COSTA ME
SA HOUSING
AUTHORITY
(A Component Unit of the
City of Costa Mesa)
Financial Statements
Year ended June 30, 2023
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Schedule of Revenues, Expenditures and Changes in
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INDEPENDENT AUDITOR’S REPORT
Board of Directors
Costa Mesa Housing Authority
Costa Mesa, California
Report on the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and the major fund of the Costa Mesa Housing Authority (Authority), a component unit of the City of Costa Mesa, California, as of and for the year June 30, 2023, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the Authority, as of June 30, 2023, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Authority and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As described more fully in Note 1A, the basic financial statements present only the Authority and are not intended to present fairly the financial position and results of operations of the City of Costa Mesa, California, in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
The Authority’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s 1 ability to continue as a going concern for one year after the date that the financial statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the schedule of proportionate share of the net pension liability and related ratios, the schedule of pension plan contributions, the schedule of proportionate share of the Other Post Employment Benefit liability and related ratios, and the schedule of revenues, expenditures and changes in fund balance - budget and actual, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic 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 2 limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Management has not presented the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information.
Report on Summarized Comparative Information
We have previously audited the Authority’s 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 Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over financial reporting and compliance.
Irvine, California
December 21, 2023
3 2023 2022
ASSETS:
Cash and investments (Note 2) 6,904,364$ 3,448,364$ Cash and investments with fiscal agent (Note 2) 24,493 22,800 Due from other governments 1,220,209 546,140
Rent receivable 58,613 58,422
Interest receivable 5,050 6,096
Loans receivable, net of allowance (Note 3) 496,064 608,294 Lease receivable (Note 6) 1,434,726 1,512,830
Capital assets (Note 4):
Not depreciated 2,063,865 2,063,865
Being depreciated, net 2,142,270 2,307,060
TOTAL ASSETS 14,349,654 10,573,871
DEFERRED OUTFLOWS OF RESOURCES:
Pension related (Note 7) 665,087 265,290
OPEB related (Note 8) 125,013 138,680
TOTAL DEFERRED OUTFLOWS OF RESOURCES 790,100 403,970 LIABILITIES:
Accounts payable 336,921 777,638
Accrued liabilities 28,771 21,895
Deposits 23,908 22,215
Net pension liability (Note 7) 2,586,560 1,690,541
OPEB liability (Note 8) 583,371 690,181
TOTAL LIABILITIES 3,559,531 3,202,470
DEFERRED INFLOWS OF RESOURCES:
Lease related (Note 6) 1,414,825 1,506,105
Pension related (Note 7) 38,780 554,476
OPEB related (Note 8) 180,623 32,591
TOTAL DEFERRED INFLOWS OF RESOURCES 1,634,228 2,093,172 NET POSITION:
Investment in capital assets 4,206,135 4,370,925 Restricted for community programs 5,739,860 1,311,274 TOTAL NET POSITION 9,945,995$ 5,682,199$
Governmental Activities
Costa Mesa Housing Authority
Statement of Net Position
June 30, 2023
(With comparative totals for June 30, 2022)
See accompanying notes to financial statements.
4 Operating Capital
Charges Grants and Grants and
Expenses for ServicesContributionsContributions 2023 2022 Governmental Activities:
Community programs 4,487,038$ 416,489$ 2,473,097$ -$ (1,597,452)$ (1,590,810)$ Total governmental
activities 4,487,038$ 416,489$ 2,473,097$ -$ (1,597,452) (1,590,810) General revenues:
Repayment of Successor Agency advance 342,011 349,917 Investment income (loss) 9,416 (68,124)
Other income 221,113 27,406
Transfer from the City of Costa Mesa 5,288,708 1,713,828 Total general revenues and transfers 5,861,248 2,023,027 CHANGE IN NET POSITION 4,263,796 432,217
NET POSITION AT BEGINNING OF YEAR 5,682,199 5,249,982 NET POSITION AT END OF YEAR 9,945,995$ 5,682,199$
Program Revenues
Functions/Programs
Net (Expense) Revenue and
Changes in Net Position
Governmental Activities
Costa Mesa Housing Authority
Statement of Activities
Year ended June 30, 2023
(With comparative totals for the year ended June 30, 2022) See accompanying notes to financial statements.
5 2023 2022
ASSETS:
Cash and investments 6,904,364$ 3,448,364$
Cash and investments with fiscal agent 24,493 22,800 Due from other governments 1,220,209 546,140
Rent receivable 58,613 58,422
Interest receivable 5,050 6,096
Loans receivable, net of allowance 496,064 608,294 Lease receivable 1,434,726 1,512,830
TOTAL ASSETS 10,143,519$ 6,202,946$
LIABILITIES:
Accounts payable 336,921$ 777,638$
Accrued liabilities 28,771 21,895
Deposits payable 23,908 22,215
TOTAL LIABILITIES 389,600 821,748
DEFERRED INFLOWS OF RESOURCES:
Lease related 1,414,825 1,506,105
Unavailable revenue 38,549 251,833
TOTAL DEFERRED INFLOWS OF RESOURCES 1,453,374 1,757,938 FUND BALANCE:
Restricted for community programs 8,300,545 3,623,260 TOTAL FUND BALANCE 8,300,545 3,623,260
TOTAL LIABILITIES AND FUND BALANCE 10,143,519$ 6,202,946$ Costa Mesa Housing Authority
Balance Sheet
Governmental Fund
June 30, 2023
(with comparative totals for June 30, 2022)
See accompanying notes to financial statements.
6 Fund balance - total governmental fund 8,300,545$
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital Related Items
When capital assets (property, plant, equipment) that are to be used in governmental activities are purchased or constructed, the cost of those assets are reported as expenditures in governmental funds. However, the Statement of Net Position includes those capital assets among the assets of the Authority as whole:
Capital assets 5,359,665
Accumulated depreciation (1,153,530)
Deferred Inflows of Resources
Certain unavailable revenues that do not provide current financial resources are reported as deferred inflows of resources in the funds. 38,549 Pension and OPEB Related Transactions
Long-term liabilities applicable to the Authority's governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities. All liabilities (both current and long-term) are reported in the Statement of Net Position. Also, deferred outflows of resources and deferred inflows of resources related to the long term liabilities do not provide current financial resources and are therefore not presented in the governmental funds:
Deferred outflows of resources related to pensions 665,087 Deferred outflows of resources related to OPEB 125,013
Deferred inflows of resources related to pensions (38,780) Deferred inflows of resources related to OPEB (180,623) CalPERS pension liability (2,586,560)
OPEB liability (583,371)
Net position of governmental activities 9,945,995$
Costa Mesa Housing Authority
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position
June 30, 2023
See accompanying notes to financial statements.
7 2023 2022
REVENUES:
Rental income 416,489$ 338,732$
Repayment of Successor Agency advance 342,011 349,917 Intergovernmental 2,686,381 1,510,066
Investment income (loss) 9,416 (68,124)
Miscellaneous 221,113 27,406
TOTAL REVENUES 3,675,410 2,157,997
EXPENDITURES:
Current:
Community programs 4,286,833 3,963,750
TOTAL EXPENDITURES 4,286,833 3,963,750
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (611,423) (1,805,753) OTHER FINANCING SOURCES:
Transfer from the City of Costa Mesa 5,288,708 1,713,828 Net change in fund balances 4,677,285 (91,925)
FUND BALANCE - BEGINNING OF YEAR 3,623,260 3,715,185 FUND BALANCE - END OF YEAR 8,300,545$ 3,623,260$
(with comparative totals for June 30, 2022)
Statement of Revenues, Expenditures and Changes in Fund Balance Costa Mesa Housing Authority
Governmental Fund
Year ended June 30, 2023
See accompanying notes to financial statements.
8 Net change in fund balances - total governmental fund 4,677,285$ Amounts reported for governmental activities in the Statement of Activities are different because:
Capital Related Items
Governmental funds report capital outlay as expenditures.
However, in the Statement of Activities, the cost of those assets are allocated over their estimated useful lives as depreciation expense. This is the amount of depreciation charged to the program in the Statement of Activities in the current period:
Depreciation expense (164,790)
Deferred Inflows of Resources
Certain unavailable revenues that do not provide current financial resources are reported as deferred inflow of resources in the funds. (213,284) Pension
Pension expense reported in the governmental funds includes the annual required contributions. In the Statement of Activities, pension expenses includes the change in the net pension liability, and related changes in pension amounts for deferred outflows of resources and deferred inflows of resources. 19,474
OPEB
OPEB expense reported in the governmental funds includes the annual required contributions. In the Statement of Activities, OPEB expense includes the change in the net pension liability, and related changes in OPEB amounts for deferred outflows of resources and deferred inflows of resources. (54,889) Change in net position of governmental activities 4,263,796$ Costa Mesa Housing Authority
Reconciliation of the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balances
to the Statement of Activities
Year ended June 30, 2023
See accompanying notes to financial statements.
9 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
Year ended June 30, 2023
1. Reporting Entity and Summary of Significant Accounting Policies:
The accounting policies of the Costa Mesa Housing Authority (Authority) conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting and financial reporting principles. The following is a summary of the Authority’s significant accounting policies:
A. Description of the Reporting Entity:
The Authority was established on January 17, 2012, pursuant to City Council Resolution No. 12-3. The primary purpose of the Authority is to promote affordable housing for families of low and moderate income within the City of Costa Mesa, California (City). Pursuant to Assembly Bill 1484, the housing assets and obligations of the former Redevelopment Agency’s Low and Moderate Income Housing Fund were transferred to the Authority. The Authority is an integral part of the reporting entity of the City. The fund of the Authority has been included within the scope of the basic financial statements of the City because the City Council exercises oversight responsibility over the operations of the Authority.
Only the fund of the Authority is included herein, therefore, these financial statements do not purport to represent the financial position or results of operations of the City.
B. Fund Accounting:
The basic accounting and reporting entity is a “fund”. A fund is defined as an independent fiscal and accounting entity with a self-balancing set of accounts, recording resources, related liabilities, obligations, reserves and equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The accounting records of the Authority are organized on the basis of funds. Currently, the Authority only utilizes one fund.
C. Basis of Accounting and Measurement Focus:
The basic financial statements of the Authority are composed of the following:
Government-wide financial statements
Fund financial statements
Notes to the basic financial statements
10 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
1. Reporting Entity and Summary of Significant Accounting Policies (Continued):
Government-wide Financial Statements
Government-wide financial statements display information about the Authority as a whole.
All activities of the Authority are classified as governmental activities. Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting . Measurement focus indicates the type of resources being measured. Under the economic resources measurement focus, all (both current and long- term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33.
Program revenues include charges for services, and payments made by parties outside of the reporting government’s citizenry if that money is restricted to a particular program.
Program revenues are netted with program expenses in the statement of activities to present the net cost of each program.
Amounts paid to acquire capital assets are capitalized in the government-wide financial statements, rather than reported as expenditures.
Fund Financial Statements
The underlying accounting system of the Authority is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of the fund are accounted for with a set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate.
Governmental resources are allocated to and accounted for in the individual fund based upon the purposes for which it is to be spent and the means by which spending activities are controlled.
Fund financial statements for the Authority’s governmental fund are presented after the government-wide financial statements. These statements display information about the governmental major fund individually and nonmajor funds in aggregate if applicable.
Governmental Funds
In the fund financial statements, governmental funds are presented using the modified- accrual basis of accounting. Their revenues are recognized when they become measurable and available as fund balances. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The Authority generally considers revenues collected within sixty days after the fiscal year-end to be available, which includes loan repayments and rental income.
11 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
1. Reporting Entity and Summary of Significant Accounting Policies (Continued):
Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Imposed nonexchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government-mandated and voluntary nonexchange transactions are recognized as revenues when all applicable eligibility requirements have been met.
In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance is considered to be a measure of “available spendable resources”. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.
Noncurrent portions of long-term receivables due to governmental funds are reported on the balance sheet in spite of their spending measurement focus.
Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term indebtedness are recorded as other financing sources rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures.
D. Cash and Investments:
Investments are reported in the accompanying financial statements at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments.
E. Leases:
The Authority is a lessor for leases as detailed in note 6. The Authority recognizes a lease receivable and a deferred inflow of resources in the financial statements.
At the commencement of the lease, the Authority initially measures the lease receivable at the present value of payments expected to be received and paid during the lease term.
Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources is recognized as revenue over the life of the lease term.
12 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
1. Reporting Entity and Summary of Significant Accounting Policies (Continued):
Key estimates and judgments include how the Authority determines the discount rate it uses to discount the expected lease receipts and payments to present value, lease term and lease receipts.
The Authority uses the estimated cost of capital rate as the discount rate for leases.
The lease term includes the noncancellable period of the lease.
The Authority monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.
F. Capital Assets:
Capital assets are recorded at historical cost at the time of purchase. Assets acquired from gifts or contributions are recorded at acquisition value on the date contributed. Generally, capital asset purchases in excess of $5,000 are capitalized if they have an expected useful life of two years or more. Capital assets used in operations are generally depreciated in the government-wide financial statements. It is the Authority’s policy not to depreciate assets in its first year of service. A full year of depreciation is charged at final year of asset life or upon disposal. Depreciation is charged as an expense against operations and accumulated depreciation is reported on the respective statement of net position. The range of lives used for computing depreciation for building improvements and structures is 10 to 20 years.
G. Net Position:
Net position of the Authority can be classified into three components - net investment in capital assets; restricted; and unrestricted. These classifications are defined as follows:
Net investment in capital assets - This component of net position consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of net investment in capital assets. Rather, that portion of the debt is included in the same net position component as the unspent proceeds.
Restricted - This component of net position consists of constraints placed on net position use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted - This component of net position consists of net position that does not meet the definition of “net investment in capital assets” or “restricted”. The Authority has no unrestricted net position.
13 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
1. Reporting Entity and Summary of Significant Accounting Policies (Continued):
When both restricted and unrestricted resources are available for use, it is the Authority’s policy to use restricted resources first, then unrestricted resources as they are needed.
H. Deferred Outflows/Inflows of Resources:
In addition to assets, the statement of net position and the governmental fund balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources , represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The Authority has two items that qualify for reporting in this category in the statement of net position. The items are deferred outflows related to pensions and OPEB.
In addition to liabilities, the statement of net position and the governmental fund balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources , represents an acquisition of net position that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The Authority has three items that qualify for reporting in this category in the statement of net position. The items are deferred inflows related to pensions, OPEB and leases.
I. Fund Balance:
Fund balance classifications are defined as follows:
Nonspendable - This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted - This classification includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers or through enabling legislation.
Committed - This classification includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority.
Assigned - This classification includes amounts to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds, other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed.
Unassigned - The classifications include the residual balance for the government’s general fund and includes all spendable amounts not contained in other classifications.
14 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
1. Reporting Entity and Summary of Significant Accounting Policies (Continued):
It is the Authority’s policy that restricted resources will be applied first, followed by (in order of application) committed, assigned, and unassigned resources, in the absence of a formal policy adopted by the Board.
J. Pensions:
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis. For the purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframe. For this report, the following timeframes are used:
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
K. Other Post Employment Benefits (OPEB):
For purposes of measuring the OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense and information about the plan (OPEB Plan), have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.
Generally accepted accounting principles require that the reported results must pertain to liability information within certain defined timeframes. For this report, the following timeframes are used:
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
L. Use of Estimates:
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
15 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
1. Reporting Entity and Summary of Significant Accounting Policies (Continued):
N. Prior Year Data
The information included in the accompanying financial statements for the prior year has been presented for comparison purposes only and does not represent a complete presentation in accordance with generally accepted accounting principles. Certain minor reclassifications of prior year data have been made in order to enhance their comparability with current year figures.
2. Cash and Investments:
Equity in Cash and Investment Pool of the City of Costa Mesa
The Authority does not have a separate bank account; however, the Authority’s cash and investments are maintained in an investment pool managed by the City. The Authority is a voluntary participant in that pool. This pool is governed by and under the regulatory oversight of the Investment Policy adopted by the City Council of the City. The Authority has not adopted an investment policy separate from that of the City. The fair value of the Authority’s investment in this pool is reported in the accompanying financial statements at amounts based upon the Authority’s pro-rata share of the fair value calculated by the City for the entire City portfolio. The balance available for withdrawal is based on the accounting records maintained by the City, which are recorded on an original cost basis. At June 30, 2023, the Authority had a total cash balance of $6,028,857, of which $6,004,364 was part of the City’s cash and investment pool and the remaining $24,493 was cash held with a fiscal agent for tenant deposits. 16 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
3. Loans Receivable:
Loans receivable as of June 30, 2023 were comprised of the following:
Amount
The first-time homebuyer program provides loans to first-time homebuyers for purchases of homes in the City of Costa Mesa. For loans made before 2007, loan repayments were deferred for 10 years and for loans made in 2007 and after, repayments of the loan are deferred for 30 years.
$ 1,552,685
The single-family rehabilitation loan program provides loans to homeowners to make home improvements and repair code
violations. There were 3 loans made under this program in 2009. The loans do not pay interest and are not due until the property is sold.
142,500
The rental rehabilitation program is for deferred loans to owners of multi-family properties to make improvements and repair code violations. There are 3 remaining loans under this program and repayment is deferred until sale, transfer or default. Interest of 4 percent is due on these loans.
154,518
There are 3 loans made to underwrite land to a developer to build 3 single-family homes to be maintained in perpetuity for affordable housing. The Authority maintains enforceable covenants on the property. The loans are to be repaid only upon default of affordable housing covenants.
508,542
There are 2 loans made to eligible homebuyers under the Federal Neighborhood Stabilization Program (NSP) administered by the State of California. The NSP program consists of acquisition, rehabilitation, and subsequent sale of foreclosed homes. Borrowers met income and affordability qualifications set by the HUD HOME Program and California Community Redevelopment law.
115,250
Total loans receivable
2,443,495
Less allowance for doubtful accounts
(1,947,431)
Loans receivable, net of allowance for doubtful accounts $ 496,064
17 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
4. Capital Assets:
The following is a summary of the capital asset activity for the year ended June 30, 2023:
Depreciation expense of $164,790 was charged to the community programs function on the Statement of Activities.
5. Repayment of Successor Agency Advance
In 2012, all California redevelopment agencies were dissolved, including the City of Costa Mesa Redevelopment agency. In the dissolution process, the State of California Department of Finance (DOF) disallowed a loan in the amount of $9,278,545 from the City’s General Fund to the former Redevelopment Agency as an enforceable obligation. Subsequently, the Department of Finance (DOF) Finding of Completion on May 24, 2013 allowed the placement of these loan agreements on the Recognized Obligation Payment Schedule (ROPS).
The City has adjusted the loan for repayments and interest additions. The loan repayment, reported on the ROPS, is subject to DOF approval on an annual basis. As of June 30, 2023, the loan balance is estimated to be $1,368,045 The Housing Authority is entitled to receive 20% of the annual repayment. In the current fiscal year, the Housing Authority received $342,011 on this loan.
6. Lease Receivable
Land
On July 1, 1985, the City entered into a 55-year ground lease agreement with Costa Mesa Family Village for three parcels of land. The lease began in July 1985 and will end in October 2039. The lessees are required to make annual fixed payments ranging from $6,750 to $13,500 with an interest rate of 2.015%. As of June 30, 2023, the lease receivable is $1,434,726, and deferred inflows of resources is $1,414,825. The City recognized $168,103 of lease revenue during the fiscal year.
Balance at Balance at
July 1, 2022 Additions Deletions June 30, 2023
Capital assets not being depreciated:
Land 2,063,865 $ - $ - $ 2,063,865$ Capital assets being depreciated:
Building improvements and structures 3,295,800 - - 3,295,800 Less accumulated depreciation/amortization:
Building improvements and structures (988,740) (164,790) - (1,153,530) Total capital assets being
depreciated, net 2,307,060 (164,790) - 2,142,270 Capital assets, net 4,370,925 $ (164,790) $ - $ 4,206,135$ 18 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
7. Defined Benefit Pension Plan (CalPERS):
Plan Description
All qualified permanent and probationary Authority employees are eligible to participate in the City’s Miscellaneous Plan, an agent multiple-employer defined benefit pension plan, administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available 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.
For further details regarding this plan, including funding progress, refer to the City of Costa Mesa’s Annual Comprehensive Financial Report.
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least 5 years of service. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least 5 years of service. All members are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. Safety members can receive a special death benefit if the member dies while actively employed and the death is job-related. The cost of living adjustments are applied as specified by the Public Employees’ Retirement Law.
The Plan’s provisions and benefits in effect at June 30, 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% Required employee contribution
rates 10.47% 7.00% 7.50%
Required employer contribution
rates 7.29% 9.76% 9.76%
Miscellaneous (Agent Multiple-Employer)
19 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
7. Defined Benefit Pension Plan (CalPERS) (Continued):
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of 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 contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. For the year ended June 30, 2023, the Authority’s total contributions for the Miscellaneous Plan were $287,431.
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
The June 30, 2021 valuation was rolled forward to determine the June 30, 2022 total pension liability, based on the following actuarial methods assumptions:
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 2.50%
Salary increases Varies by Entry Age and Service
Mortality Rate Table1
Derived using CalPERS Membership Data
for all funds
Postretirement benefit
increase
The lessor of contract COLA or 2.30%
until Purchasing Power Protection
Allowance floor on purchasing power
applies, 2.30% thereafter
1 The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rate include 15 years of projected mortality improvement using le includes 15 years of mortality improvements using 90% of Scale MP 2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.
Discount Rate
The discount rate used to measure the total pension liability was 6.90 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members 20 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
7. Defined Benefit Pension Plan (CalPERS) (Continued):
will be made at the current member contribution rates and that contributions from employers will be made at the statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long term expected rate of return on plan on investment was applied to all periods of projected benefit payments to determine the total pension liability.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short- term and long-term market return expectations as well as the expected pension fund cash flows.
Using historical returns of all the funds’ asset classes, except compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The expected real rate of 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.
21 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
7. Defined Benefit Pension Plan (CalPERS) (Continued):
The following table shows the Authority’s proportionate share of the net pension liability over the measurement period:
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at: 6/30/2021 (VD) $ 7,369,056 $ 5,678,515 $1,690,541 Balance at: 6/30/2022 (MD) 7,733,777 5,147,217 2,586,560 Net Changes during 2021-22 364,721 (531,298) 896,019
The Authority’s net pension liability for the plan is measured as the proportionate share of the net pension liability. The net pension liability of the plan is measured as of June 30, 2022, and the total pension liability for the plan used to calculate the net pension liability was determined by an actuarial valuation of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. The Authority’s proportion of the net pension liability was based on a projection of the Authority’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined.
The Authority’s proportionate share of the net pension liability for the plan as of June 30, 2021 and 2022 was as follows:
Miscellaneous Plan
Proportion – June 30, 2021 2.396%
Proportion – June 30, 2022 2.405%
Change – Increase (Decrease) (0.009%)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 6.90 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90 percent) or 1 percentage-point higher (7.90 percent) than the current rate:
Discount
Rate – 1%
(5.90%)
Current
Discount Rate
(6.90%)
Discount
Rate + 1%
(7.90%)
Authority’s proportionate share of the Net
Pension Liability $3,588,852
$2,586,560
$1,762,847
Amortization of Deferred Outflows and Deferred Inflows of Resources
Under GASB 68, actuarial gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred inflows and deferred outflows to be recognized 22 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
7. Defined Benefit Pension Plan (CalPERS) (Continued):
in future pension expense. The amortization period differs depending on the source of the gain or loss:
Net difference between projected and
actual earnings on pension plan
investments
5 year straight-line amortization
All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all members
that are provided with pensions (active, inactive, and
retired) as of the beginning of the measurement
period
Pension Expense, and Deferred Outflows/Inflows of Resources Related to Pensions
For the fiscal year ended June 30, 2023, the Authority recognized pension expense of $260,653.
At June 30, 2023, the Authority reported deferred outflows of resources and deferred inflows of resources related to the CalPERS pension as follows:
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to the
measurement date $ 287,431 $ -
Differences between expected and actual
experience 122,988 (38,780)
Net difference between projected and
actual earnings on pension plan
investments 254,668 -
Totals
$ 665,087
$ (38,780)
The Authority reported $287,431 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2024. Other amounts reported as deferred inflows or outflows of resources related to pensions will be recognized as pension expense as follows:
Fiscal Year Ended
June 30:
Deferred
Outflows/(Inflows)
of Resources
2024 $ 104,395
2025 55,224
2026 15,751
2027 163,506
2028 -
23 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
8. Other Post-Employment Benefits (OPEB):
Plan Description
The City administers a single-employer defined benefit plan, which provides medical insurance benefits to eligible retirees and their spouses in accordance with various labor agreements.
The plan covers employees hired before January 1, 2004 who retire directly from the City with 10 or more years of City service. The City provides a contribution up to a percentage of the lesser of $500 per month or the premium for the most popular medical plan elected by the employees. The percentage varies by retirement date and years of City service. For employees hired on or after January 1, 2004, the City will only pay for the PEMHCA subsidy once they meet the definition of a retiree under CalPERS. The City provides retiree life insurance of $1,000 for the retiree and $500 for the retiree’s spouse.
Contributions
The contribution requirements of plan members and the Authority are established and may be amended by the City Council. The required contribution is made on a pay-as-you-go basis (i.e., as medical insurance premiums become due). Neither the City nor the Authority has established a trust for the purpose of holding assets accumulated for plan benefits.
Actuarial Methods and Assumptions Used to Determine Total OPEB Liability
The Authority’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 24 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
8. Other Post-Employment Benefits (OPEB) (Continued):
the probability of termination in the next 12 months. The termination rates are based on those used in the most recent CalPERS pension valuation.
Retirement Rate: Annual retirement rates are based on those used in the most recent CalPERS pension valuation.
The following table shows the Authority’s proportionate share of the total OPEB liability over the measurement period ended June 30, 2022:
Increase (Decrease)
Total OPEB
Liability
Balance at: June 30, 2021 $ 690,181
Balance at: June 30, 2022 583,371
Net Changes during 2021-22 (106,810)
The Authority’s total OPEB liability for the plan is measured as the proportionate share of the plan’s total OPEB liability. The total OPEB liability of the plan is measured as of June 30, 2022, and the total OPEB liability for the plan used to calculate the net pension liability was determined by an actuarial valuation of June 30, 2021. The Authority’s proportion of the total OPEB liability was based on a projection of the Authority’s long-term share of contributions to the OPEB plan relative to the projected contributions of all participating employers, actuarially determined. The Authority’s proportionate share of the total OPEB liability for the plan as of June 30, 2022 and 2021 was as follows:
OPEB Plan
Proportion – June 30, 2021 1.042%
Proportion – June 30, 2022 1.114%
Change – Increase (Decrease) (0.072%)
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total OPEB liability of the Plan as of the Measurement Date, calculated using the discount rate of 4.09 percent, as well as what the total OPEB liability would be if it were calculated using a discount rate that is 1 percentage-point lower (3.09 percent) or 1 percentage-point higher (5.09 percent) than the current rate:
Discount
Rate – 1%
(3.09%)
Current
Discount Rate
(4.09%)
Discount
Rate + 1%
(5.09%)
Authority’s proportionate share of the total
OPEB liability $662,906
$583,371
$518,337
25 COSTA MESA HOUSING AUTHORITY
Notes to Basic Financial Statements
(Continued)
8. Other Post-Employment Benefits (OPEB) (Continued):
The following presents the total OPEB liability, as well as what the total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage-point lower or 1 percentage-point higher than the current healthcare cost trend rates:
1% Decrease
(5.25% decreasing
to 3.50%)
Current Healthcare
Cost
Trend Rates
(6.25% decreasing
to 4.50%)
1% Increase
(7.25% decreasing to
5.50%)
Authority’s
proportionate share
of the total OPEB
liability $538,841
$583,371
$646,158
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2023, the Authority recognized OPEB income of $71,060. At June 30, 2023, the Authority reported deferred outflows of resources and deferred inflows of resources related to the OPEB plan as follows:
Deferred
Outflows
Deferred
Inflows
of Resources of Resources
OPEB contributions subsequent to
the measurement date $ 20,559 $ -
Differences between expected and
actual differences 9,938 (34,115)
Changes in assumptions 94,516 (146,508)
Totals $ 125,013 $ (180,623)
The Authority reported $20,559 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the total OPEB liability in the fiscal year ending June 30, 2024.
Other amounts reported as deferred inflows or outflows of resources related to pensions will be recognized as pension expense as follows:
Fiscal Year Ended
June 30:
Deferred
Outflows/(Inflows)
of Resources
2024 $ 2,582
2025 2,582
2026 2,582
2027 (6,173)
2028 (6,173)
Thereafter (71,569)
26 Measurement date June 30 2014 2015 2016 2017
Plan's proportion of the net pension liability 0.703% 0.703% 0.703% 1.095% Plan's proportionate share of the net pension liability 536,746$ 561,947$ 632,922$ 1,095,223$ Plan's covered payroll 129,116$ 126,041$ 139,833$ 213,885$ Plan's proportionate share of the net pension liability as a percentage of covered payroll 415.71% 445.84% 452.63% 512.06% Plan's proportionate share of the fiduciary net position as a percentage of the Plan's total pension liability 69.49% 68.26% 64.94% 64.17% Plan's proportionate share of aggregate employer
contributions 36,704$ 42,575$ 45,855$ 75,706$
Notes to schedule:
Benefit changes:
Changes in assumptions:
* - Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.
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).
Costa Mesa Housing Authority
Required Supplementary Information
Schedule of Proportionate Share of the Net Pension Liability and Related Ratios CalPERS Miscellaneous Plan
Last Ten Fiscal Years*
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.
27 2018 2019 2020 2021 2022
0.831% 2.218% 2.608% 2.396% 2.405%
783,393$ 2,221,033$ 2,699,607$ 1,690,541$ 2,586,560$ 166,758$ 541,070$ 626,246$ 299,397$ 634,611$ 469.78% 410.49% 431.08% 564.65% 407.58%
66.53% 65.86% 65.62% 77.06% 66.56%
76,921$ 219,059$ 267,302$ 265,290$ 287,431$ 28 Fiscal year ended June 30 2015 2016 2017 2018
Contractually required contribution
(actuarially determined) 36,704$ 42,575$ 45,855$ 75,706$ Contributions in relation to the actuarially
determined contributions (36,704) (42,575) (45,855) (75,706) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 126,041$ 139,833$ 213,885$ 166,758$ Contributions as a percentage of covered payroll 29.12% 30.45% 21.44% 45.40%
Notes to schedule:
Valuation date 6/30/20126/30/20136/30/20146/30/2015
Methods and assumptions used to determine contribution rates:
Single and agent employers Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.50%
Salary increases Varies by Entry Age and Service
Payroll growth 2.75%
Investment rate of return
Retirement age
Mortality
Other information:
For changes to previous year’s information, refer to past GASB 68 reports. * -
Costa Mesa Housing Authority
Required Supplementary Information
Schedule of Pension Plan Contributions
CalPERS Miscellaneous Plan
Last Ten Fiscal Years*
For details, see June 30, 2020 Funding Valuation
Report.
Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.
Market Value of Assets. For details, see June 30, 2020
Funding Valuation Report.
7.00%, net of pension plan investment and
administrative expense; including inflation.
The probabilities of Retirement are based on the 2017
CalPERS Experience Study for the period from 1997 to
2015.
The probabilities of mortality are based on the 2017
CalPERS Experience Study for the period from 1997 to
2015. Pre-retirement and Post-retirement mortality
rates include period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale
MP-2016 published by the Society of Actuaries.
29 2019 2020 2021 2022 2023
76,921$ 219,059$ 267,302$ 265,290$ 287,431$
(76,921) (219,059) (267,302) (265,290) (287,431) -$ -$ -$ -$ -$
541,070$ 627,898$ 299,397$ 634,611$ 667,518$
14.22% 34.89% 89.28% 41.80% 43.06%
6/30/20166/30/20176/30/2018 6/30/2019 6/30/2020
30 Measurement date June 30 2017 2018 2019 2020 2021 2022 Plan's proportion of the total OPEB liability 0.391% 0.510% 1.065% 1.142% 1.042% 1.114% Plan's proportionate share of the total OPEB liability 208,922$ 271,334$ 627,570$ 718,412$ 690,181$ 583,371$ Plan's covered payroll 160,415$ 221,304$ 466,770$ 521,271$ 556,337$ 654,345$
Plan's proportionate share of the OPEB liability
as a percentage of covered employee payroll 130.24% 122.61% 134.45% 137.82% 124.06% 89.15% Plan's proportionate share of the fiduciary net position as a percentage of the Plan's total OPEB liability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Notes to schedule:
Changes in assumptions. The discount rate as of the June 30, 2016 measurement date was 2.85%. The discount rate as of the June 30, 2017 measurement date was 3.40%. The discount rate as of the June 30, 2018 measurement date was 3.50%. The discount rate as of the June 30, 2019 measurement date was 3.51%. The discount rate as of the June 30, 2020 measurement date was 2.66%. 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.
Required Supplementary Information
Costa Mesa Housing Authority
Schedule of Proportionate Share of OPEB Liability and Related Ratios Last Ten Fiscal Years*
31 Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
REVENUES:
Rental income 370,000$ 370,000$ 416,489$ 46,489$ 338,732$ Repayment of Successor
Agency advance 381,141 381,141 342,011 (39,130) 349,917 Intergovernmental 2,149,179 2,274,179 2,686,381 412,202 1,510,066 Investment income (loss) 21,550 21,550 9,416 (12,134) (68,124) Miscellaneous 6,000 6,000 221,113 215,113 27,406 TOTAL REVENUES 2,927,870 3,052,870 3,675,410 622,540 2,157,997 EXPENDITURES:
Current:
Community programs 4,192,863 8,789,294 4,286,833 4,502,461 3,963,750 TOTAL EXPENDITURES 4,192,863 8,789,294 4,286,833 4,502,461 3,963,750
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES (1,264,993) (5,736,424) (611,423) 5,125,001 (1,805,753) Other financing sources:
Transfers from the City
of Costa Mesa 1,264,993 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 - BEGINNING OF YEAR 3,623,260 3,623,260 3,623,260 - 3,715,185 FUND BALANCE - END OF YEAR 3,623,260$ 3,101,829$ 8,300,545$ 5,198,716$ 3,623,260$ Costa Mesa Housing Authority
Year ended June 30, 2023
(With Comparative Data for Prior Year)
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Housing Authority Fund
Required Supplementary Information
32 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Board of Directors
Costa Mesa Housing Authority
Costa Mesa, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, financial statements of the governmental activities and the major fund of the Costa Mesa Housing Authority (Authority), as of and for the year ended June 30, 2023, and the related notes to the basic financial statements, which collectively comprise of the Authority’s basic financial statements, and have issued our report thereon dated December 21, 2023.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Authority’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of Authority’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
33 Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Authority’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Irvine, California
December 21, 2023
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