the Costa Mesa Redevelopment Agency (Successor Agency) succeeded to the former Costa Mesa Redevelopment Agency (former Agency) and administers the enforceable obligations, including a $9,278,545 loan from the City’s General Fund to the former agency.

The Department of Finance has approved the Successor Agency to reinstate this loan on its Report Obligation Payment Schedule (ROPS).

The City has adjusted the loan for principal/interest additions and principal repayments from the annual ROPS as approved by the Department of Finance. As of June 30, 2023, the Successor Agency’s loan payable balance was $1,368,045.

A summary of changes in long-term liabilities in the Successor Agency for the year ended June 30, 2023 is as follows:

Fiscal Year
Beginning
Balance
Claims
Incurred and
Changes in
Estimates Claim Payments Ending Balance
2021-22 17,454,524$ 100,282$ (3,255,364)$ 14,299,442$ 2022-23 14,299,442 1,602,104 (2,074,148) 13,827,398 Portion Due
Balance Balance at Within One
July 1, 2022 Additions Reductions June 30, 2023 Year
Loans Payable 3,102,031$ -$ (1,733,986)$ 1,368,045$ 1,368,045$ Total 3,102,031$ -$ (1,733,986)$ 1,368,045$ 1,368,045$ 75 REQUIRED SUPPLEMENTARYINFORMATION

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION
Measurement date June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 Total pension liability:

Service cost 3,366,560$ 3,187,235$ 3,269,125$ 3,659,618$ Interest on total pension liability 17,792,384 18,262,096 18,633,944 18,996,998 Difference between expected and
actual experience - (2,016,112) (2,818,846) (1,038,444) Changes in assumptions - (4,399,842) - 15,484,252 Benefit payments, including refunds
of employee contributions (12,853,585) (13,476,175) (14,145,202) (14,720,378)

Net Change in Total Pension Liability 8,305,359 1,557,202 4,939,021 22,382,046 Total pension liability - beginning of year 241,975,291 250,280,650 251,837,852 256,776,873 Total pension liability - End of Year (a) 250,280,650$ 251,837,852$ 256,776,873$ 279,158,919$ Plan Fiduciary Net Position:

Contributions - employer 4,903,142$ 5,768,827$ 6,226,072$ 6,712,045$ Contributions - employees 2,137,933 1,978,052 1,966,557 1,936,240 Net investment income 26,075,603 3,881,685 897,287 18,711,484 Benefit payments (12,853,585) (13,476,175) (14,145,205) (14,720,378) Plan to plan resource movement - 13,634 3,064 - Administrative expense - (193,604) (104,766) (246,188) Other miscellaneous income (expense) - - - - Net change in plan fiduciary net position 20,263,093 (2,027,581) (5,156,991) 12,393,203 Plan fiduciary net position - beginning of year 153,666,841 173,929,934 171,902,353 166,745,362 173,929,934Plan fiduciary net position - end of year (b) 171,902,353$ 166,745,362 $ 179,138,565 $ $ 76,350,716Net pension liability - ending (a)-(b) 79,935,499 $ 90,031,511 $ 100,020,354 $ $ Plan fiduciary net position as a percentage of
the total pension liability 69.49% 68.26% 64.94% 64.17% Covered payroll 18,366,435$ 17,928,997$ 19,890,931$ 19,532,886$ Net pension liability as a percentage of
covered payroll 415.71% 445.84% 452.63% 512.06%
Notes to schedule:

Benefit changes:
* - Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

Effective with the June 30, 2021 valuation date, the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns from all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates 2017 through 2021, 7.65% for measurement dates 2015 through 2016, and 7.50% for measurement date 2014.

CITY OF COSTA MESA, CALIFORNIA
Schedule of Changes in the Net Pension Liability and Related Ratios Miscellaneous Plan
Last Ten Fiscal Years*
76 The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2021 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Changes in assumptions:

June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 3,528,896$ 3,828,540$ 4,081,002$ 4,114,686$ 4,524,340$ 19,188,563 19,990,625 20,506,212 20,957,522 21,200,745 (3,837,320) 4,152,146 (324,784) (1,467,232) (2,514,720) (1,071,584) - - - 9,049,210 (15,285,935) (16,317,568) (16,501,681) (17,147,887) (18,185,189) 2,522,620 11,653,743 7,760,749 6,457,089 14,074,386 279,158,919 281,681,539 293,335,282 301,096,031 307,553,120 281,681,539$ 293,335,282$ 301,096,031$ 307,553,120$ 321,627,506$ 7,300,573$ 8,320,570$ 9,336,852$ 10,097,843$ 10,995,829$ 1,906,040 2,055,169 2,205,872 2,062,454 2,265,758 15,161,548 11,863,211 9,609,644 44,605,186 (17,866,615) (15,285,935) (16,317,568) (16,501,681) (17,147,887) (18,185,189) (1,077) - - - - (279,147) (133,740) (272,363) (197,367) (147,635) (530,105) 435 - - - 8,271,897 5,788,077 4,378,324 39,420,229 (22,937,852) 179,138,565 187,410,462 193,198,539 197,576,863 236,997,092 187,410,462$ 193,198,539 $ 197,576,863 $ 236,997,092 $ 214,059,240 $ 94,271,077$ 100,136,743 $ 103,519,168 $ 70,556,028 $ 107,568,266 $

66.53% 65.86% 65.62% 77.06% 66.56%
20,067,193$ 24,394,495$ 24,012,483$ 26,206,105$ 26,486,277$ 469.78% 410.49% 431.11% 269.24% 406.13%
77 Fiscal year ended June 30, 2015June 30, 2016June 30, 2017 June 30, 2018 Actuarially determined contribution 5,221,083$ 6,056,123$ 6,522,784$ 6,913,866$ Contributions in relation to the actuarially
determined contributions (5,221,083) (6,056,123) (6,522,784) (6,913,866) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 17,928,997$ 19,890,931$ 19,532,886$ 20,067,193$ Contributions as a percentage of covered payroll 29.12% 30.45% 33.39% 34.45%

Notes to schedule:

Valuation date for June 30, 2023 6/30/2020
Methods and assumptions used to determine contribution rates:

Single and agent employers
Amortization method/period
Asset valuation method
Inflation
Salary increases
Payroll growth
Investment rate of return
Retirement age
Mortality
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 Entry Age Normal
For details, see June 30, 2020 Funding Valuation Report.

Fair Value of Assets. For details, see June 30, 2020 Funding Valuation Report.

2.50%
Varies by Entry Age and Service

2.75%

CITY OF COSTA MESA, CALIFORNIA
Miscellaneous Plan
Schedule of Contributions
Last Ten Fiscal Years*

7.00%, net of pension plan investment and administrative expense; includes inflation.
78 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.

Other information:

For changes to previous year’s information, refer to past GASB 68 reports. * - Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 June 30, 2023 9,256,492$ 9,876,401$ 10,249,971$ 11,072,097$ 11,953,509$ (9,256,492) (9,876,401) (10,249,971) (11,072,097) (11,953,509) -$ -$ -$ -$ -$ 24,394,495$ 24,012,483$ 26,206,105$ 26,486,277$ 27,755,413$

37.95% 41.13% 39.11% 41.80% 43.07%
79 Measurement date June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 Total pension liability:

Service cost 4,675,505$ 4,048,034$ 4,011,055$ 4,475,641$ Interest on total pension liability 17,563,332 18,452,568 19,519,447 20,072,034 Difference between expected and
actual experience - 1,744,508 4,436,634 (2,148,051) Changes in assumptions - (4,744,823) - 17,608,748 Benefit payments, including refunds of
employee contributions (11,159,179) (12,625,831) (13,319,431) (13,984,335)

Net Change in Total Pension Liability 11,079,658 6,874,456 14,647,705 26,024,037 Total pension liability - beginning of year 237,419,600 248,499,258 255,373,714 270,021,419 Total pension liability - end of year (a) 248,499,258$ 255,373,714$ 270,021,419$ 296,045,456$ Plan fiduciary net position:

Contributions - employer 5,066,147$ 5,228,944$ 5,992,098$ 7,592,902$ Contributions - employees 2,204,590 2,191,295 1,988,684 2,012,546 Net investment income 24,794,991 3,618,253 825,770 17,309,154 Benefit payments (11,159,179) (12,625,831) (13,319,431) (13,984,335) Plan to plan resource movement - - 72 - Administrative expense - (182,933) (98,993) (233,009) Other miscellaneous income (expense) - - - - Net change in plan fiduciary net position 20,906,549 (1,770,272) (4,611,800) 12,697,258 Plan fiduciary net Position -beginning of year 143,294,304 164,200,853 162,430,581 157,818,781 Plan fiduciary new position - end of year (b) 164,200,853$ 162,430,581$ 157,818,781$ 170,516,039$ Net pension liability - ending (a)-(b) 84,298,405$ 92,943,133$ 112,202,638$ 125,529,417$ Plan fiduciary net position as a percentage
of the total pension liability 66.08% 63.61% 58.45% 57.60% Covered payroll 14,884,359$ 13,714,558$ 14,161,162$ 14,696,132$ Net pension liability as a percentage of
covered payroll 566.36% 677.70% 792.33% 854.17%
Notes to schedule:

Benefit changes:

The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2017 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Credit (a.k.a. Golden Handshakes).

Changes in assumptions:
* - Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

Effective with the June 30, 2021 valuation date, the accounting discount rate was reduced from 7.15% to 6.90%.

In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns from all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates 2017 through 2021, 7.65% for measurement dates 2015 through 2016, and 7.50% for measurement date 2014.

CITY OF COSTA MESA, CALIFORNIA
Schedule of Changes in the Net Pension Liability and Related Ratios Police Safety Plan
Last Ten Fiscal Years*
80 June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 4,653,580$ 4,959,915$ 4,912,766$ 4,811,521$ 5,458,052$ 20,611,486 21,235,614 21,872,003 22,650,069 23,094,674 (1,494,789) (2,112,152) (1,729,542) 503,266 (4,554,440) (1,540,347) - - - 11,831,923 (14,129,155) (15,024,883) (16,058,867) (16,651,882) (17,630,306) 8,100,775 9,058,494 8,996,360 11,312,974 18,199,903 296,045,456 304,146,231 313,204,725 322,201,085 333,514,059 304,146,231$ 313,204,725$ 322,201,085$ 333,514,059$ 351,713,962$ 8,263,652$ 9,471,893$ 10,608,592$ 11,583,086$ 12,366,023$ 2,120,029 2,222,313 2,285,323 2,166,528 2,367,983 14,402,562 11,872,172 9,465,284 44,470,479 (18,004,303) (14,129,155) (15,024,883) (16,058,867) (16,651,882) (17,630,306) 222 - - - - (265,711) (128,739) (266,185) (194,644) (147,153) (504,590) 420 - - - 9,887,009 8,413,176 6,034,147 41,373,567 (21,047,756) 170,516,039 180,403,048 188,816,224 194,850,371 236,223,938 180,403,048$ 188,816,224$ 194,850,371$ 236,223,938$ 215,176,182$ 123,743,183$ 124,388,501$ 127,350,714$ 97,290,121$ 136,537,780$

59.31% 60.29% 60.47% 70.83% 61.18%
14,529,255$ 17,534,445$ 16,175,525$ 15,883,165$ 17,075,363$ 851.68% 709.40% 787.30% 612.54% 799.62%
81 Fiscal year ended June 30, 2015June 30, 2016June 30, 2017June 30, 2018 Actuarially determined contribution 5,237,595$ 5,994,277$ 7,592,899$ 8,098,773$ Contributions in relation to the actuarially
determined contributions (5,237,595) (5,994,277) (7,592,899) (8,098,773) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 13,714,558$ 14,161,162$ 14,696,132$ 14,529,255$ Contributions as a percentage of covered payroll 38.19% 42.33% 51.67% 55.74%

Notes to schedule:

Valuation date for June 30, 2023 6/30/2020
Methods and assumptions used to determine contribution rates:

Actuarial Cost Method
Amortization method/period
Asset valuation method
Inflation 2.50%
Salary increases Varies by Entry Age and Service
Payroll growth 2.75%
Investment rate of return
Retirement age
Mortality
Other information:

For changes to previous year’s information, refer to past GASB 68 reports. * -

CITY OF COSTA MESA, CALIFORNIA
Last Ten Fiscal Years*
Police Safety Plan
Schedule of Contributions
Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

Entry Age Normal
The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP- 2016 published by the Society of Actuaries.

The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

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

Fair Value of Assets. For details, see June 30, 2020 Funding Valuation Report.

For details, see June 30, 2020 Funding Valuation Report. 82 June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 June 30, 2023 10,894,754$ 11,174,155$ 11,803,904$ 11,680,985$ 13,172,096$ (10,894,754) (11,174,155) (11,803,904) (11,680,985) (13,172,096) -$ -$ -$ -$ -$ 17,534,445$ 16,175,525$ 15,883,165$ 17,075,363$ 20,069,395$

62.13% 69.08% 74.32% 68.41% 65.63%
83 Measurement date June 30, 2014June 30, 2015June 30, 2016June 30, 2017 Plan's proportion of the net pension
liability 0.86630% 0.85980% 0.78750% 0.75976%
Plan's proportionate share of the net
pension liability 53,906,245$ 59,018,969$ 68,144,130$ 75,347,795$ Plan's covered payroll 9,348,967$ 8,616,507$ 9,235,056$ 9,116,708$ Plan's proportionate share of the
net pension liability as a percentage
of covered payroll 576.60% 684.95% 737.89% 826.48%
Plan's proportionate share of the
fiduciary net position as a percentage
of the Plan's total pension liability 70.20% 78.40% 74.06% 71.74% Plan's proportionate share of aggregate
employer contributions 4,567,080$ 4,600,229$ 4,087,020$ 5,040,152$ Notes to schedule:

Benefit changes:

Changes in assumptions:
* - Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

Golden Handshakes).

CITY OF COSTA MESA, CALIFORNIA
Schedule of Proportionate Share of the Net Pension Liability Fire Safety Plan
Last Ten Fiscal Years*
84 June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022

0.78122% 0.75901% 0.74962% 0.67861% 0.63698%
75,280,246$ 77,775,545$ 81,561,540$ 61,763,064$ 88,285,197$ 9,057,608$ 9,614,585$ 9,034,047$ 9,203,544$ 9,845,473$ 831.13% 808.93% 902.82% 671.08% 896.71%

73.39% 73.37% 73.12% 71.38% 71.38%
5,040,152$ 5,855,909$ 6,865,279$ 7,555,477$ 9,072,094$ 85 Fiscal year ended June 30, 2015June 30, 2016June 30, 2017June 30, 2018 Contractually required contribution
(actuarially determined) 3,877,163$ 3,286,280$ 3,598,782$ 5,040,152$ Contributions in relation to the actuarially
determined contributions (4,603,714) (3,786,280) (3,598,782) (5,040,152) Contribution deficiency (excess) (726,551)$ (500,000)$ -$ -$ Covered payroll 8,616,507$ 9,235,056$ 9,116,708$ 9,057,608$ Contributions as a percentage
of covered payroll 53.43% 41.00% 39.47% 55.65%
Notes to schedule:

Valuation date for June 30, 2023 6/30/2020
Methods and assumptions used to determine contribution rates:

Actuarial Cost Method Entry Age Normal
Amortization method/periodFor details, see June 30, 2020 Funding Valuation Report.

Asset valuation method
Inflation 2.50%
Salary increases Varies by Entry Age and Service
Payroll growth 2.75%
Investment rate of return
Retirement age
Mortality
Other information:

For changes to previous year’s information, refer to past GASB 68 reports. * -
Last Ten Fiscal Years*
Fire Safety Plan
Schedule of Contributions

CITY OF COSTA MESA, CALIFORNIA
Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

Fair Value of Assets. For details, see June 30, 2020 Funding Valuation Report.

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

The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre- retirement and Post-retirement mortality rates include period from 1997 to 2015. Pre-retirement and Post-retirement
mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

The probabilities of Retirement are based on the 2017
CalPERS Experience Study for the period from 1997 to 2015. 86 June 30, 2019June 30, 2020June 30, 2021June 30, 2022June 30, 2023 5,855,909$ 6,865,279$ 7,555,477$ 9,072,094$ 9,408,864$ (5,855,909) (6,865,279) (7,555,477) (9,072,094) (9,408,864) -$ -$ -$ -$ -$ 9,614,585$ 9,034,047$ 9,203,544$ 9,845,473$ 10,924,436$

60.91% 75.99% 82.09% 92.14% 86.13%
87 Measurement date June 30, 2016June 30, 2017June 30, 2018June 30, 2019 Total pension liability:

Interest on total pension liability 80,950$ 77,214$ 82,454$ 79,579$ Difference between expected and actual experience (19) - (9,704) - Changes in assumptions - (107,900) (18,938) 46,602 Benefit payments, including refunds of
employee contributions (211,287) (208,260) (205,233) (205,233)

Net change in Total Pension Liability (130,356) (238,946) (151,421) (79,052) Total pension liability - beginning of year 2,897,028 2,766,672 2,527,726 2,376,305 Total pension liability - end of year (a) 2,766,672$ 2,527,726$ 2,376,305$ 2,297,253$ Plan fiduciary net position as a percentage of the
total pension liability 0.00% 0.00% 0.00% 0.00%
Covered - employee payroll N/A N/A N/A N/A
Net pension liability as a percentage of
covered payroll N/A N/A N/A N/A
Notes:

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS POLICE 1% SUPPLEMENTAL RETIREMENT PLAN
Last Ten Fiscal Years*
The discount rate changed from 3.15% as of June 30, 2019 to 2.45% as of June 30, 2020 measurement date.

The discount rate changed from 2.45% as of June 30, 2020 to 2.10% as of June 30, 2021 measurement date.
* - Fiscal year 2016 was the first year of implementation, therefore only eight years are shown.

There are no assets accumulated in a trust that meets the criteria of GASB codification P22.101 or P52.101 to pay related benefits for the pension plan.

The discount rate changed from 2.10% as of June 30, 2021 to 3.75% as of June 30, 2022 measurement date.

The discount rate changed from 3.75% as of June 30, 2022 to 3.90% as of June 30, 2023 measurement date.

The discount rate changed from 3.50% as of June 30, 2018 to 3.15% as of June 30, 2019 measurement date.
88 June 30, 2020June 30, 2021June 30, 2022June 30, 2023 69,134$ 55,426$ 45,623$ 66,959$ 80,298 - 101,666 -
122,873 59,262 (332,850) (16,007) (205,036) (204,445) (204,445) (198,365) 67,269 (89,757) (390,006) (147,413) 2,297,253 2,364,522 2,274,765 1,884,759 2,364,522$ 2,274,765$ 1,884,759$ 1,737,346$

0.00% 0.00% 0.00% 0.00%

N/A N/A N/A N/A

N/A N/A N/A N/A
89 Measurement date June 30, 2017June 30, 2018June 30, 2019June 30, 2020 Total OPEB liability
Service cost 1,229,918$ 1,098,145$ 1,110,733$ 1,145,090$ Interest on the total OPEB liability 1,622,474 1,812,069 1,852,821 2,060,874 Actual and expected experience difference - - 2,081,994 (3,128,209) Changes in assumptions (3,959,316) (670,841) 3,420,614 6,606,929 Benefit payments (2,318,709) (2,469,425) (2,751,358) (2,719,892) Net change in total OPEB liability (3,425,633) (230,052) 5,714,804 3,964,792 Total OPEB liability - beginning 56,858,361 53,432,728 53,202,676 58,917,480 Total OPEB liability - ending 53,432,728$ 53,202,676$ 58,917,480$ 62,882,272$ Plan fiduciary net position as a percentage
of the total OPEB liability 0.00% 0.00% 0.00% 0.00%
Covered - employee payroll1 41,026,788$ 43,392,898 $ 43,828,141 $ 45,645,442 $ OPEB liability as a percentage of
covered-employee payroll1 130.24% 122.61% 134.43% 137.76% Notes to schedule:
1 - OPEB benefits are not based on employee payroll.

In Fiscal Year 2021 the City created a trust that meets the criteria of GASB codification P22.101 or P52.101 to pay related benefits for the OPEB plan. The funds are in a pooled account - balanced index. As of June 30, 2023 the market value of the investments held in the trust was $1,678,229 and is reflected as a contribution subsequent to the measurement date as of Fiscal Year 2023.

Changes in assumptions. The discount rate as of the June 30, 2016 measurement date was 2.85%. The discount rate as of the June 30, 2017 measurement date was 3.40%. The discount rate as of the June 30, 2018 measurement date was 3.50%. The discount rate as of the June 30, 2019 measurement date was 3.51%. The discount rate as of the June 30, 2020 measurement date was 2.66%. The discount rate as of the June 30, 2021 measurement date was 2.19%. The discount rate as of the June 30, 2022 measurement date was 4.09%.

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 six years are shown.

CITY OF COSTA MESA, CALIFORNIA
Schedule of Changes in Total OPEB Liability and Related Ratios Last Ten Fiscal Years*
90 $ 1,469,582
1,675,650
(894,275)
3,854,176
(2,732,910)
June 30, 2021 June 30, 2022
$ 66,254,495

0.00%
$ 48,101,217
137.74%
$ 52,376,993

0.00%
$ 53,773,706

97.40%
(480,791)
(14,469,369)
(2,520,497)
2,123,135$
1,470,020
3,372,223 (13,877,502)
62,882,272 66,254,495
91 GENERAL FUND
The General Fund is used to account for all general revenues of the City not specifically levied or collected for special purposes, and for expenditures related to the provision of general services by the City. The General Fund is used to account for all resources not required to be accounted for in another fund.

GOVERNMENT GRANTS FUND
The Government Grants Fund is used to account for receipt and disbursement of grant monies provided by Federal, State, and County governmental agencies for various programs.

GAS TAX FUND
The Gas Tax Fund is used to account for the receipt and disbursement of funds required to be use for construction and maintenance of the City’s road network system. Financing is provided by the City’s share of State gasoline taxes, including allocations from the Highway Users Tax Account (HUTA) and the Road Maintenance and Rehabilitation Account (RMRA).

AMERICAN RESCUE PLAN ACT FUND (ARPA)
The ARPA Fund is used to account for the receipt and disbursement of grant monies under the American Rescue Plan Act.
92 Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Revenues:

Taxes:

Sales tax 71,243,148$ 78,643,950$ 79,851,289$ 1,207,339$ 77,312,838$ Property tax 52,047,128 53,470,100 53,442,949 (27,151) 49,087,175 Transient occupancy tax 7,373,732 9,830,790 9,830,790 - 8,366,278 Franchise tax 5,168,793 6,130,590 6,094,232 (36,358) 5,318,541 Business license tax 3,086,667 1,074,386 939,200 (135,186) 919,491 Marijuana business tax 913,264 968,351 968,351 - 548,711 Total taxes 139,832,732 150,118,167 151,126,811 1,008,644 141,553,034 Licenses and permits 6,567,708 6,635,580 6,342,557 (293,023) 7,331,252 Fines and forfeitures 1,066,632 1,007,017 1,190,281 183,264 1,170,795 Intergovernmental:

Motor vehicle in-lieu 136,804 136,804 115,307 (21,497) 130,289 Prop 172 1,372,284 1,255,920 1,396,896 140,976 1,467,173 Advances repayment 1,749,586 1,399,669 1,399,669 - 1,524,562 Grants and other reimbursements 477,448 804,317 1,263,333 459,016 1,407,067 Total intergovernmental 3,736,122 3,596,710 4,175,205 578,495 4,529,091 Charges for services 7,051,680 9,052,615 8,886,692 (165,923) 6,964,934 Rental 4,595,652 4,137,977 3,995,450 (142,527) 4,042,324 Investment income (loss) 100,000 300,000 640,980 340,980 (1,246,827) Miscellaneous 1,025,407 1,399,415 1,282,572 (116,843) 1,374,266 Total revenues 163,975,933 176,247,481 177,640,548 1,393,067 165,718,869 Expenditures:

Current:

General government:

City council 950,772 955,497 834,324 121,173 867,913 City manager:

Administration 4,621,476 3,980,236 3,941,701 38,535 3,796,264 City clerk 1,177,100 1,161,899 1,151,400 10,499 936,966 Personnel services 2,028,585 2,094,964 2,079,915 15,049 1,481,900 Risk management services 337,197 319,478 400,346 (80,868) 362,648 City attorney 1,000,000 1,000,000 988,108 11,892 958,775 Financial services 5,233,710 4,342,420 4,271,187 71,233 3,799,043 Information technology 5,002,954 4,934,586 5,016,142 (81,556) 4,092,844 Facilities and equipment
maintenance 12,468,699 12,623,149 12,463,523 159,626 12,151,003 Non-departmental 6,414,708 5,904,075 5,446,525 457,550 4,532,996 Total general government 39,235,201 37,316,304 36,593,171 723,133 32,980,352

CITY OF COSTA MESA, CALIFORNIA
General Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
See notes to required supplementary information
93 Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Protection of persons and property:

Police protection 53,591,411 55,713,547 55,717,178 (3,631) 53,409,112 Fire protection 32,518,134 33,859,114 33,480,396 378,718 32,298,528 Building and safety 2,978,145 2,922,631 2,964,713 (42,082) 2,706,591 Total protection of persons
and property 89,087,690 92,495,292 92,162,287 333,005 88,414,231 Community programs:

Community recreation 7,802,826 7,522,115 7,528,022 (5,907) 6,288,274 Planning 3,006,989 2,658,450 2,627,389 31,061 2,135,517 Community improvement 1,666,832 1,698,541 1,620,694 77,847 1,592,410 Development services
administration 858,008 975,756 995,208 (19,452) 1,076,135 Total community programs 13,334,655 12,854,862 12,771,313 83,549 11,092,336 Public services:

Administration 2,292,395 2,190,489 2,115,976 74,513 2,171,885 Engineering 2,596,132 2,373,486 2,287,474 86,012 2,097,776 Transportation 3,059,071 3,207,613 3,545,291 (337,678) 3,069,222 Total public services 7,947,598 7,771,588 7,948,741 (177,153) 7,338,883 Debt Service:

Principal 620,000 15,392 342,370 (326,978) 217,231 Interest and fiscal charges 1,067,905 973,300 26,564 946,736 27,137 Total debt service 1,687,905 988,692 368,934 619,758 244,368 Total expenditures 149,605,144 150,438,045 149,844,446 1,582,291 140,070,170 Excess (deficiency) of revenues
over (under) expenditures 14,370,789 25,809,436 27,796,102 2,975,358 25,648,699 Other financing sources (uses):

Transfers out (12,457,990) (26,023,249) (26,534,995) (511,746) (21,365,113) Total other financing sources (uses) (12,457,990) (26,023,249) (26,534,995) (511,746) (21,365,113) Net change in fund balance 1,912,799 (213,813) 1,261,107 2,463,612 4,283,586 Fund balance at beginning of year 57,775,847 57,775,847 57,775,847 - 53,492,261 Fund balance at end of year 59,688,646 $ 57,562,034 $ 59,036,954 $ 2,463,612 $ 57,775,847 $

CITY OF COSTA MESA, CALIFORNIA
General Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the fiscal year ended June 30, 2023
(With Comparative Data for Prior Year)
(continued)
See notes to required supplementary information
94 Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Revenues:

Intergovernmental 858,919$ 4,768,418$ 2,169,633$ (2,598,785)$ 897,489$ Investment income (loss) - - 32,753 32,753 10 Total revenues 858,919 4,768,418 2,202,386 (2,566,032) 897,499 Expenditures:

Current:

General government 2,561,125 5,272,250 13,536 5,258,714 - Protection of persons and property 530,202 1,256,207 538,168 718,039 1,426,724 Community programs - 703,077 130,723 572,354 116,405 Public services 331,116 2,799,354 111,344 2,688,010 115,699 Total expenditures 3,422,443 10,030,888 793,771 9,237,117 1,658,828 Excess (deficiency) of revenues
over (under) expenditures (2,563,524) (5,262,471) 1,408,615 6,671,086 (761,329) Other financing sources (uses):

Transfer in - - - - 66,419 Total other financing sources (uses) - - - - 66,419 Net change in fund balance (2,563,524) (5,262,471) 1,408,615 6,671,086 (694,910) Fund balance (deficit) at beginning of year (1,145,765) (1,145,765) (1,145,765) - (450,855) Fund balance (deficit) at end of year (3,709,289)$ (6,408,236) $ 262,850 $ 6,671,086 $ (1,145,765) $

CITY OF COSTA MESA, CALIFORNIA
Government Grants Fund - Major Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
See notes to required supplementary information
95 Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Revenues:

Intergovernmental 5,857,969$ 5,611,119$ 5,357,007$ (254,112)$ 4,937,524$ Investment income (loss) - - 162,210 162,210 (363,514) Miscellaneous - - - - 32,358 Total revenues 5,857,969 5,611,119 5,519,217 (91,902) 4,606,368 Expenditures:

Current:

Public services 6,459,528 38,331,374 2,616,617 35,714,757 3,505,880 Total expenditures 6,459,528 38,331,374 2,616,617 35,714,757 3,505,880 Excess (deficiency) of revenues
over (under) expenditures (601,559) (32,720,255) 2,902,600 35,622,855 1,100,488 Net change in fund balance (601,559) (32,720,255) 2,902,600 35,622,855 1,100,488 Fund balance at beginning of year 14,653,754 14,653,754 14,653,754 - 13,553,266 Fund balance (deficit) at end of year 14,052,195$ (18,066,501) $ 17,556,354 $ 35,622,855 $ 14,653,754 $

CITY OF COSTA MESA, CALIFORNIA
Gas Tax Fund - Major Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
See notes to required supplementary information
96 Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
Revenues:

Intergovernmental -$ 2,525,000$ 4,802,856$ 2,277,856$ -$ Investment income (loss) - - 208,050 208,050 50,329 Total revenues - 2,525,000 5,010,906 2,485,906 50,329 Expenditures:

Current:

Protection of persons and property - 4,475,000 2,915,000 1,560,000 - Total expenditures - 4,475,000 2,915,000 1,560,000 - Excess (deficiency) of revenues
over (under) expenditures - (1,950,000) 2,095,906 4,045,906 50,329 Other financing sources (uses):

Transfer out - (2,187,856) (1,887,856) 300,000 - Total other financing sources (uses) - (2,187,856) (1,887,856) 300,000 - Net change in fund balance - (4,137,856) 208,050 4,345,906 50,329 Fund balance at beginning of year 50,329 50,329 50,329 - - Fund balance at end of year 50,329 $ (4,087,527)$ 258,379 $ 4,345,906 $ 50,329 $

CITY OF COSTA MESA, CALIFORNIA
American Resuce Plan Act Fund - Major Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
See notes to required supplementary information
97 CITY OF COSTA MESA, CALIFORNIA
Notes to Required Supplementary Information
Year ended June 30, 2023

(1) Budgetary Data

Annual budgets are legally adopted or amended for all governmental funds on a basis consistent with generally accepted accounting principles, except for the following funds for which annual budgets were not adopted or amended:

Special Revenue Funds:

Disaster Fund
Opioid Settlement
Debt Service Funds:

Financing Authority Debt Service Fund

The City Council adopts an annual budget submitted by the City Manager prior to the beginning of each new fiscal year. Public hearings are conducted prior to budget adoption by the Council. Supplemental appropriations, when required during the period, are also approved by the City Council. Interfunctional budget adjustments are approved by the City Manager. Expenditures may not legally exceed appropriations at the department functional level. At fiscal year-end all operating budget appropriations lapse. 98 SUPPLEMENTARYSCHEDULES

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

SUPPLEMENTARY SCHEDULES

MAJOR AND NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

Special Revenue Funds are used to account for revenue derived from specific taxes or other earmarked revenues sources (other than expendable trust or for major capital projects) that are restricted by law or administrative action to expenditures for specified purposes.

The following funds have been classified as nonmajor governmental funds in the accompanying fund financial statements:

HOME Program Fund
Established to account for the receipt and disbursement of funds received under the Federal Home Investment Partnership Program of the Department of Housing and Urban Development. These revenues must be expended for acquisition, rehabilitation, and new construction of rental housing.

Air Quality Improvement Fund
Established to account for the receipt and disbursement of the City’s share of funds received under Health & Safety Code 44223 (AB 2766) to finance mobile source air pollution reduction programs consistent with the California Clean Air Act of 1988.

Community Development Fund
This fund accounts for the receipt and disbursement of the Department of Housing and Urban Development grants. These revenues must be expended to accomplish one of the following objectives: elimination of slum or blighted areas to benefit low and moderate income persons, or to meet certain urgent community development needs.

Supplemental Law Enforcement Services Fund (SLESF)
Established to account for the receipt and disbursement of funds received under the State Citizen’s Option for Public Safety (COPS) Program allocated pursuant to Government Code Section 30061 enacted by Assembly Bill 3229, Chapter 134 of the 1996 Statutes. These COPS/SLESF funds are allocated based on population and can only be spent for “front line municipal police services” as per Government Code Section 30061(c)(2).

Rental Rehabilitation Program Fund
Established to account for the receipt and disbursement of grants received from the Department of Housing and Urban Development under Section 17 of the U.S. Housing Act of 1937. These revenues must be expended to provide assistance to rehabilitate primarily privately-owned residential rental property.

Narcotics Forfeiture Fund
Established to account for the receipt and disbursement of narcotic forfeitures received from County, State, and Federal agencies pursuant to Section 11470 of State Health and Safety Code and Federal Statute 21USC Section 881.

Local Law Enforcement Block Grant Fund
Established to account for the receipt and disbursement of Federal grant monies provided by the 1998 Appropriations Act, Public Law 105-119. These funds are restricted for projects utilized to reduce crime and improve public safety.

Office of Traffic Safety Fund
Established to account for the receipt and disbursement of Federal grant monies received through the State Office of Traffic Safety. These funds are restricted for operations utilized to enhance traffic safety and to reduce drunk driving within the City.

99 Opioid Settlement Fund
Established to account for receipt and disbursements from settlements related to opioid litigation.

These funds are restricted for purposes aligned with mitigating the adverse effects of opioid abuse and supporting initiatives aimed at prevention, treatment, recovery, and community support.

Housing Authority Fund
Established pursuant to the California Health and Safety Code, Section 34176(a). The Housing Authority serves two distinct functions: Low and Moderate Income Housing Asset Fund (LMIHAF) and homeless program. The LMIHAF is to promote affordable housing for families of low and moderate income within the City. The homeless program is to provide temporary assistance including housing to homeless individuals.

Disaster Fund
Established to account for receipt and disbursement of Federal and State grant monies received for COVID-19 mitigation and relief efforts.

CAPITAL PROJECTS FUNDS

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

The following have been classified as a major fund in the accompanying government-wide financial statements:

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

The following have been classified as nonmajor funds in the accompanying fund financial statements:

Measure “M2” Fund
Established to account for the receipt and expenditure of the 2006 voter-approved one-half percent sales tax for local transportation improvements. Measure M2 is a 30-year extension of the earlier Measure M program.

Parking Districts Fund
Established under the Vehicle Parking District Law of 1943 to provide vehicle facilities in the downtown area. Funding is provided through specific property tax levies.

Golf Course Improvements Fund
Established to account the receipt and disbursement of funds for Costa Mesa Country Club capital improvements. Funding is provided by the receipt of two and one-half percent of monthly gross receipts of green and tournament fees.

Park Development Fund
Established to account for the receipt and disbursement of funds for development and maintenance of the City’s park system. Funding is provided by fees charged to residential and commercial developers.

Drainage Fees Fund
Established to account for the receipt and disbursement of funds for construction and maintenance of the City’s drainage system. Funding is provided by fees charged to residential and commercial developers.
100

Traffic Impact Fees Fund
Established to account for the receipt and disbursement of funds for transportation improvements Citywide. Funding is provided by fees charged to residential and commercial developers.

Fire System Development Fees Fund
Established to account for receipt and disbursement of development impact fees established by Ordinance 89-1 for future construction of fire protection facilities and equipment for the north Costa Mesa area.

Jack Hammett Sports Complex Fund
Establish to account for receipt and disbursement of funds related to on-going maintenance of Jack Hammett Sports Complex. Funding is provided by the facility’s rental income.

Lions Park Capital Improvements Fund
Established to account for the receipt and disbursement of funds for construction of a new library and renovation of the existing library into a neighborhood community center. Project funding is partially provided by bond proceeds with the remaining balance provided by the Capital Improvements Fund.

DEBT SERVICE FUNDS

Debt Service Funds are used to account for accumulated resources for and payment of general long- term debt.

The following have been classified as nonmajor funds in the accompanying fund financial statements:

Financing Authority Debt Service Fund
To accumulate monies for the payment of the 2017 Lease Revenue Bonds. The 2017 Lease Revenue bonds refunded the Public Financing Authority 2007 Certificates of Participation and provided partial funding for the Lion’s Park Project.

101
Special Revenue
Supplemental
Air Law Rental
HOME Quality Community Enforcement Rehabilitation
Program Improvement Development Services Program
Assets:

Cash and investments 1,384,892$ 426,986$ 4,209$ 55,701$ 277,140$ Cash and investments with fiscal agents - - - - - Due from other governments 30,457 30,227 185,663 - - Accounts receivable, net - - - - - Interest receivable 1,704 500 29 79 340 Loans receivable, net - - - - - Leases receivable - - - - - Total assets 1,417,053 $ 457,713 $ 189,901 $ 55,780 $ 277,480 $ Liabilities:

Accounts payable 3,694 $ 11,709 $ 28,003 $ - $ - $ Accrued liabilities 581 - 14,449 7,288 - Retentions payable - - 58,289 - - Deposits payable - - - - - Due to other funds - - - - - Unearned revenue - - - - - Total liabilities 4,275 11,709 100,741 7,288 - Deferred Inflows of Resources:

Lease related - - - - - Unavailable revenues - - - - - Total deferred inflows of resources - - - - - Fund Balances:

Restricted for:

Protection of persons or property - - - 48,492 - Community programs 1,412,778 - 89,160 - 277,480 Public services - 446,004 - - - Debt service - - - - - Assigned for:

Protection of persons and property - - - - - Public services - - - - - Unassigned - - - - - Total fund balances (deficit) 1,412,778 446,004 89,160 48,492 277,480 Total liabilities, deferred inflows
of resources, and fund balances 1,417,053$ 457,713 $ 189,901 $ 55,780 $ 277,480 $ Special Revenue

CITY OF COSTA MESA, CALIFORNIA
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2023
(With Comparative Data for Prior Year)
102
Local Law
Enforcement Office of
Narcotics Block Traffic Opioid Housing Disaster
Forfeiture Grant Safety Settlement Authority Fund
1,292,095$ 33,911$ -$ 290,217$ 6,904,364$ 50,743$ - - - - 24,493 - - - 57,182 - 1,220,209 - - - - 307,442 58,613 - 2,009 42 - 287 5,050 - - - - - 496,064 - - - - - 1,434,726 - 1,294,104$ 33,953 $ 57,182 $ 597,946 $ 10,143,519$ 50,743 $ -$ - $ 904 $ - $ 336,921$ 216 $ - - 10,136 - 28,771 - - - - - - - - - - - 23,908 - - - 54,037 - - - - - - 232,092 - - - - 65,077 232,092 389,600 216 - - - - 1,414,825 - - - - 296,265 38,549 - - - - 296,265 1,453,374 - 1,294,104 33,953 - - - - - - - - 7,400,545 - - - - - - 50,527 - - - - - - - - - - - - - - - - - - - - (7,895) 69,589 900,000 - 1,294,104 33,953 (7,895) 69,589 8,300,545 50,527 1,294,104$ 33,953 $ 57,182 $ 597,946 $ 10,143,519$ 50,743 $ Special Revenue
103
Parking Golf Course Park Drainage Traffic
Measure "M2" DistrictsImprovementsDevelopment Fees Impact Fees Assets:

Cash and investments 5,178,617$ 152,701$ 658,204$ 2,989,839$ 2,204,685$ 6,306,139$ Cash and investments with fiscal agents 127,167 - - - - - Due from other governments 1,229,090 13 - - - - Accounts receivable, net - - 17,383 - - 46 Interest receivable 7,446 187 797 3,724 2,735 7,723 Loans receivable, net - - - - - - Leases receivable - - - - - - Total assets 6,542,320 $ 152,901 $ 676,384 $ 2,993,563 $ 2,207,420 $ 6,313,908 $ Liabilities:

Accounts payable 138,219 $ - $ - $ 55,375$ 32,469 $ 37,570 $ Accrued liabilities 12,299 - - - - - Retentions payable 177,167 - - 65,466 - - Deposits payable - - - - - - Due to other funds - - - - - - Unearned revenue - - - - - - Total liabilities 327,685 - - 120,841 32,469 37,570 Deferred Inflows of Resources:

Lease related - - - - - - Unavailable revenues 465,125 - - - - - Total deferred inflows of resources 465,125 - - - - - Fund Balances:

Restricted for:

Protection of persons or property - - - - - - Community programs - - - - - - Public services 5,749,510 - - - - - Debt service - - - - - - Assigned for:

Protection of persons and property - - - - - - Public services - 152,901 676,384 2,872,722 2,174,951 6,276,338 Unassigned - - - - - - Total fund balances (deficit) 5,749,510 152,901 676,384 2,872,722 2,174,951 6,276,338 Total liabilities, deferred inflows
of resources, and fund balances 6,542,320$ 152,901 $ 676,384 $ 2,993,563 $ 2,207,420 $ 6,313,908 $ Capital Projects
(With Comparative Data for Prior Year)

CITY OF COSTA MESA, CALIFORNIA
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2023
(Continued)
104
Debt Service
Fire System Jack Hammett Lions Park
Development Sports Capital Financing
Fees Complex Improvements Authority 2023 2022
641,466$ 243,972$ 11,765$ -$ 29,107,646$ 24,246,951$ - - 322,357 7,278 481,295 460,281 - - - - 2,752,841 3,249,319 - 150,750 - - 534,234 225,126 787 299 14 - 33,752 52,202 - - - - 496,064 608,294 - - - - 1,434,726 1,512,830 642,253$ 395,021 $ 334,136 $ 7,278 $ 34,840,558$ 30,355,003 $ -$ - $ - $ - $ 645,080$ 2,283,046 - - - - 73,524 80,491 - 33,150 - - 334,072 338,130 - 15,000 - - 38,908 37,215 - - - - 54,037 672,766 - - - - 232,092 - 48,150 - - 1,377,713 3,411,648 - - - - 1,414,825 1,506,105 - - - - 799,939 1,139,548 - - - - 2,214,764 2,645,653 - - - - 1,376,549 1,293,762 - - - - 9,179,963 5,480,097 - - 334,136 - 6,580,177 5,209,268 - - - 7,278 7,278 4 642,253 - - - 642,253 635,684 - 346,871 - - 12,500,167 12,383,909 - - - - 961,694 (705,022) 642,253 346,871 334,136 7,278 31,248,081 24,297,702 642,253$ 395,021 $ 334,136 $ 7,278 $ 34,840,558$ 30,355,003 $ Totals
Capital Projects
105
Supplemental
Air Law Rental
HOME Quality Community Enforcement Rehabilitation
Program Improvement Development Services Program
Revenues:

Taxes -$ -$ -$ -$ -$ Charges for services - - - - - Fines and forfeitures - - - - - Intergovernmental 137,581 177,214 1,794,310 284,819 - Investment income (loss) 15,117 3,843 609 522 2,837 Rental income - - - - - Miscellaneous 40,000 - - - - Total revenues 192,698 181,057 1,794,919 285,341 2,837 Expenditures:

Current:

General government - - - - - Protection of persons and property - - - 254,738 - Community programs 267,310 - 1,800,563 - - Public services - 117,963 - - - Debt service:

Principal - - - - - Interest - - - - - Total expenditures 267,310 117,963 1,800,563 254,738 - Excess (deficiency) of revenues
over (under) expenditures (74,612) 63,094 (5,644) 30,603 2,837 Other financing sources (uses):

Transfer in - - - - - Total other financing
sources (uses) - - - - - Net change in fund balances (74,612) 63,094 (5,644) 30,603 2,837 Fund balances (deficit) at beginning
of the year 1,487,390 382,910 94,804 17,889 274,643 Fund balances (deficit) at end of year 1,412,778$ 446,004$ 89,160$ 48,492$ 277,480$

CITY OF COSTA MESA, CALIFORNIA
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Year ended June 30, 2023
(With Comparative Data for Prior Year)
Special Revenue
106
Local Law
Enforcement Office of
Narcotics Block Traffic Opioid Housing Disaster
Forfeiture Grant Safety Settlement Authority Fund
-$ -$ -$ -$ 342,011$ -$ - - - - - - 76,487 - - - - - - - 259,141 154,965 2,686,381 306,283 17,752 347 - 506 9,416 - - - - - 416,489 - - - - - 221,113 - 94,239 347 259,141 155,471 3,675,410 306,283 - - - - - 12,564 42,402 - 226,977 85,882 - 216,416 - - - - 4,286,833 (331) - - - - - - - - - - - - - - - - - - 42,402 - 226,977 85,882 4,286,833 228,649 51,837 347 32,164 69,589 (611,423) 77,634 - - - - 5,288,708 637,856 - - - - 5,288,708 637,856 51,837 347 32,164 69,589 4,677,285 715,490 1,242,267 33,606 (40,059) - 3,623,260 (664,963) 1,294,104$ 33,953$ (7,895)$ 69,589$ 8,300,545$ 50,527$ Special Revenue
107
Parking Golf Course Park Drainage Traffic
Measure "M2" Districts Improvements Development Fees Impact Fees Revenues:

Taxes -$ 15,353$ -$ -$ -$ -$ Charges for services - - - 158,327 76,516 1,033,989 Fines and forfeitures - - - - - - Intergovernmental 3,650,774 - - - 107,327 - Investment income (loss) 53,052 1,478 6,255 33,194 22,712 63,154 Rental income - - 159,695 - - - Miscellaneous - - - - - 7,167 Total revenues 3,703,826 16,831 165,950 191,521 206,555 1,104,310 Expenditures:

Current:

General government - - - - - - Protection of persons and property - - - - - - Community programs - - - 338,019 - - Public services 2,456,115 - 28,023 596,217 273,825 485,739 Debt service:

Principal - - - - - - Interest - - - - - - Total expenditures 2,456,115 - 28,023 934,236 273,825 485,739 Excess (deficiency) of revenues
over (under) expenditures 1,247,711 16,831 137,927 (742,715) (67,270) 618,571 Other financing sources (uses):

Transfer in - - - - - - Total other financing
sources (uses) - - - - - - Net change in fund balances 1,247,711 16,831 137,927 (742,715) (67,270) 618,571 Fund balances (deficit) at beginning
of the year 4,501,799 136,070 538,457 3,615,437 2,242,221 5,657,767 Fund balances (deficit) at end of year 5,749,510$ 152,901$ 676,384$ 2,872,722$ 2,174,951$ 6,276,338$ (With Comparative Data for Prior Year)

CITY OF COSTA MESA, CALIFORNIA
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Year ended June 30, 2023
(Continued)
Capital Projects
108
Debt Service
Fire System Jack Hammett Lions Park
Development Sports Capital Financing
Fees Complex Improvements Authority 2023 2022
-$ -$ -$ -$ 357,364$ 366,844$ - - - - 1,268,832 2,065,622 - - - - 76,487 5,562 - - - - 9,558,795 7,167,219 6,569 2,165 9,577 7,274 256,379 (603,946) - 150,749 - - 726,933 773,253 - - - - 268,280 79,919 6,569 152,914 9,577 7,274 12,513,070 9,854,473 - - - - 12,564 587,233 - - - - 826,415 782,720 - - - - 6,692,394 4,974,070 - - - - 3,957,882 6,308,147 - - - 1,830,000 1,830,000 1,985,332 - - - 973,300 973,300 1,068,649 - - - 2,803,300 14,292,555 15,706,151 6,569 152,914 9,577 (2,796,026) (1,779,485) (5,851,678) - - - 2,803,300 8,729,864 4,516,377 - - - 2,803,300 8,729,864 4,516,377 6,569 152,914 9,577 7,274 6,950,379 (1,335,301) 635,684 193,957 324,559 4 24,297,702 25,633,003 642,253$ 346,871$ 334,136$ 7,278$ 31,248,081$ 24,297,702$ Totals
Capital Projects
109
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 527,620$ 137,581$ (390,039)$ 16,639$ Investment income (loss) - 15,117 15,117 (37,271) Miscellaneous 20,000 40,000 20,000 45,009 Total revenues 547,620 192,698 (354,922) 24,377 Expenditures:

Current:

Community programs 596,648 267,310 329,338 109,036 Total expenditures 596,648 267,310 329,338 109,036 Excess (deficiency) of revenues
over (under) expenditures (49,028) (74,612) (25,584) (84,659) Net change in fund balance (49,028) (74,612) (25,584) (84,659) Fund balance at beginning of year 1,487,390 1,487,390 - 1,572,049 Fund balance at end of year 1,438,362 $ 1,412,778 $ (25,584) $ 1,487,390 $

CITY OF COSTA MESA, CALIFORNIA
HOME Program Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
110
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 150,000$ 177,214$ 27,214$ 108,658$ Investment income (loss) - 3,843 3,843 (9,893) Total revenues 150,000 181,057 31,057 98,765 Expenditures:

Current:

Public services 591,539 117,963 473,576 218,184 Total expenditures 591,539 117,963 473,576 218,184 Excess (deficiency) of revenues
over (under) expenditures (441,539) 63,094 504,633 (119,419) Net change in fund balance (441,539) 63,094 504,633 (119,419) Fund balance at beginning of year 382,910 382,910 - 502,329 Fund balance (deficit) at end of year (58,629) $ 446,004 $ 504,633 $ 382,910 $

CITY OF COSTA MESA, CALIFORNIA
Air Quality Improvement Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
111
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 1,054,960$ 1,794,310$ 739,350$ 594,255$ Investment income - 609 609 152 Miscellaneous - - - 7,500 Total revenues 1,054,960 1,794,919 739,959 601,907 Expenditures:

Current:

Community programs 2,127,593 1,800,563 327,030 594,255 Total expenditures 2,127,593 1,800,563 327,030 594,255 Excess (deficiency) of revenues
over (under) expenditures (1,072,633) (5,644) 1,066,989 7,652 Net change in fund balance (1,072,633) (5,644) 1,066,989 7,652 Fund balance at beginning of year 94,804 94,804 - 87,152 Fund balance (deficit) at end of year (977,829)$ 89,160 $ 1,066,989$ 94,804 $

CITY OF COSTA MESA, CALIFORNIA
Community Development Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
112
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 271,551$ 284,819$ 13,268$ 279,630$ Investment income (loss) - 522 522 (694) Total revenues 271,551 285,341 13,790 278,936 Expenditures:

Current:

Protection of persons and property 307,229 254,738 52,491 277,824 Total expenditures 307,229 254,738 52,491 277,824 Excess (deficiency) of revenues
over (under) expenditures (35,678) 30,603 66,281 1,112 Net change in fund balance (35,678) 30,603 66,281 1,112 Fund balance at beginning of year 17,889 17,889 - 16,777 Fund balance (deficit) at end of year (17,789) $ 48,492 $ 66,281 $ 17,889 $

CITY OF COSTA MESA, CALIFORNIA
Supplemental Law Enforcement Services Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
113
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) -$ 2,837$ 2,837$ (6,851)$ Total revenues - 2,837 2,837 (6,851) Expenditures:

Current:

Community programs 80,000 - 80,000 - Total expenditures 80,000 - 80,000 - Excess (deficiency) of revenues
over (under) expenditures (80,000) 2,837 82,837 (6,851) Net change in fund balance (80,000) 2,837 82,837 (6,851) Fund balance at beginning of year 274,643 274,643 - 281,494 Fund balance at end of year 194,643 $ 277,480 $ 82,837 $ 274,643 $

CITY OF COSTA MESA, CALIFORNIA
Rental Rehabilitation Program Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
114
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Fines and forfeitures -$ 76,487$ 76,487$ 5,562$ Investment income (loss) - 17,752 17,752 (41,213) Total revenues - 94,239 94,239 (35,651) Expenditures:

Current:

Protection of persons and property 80,000 42,402 37,598 - Total expenditures 80,000 42,402 37,598 - Excess (deficiency) of revenues
over (under) expenditures (80,000) 51,837 131,837 (35,651) Net change in fund balance (80,000) 51,837 131,837 (35,651) Fund balance at beginning of year 1,242,267 1,242,267 - 1,277,918 Fund balance at end of year 1,162,267 $ 1,294,104 $ 131,837 $ 1,242,267 $

CITY OF COSTA MESA, CALIFORNIA
Narcotics Forfeiture Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
115
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) -$ 347$ 347$ (837)$ Total revenues - 347 347 (837) Excess (deficiency) of revenues
over (under) expenditures - 347 347 (837) Net change in fund balance - 347 347 (837) Fund balance at beginning of year 33,606 33,606 - 34,443 Fund balance at end of year 33,606 $ 33,953 $ 347 $ 33,606$

CITY OF COSTA MESA, CALIFORNIA
Local Law Enforcement Block Grant Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
116
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 265,000$ 259,141$ (5,859)$ 130,022$ Total revenues 265,000 259,141 (5,859) 130,022 Expenditures:

Current:

Protection of persons and property 265,000 226,977 38,023 169,868 Total expenditures 265,000 226,977 38,023 169,868 Excess (deficiency) of revenues
over (under) expenditures - 32,164 32,164 (39,846) Fund balance (deficit) at beginning of year (40,059) (40,059) - (213) Fund balance (deficit) at end of year (40,059)$ (7,895) $ 32,164 $ (40,059) $

CITY OF COSTA MESA, CALIFORNIA
Office of Traffic Safety Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
117
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Taxes 381,141$ 342,011$ (39,130)$ 349,917$ Intergovernmental 2,274,179 2,686,381 412,202 1,510,066 Investment income (loss) 21,550 9,416 (12,134) (68,124) Rental income 370,000 416,489 46,489 338,732 Miscellaneous 6,000 221,113 215,113 27,406 Total revenues 3,052,870 3,675,410 622,540 2,157,997 Expenditures:

Current:

Community programs 8,789,294 4,286,833 4,502,461 3,963,750 Total expenditures 8,789,294 4,286,833 4,502,461 3,963,750 Excess (deficiency) of revenues
over (under) expenditures (5,736,424) (611,423) 5,125,001 (1,805,753) Other financing sources (uses):

Transfers in 5,214,993 5,288,708 73,715 1,713,828 Total other financing
sources (uses) 5,214,993 5,288,708 73,715 1,713,828 Net change in fund balance (521,431) 4,677,285 5,198,716 (91,925) Fund balance at beginning of year 3,623,260 3,623,260 - 3,715,185 Fund balance at end of year 3,101,829 $ 8,300,545 $ 5,198,716 $ 3,623,260 $

CITY OF COSTA MESA, CALIFORNIA
Housing Authority Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
118
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental -$ 190,599$ 190,599$ 546,129$ Investment income (loss) - 216,228 216,228 (603,855) Miscellaneous 50,000 64,585 14,585 59,431 Total revenues 50,000 471,412 421,412 1,705 Expenditures:

Current:

Protection of persons and property 3,676,035 1,275,395 2,400,640 74,688 Community programs 1,720,000 40,505 1,679,495 84,589 Public services 21,653,745 2,969,206 18,684,539 3,693,683 Total expenditures 27,049,780 4,285,106 22,764,674 3,852,960 Excess (deficiency) of revenues
over (under) expenditures (26,999,780) (3,813,694) 23,186,086 (3,851,255) Other financing sources (uses):

Transfers in 13,482,325 13,482,325 - 8,533,467 Total other financing sources (uses) 13,482,325 13,482,325 - 8,533,467 Net change in fund balance (13,517,455) 9,668,631 23,186,086 4,682,212 Fund balance at beginning of year 21,869,391 21,869,391 - 17,187,179 Fund balance (deficit) at end of year 8,351,936 $ 31,538,022 $ 23,186,086 $ 21,869,391 $

CITY OF COSTA MESA, CALIFORNIA
Capital Improvements Fund - Major Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
119
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental 3,312,964$ 3,650,774$ 337,810$ 4,420,073$ Investment income (loss) - 53,052 53,052 (105,712) Total revenues 3,312,964 3,703,826 390,862 4,314,361 Expenditures:

Current:

Public services 8,422,954 2,456,115 5,966,839 3,084,199 Total expenditures 8,422,954 2,456,115 5,966,839 3,084,199 Excess (deficiency) of revenues
over (under) expenditures (5,109,990) 1,247,711 6,357,701 1,230,162 Net change in fund balance (5,109,990) 1,247,711 6,357,701 1,230,162 Fund balance at beginning of year 4,501,799 4,501,799 - 3,271,637 Fund balance (deficit) at end of year (608,191)$ 5,749,510 $ 6,357,701 $ 4,501,799 $

CITY OF COSTA MESA, CALIFORNIA
Measure "M2" Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
120
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Taxes 16,311$ 15,353$ (958)$ 16,927$ Investment income (loss) - 1,478 1,478 (3,453) Total revenues 16,311 16,831 520 13,474 Excess (deficiency) of revenues
over (under) expenditures 16,311 16,831 520 13,474 Net change in fund balance 16,311 16,831 520 13,474 Fund balance at beginning of year 136,070 136,070 - 122,596 Fund balance at end of year 152,381 $ 152,901 $ 520 $ 136,070$

CITY OF COSTA MESA, CALIFORNIA
Parking Districts Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
121
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) -$ 6,255$ 6,255$ (13,547)$ Rental income 110,000 159,695 49,695 163,021 Total revenues 110,000 165,950 55,950 149,474 Expenditures:

Current:

Public services 665,000 28,023 636,977 - Total expenditures 665,000 28,023 636,977 - Excess (deficiency) of revenues
over (under) expenditures (555,000) 137,927 692,927 149,474 Net change in fund balance (555,000) 137,927 692,927 149,474 Fund balance at beginning of year 538,457 538,457 - 388,983 Fund balance at end of year (16,543) $ 676,384 $ 692,927 $ 538,457 $

CITY OF COSTA MESA, CALIFORNIA
Golf Course Improvements Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
122
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Charges for services 328,095$ 158,327$ (169,768)$ 1,278,940$ Investment income (loss) - 33,194 33,194 (100,791) Total revenues 328,095 191,521 (136,574) 1,178,149 Expenditures:

Current:

Community programs 1,148,087 338,019 810,068 206,815 Public services 1,815,715 596,217 1,219,498 2,007,353 Total expenditures 2,963,802 934,236 2,029,566 2,214,168 Excess (deficiency) of revenues
over (under) expenditures (2,635,707) (742,715) 1,892,992 (1,036,019) Net change in fund balance (2,635,707) (742,715) 1,892,992 (1,036,019) Fund balance at beginning of year 3,615,437 3,615,437 - 4,651,456 Fund balance at end of year 979,730 $ 2,872,722 $ 1,892,992 $ 3,615,437 $

CITY OF COSTA MESA, CALIFORNIA
Park Development Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
123
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Intergovernmental -$ 107,327$ 107,327$ -$ Charges for services 213,206 76,516 (136,690) 348,736 Investment income (loss) - 22,712 22,712 (57,057) Total revenues 213,206 206,555 (6,651) 291,679 Expenditures:

Current:

Public services 2,478,471 273,825 2,204,646 145,850 Total expenditures 2,478,471 273,825 2,204,646 145,850 Excess (deficiency) of revenues
over (under) expenditures (2,265,265) (67,270) 2,197,995 145,829 Net change in fund balance (2,265,265) (67,270) 2,197,995 145,829 Fund balance at beginning of year 2,242,221 2,242,221 - 2,096,392 Fund balance (deficit) at end of year (23,044)$ 2,174,951 $ 2,197,995 $ 2,242,221 $

CITY OF COSTA MESA, CALIFORNIA
Drainage Fees Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
124
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Charges for services 1,533,025$ 1,033,989$ (499,036)$ 437,946$ Investment income (loss) - 63,154 63,154 (143,171) Miscellaneous - 7,167 7,167 - Total revenues 1,533,025 1,104,310 (428,715) 294,775 Expenditures:

Current:

Public services 3,364,073 485,739 2,878,334 127,222 Total expenditures 3,364,073 485,739 2,878,334 127,222 Excess (deficiency) of revenues
over (under) expenditures (1,831,048) 618,571 2,449,619 167,553 Net change in fund balance (1,831,048) 618,571 2,449,619 167,553 Fund balance at beginning of year 5,657,767 5,657,767 - 5,490,214 Fund balance at end of year 3,826,719 $ 6,276,338 $ 2,449,619 $ 5,657,767 $

CITY OF COSTA MESA, CALIFORNIA
Traffic Impact Fees Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
125
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) -$ 6,569$ 6,569$ (15,857)$ Total revenues - 6,569 6,569 (15,857) Net change in fund balance - 6,569 6,569 (15,857) Fund balance at beginning of year 635,684 635,684 - 651,541 Fund balance at end of year 635,684 $ 642,253 $ 6,569 $ 635,684$

CITY OF COSTA MESA, CALIFORNIA
Fire System Development Fees Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
126
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income -$ 2,165$ 2,165$ 533$ Rental income 150,750 150,749 (1) 271,500 Total revenues 150,750 152,914 2,164 272,033 Expenditures:

Current:

Public services - - - 663,000 Total expenditures - - - 663,000 Excess (deficiency) of revenues
over (under) expenditures 150,750 152,914 2,164 (390,967) Net change in fund balance 150,750 152,914 2,164 (390,967) Fund balance at beginning of year 193,957 193,957 - 584,924 Fund balance at end of year 344,707 $ 346,871 $ 2,164 $ 193,957$

CITY OF COSTA MESA, CALIFORNIA
Jack Hammett Sports Complex Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2023
(With Comparative Data for Prior Year)
127
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual
Revenues:

Investment income (loss) -$ 9,577$ 9,577$ (170)$ Total revenues - 9,577 9,577 (170) Expenditures:

Current:

Public services - - - - Total expenditures - - - - Excess (deficiency) of revenues
over (under) expenditures - 9,577 9,577 (170) Net change in fund balance - 9,577 9,577 (170) Fund balance at beginning of year 324,559 324,559 - 324,729 Fund balance at end of year 324,559 $ 334,136 $ 9,577 $ 324,559 $

CITY OF COSTA MESA, CALIFORNIA
Lions Park Capital Improvements Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year ended June 30, 2022
(With Comparative Data for Prior Year)
128

INTERNAL SERVICE FUNDS

Internal Service Funds are used to account for the financing of goods and services provided by one City department to another City department on a cost-reimbursement basis.

Equipment Replacement Fund
Established to account for all motorized equipment used by City departments.

Self Insurance Fund – Workers’ Compensation/General Liability/Unemployment Established to account for receipt and disbursement of funds used to pay worker’s compensation, general liability, and unemployment premiums and claims filed against the City.

Information Technology Replacement Fund
Established to provide funds for future replacements and upgrades to City computer equipment, systems, and supporting infrastructure.
129
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
ReplacementUnemploymentReplacement 2023 2022
Assets:

Current assets:

Cash and investments 8,954,515$ 19,147,938$ 9,707,577$ 37,810,030$ 31,293,065$ Interest receivable 10,308 22,278 11,006 43,592 59,970 Prepaid items 2,134,210 242,026 - 2,376,236 3,719,059 Inventories 149,203 - - 149,203 240,189 Total current assets 11,248,236 19,412,242 9,718,583 40,379,061 35,312,283 Capital assets:

Construction in progress - - 1,932,537 1,932,537 1,412,635 Motorized equipment 18,802,993 - - 18,802,993 14,777,717 Other equipment 3,713,761 - 187,799 3,901,560 3,645,870 Accumulated depreciation (12,394,092) - (101,411) (12,495,503) (11,881,554) Net capital assets 10,122,662 - 2,018,925 12,141,587 7,954,668 Total assets 21,370,898 19,412,242 11,737,508 52,520,648 43,266,951 Liabilities:

Current liabilities:

Accounts payable 542,862 289,509 293,063 1,125,434 801,171 Accrued liabilities 95,791 12,660 24,809 133,260 44,918 Notes payable 564,329 - - 564,329 325,037 Claims payable - 1,134,946 - 1,134,946 1,379,844 Total current liabilities 1,202,982 1,437,115 317,872 2,957,969 2,550,970 Long-term liabilities:

Notes payable 3,738,263 - - 3,738,263 3,061,525 Claims payable - 12,692,453 - 12,692,453 12,919,598 Total long-term liabilities 3,738,263 12,692,453 - 16,430,716 15,981,123 Total liabilities 4,941,245 14,129,568 317,872 19,388,685 18,532,093 Net Position:

Net investment in capital assets 5,820,070 - 2,018,925 7,838,995 4,568,106 Unrestricted 10,609,583 5,282,674 9,400,711 25,292,968 20,166,752 Total net position 16,429,653$ 5,282,674$ 11,419,636$ 33,131,963$ 24,734,858$ Totals

CITY OF COSTA MESA, CALIFORNIA
Internal Service Funds
Combining Statement of Net Position
June 30, 2023
(With Comparative Data for Prior Year)
130
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
ReplacementUnemploymentReplacement 2023 2022
Operating revenues:

Charges for services 5,442,580$ 4,842,316$ -$ 10,284,896$ 7,472,134$ Total operating revenues 5,442,580 4,842,316 - 10,284,896 7,472,134 Operating expenses:

Allocated administrative costs 1,694,810 886,546 1,379,708 3,961,064 2,854,592 Depreciation 1,120,805 - - 1,120,805 1,248,411 Fuel and repair parts 1,050,894 - - 1,050,894 1,230,211 Materials and supplies - - 71,077 71,077 65,073 Claims and premiums - 3,589,183 - 3,589,183 3,023,082 Total operating expenses 3,866,509 4,475,729 1,450,785 9,793,023 8,421,369 Operating income (loss) 1,576,071 366,587 (1,450,785) 491,873 (949,235) Nonoperating revenues (expenses):

Investment income (loss) 76,739 153,798 74,675 305,212 (841,310) Intergovernmental 159,985 - - 159,985 - Other nonoperating revenue 41,562 1,326,382 - 1,367,944 503,000 Interest expense (121,301) - - (121,301) (26,197) Gain (loss) on disposal of equipment (17,270) - - (17,270) (1,319) Total nonoperating revenues (expenses) 139,715 1,480,180 74,675 1,694,570 (365,826) Income (loss) before transfers 1,715,786 1,846,767 (1,376,110) 2,186,443 (1,315,061) Transfers in 1,003,556 1,648,622 3,558,484 6,210,662 8,248,850 Change in net position 2,719,342 3,495,389 2,182,374 8,397,105 6,933,789 Net position at beginning of year 13,710,311 1,787,285 9,237,262 24,734,858 17,801,069 Net position at end of year 16,429,653 $ 5,282,674 $ 11,419,636 $ 33,131,963 $ 24,734,858 $ Totals

CITY OF COSTA MESA, CALIFORNIA
Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position Year ended June 30, 2023
(With Comparative Data for Prior Year)
131
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
ReplacementUnemploymentReplacement 2023 2022
Cash flows from operating activities:

Cash received from customers and user departments 5,442,580$ 4,842,316$ -$ 10,284,896$ 7,472,134$ Cash payments to suppliers for goods and services (753,056) (4,127,992) (1,427,122) (6,308,170) (11,023,399) Cash payments to employees for services (1,631,176) (655,413) - (2,286,589) (1,685,505) Net cash provided by (used for) operating activities 3,058,348 58,911 (1,427,122) 1,690,137 (5,236,770) Cash flows from noncapital financing activities:

Cash received from other funds 1,003,556 1,648,622 3,558,484 6,210,662 8,248,850 Intergovernmental revenue received 159,985 - - 159,985 - Net cash provided by (used for)
noncapital financing activities 1,163,541 1,648,622 3,558,484 6,370,647 8,248,850 Cash flows from capital and related financing activities:

Principal paid on capital debt (325,038) - - (325,038) (135,493) Interest paid on capital debt (121,301) - - (121,301) - Proceeds from note payable 1,241,068 - - 1,241,068 2,049,653 Proceeds from insurance settlement 41,562 1,326,382 - 1,367,944 503,000 Proceeds from sale of capital assets 67,960 - - 67,960 - Acquisition of capital assets (3,485,206) - (610,835) (4,096,041) (1,440,414) Net cash provided by (used for) capital
and related financing activities (2,580,955) 1,326,382 (610,835) (1,865,408) 976,746 Cash flows from investing activities:

Investment income (loss) 77,931 163,423 80,235 321,589 (858,845) Net cash provided by (used for) investing activities 77,931 163,423 80,235 321,589 (858,845) Net increase (decrease) in cash and cash equivalents 1,718,865 3,197,338 1,600,762 6,516,965 3,129,981 Cash and cash equivalents at beginning of year 7,235,650 15,950,600 8,106,815 31,293,065 28,163,084 Cash and cash equivalents at end of year 8,954,515 $ 19,147,938 $ 9,707,577 $ 37,810,030 $ 31,293,065 $ Reconciliation of operating income (loss) to net cash
provided by (used for) operating activities:

Operating income (loss) 1,576,071 $ 366,587 $ (1,450,785)$ 491,873 $ (975,432) $ Adjustments to reconcile operating income (loss)
to net cash provided by (used for) operating activities:

Depreciation 1,120,805 - - 1,120,805 1,248,411 (Increase) decrease in prepaid items - (45,022) - (45,022) (2,062,787) (Increase) decrease in inventories 90,986 - - 90,986 (108,595) Increase (decrease) in accounts payable 206,852 208,344 - 415,196 (196,786) Increase (decrease) in accrued liabilities 63,634 1,045 23,663 88,342 13,501 Increase (decrease) in claims payable - (472,043) - (472,043) (3,155,082) Net cash provided by (used for) operating activities 3,058,348$ 58,911$ (1,427,122)$ 1,690,137$ (5,236,770)$ Totals

CITY OF COSTA MESA, CALIFORNIA
Internal Service Funds
Combining Statement of Cash Flows
Year ended June 30, 2023
(With Comparative Data for Prior Year)
132

STATISTICAL SECTION

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

STATISTICAL SECTION

STATISTICAL SECTION
This part of the City’s annual comprehensive financial report presents detailed information as a context for understanding what information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health.

FINANCIAL TRENDS TABLES 1 - 4
These schedules contain financial trend information to help the reader understand how the government’s financial performance and well- being have changed over time.

REVENUE CAPACITY TABLES 5 - 12
These schedules contain revenue information to help the reader assess the government’s most significant local revenue source.

DEBT CAPACITY TABLES 13 - 15
These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future.

DEMOGRAPHIC AND ECONOMIC INFORMATION TABLES 16 - 17
These schedules offer demographic and economic indicators to help the reader understand the environment within which the
government’s financial activities take place.

OPERATING INFORMATION TABLES 18 - 20
These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs.
133
TABLE 1
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Governmental Activities
Net investment in capital assets 211,291,261$ 211,133,458$ 216,195,466$ 219,280,752$ 235,177,233$ 248,255,931$ 248,815,081$ 255,443,158$ 249,096,798$ 258,068,790$ Restricted
Protection of Persons and
Property 1,441,906 552,573 1,022,546 217,303 150,169 872,898 1,628,892 1,329,350 1,333,365 1,672,814 Community programs 9,622,339 8,892,751 12,793,475 9,588,998 3,767,377 6,162,341 5,687,227 6,176,036 6,796,140 10,118,512 Public services 21,642,345 17,660,289 15,495,090 20,253,747 13,625,826 14,845,159 17,051,750 18,047,015 20,103,188 7,236,370 Unrestricted 51,403,839 (170,836,260) (159,357,224) (161,805,274) (224,657,548) (241,478,263) (251,417,100) (243,934,825) (225,702,393) (166,151,695) Total governmental activities
net position 295,401,690$ 67,402,811$ 86,149,353$ 87,535,526$ 28,063,057$ 28,658,066$ 21,765,850$ 37,060,734$ 51,627,098$ 110,944,791$ Source: Government-Wide Financial Statements

NET POSITION BY COMPONENT

LAST TEN FISCAL YEARS
(accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
134
TABLE 2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Expenses
Governmental Activities:

General government 23,396,581$ 25,225,607$ 24,631,010$ 28,474,037$ 31,695,402$ 34,008,731$ 32,124,703$ 36,763,868$ 31,808,370$ 34,980,361$ Protection of persons and
property 62,634,432 64,184,047 63,956,413 70,786,483 86,777,544 86,440,751 96,625,585 88,643,852 98,324,072 73,551,002 Community programs 6,784,867 10,189,480 4,639,743 12,069,675 10,126,755 16,363,506 17,285,898 22,007,275 14,887,015 21,097,340 Public services 22,768,197 21,549,681 22,498,495 21,415,061 20,062,183 27,937,004 16,269,612 17,663,842 21,645,247 13,379,020 Interest on long-term debt 1,273,152 1,210,723 1,081,605 974,233 1,082,361 1,138,694 1,083,190 986,593 929,979 962,189 Total primary government
expenses 116,857,229 122,359,538 116,807,266 133,719,489 149,744,245 165,888,686 163,388,988 166,065,430 167,594,683 143,969,912 Program Revenues
Governmental Activities:

Charges for services:

Protection of persons and
property 2,338,910 2,299,476 2,707,819 2,819,809 3,805,473 7,267,233 7,461,872 5,497,350 6,846,240 8,548,513 Community programs 6,229,677 7,498,348 8,232,995 7,577,878 9,536,570 8,207,122 4,816,413 5,243,843 6,220,199 5,440,973 Public services 2,680,625 3,089,801 3,721,366 3,232,506 5,046,984 6,179,653 7,096,062 6,372,272 8,896,422 8,551,558 Operating grants and
contributions 8,534,673 8,562,955 4,907,815 4,487,089 7,727,382 9,339,283 10,576,719 32,519,129 14,404,940 19,907,594 Capital grants and
contributions 6,148,876 5,143,592 3,370,260 7,114,471 4,755,573 9,142,040 6,251,484 8,267,623 5,528,637 3,905,958 Total primary government
revenues 25,932,761 26,594,172 22,940,255 25,231,753 30,871,982 40,135,331 36,202,550 57,900,217 41,896,438 46,354,596 Total primary government
net expense (90,924,468)$ (95,765,366)$ (93,867,011)$ (108,487,736)$ (118,872,263)$ (125,753,355)$ (127,186,438)$ (108,165,213)$ (125,698,245)$ (97,615,316)$ General Revenues and Other
Changes in Net Position
Governmental Activities:

Taxes:

Property taxes 22,984,093$ 24,139,297$ 26,168,612$ 37,925,385$ 40,373,351$ 43,226,688$ 45,548,585$ 47,891,698$ 49,706,079$ 53,806,587$ Sales and use taxes 50,329,310 52,117,128 58,524,162 57,591,889 56,971,636 62,689,811 55,866,831 63,738,411 77,165,533 79,851,289 Transient occupancy tax 7,676,090 7,995,154 8,622,505 8,924,854 8,819,617 8,595,417 6,587,224 4,282,802 8,366,278 9,830,790 Franchise taxes 4,891,465 4,885,925 5,060,402 4,593,631 4,965,515 5,042,551 4,822,964 4,895,574 5,318,541 6,094,232 Business tax 916,285 954,408 973,521 918,928 919,450 1,093,154 1,663,100 1,227,843 1,468,202 1,907,551 Other intergovernmental
unrestricted 9,229,059 5,660,305 11,209,989 51,340 60,031 55,343 91,674 84,182 130,289 275,292 Investment income (loss) 1,772,900 1,692,528 1,871,216 496,650 256,438 4,264,987 4,075,623 (80,831) (3,609,117) 1,821,815 Miscellaneous 495,154 949,533 913,351 1,333,610 1,903,266 1,380,413 1,638,221 1,420,418 1,718,804 3,345,453 Settlements 121,971 - - - - - - - - - Total primary government 98,416,327 98,394,278 113,343,758 111,836,287 114,269,304 126,348,364 120,294,222 123,460,097 140,264,609 156,933,009 Change in Net Position 7,491,859$ 2,628,912$ 19,476,747$ 3,348,551$ (4,602,959)$ 595,009$ (6,892,216)$ 15,294,884$ 14,566,364$ 59,317,693$ Source: Government-Wide Financial Statements
Fiscal Years

CHANGES IN NET POSITION

LAST TEN FISCAL YEARS
(accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
135
TABLE 3
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
General fund
Nonspendable 3,430,104$ 4,165,795$ 2,486,085$ 2,253,843$ 2,038,518$ 280,195$ 362,189$ 964,846$ 603,547$ 458,687$ Restricted - - - - - - - 1,778,220 3,061,154 3,178,229 Committed 16,125,000 16,125,000 16,125,000 16,125,000 16,125,000 23,625,000 25,125,000 25,125,000 25,125,000 25,125,000 Assigned 10,016,092 11,325,819 13,820,663 13,819,088 13,730,832 8,940,072 9,151,062 8,195,429 12,469,067 14,646,622 Unassigned 20,629,130 22,199,337 32,040,713 30,867,198 23,329,730 20,451,232 18,825,417 17,428,766 16,517,079 15,628,416 Total general fund 50,200,326$ 53,815,951$ 64,472,461$ 63,065,129$ 55,224,080$ 53,296,499$ 53,463,668$ 53,492,261$ 57,775,847$ 59,036,954$ All other governmental funds
Restricted 25,097,114$ 20,914,771$ 19,309,083$ 28,056,898$ 30,108,463$ 21,753,832$ 25,676,330$ 25,200,380$ 26,636,885$ 35,221,550$ Assigned 11,741,220 19,147,805 23,738,380 27,619,480 25,415,708 24,337,823 25,474,636 31,173,285 34,939,313 44,680,442 Unassigned (2,288,538) (368,083) (139,064) (248,979) (6,353) (9,453) (2,312,520) (451,068) (1,850,787) 961,694 Total all other governmental funds 34,549,796$ 39,694,493$ 42,908,399$ 55,427,399$ 55,517,818$ 46,082,202$ 48,838,446$ 55,922,597$ 59,725,411$ 80,863,686$ Source: Fund Financial Statements

CITY OF COSTA MESA, CALIFORNIA

FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
136
TABLE 4
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Revenues
Taxes 86,797,242$ 90,091,915$ 99,349,202$ 99,464,729$ 110,884,896$ 123,969,423$ 114,463,599$ 122,138,588$ 141,919,878$ 151,484,175$ Licenses and permits 2,085,348 2,313,296 2,983,081 2,933,305 3,837,564 5,104,022 5,496,049 4,368,740 7,331,252 6,342,557 Fines and forfeits 3,614,144 1,367,190 1,609,134 1,352,682 1,612,230 2,468,993 2,067,884 1,061,346 1,176,357 1,266,768 Intergovernmental 21,769,293 22,010,125 17,612,288 23,205,265 10,558,481 16,646,740 15,006,292 39,855,634 18,077,452 26,254,095 Charges for services 4,721,191 6,117,030 6,668,445 5,909,112 9,553,421 9,990,454 9,489,827 7,309,872 9,030,556 10,155,524 Rental 3,021,585 3,113,662 3,336,053 3,289,222 3,404,676 3,479,527 3,566,255 4,773,662 4,815,577 4,722,383 Investment income (loss) 1,712,058 1,771,527 1,775,765 420,561 244,606 3,616,606 3,394,398 (37,016) (2,767,803) 1,516,600 Settlements 121,971 - - - - - - - - -
Miscellaneous 1,177,245 2,206,428 1,679,917 2,170,215 2,081,739 3,226,941 2,161,633 1,410,996 1,545,970 1,615,437 Total revenues 125,020,077 128,991,173 135,013,885 138,745,091 142,177,613 168,502,706 155,645,937 180,881,822 181,129,239 203,357,539 Expenditures
General government 23,893,450 24,699,226 25,102,067 26,518,266 29,048,355 29,219,530 30,808,182 31,851,632 33,567,585 36,619,271 Protection of persons and
property 64,047,209 61,096,404 64,426,376 66,141,703 70,198,327 78,762,212 82,939,180 84,027,648 90,698,363 98,044,159 Community programs 6,442,241 8,821,298 8,019,356 9,410,168 10,888,393 13,265,742 14,297,137 18,578,311 16,267,400 19,397,579 Public services 22,863,385 21,860,252 19,836,633 21,680,495 42,305,565 50,429,478 20,506,675 27,033,542 20,962,292 17,514,252 Debt service:

Principal 2,450,000 2,540,000 2,650,000 2,755,000 4,070,000 1,795,261 1,815,392 1,890,391 2,202,563 2,172,370 Interest 1,296,111 1,213,671 1,109,037 992,383 1,041,853 1,298,315 1,230,958 1,155,360 1,095,786 999,864 Bond issuance costs - - - - 344,858 - - - - -
Payment to refunded
bond escrow agent - - - - 2,302,225 - - - - - Total expenditures 120,992,396 120,230,851 121,143,469 127,498,015 160,199,576 174,770,538 151,597,524 164,536,884 164,793,989 174,747,495 Excess of revenues over
(under) expenditures 4,027,681 8,760,322 13,870,416 11,247,076 (18,021,963) (6,267,832) 4,048,413 16,344,938 16,335,250 28,610,044 Other financing sources
(uses):

Transfers in 8,597,756 14,253,945 12,852,940 16,058,019 12,370,819 15,899,228 10,811,227 26,619,517 13,116,263 22,212,189 Transfers out (9,094,260) (14,253,945) (12,852,940) (19,658,019) (18,063,009) (21,148,507) (11,936,227) (35,851,711) (21,365,113) (28,422,851) Issuance of debt - - - - 29,735,000 153,914 - - - - Premium on debt issue - - - - 3,694,172 - - - - - Payment to bond
escrow agent - - - - (14,530,520) - - - - -
Total other financing
sources (uses) (496,504) - - (3,600,000) 13,206,462 (5,095,365) (1,125,000) (9,232,194) (8,248,850) (6,210,662) Net change in fund
balances 3,531,177$ 8,760,322$ 13,870,416$ 7,647,076$ (4,815,501)$ (11,363,197)$ 2,923,413$ 7,112,744$ 8,086,400$ 22,399,382$ Debt service as a percentage
of noncapital expenditures 3.44% 3.37% 3.38% 3.18% 5.64% 2.21% 2.19% 2.10% 2.27% 2.03% Source: Fund Financial Statements

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
137
TABLE 5
Transient Proposition
Fiscal Years Sales Property Occupancy Franchise Business 172 Total 2014 49,264,634 22,984,093 7,676,090 4,891,465 916,285 1,064,676 86,797,243 2015 51,115,064 24,139,297 7,995,154 4,885,926 954,408 1,002,064 90,091,914 2016 57,593,561 26,168,612 8,622,505 5,060,402 973,521 930,601 99,349,202 2017 56,556,867 27,435,427 8,924,854 4,593,631 918,928 1,035,022 99,464,729 2018 54,656,183 40,458,402 8,819,617 4,965,515 919,450 1,065,729 110,884,896 2019 64,902,009 42,873,901 8,595,417 5,042,551 1,093,154 1,126,008 123,633,040 2020 55,866,831 45,548,585 6,587,224 4,822,964 1,663,100 1,102,506 115,591,210 2021 63,738,411 47,891,698 4,282,802 4,895,574 1,227,843 1,151,953 123,188,281 2022 77,165,533 49,706,079 8,366,278 5,318,541 1,468,199 1,467,173 143,491,803 2023 79,851,289 53,442,949 9,830,790 6,094,232 1,907,551 1,396,896 152,523,707 Source: Required Supplementary Information

CITY OF COSTA MESA, CALIFORNIA

TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
138
TABLE 6
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Apparel stores 681,348$ 715,097$ 727,073$ 754,197$ 714,478$ 814,593$ 835,594$ 569,776$ 1,031,162$ 1,167,167$ General merchandise 599,163 615,702 618,702 582,500 565,635 534,747 512,500 315,884 515,117 553,045 Food stores 87,225 88,872 103,225 90,941 88,385 90,178 91,470 92,557 91,147 91,789 Eating and drinking
establishments 421,830 443,384 469,465 496,041 515,683 535,744 556,504 405,696 589,711 681,847 Building materials 180,198 193,248 205,343 224,225 236,497 242,750 251,846 251,117 314,137 351,411 Auto dealers and supplies 670,976 753,804 858,187 924,641 1,006,804 1,153,396 1,230,062 1,149,598 1,380,887 1,402,985 Service stations 263,352 245,432 215,707 190,969 200,170 235,572 232,911 161,495 242,199 315,387 Other retail stores 972,383 1,025,424 1,047,009 1,050,063 1,116,930 1,178,337 1,165,897 943,056 1,320,071 1,509,430 All other outlets 914,501 1,015,134 1,112,851 1,206,829 1,157,415 1,269,997 1,402,675 1,447,700 1,697,098 1,809,139 4,790,976$ 5,096,097$ 5,357,562$ 5,520,406$ 5,601,997$ 6,055,314$ 6,279,459$ 5,336,879$ 7,181,529$ 7,882,200$ City direct sales tax rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Source: State of California Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office and the HdL Companies Calendar Years

TAXABLE SALES BY CATEGORY

LAST TEN CALENDAR YEARS
(in thousands of dollars)

CITY OF COSTA MESA, CALIFORNIA
139
TABLE 7
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Category Sales Rank Sales Sales Rank Sales
All other outlets 1,809,139$ 1 22.95% 914,501$ 2 19.09% Other retail stores 1,509,430 2 19.15% 972,383$ 1 20.30% Auto dealers and supplies 1,402,985 3 17.80% 670,976$ 4 14.00% Apparel stores 1,167,167 4 14.81% 681,348$ 3 14.22% Eating and drinking establishments 681,847 5 8.65% 421,830$ 6 8.80% General merchandise 553,045 6 7.02% 599,163$ 5 12.51% Building materials 351,411 7 4.46% 180,198$ 8 3.76% Service stations 315,387 8 4.00% 263,352$ 7 5.50% Food stores 91,789 9 1.16% 87,225$ 9 1.82% Source: State of California Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office and the HdL Companies

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL SALES TAX REMITTERS BY CATEGORY

CURRENT YEAR AND NINE YEARS AGO
2022 2013
140
TABLE 8
City Orange State of Total
Local County California Sales Tax
Fiscal Years Rate Rate Rate Rate
2014 1.00 0.50 6.50 8.00 2015 1.00 0.50 6.50 8.00 2016 1.00 0.50 6.50 8.00 2017 1.25 0.50 6.00 7.75 2018 1.25 0.50 6.00 7.75 2019 1.25 0.50 6.00 7.75 2020 1.25 0.50 6.00 7.75 2021 1.25 0.50 6.00 7.75 2022 1.25 0.50 6.00 7.75 2023 1.25 0.50 6.00 7.75 Source: State of California Board of Equalization

CITY OF COSTA MESA, CALIFORNIA

DIRECT AND OVERLAPPING SALES TAX RATES

LAST TEN FISCAL YEARS
141
TABLE 9
Fiscal Year Taxes Levied Collected for
Ended for the Percentage Subsequent Percentage
June 30, Fiscal Year Amount of Levy Years (2) Amount of Levy (1) 2014 22,178,464 21,732,926 97.99% 285,325 22,018,251 99.28% 2015 23,405,838 22,897,171 97.83% 242,634 23,139,805 98.86% 2016 24,960,369 24,222,713 97.04% 227,104 24,449,817 97.95% 2017 26,330,538 25,640,344 97.38% 216,963 25,857,308 98.20% 2018 27,825,846 27,272,459 98.01% 198,624 27,471,083 98.73% 2019 29,820,941 29,186,740 97.87% 196,710 29,383,450 98.53% 2020 31,300,931 30,714,805 98.13% 214,204 30,929,009 98.81% 2021 32,769,949 32,203,394 98.27% 294,030 32,497,424 99.17% 2022 33,917,865 33,032,650 97.39% 298,304 33,330,954 98.27% 2023 37,663,468 36,812,087 97.74% 268,998 37,081,085 98.45% (1) The Percentage of Levy may exceed 100% if the amounts collected for subsequent years exceed the delinquency. (2) The County of Orange only makes this data available by collection year. Data by levy year is not available.

Source: Orange County Assessor 2022/2023 Combined Tax Rolls

CITY OF COSTA MESA, CALIFORNIA
Fiscal Year of the Levy Total Collections to Date
Collected within the

PROPERTY TAX LEVIES AND COLLECTIONS

LAST TEN FISCAL YEARS
142
TABLE 10
Less: Total Taxable Estimated Taxable Assessed
Residential Commercial Industrial Miscellaneous Tax-Exempt Assessed Total Direct Actual Taxable Value as a Percentage Fiscal Years Property Property Property Property Property Value Tax Rate Value (1) of Actual Taxable Value
2014 9,101,889,466 3,566,114,710 1,117,794,289 1,140,508,581 - 14,926,307,046 0.15040% 14,926,307,046 100.00% 2015 9,745,389,688 3,633,678,888 1,126,437,386 1,206,217,946 - 15,711,723,908 0.15035% 15,711,723,908 100.00% 2016 10,456,976,124 3,766,616,981 1,190,970,066 1,118,171,362 - 16,532,734,533 0.15038% 16,532,734,533 100.00% 2017 11,033,602,522 3,918,807,590 1,336,961,702 1,180,683,099 - 17,470,054,913 0.15014% 17,470,054,913 100.00% 2018 11,685,011,850 4,096,390,455 1,500,236,782 1,222,877,713 - 18,504,516,800 0.15009% 18,504,516,800 100.00% 2019 12,557,043,739 4,473,583,090 1,646,413,988 1,223,132,784 - 19,900,173,601 0.15002% 19,900,173,601 100.00% 2020 13,389,240,208 4,687,990,535 1,744,806,502 1,290,509,110 - 21,112,546,355 0.14848% 21,112,546,355 100.00% 2021 14,143,690,438 4,858,631,950 1,822,103,130 1,295,199,231 - 22,119,624,749 0.14856% 22,119,624,749 100.00% 2022 14,753,436,539 4,866,777,961 1,875,392,912 1,244,087,188 - 22,739,694,600 0.14824% 22,739,694,600 100.00% 2023 15,853,782,350 5,070,138,124 2,052,311,019 1,390,912,662 - 24,367,144,155 0.15103% 24,367,144,155 100.00% (1) In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1%, based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an inflation factor (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above, represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Therefore, the estimated actual taxable value equals the total taxable assessed value.

Source: HdL Coren & Cone, Orange County Assessor 2013/2014 - 2022/2023 Combined Tax Rolls.

CITY OF COSTA MESA, CALIFORNIA

ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
143
TABLE 11
Total County of School Special
Basic Direct Orange District Districts
Fiscal Year Rate Rate (1)
Debt Debt Debt
2014 0.14879 0.15040 0.36649 0.48300 0.00535 2015 0.14879 0.15035 0.36649 0.48300 0.00515 2016 0.14879 0.15038 0.36649 0.48300 0.00515 2017 0.14879 0.15014 0.36649 0.48300 0.00515 2018 0.14879 0.15009 0.36649 0.48300 0.00515 2019 0.14879 0.15002 0.36649 0.48300 0.00515 2020 0.14879 0.14848 0.36649 0.48300 0.00515 2021 0.14879 0.14856 0.36649 0.48300 0.00515 2022 0.14879 0.14824 0.36649 0.48300 0.00515 2023 0.14879 0.15103 0.36649 0.48300 0.00515 (1) Per the Government Finance Officers Association, the definition of "total direct rate" is as follows:
"The weighted average of all individual rates applied by the government preparing the statistical section The "total direct rate" for the City of Costa Mesa is a weighted average derived by dividing total City revenue by taxable assessed value.

Source: HdL Coren & Cone, Orange County Assessor 2013/2014 - 2022/2023 Combined Tax Rolls.

City Direct Rates Overlapping Rates

CITY OF COSTA MESA, CALIFORNIA

DIRECT AND OVERLAPPING PROPERTY TAX RATES

LAST TEN FISCAL YEARS
144
TABLE 12
Percentage Percentage
of Total City of Total City
Property Property Property Property
Tax Tax Tax Tax
Taxpayer Revenue Rank Revenue Revenue Rank Revenue
The Irvine Company LLC 760,460$ 1 1.78% 340,457$ 1.32% Trust Costa Mesa Courtyards LLC 587,577 2 1.38% 408,369 1.58% Triangle Center LLC 574,988 3 1.35%
Behringer Harvard Pacifica Project 540,089 4 1.26% South Coast Plaza 534,320 5 1.25% 410,258 1.59% PR II MCC South Coast Property Owner 413,121 6 0.97% United Dominion Realty LP 336,279 7 0.79% 246,977 0.96% 1901 Newport LLC Royal Street 298,731 8 0.70% 320,317 1.24% Automobile CLUB of Southern CA 272,125 9 0.64% Advanced Group 254,633 10 0.60% 215,584 0.84%
WWG TSQ Owner LLC 255,012 0.99%
Marjack LLC Irvine Company LLC 221,433 0.86%
RREEF America Reit II Corporation 388,127 1.51% Casden Lakes LP 183,577 0.71%
Total 4,572,323$ 10.71% 2,990,109$ 11.60%
Source: HdL Coren & Cone, Orange County Assessor 2022/2023 & 2013/2014 Combined Tax Rolls.

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL PROPERTY TAX PAYERS

CURRENT YEAR AND NINE YEARS AGO
2022-2023 2013-2014
145
TABLE 13
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
General bonded debt outstanding
General obligation bonds -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Redevelopment bonds (1) - - - - - - - - - - Total -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Percentage of taxable
assessed value 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% Per capita -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Less: Amounts set aside to
repay general debt - - - - - - - - - - Total net debt applicable to
debt limit - - - - - - - - - - Legal debt limit
(3.75% of Assessed Value) 607,508,126 637,377,201 669,713,004 705,606,516 743,516,945 796,252,660 842,737,426 881,515,407 907,985,504 968,274,281 Legal debt margin 607,508,126 637,377,201 669,713,004 705,606,516 743,516,945 796,252,660 842,737,426 881,515,407 907,985,504 968,274,281 Legal debt margin as a
percentage of the debt limit 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% (1) As of February 1, 2012, the Successor Agency to the former Costa Mesa Redevelopment Agency is responsible for the outstanding Redevelopment debt.

Source: City of Costa Mesa Finance Department and Orange County Assessor 2022/2023 combined tax rolls

FISCAL YEARS

CITY OF COSTA MESA, CALIFORNIA

RATIO OF GENERAL BONDED DEBT OUTSTANDING AND LEGAL DEBT MARGIN

LAST TEN FISCAL YEARS
146
TABLE 14
Percentage
Fiscal Year of Total Certificates Lease Total Percentage Ended Redevelopment Taxable Per Revenue of Loan Purchase Primary of Personal Per June 30, Bond (1)
Assessed Value Capita Bonds (2)
Participation Payable Financing Government Income Capita 2014 - 0.0000% - 7,005,000 22,560,000 - 415,395 29,980,395 0.79% 886.84 2015 - 0.0000% - 5,830,000 21,195,000 - - 27,025,000 0.73% 832.10 2016 - 0.0000% - 4,600,000 19,775,000 - - 24,375,000 0.64% 732.66 2017 - 0.0000% - 3,325,000 18,295,000 - - 21,620,000 0.57% 649.85 2018 - 0.0000% - 34,103,345 - - - 34,103,345 0.77% 991.21 2019 - 0.0000% - 32,170,580 - 143,653 - 32,314,233 0.78% 906.39 2020 - 0.0000% - 30,222,813 - 128,261 - 30,351,074 0.69% 788.54 2021 - 0.0000% - 28,200,046 - 112,870 1,472,402 29,785,318 0.64% 721.65 2022 - 0.0000% - 26,102,279 - 97,479 1,336,909 27,536,667 0.55% 613.11 2023 - 0.0000% - 24,124,512 - 82,086 1,198,931 25,405,529 0.48% 528.74 (1) As of February 1, 2012, the Successor Agency to the former Costa Mesa Redevelopment Agency is responsible for the outstanding Redevelopment debt. (2) Amount includes the unamortized Bond Premium.

Source: City of Costa Mesa Finance Department

CITY OF COSTA MESA, CALIFORNIA

RATIOS OF OUTSTANDING DEBT BY TYPE

LAST TEN FISCAL YEARS
Other Governmental Activities DebtGeneral Bonded Debt
147
TABLE 15
Estimated
Share of
Estimated Direct and
Debt Percenta ge Overlappin g
Governmental Unit Outstanding Applicable (2) Debt
Overlapping Debt
Newport Mesa Unified School District 224,754,326 $ 26.396% 59,326,152 $ Coast Community College District 923,641,084 13.483% 124,534,527 Santa Ana Unified School District 465,406,416 3.483% 16,210,105 Rancho Santiago Community College District 176,539,286 1.502% 2,651,620 Rancho Santiago Community College District SFID No. 1 149,820,000 2.833% 4,244,401 Metropolitan Water District 19,215,000 0.681% 130,854 OC General Fund Obligation 451,165,000 3.420% 15,429,843 OC Board of Education Certificate of Participation 10,860,000 3.420% 371,412 OC Santa Ana Heights Tax Allocation Bonds 1,320,000 0.117% 1,544 Total Overlapping Debt 2,422,721,112 222,900,458 City Direct Debt
Costa Mesa Public Financing Authority 2006 Revenue Refunding Bonds/ Costa Mesa Community Facilities District No. 91-1 - $ 100% - $ City of Costa Mesa General Fund Obligations (1) 21,280,000 100% 21,280,000 Financed Lease 1,241,068 100% 1,241,068
Lease Payable 1,045,588 100% 1,045,588
Loan Payable 82,086 100% 82,086
Note Payable 3,061,524 100% 3,061,524
Total Direct Debt 26,710,266 26,710,266
Total Direct and Overlapping Debt 249,610,724$
(1) See Note 8 in Finance Statement for more information about the City's direct debt. The amount included the unamortized Bond Premium $2,992,279
(2) Overlapping governments are those that coincide with the geographic boundaries of the city. The percentage of overlapping debt applicable is estimated by using taxable assessed values. Applicable percentages were estimated by determining the portion of another governmental unit’s taxable assessed value that is within the city’s boundaries and dividing it by each unit’s total taxable assessed value.

Source: HdL Coren & Cone, Orange County Assessor and Auditor Combined 2022/23 Lien Data Tax Rolls.

AS OF JUNE 30, 2023

DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

CITY OF COSTA MESA, CALIFORNIA
148
TABLE 16
Personal
Income Per Capita Orange County
(thousands Personal Median School Unemployment
Year Population (2)
of dollars) Income (1)
Age
(1) Enrollment (3) Rate (4)
2014 111,846 3,650,877 32,642 34 21,683 5.20% 2015 111,835 3,780,694 33,806 34 21,540 4.30% 2016 114,603 3,722,083 32,478 34 21,392 4.40% 2017 114,044 3,794,132 33,269 34 20,801 3.80% 2018 115,296 3,966,839 34,406 35 20,853 3.30% 2019 115,830 4,129,505 35,651 35 20,316 3.00% 2020 114,778 4,417,883 38,490 35 20,008 13.60% 2021 112,780 4,654,963 41,274 35 20,173 6.50% 2022 111,394 5,003,062 44,913 36 17,962 5.40% 2023 111,183 5,342,262 48,049 36 17,816 3.70% Source: (1) - City of Costa Mesa Finance Department / and The HdL Companies (2) - California State Department of Finance
(3) - Newport-Mesa Unified School District.
(4) - State of California Employment Development Department as of June 30th each year.

CITY OF COSTA MESA, CALIFORNIA

DEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN CALENDAR YEARS
149
TABLE 17
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment EPL Intermediate, Inc. 3,998 1 6.23%
Experian Information Solutions, Inc. 3,700 2 5.77% 3,700 5.73% Coast Community College District 2,900 3 4.52% 2,900 4.49% Orange Coast College 1,900 4 2.96% 1,900 2.94% Automobile Club of Southern California 1,773 5 2.76% Anduril Industries 1,100 6 1.71%
Deloitte & Touche LLP 700 7 1.09%
Filenet Corporation 600 8 0.94%
Vans 550 9 0.86%
Vanguard University 319 10 0.50%
Source: City of Costa Mesa Department of Economic Development, Dunn & Bradstreet, State of California Employment Development Department

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL EMPLOYERS

CURRENT YEAR AND NINE YEARS AGO
2022-2023 2013-2014
150
TABLE 18
Function/Program 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General Government
Number of residents served via
public services programs 1,000 1,500 785 750 700 700 700 700 1,042 1,123 Accounts payable checks issued 9,506 9,764 9,182 9,031 8,734 8,857 8,604 7,269 7,079 7,347 Total printshop photocopies produced 1,691,606 1,806,965 1,619,784 1,749,460 1,996,486 1,699,007 1,116,892 1,250,000 1,250,000 1,250,000 Protection of persons and property
Police protection
Emergency calls 1,180 1,330 N/A 1,000 1,029 882 876 847 1,027 1,248 Calls responded to within 5 minutes 82% 77% N/A 66% 72% 75% 72% 76% 96% 96% Assigned theft cases 1,000 400 900 1,200 N/A N/A N/A N/A 2,171 1,597 Percentage of theft cases cleared 40% 40% 40% 60% 74% 64% 52% 31% 59% 59% Assigned burglary cases 800 350 400 200 N/A N/A N/A N/A 897 1,097 Percentage of burglary cases
cleared 40% 40% 40% 70% 69% 64% 50% 38% 54% 38%
Case and arrest reports processed 18,133 15,128 14,584 19,310 19,319 18,382 19,079 18,794 22,135 20,050 Fire protection
Number of calls for service 11,300 11,100 12,955 12,721 12,936 10,572 10,637 10,073 11,249 12,063 Fire related responses 218 214 238 271 218 261 245 246 222 251 Emergency medical aid responses 7,818 7,250 9,366 9,374 9,603 9,639 9,454 8,960 10,055 10,746 Community Programs
Number of program participants at
the Downtown Recreation Center 31,018 31,521 33,446 34,939 38,247 42,000 28,000 21,150 21,150 15,000 Over-the-counter plan checks
reviewed within five working days 337 225 240 240 522 630 630 630 N/A N/A Number of inspections performed 17,460 22,560 29,100 31,040 29,585 29,100 18,966 28,012 35,000 37,000 Complaint response within two
working days 90% 90% 90% 90% 90% 90% 90% 90% 100% N/A
Public services
Number of trees trimmed annually 8,140 7,700 7,750 6,250 6,250 6,250 8,750 5,291 3,317 3,611 Number of catch basins cleaned
annually 1,165 1,165 1,165 1,115 1,100 1,100 1,165 1,165 1,165 1,165 Source: City of Costa Mesa Finance Department
Fiscal Years

CITY OF COSTA MESA, CALIFORNIA

OPERATING INDICATORS BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
151
TABLE 19
Function/Program 2014 2015 (1) 2016 2017 2018 2019 2020 2021 2022 2023 General Government
City Council 6.0 6.0 6.0 6.0 6.0 8.0 10.5 10.5 10.5 10.5 City Manager's Office 29.75 38.41 33.30 37.59 39.74 41.60 36.48 37.00 37.88 47.95 Financial Services 27.21 20.21 21.71 21.50 22.25 22.50 22.00 23.00 23.00 24.00 Information Technology - 10.50 12.50 12.94 13.16 12.16 13.70 15.50 17.50 20.50 Administrative Services - - - - - - - - - - Development Services 27.00 37.25 43.50 46.23 45.95 44.80 48.79 51.64 52.64 53.34 Park and Community
Services - 53.43 70.70 74.00 80.54 87.23 96.71 95.67 96.73 88.16 Protection of Persons and Property
Police Protection 237.68 236.41 232.63 234.46 235.60 233.76 235.17 235.86 236.36 240.36 Fire Protection 95.75 84.75 87.25 87.50 94.00 94.00 95.00 96.25 97.25 98.75 Public Services 124.43 83.37 81.77 84.82 77.47 72.05 76.70 76.50 80.00 81.25 547.82 570.33 589.36 605.04 614.71 616.10 635.05 641.92 651.86 664.81

CITY OF COSTA MESA, CALIFORNIA

FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
152
(1) The Information Technology was separated from the Finance Department and Park & Community Services Department was separated from Public Works Department.

Source: City of Costa Mesa Finance Department
TABLE 20
Function/Program 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Police
Stations/substations 2 2 2 2 2 2 2 2 2 2 Fire
Fire stations 6 6 6 6 6 6 6 6 6 6 Other public works
Streets (lane miles) 529.0 529.0 529.0 529.0 535.6 535.6 535.6 540.0 522.0 522.0 Streetlights 6,674 6,674 6,674 6,674 6,674 6,881 6,869 6,869 6,882 6,882 Traffic signals 123 124 124 124 125 126 127 128 131 131 Parks and recreation
Acres of open space 1,957 1,957 1,957 1,957 1,957 1,957 2,067 2,067 2,067 2,067 Park sites 30 31 31 31 31 31 32 32 30 30 Baseball/softball diamonds 5 6 6 6 6 6 6 6 6 6 Soccer/football fields 10 10 10 10 10 10 6 6 6 6 Community centers 3 4 4 3 3 3 4 4 3 3 Wastewater (miles)
Sanitary sewers 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 Storm sewers 45.5 45.5 45.5 45.5 45.5 45.5 45.5 64.7 45.5 45.5 Source: City of Costa Mesa Finance Department
Fiscal Years

CITY OF COSTA MESA, CALIFORNIA

CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
153

Costa Mesa City CouncilFebruary 20, 2024

Costa Mesa City Council
February 20, 2024