Covina City Council
March 1, 2022

City Council/CSA/CPFA/CHA Agenda Tuesday March 1, 2022

REGULAR MEETING AGENDA
125 E. College Street, Covina, California
Council Chamber of City Hall
Tuesday, March 1, 2022

IMPORTANT NOTICE
This meeting is being conducted in accordance with Assembly Bill 361, regarding the COVID19 pandemic.

Members of the public may view the meeting live on the City’s website at www.covinaca.gov or on local cable television, Spectrum channel 29 and Frontier Channel 42. To view from the website, hover over the Departments & Services tab until the drop-down menu appears and click on City Council Video Library under the City Council header. A live banner will appear at the start of the meeting.

Public Comments: During the meeting, there will be an opportunity for the public to speak.

Public testimony is limited to five (5) minutes per speaker, unless, for good cause, the Mayor/Chairperson amends the time limit; a speaker’s time may not be transferred to another speaker. State Law prohibits the Council/Agency/Authority Members from taking action on any item not on the agenda. Those wishing to speak on a LISTED AGENDA ITEM will be heard when that item is addressed.

In Person: To address the Council/Agency/Authority please complete a yellow speaker request card located at the entrance of the Council Chamber and give it to the City Clerk. Your name will be called when it is your turn to speak.

Remotely via Zoom: Access the meeting remotely via Zoom with one of the following devices:

Computer or Smart Device:
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Dial: +1 669 900 6833
Webinar ID: 886 5933 6279
Passcode: 233003
City Council/CSA/CPFA/CHA Agenda Tuesday March 1, 2022

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Note:

Computer / Smart Device Users: The “raise hand” feature is in the reactions tab.

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Meeting Assistance Information: In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at [email protected] or 626-384-5430. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.

CITY COUNCIL/SUCCESSOR AGENCY TO THE COVINA

REDEVELOPMENT AGENCY/COVINA PUBLIC FINANCING

AUTHORITY/COVINA HOUSING AUTHORITY
JOINT MEETING—CLOSED SESSION
6:30 PM – WILL NOT BE HELD

CITY COUNCIL/SUCCESSOR AGENCY TO THE COVINA

REDEVELOPMENT AGENCY/COVINA PUBLIC FINANCING

AUTHORITY/COVINA HOUSING AUTHORITY
JOINT MEETING—OPEN SESSION
7:30 PM

CALL TO ORDER

ROLL/CALL
Council/Agency/Authority Members: Walter Allen, III, John C. King, Victor Linares, Mayor Pro Tem/Vice-Chair Patricia Cortez, and Mayor/Chair Jorge A. Marquez

PLEDGE OF ALLEGIANCE
Led by Mayor Marquez

INVOCATION
Given by Covina Police Chaplain Cannizzaro

PRESENTATIONS
A. American Red Cross Month Proclamation
B. San Gabriel River Hinge Replacement Project Presentation City Council/CSA/CPFA/CHA Agenda Tuesday March 1, 2022

PUBLIC COMMENTS
To address the Council/Agency/Authority please complete a yellow speaker request card located at the entrance and give it to the City Clerk. Your name will be called when it is your turn to speak. Those wishing to speak on a LISTED AGENDA ITEM will be heard when that item is addressed. Those wishing to speak on an item NOT ON THE AGENDA will be heard at this time. State Law prohibits the Council/Agency/Authority Members from taking action on any item not on the agenda. Individual speakers are limited to five minutes each, unless, for good cause, the Mayor/Chairperson amends the time limit.

COUNCIL/AGENCY/AUTHORITY COMMENTS
Council/Agency/Authority Members wishing to make any announcements of public interest or to request that specific items be added to future Council/Agency/Authority agendas may do so at this time.

CITY MANAGER COMMENTS

CONSENT CALENDAR
All matters listed under consent calendar are considered routine, and will be enacted by one motion. There will be no separate discussion on these items prior to the time the Council/Agency/Authority votes on them, unless a member of the Council/Agency/Authority requests a specific item be removed from the consent calendar for discussion.

CC 1. Minutes
Staff Recommendation:

Approve the Minutes of the February 15, 2022, Special Meeting of the City Council/Successor Agency to the Covina Redevelopment Agency/Covina Public Financing Authority/Housing Authority.
2022 02 15 Minutes CC DRAFT - Spc Mtg Closed Session
CC 2. Minutes
Staff Recommendation:

Approve the Minutes of the February 15, 2022, Regular Meeting of the City Council/Successor Agency to the Covina Redevelopment Agency/Covina Public Financing Authority/Housing Authority.
2022 02 15 Minutes CC DRAFT
CC 3. Payment of Demands
Staff Recommendation:

Approve Payment of Demands in the amount of $3,823,334.71 Agenda Report - Payment of Demands JAN 28 2022 - FEB 10 2022 - Pdf CC 4. Resolution CC 2022-20, declaring Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes, Community Facilities District No. 2022-1 (Stormwater)
City Council/CSA/CPFA/CHA Agenda Tuesday March 1, 2022
Staff Recommendation:

Adopt Resolution CC 2022-20, declaring Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes.

Agenda Report - Resolution CC 2022-20, Intention CFD No. 2022-1 (Stormwater) - Pdf
CC 5. Annual Comprehensive Financial Report (ACFR) for Fiscal Year Ended June 30, 2021 Staff Recommendation:

Receive and file the following reports for Fiscal Year ended June 30, 2021:
• Annual Comprehensive Financial Report (ACFR) and related Auditor Communications
• Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit
Agenda Report - ACFR FY Ended June 30, 2021 - Pdf
CC 6. Downtown Trash Enclosure Project for 125 E. College Street - Final Acceptance and Filing Notice of Completion
Staff Recommendation:

1. Accept the work performed by FS Contractors, Inc; and

2. Authorize the City Clerk to file a Notice of Completion for the Downtown Trash Enclosure Project for 125 E. College Street.

Agenda Report - NOC - Downtown Trash Enclosure Project - Pdf CC 7. Downtown Civic Center Parking Structure Façade Improvements Project - Final Acceptance and Filing Notice of Completion
Staff Recommendation:

1. Accept the work performed by California Stone Veneer, Inc; and

2. Authorize the City Clerk to file a Notice of Completion for the Downtown Civic Center Parking Structure Façade Improvements Project.

Agenda Report - NOC - Downtown Civic Center Parking Structure Façade Improvements - Pdf
CC 8. Panels Replacement Project Rancho La Merced Reservoir Electrical Upgrade - Final Acceptance and Filing Notice of Completion
Staff Recommendation:

1. Accept the work performed by Minako America Corporation, dba Minco Construction, and;

2. Authorize the City Clerk to file a Notice of Completion for the Panels Replacement Project Rancho La Merced Reservoir Electrical Upgrade Agenda Report - NOC - Panels Replacement Project Rancho La Merced Reservoir Electrical Upgrade - Pdf
CC 9. Renewal of General Services Agreement between the County of Los Angeles and the City of Covina
Staff Recommendation:

City Council/CSA/CPFA/CHA Agenda Tuesday March 1, 2022

1. Adopt Resolution CC 2022-21 requesting the County of Los Angeles to renew the General Services Agreement between the County of Los Angeles and the City of Covina for a five-year period commencing July 1, 2022 through June 30, 2027; and

2. Authorize the Mayor, or designee, to execute the attached General Services Agreement between the County of Los Angeles and the City of Covina for the five-year period commencing July 1, 2022 through June 30, 2027.

Agenda Report - General Services Agreement 2022 - Pdf
CONTINUED PUBLIC HEARINGS - NONE.

PUBLIC HEARINGS - NONE.

CONTINUED BUSINESS - NONE.

NEW BUSINESS
NB 1. Fiscal Year 2021-22 Mid-Year Budget Update and Adjustments Resolution CC 2022-22
Staff Recommendation:

1. Adopt Resolution CC 2022-22 authorizing Fiscal Year 2021-2022 mid-year budget adjustments; and

2. Receive and file the Fiscal Year 2021-22 Mid-Year Budget Update.

Agenda Report - Resolution CC 2022-22 FY 2021-22 Mid Year Adjustments - Pdf

ADJOURNMENT
The Covina City Council/Successor Agency to the Covina Redevelopment Agency/Covina Public Financing Authority/Covina Housing Authority will adjourn to its next regular meeting of the Council/Agency/Authority scheduled for Tuesday, March 15, 2022 at 6:30 p.m. for closed session and at 7:30 p.m. for open session inside the Council Chamber at City Hall, located at 125 East College Street, Covina, California, 91723.

The Covina City Clerk’s Office does hereby declare that, in accordance with California Government Code Section 54954.2(a), the agenda for the Tuesday, March 1, 2022, meeting was posted on February 24, 2022, on the City’s website and near the front entrances of: Covina City Hall, 125 East College Street, Covina.

If you challenge in court any discussion or action taken concerning an item on this agenda, you may be limited to raising only those issues you or someone else raised during the meeting or in written correspondence delivered to the City at or prior to the City’s consideration of the item at the meeting.

MATERIALS RELATED TO AN ITEM ON THIS AGENDA, AND SUBMITTED TO THE CITY COUNCIL AFTER PUBLICATION OF THE AGENDA, ARE AVAILABLE TO THE PUBLIC IN THE CITY CLERK’S OFFICE AT 125 E.

COLLEGE STREET, COVINA.

DRAFT
COUNCIL/CSA/CPFA/CHA MINUTES Page 1 of 2 Tuesday, February 15, 2022 MINUTES OF FEBRUARY 15, 2022

SPECIAL MEETING OF THE COVINA CITY COUNCIL/SUCCESSOR AGENCY TO

THE COVINA REDEVELOPMENT AGENCY/COVINA PUBLIC FINANCING

AUTHORITY/COVINA HOUSING AUTHORITY HELD IN THE COUNCIL CHAMBER OF CITY HALL, 125 EAST COLLEGE STREET, COVINA, CALIFORNIA/VIRTUAL

MEETING
This meeting was conducted utilizing teleconferencing and electronic means consistent with State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19 pandemic.

CALL TO ORDER
Mayor Marquez called the Council/Agency/Authority meeting to order at 7:00 p.m. with all Councilmembers present.

ROLL CALL
Councilmembers Present: Walter Allen, III, John C. King, Victor Linares, Mayor Pro Tem/Vice-Chair Patricia Cortez, and Mayor/Chair Jorge A. Marquez.

Councilmembers Absent: None.

Elected Members Present: None.

Elected Members Absent: City Clerk Mary Lou Walczak and City Treasurer Geoffrey Cobbett.

Staff Members Present: City Manager Chris Marcarello, City Attorney Candice K. Lee, Police Chief David Povero, Assistant to the City Manager Angel Carrillo, Administrative Services Director Anita Agramonte, Human Resources Manager Suzanne Stone, and Chief Deputy City Clerk Nicole Alvarez.

PUBLIC COMMENTS – None.

CLOSED SESSION
Mayor Marquez recessed the Council to Closed Session at 7:01 p.m. for the following:

A. Government Code § 54956.9(d)(1) – CONFERENCE WITH LEGAL COUNSEL EXISTING LITIGATION: Name of case: Ochoa-Pinto v. City of Covina; 18STCV04766

ADJOURNMENT
The meeting of the Covina City Council/Successor Agency to the Covina Redevelopment Agency/Covina Public Financing Authority/Covina Housing Authority was adjourned to its next ITEM NO. CC 1
DRAFT
COUNCIL/CSA/CPFA/CHA MINUTES Page 2 of 2 Tuesday, February 15, 2022 regular meeting of the Council/Agency/Authority on Tuesday, February 15, 2022, at 7:30 p.m. for open session in the Council Chamber of City Hall located at 125 East College Street, Covina, CA 91723.

Respectfully Submitted:
__________________________________________
Georgianna Nicole Alvarez, CMC, CPMC
Chief Deputy City Clerk
Approved this 1
st day of March 2022:
_____________________________________
Jorge A. Marquez Mayor/Chair
DRAFT
COUNCIL/CSA/CPFA/CHA MINUTES Page 1 of 4 Tuesday, February 15, 2022 MINUTES OF FEBRUARY 15, 2022

REGULAR MEETING OF THE COVINA CITY COUNCIL/SUCCESSOR AGENCY TO

THE COVINA REDEVELOPMENT AGENCY/COVINA PUBLIC FINANCING

AUTHORITY/COVINA HOUSING AUTHORITY HELD IN THE COUNCIL CHAMBER OF CITY HALL, 125 EAST COLLEGE STREET, COVINA, CALIFORNIA AND

VIRTUALLY VIA ZOOM
This meeting was conducted in accordance with Assembly Bill 361, regarding the COVID-19 pandemic.

CALL TO ORDER
Mayor Marquez called the Council/Agency/Authority meeting to order at 7:30 p.m. with all Councilmembers present.

ROLL CALL
Councilmembers Present: Walter Allen, III, John C. King, Victor Linares, Mayor Pro Tem/Vice-Chair Patricia Cortez, and Mayor/Chair Jorge A. Marquez.

Councilmembers Absent: None.

Elected Members Present: City Clerk Mary Lou Walczak and City Treasurer Geoffrey Cobbett.

Elected Members Absent: None.

Staff Members Present: City Manager Chris Marcarello, City Attorney Candice K. Lee, Police Chief David Povero, Administrative Services Director Anita Agramonte, Community Development Director Brian Lee, Parks & Recreation/Library Services Director Lisa Evans, Public Works Director Andy Bullington, Deputy City Manager Angel Carrillo, and Chief Deputy City Clerk Nicole Alvarez.

PLEDGE OF ALLEGIANCE
Led by Councilmember King

INVOCATION
Given by Covina Police Chaplain David Truax

CLOSED SESSION REPORT
City Attorney Lee announced that direction was given to staff and no reportable action was taken.

ITEM NO. CC 2
DRAFT
COUNCIL/CSA/CPFA/CHA MINUTES Page 2 of 4 Tuesday, February 15, 2022 PRESENTATIONS – None.

PUBLIC COMMENTS
David Rose, Board Member of Charter Oak Unified School District, commented regarding Mayor Marquez and a contract approved by the Charter Oak Unified School District.

COUNCIL AGENCY AUTHORITY COMMENTS
Councilmember Allen commented on the weather and gave Public Works staff a shout out for keeping the community looking nice.

Mayor Pro Tem Cortez reminded the community to turn off their sprinklers during the rain and thanked Public Works and City staff for the new City signs that are going up.

Councilmember Linares announced that he pulled nomination papers and will be running for reelection.

Councilmember King announced that he pulled nomination papers and will be running for reelection. Councilmember King requested to adjourn in memory of James Felton.

Mayor Marquez expressed his excitement for the upcoming events with the Covina Chamber of Commerce, Covina Gala and State of the City Address, and wished everyone a belated Happy Valentine’s Day.

Councilmember Allen expressed his full support for Councilmember Linares and Councilmember King.

Mayor Marquez announced that he did not pull nomination papers.

CITY MANAGER COMMENTS
City Manager Marcarello reminded the community about the Los Angeles County Homeless Count next Tuesday, February 22, 2022, at the Covina Senior & Community Center.

CONSENT CALENDAR
A motion was made by Councilmember King, seconded by Councilmember Allen, to approve Consent Calendar items CC 1 – 9, as presented.

Motion approved by roll call vote for Consent Calendar items CC 1 – 9, as follows:

AYES: ALLEN, KING, LINARES, CORTEZ, MARQUEZ
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE
In response to an inquiry from Councilmember King regarding Consent Calendar item CC 9, City Manager Marcarello clarified that Parks & Recreation/Library Services Director Evans is reaching DRAFT
COUNCIL/CSA/CPFA/CHA MINUTES Page 3 of 4 Tuesday, February 15, 2022 out to the vendor regarding a potential expanded footprint and, if needed, will bring back an updated license agreement.

CC 1. City Council/Successor Agency to the Covina Redevelopment Agency/Covina Public Financing Authority/Covina Housing Authority approved the Minutes of the February 1, 2022, Regular Meeting of the City Council/Successor Agency to the Covina Redevelopment Agency/Covina Public Financing Authority/Housing Authority.

CC 2. City Council/Successor Agency to the Covina Redevelopment Agency approved the Payment of Demands in the amount of $1,654,096.73.

CC 3. City Council/Successor Agency to the Covina Redevelopment Agency received and filed the Monthly Investment Report of the Treasurer to the City Council and Successor Agency to the Covina Redevelopment Agency for January 2022.

CC 4. City Council adopted on second reading Ordinance 22-02, “An Ordinance of the City Council of City of Covina, California, approving Zoning Code Amendment (ZCA) 21- 004, modifying the sign regulations for premises in the C-3 commercial (central business) zone to permit monument signs, and making a determination of exemption under CEQA guidelines section 15061(B)(3)."
CC 5. City Council approved and made the following findings so that meetings of the City Council and the City’s Other Legislative Bodies are authorized to meet remotely in accordance with AB 361’s special Brown Act requirements for teleconference meetings: (1) the City Council has reconsidered the circumstances of the COVID-19 state of emergency; and (2) state and local officials continue to recommend measures to promote social distancing.

CC 6. City Council approved the Renewal of Professional Services Agreement with Blueray Management LLC to Provide Seasonal Aquatics Programs and Services and Authorized the City Manager to Execute the Agreement.

CC 7. City Council:

1. Approved and signed the 2019 State Homeland Security Program SubRecipient Agreement between the County of Los Angeles the City of Covina;

2. Approved the purchase of Motorola radio equipment offered through the reimbursable State of California FY 2019 Homeland Security Grant Program (SHSGP) in an amount not to exceed $57,628.23; and

3. Adopted Resolution CC 2022-18 to increase the Police Department's 2021-22 budget by $51,789 resulting from the 2019 Homeland Security Grant award.

CC 8. City Council adopted Resolution CC 2022-19, amending the Fiscal Year 2021-2022 Operating Budget to accept and appropriate $319,151 in Grant Funds and $41,349 from the Proposition C Fund to establish the Covina Active Streets and Multimodal Connectivity Plan (CASMCP) Project for the Purpose of Facilitating the Development of an Active Street and Multimodal Connectivity Plan awarded by the California Department of Transportation (Caltrans).

CC 9. City Council approved the Renewal of License Agreement for Use of a Portion of City Property at Heritage Plaza for a Certified Farmers' Market and Authorized the City Manager to Execute the Agreement.

DRAFT
COUNCIL/CSA/CPFA/CHA MINUTES Page 4 of 4 Tuesday, February 15, 2022

CONTINUED PUBLIC HEARINGS
CPH 1. A Continued Public Hearing for Notice of Intent to Vacate a Portion of Geneva Place between Citrus Avenue and 3rd Avenue and a Strip of Public Alley located at East Side of 141 West Geneva Place
Mayor Marquez declared the public hearing open.

The agenda report was presented by Community Development Director Lee.

In response to an inquiry from Councilmember King, Community Development Director Lee provided a status update.

There were no public comments.

A motion was made by Councilmember Linares, seconded by Mayor Pro Tem Cortez, to continue the Public Hearing to the meeting of March 15, 2022.

Motion approved by roll call vote for Continued Public Hearing item CPH 1 as follows:

AYES: ALLEN, KING, LINARES, CORTEZ, MARQUEZ
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE

ADJOURNMENT
At 7:48 p.m., the Covina City Council/Successor Agency to the Covina Redevelopment Agency/Covina Public Financing Authority/Covina Housing Authority was adjourned in memory of James Felton to its next regular meeting of the Council/Agency/Authority scheduled for Tuesday, March 1, 2022, at 6:30 p.m. for closed session and 7:30 p.m. for open session inside the Council Chamber at City Hall, located at 125 East College Street, Covina, California, 91723.

Respectfully Submitted:
__________________________________________
Georgianna Nicole Alvarez, CMC, CPMC
Chief Deputy City Clerk
Approved this 1
st day of March, 2022:
_____________________________________
Jorge A. Marquez, Mayor/Chair
CC Regular Meeting

AGENDA ITEM REPORT
ITEM NO. CC 3
Meeting: CC Regular Meeting - Mar 01 2022
Title: Payment of Demands
Presented By: Geoffrey Cobbett, City Treasurer
Anita Agramonte, Administrative Services Director
Recommendation: Approve Payment of Demands in the amount of $3,823,334.71 EXECUTIVE SUMMARY / BACKROUND:

Attached is a list of warrants and demands which are being presented for approval and are summarized as follows:

Accounts Payable Warrants January 28, 2022 - February 10, 2022 CITY checks/EFTs $ 2,945,256.86
CITY payroll $ 868,359.11
CITY voids $ (2,470.85)
Worker's Comp $ 6,414.36
$ 3,817,559.48
SACRA checks/EFTs $ 1,652.65
SACRA payroll $ 4,122.58
$ 5,775.23
TOTAL checks/EFTs $3,823,334.71
DISCUSSION:

The attached reports have been reviewed by the City Treasurer and by the Administrative Services Director.

FISCAL IMPACT:

Sufficient funding is available and the related costs are included in the Fiscal Year 21/22 Adopted Budget.

ATTACHMENTS:

Attachment A - Check Register January 28, 2022 - February 10, 2022 Respectfully submitted,

CITY OF COVINA
Check Register
Jan 28, 2022 - Feb 10, 2022
Check # Check Date Vendor Name Amount
5756 11/29/2021 283 BANK OF THE WEST 19,783.65
5757 01/04/2022 1075 WEX BANK 749.31
5758 01/11/2022 487 CALIFORNIA PUBLIC EMPLOYEES' 200.00 5759 01/12/2022 487 CALIFORNIA PUBLIC EMPLOYEES' 8,402.04 5760 02/03/2022 4160 ICMA RETIREMENT TRUST-IRA 30.00
5761 02/03/2022 1405 ICMA RETIREMENT TRUST-457 5,085.94 5762 02/03/2022 4003 MidAmerica 1,978.38
5763 02/03/2022 2033 NATIONWIDE RETIREMENT SOLUTIONS 16,659.00 20484 02/01/2022 487 CalPERS 79,497.25
20485 02/01/2022 487 CalPERS 7,855.32
20488 02/01/2022 487 CalPERS 77,076.06
20489 01/27/2022 487 CalPERS 228.74
20490 02/03/2022 788 COVINA, CITY OF 24.90
20491 02/03/2022 789 COVINA-FSA, CITY OF 458.34
20492 02/03/2022 788 COVINA, CITY OF 42,110.13
20493 02/03/2022 789 COVINA-FSA, CITY OF 715.40
subtotal EFT/wires/direct deposits $260,854.46
109655 02/03/2022 4379 789, Inc. 5,376.09
109656 02/03/2022 4188 ACCO ENGINEERED SYSTEMS 2,638.59 109657 02/03/2022 30 ACE PELIZON PLUMBING INC 1,298.00
109658 02/03/2022 32 ACE-1 AUTO SERVICE 334.68
109659 02/03/2022 4760 Albertsons Companies, Inc. 31.00 109660 02/03/2022 113 ALL CITY MANAGEMENT SVC 4,469.76
109661 02/03/2022 219 AT&T 23.34
109662 02/03/2022 3929 BOOT BARN INC 299.67
109663 02/03/2022 5189 Bosco Legal Services, Inc. 4,442.78 109664 02/03/2022 4894 Bureau Veritas Technical Assessments LLC 14,951.65 109665 02/03/2022 536 CARQUEST AUTO PARTS 28.36
109666 02/03/2022 4854 CEJ Engineers, Inc. 3,600.00
109667 02/03/2022 682 CLINICAL LAB OF SAN BERNARDINO 570.00 109668 02/03/2022 700 COLLEY FORD 1,460.08
109669 02/03/2022 4647 Daniel Isida 33.13
109670 02/03/2022 849 DAPEER ROSENBLIT & LITVAK LLP 875.00 109671 02/03/2022 894 DF POLYGRAPH 175.00
109672 02/03/2022 5084 Dr. Sunshine, LLC 1,100.00
109673 02/03/2022 970 EDISON CO 7,322.28
109674 02/03/2022 4885 ELIE FARAH 2,090.00
109675 02/03/2022 1106 FRANCHISE TAX BOARD 511.38
109676 02/03/2022 4805 Fuel Equipment Services, Inc. 15,585.03 109677 02/03/2022 1156 THE GAS COMPANY 721.34
109678 02/03/2022 1235 GRAINGER 302.77
109679 02/03/2022 1241 GRAND PRINTING 328.61
109680 02/03/2022 1275 HAAKER EQUIPMENT CO 9.29
109681 02/03/2022 4766 HASA, INC. 938.95
109682 02/03/2022 1361 HOLLIDAY ROCK CO INC 621.09
109683 02/03/2022 1371 HOSE MAN INC, THE 58.76
109684 02/03/2022 3988 LANDSCAPE WAREHOUSE III 43.92
109685 02/03/2022 1441 INTERSTATE BATTERY SYSTEM OF EAST SAN GABRIEL 145.01 109686 02/03/2022 4077 INTERWEST CONSULTING GROUP INC 10,140.00

CITY OF COVINA
Check Register
Jan 28, 2022 - Feb 10, 2022
Check # Check Date Vendor Name Amount
109687 02/03/2022 1463 J.G. TUCKER AND SON 388.05
109688 02/03/2022 3749 JCL BARRICADE COMPANY 328.55
109689 02/03/2022 4861 John H. Douglas 24,430.00
109690 02/03/2022 1531 JW LOCK CO INC 156.50
109691 02/03/2022 1561 KEYSTONE UNIFORM DEPOT 143.22
109692 02/03/2022 1612 LA CNTY DEPT OF PUBLIC WORKS 4,771.95 109693 02/03/2022 1633 LACPCA 300.00
109694 02/03/2022 1707 LIEBERT CASSIDY WHITMORE 1,072.00 109695 02/03/2022 1792 MANNING & MARDER KASS, 2,555.45
109696 02/03/2022 1933 MISSION LINEN SUPPLY 13.20
109697 02/03/2022 5169 Occupational Health Centers of California 232.50 109698 02/03/2022 99999 SGV CAPITAL LLC 1,220.69
109699 02/03/2022 4688 PCAM, LLC 37,201.98
109700 02/03/2022 2329 PUENTE READY MIX INC 7,779.60
109701 02/03/2022 2345 QUILL 270.91
109702 02/03/2022 3796 RICHARDS, WATSON & GERSHON 3,701.59 109703 02/03/2022 5138 Ricoh USA, Inc. 235.83
109704 02/03/2022 4350 RKA Consulting Group 618.13
109705 02/03/2022 4704 S & J Supply Company, Inc. 3,397.63 109706 02/03/2022 2542 SAN GABRIEL VALLEY WATER ASSOCIATION 25.00 109707 02/03/2022 2711 SOUTHEAST CONSTRUCTION INC 701.40 109708 02/03/2022 2714 SOUTHERN CA GAS CO ML711D 500.00 109709 02/03/2022 2855 CHARTER COMMUNICATION 378.66
109710 02/03/2022 2935 UNDERGROUND SERVICE ALERT 201.11 109711 02/03/2022 4247 UNITED WATER WORKS INC 11,072.90 109712 02/03/2022 3001 VERIZON WIRELESS 1,921.23
109713 02/03/2022 3075 CITY OF WEST COVINA 575.00
109714 02/03/2022 3082 WESTERN WATER WORKS SUPPLY 3,627.66 109715 02/03/2022 3274 WILLDAN ENGINEERING 60,000.00
109716 02/03/2022 3137 Y TIRE SALES 1,007.94
109717 02/03/2022 68 AFLAC ACCT# YQ792 WORLDWIDE HEADQUARTERS 4,099.67 109718 02/03/2022 69 AFSCME District Council 36 676.73
109719 02/03/2022 3846 CLEA 784.00
109720 02/03/2022 775 COVINA POLICE ASSOCIATION 2,850.00 109721 02/03/2022 878 DELTA DENTAL OF CALIFORNIA 8,053.32 109722 02/03/2022 4710 Fidelity Security Life Insurance Company 887.40 109723 02/03/2022 1247 GREAT WEST LIFE & ANNUITY 4,017.00 109724 02/03/2022 3795 PRE-PAID LEGAL SERVICES, INC 139.52 109725 02/03/2022 2235 PERS LONG TERM CARE PROGRAM 191.04 109726 02/03/2022 4255 RELIASTAR LIFE INSURANCE COMPANY 4,125.11 109727 02/03/2022 3045 WASHINGTON NATIONAL INSURANCE COMPANY 33.38 109728 02/09/2022 4379 789, Inc. 5,376.09
109729 02/09/2022 30 ACE PELIZON PLUMBING INC 330.00
109730 02/09/2022 4765 Advanced Microcomputing Concepts, Inc. 2,735.31 109731 02/09/2022 5075 Amalia Q. Seresinghe 756.00
109732 02/09/2022 3789 SYNCB/AMAZON 1,003.29
109733 02/09/2022 160 AMERICAN WEST COAST SECURITY 25.00 109734 02/09/2022 219 AT&T 782.93
109735 02/09/2022 219 AT&T 70.02

CITY OF COVINA
Check Register
Jan 28, 2022 - Feb 10, 2022
Check # Check Date Vendor Name Amount
109736 02/09/2022 4894 Bureau Veritas Technical Assessments LLC 4,721.55 109737 02/09/2022 437 BURRO CANYON ENT INC 80.00
109738 02/09/2022 617 CHARTER OAK GYMNASTICS INC 2,319.32 109739 02/09/2022 649 CINTAS CORP #693 262.59
109740 02/09/2022 649 CINTAS CORP #693 262.59
109741 02/09/2022 664 CIVILTEC ENGINEERING INC. 320.00
109742 02/09/2022 3235 COOK, SHAWNA 405.30
109743 02/09/2022 739 COPWARE 1,500.00
109744 02/09/2022 749 THE COUNSELING TEAM 600.00
109745 02/09/2022 771 COVINA IRRIGATING CO 182,982.63
109746 02/09/2022 4268 S&K POWER EQUIPMENT 41.87
109747 02/09/2022 783 CITY OF COVINA WATER 61.64
109748 02/09/2022 5184 Danny Ryan Precision Contracting, Inc. 41,325.00 109749 02/09/2022 5186 Dash Platform, LLC 271.57
109750 02/09/2022 962 SUPERIOR COURT OF CALIFORNIA, CNTY OF LOS ANGELES 345.00 109751 02/09/2022 962 SUPERIOR COURT OF CALIFORNIA, CNTY OF LOS ANGELES 12,500.00 109752 02/09/2022 970 EDISON CO 47,832.92
109753 02/09/2022 4977 Enterprise FM Trust 4,233.02
109754 02/09/2022 4455 FRONTIER 4,139.64
109755 02/09/2022 4883 Glendora Employment Agency, Inc 2,895.40 109756 02/09/2022 1198 GLOBALSTAR LLC 177.84
109757 02/09/2022 1204 GOLDEN STATE WATER COMPANY 1,230.97 109758 02/09/2022 1235 GRAINGER 182.32
109759 02/09/2022 4979 GRBCON, Inc. 45,809.00
109760 02/09/2022 4766 HASA, INC. 1,704.43
109761 02/09/2022 1312 HAWK INDUSTRY PRODUCTS 700.00
109762 02/09/2022 1371 HOSE MAN INC, THE 76.24
109763 02/09/2022 1387 HUNTER, JOHN L. 16,290.25
109764 02/09/2022 3988 LANDSCAPE WAREHOUSE III 86.47
109765 02/09/2022 1429 INLAND EMPIRE STAGES 1,175.04
109766 02/09/2022 3751 KELLY ASSOCIATES MANAGEMENT GROUP 1,475.00 109767 02/09/2022 1561 KEYSTONE UNIFORM DEPOT 956.77
109768 02/09/2022 1614 LA CNTY FIRE DEPARTMENT 988,796.10 109769 02/09/2022 1617 LA CNTY REGISTRAR RECORDER 95.00 109770 02/09/2022 1680 LEAGUE OF CALIF CITIES 16,477.00 109771 02/09/2022 1694 LEWIS ENGRAVING INC 108.05
109772 02/09/2022 3932 ARLENE D. MAR 238.00
109773 02/09/2022 4089 MEASOM, DEVIN THOMAS 596.40
109774 02/09/2022 4833 Michael R. Hillmann 2,730.00
109775 02/09/2022 5051 Minako America Corporation 250.00 109776 02/09/2022 1933 MISSION LINEN SUPPLY 13.20
109777 02/09/2022 3718 NADENE VALDEZ 132.30
109778 02/09/2022 5171 Nielsen Merksamer Parrinello Gross & Leoni LLP 9,069.85 109779 02/09/2022 2091 O REILLY AUTO PARTS 9.63
109780 02/09/2022 5169 Occupational Health Centers of California 466.50 109781 02/09/2022 2104 OFFICE DEPOT 82.84
109782 02/09/2022 99999 ALEC CAMERENA 335.00
109783 02/09/2022 99999 ANDREA MARTINEZ 80.00
109784 02/09/2022 99999 ANDREA PICAZO 74.12

CITY OF COVINA
Check Register
Jan 28, 2022 - Feb 10, 2022
Check # Check Date Vendor Name Amount
109785 02/09/2022 99999 FERNANDO PADILLA 240.00
109786 02/09/2022 99999 GLADWIN GILL 1,458.32
109787 02/09/2022 99999 JESSICA KISHIMOTO 199.14
109788 02/09/2022 99999 MARIA CALDERON 60.00
109789 02/09/2022 99999 RAFAEL FAJARDO 125.00
109790 02/09/2022 99999 Smitty's Construction and Pools 1,200.00 109791 02/09/2022 99999 STARZ KWAN 80.00
109792 02/09/2022 2134 ORKIN PEST CONTROL 128.00
109793 02/09/2022 2163 PACIFIC PARKING SYS INC 5,701.00 109794 02/09/2022 2275 POIRIER, ROBERT 140.00
109795 02/09/2022 5127 PRECISION AERIAL SERVICES, INC. 988.52 109796 02/09/2022 5112 Procure America, Inc 608.90
109797 02/09/2022 5166 Project 29:11, A Community Development Corp. 3,333.23 109798 02/09/2022 2415 REPUBLIC MASTER CHEFS 515.30
109799 02/09/2022 2426 REYNOLDS BUICK INC 341.91
109800 02/09/2022 3796 RICHARDS, WATSON & GERSHON 1,762.80 109801 02/09/2022 2736 STAPLES BUSINESS ADVANTAGE 476.66 109802 02/09/2022 2737 STAPLES INC 3,425.26
109803 02/09/2022 5117 Steam It All LLC 630.00
109804 02/09/2022 2752 STEPHEN DORECK EQUIPMENT RENTALS INC 940,913.11 109805 02/09/2022 5113 StorageCraft Technology Corporation 1,966.65 109806 02/09/2022 3729 SUNBELT RENTALS INC 656.46
109807 02/09/2022 4738 Support Solutions, Inc. 7,402.94 109808 02/09/2022 2795 STATE WATER RESOURCES CONTROL BOARD 17,666.00 109809 02/09/2022 2796 SYNTECH 1,675.00
109810 02/09/2022 2804 TAG AMS INC 257.50
109811 02/09/2022 2818 TAVANNA 110.60
109812 02/09/2022 2846 THOMAS, TERRI 690.82
109813 02/09/2022 3185 TOSHIBA FINANCIAL SERVICES 1,216.30 109814 02/09/2022 4764 UniFirst Corporation 1,126.96
109815 02/09/2022 2958 US POSTMASTER TMS ACCOUNT#135095 3,552.17 109816 02/09/2022 4804 Vihulu L. Villagran 210.27
109817 02/09/2022 4255 RELIASTAR LIFE INSURANCE COMPANY 13.38 109818 02/09/2022 3137 Y TIRE SALES 2,946.67
109819 02/09/2022 3152 YWCA 1,427.77
subtotal checks $ 2,686,055.05
109333 01/06/2022 1106 FRANCHISE TAX BOARD (583.10)
109570 01/20/2022 1106 FRANCHISE TAX BOARD (583.10)
109644 01/27/2022 2714 SOUTHERN CA GAS CO ML711D (500.00) 109120 12/15/2021 1204 GOLDEN STATE WATER COMPANY (804.65) voids (prior to current mo.) $ (2,470.85)
payroll (2/3/2022) $ 872,481.69
workers' compensation $ 6,414.36
TOTAL checks/EFTs $3,823,334.71

CC Regular Meeting

AGENDA ITEM REPORT
ITEM NO. CC 4
Meeting: CC Regular Meeting - Mar 01 2022
Title: Resolution CC 2022-20, declaring Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes, Community Facilities District No. 2022-1 (Stormwater)
Presented By: Brian K. Lee, AICP, Director of Community Development Recommendation: Adopt Resolution CC 2022-20, declaring Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes.

DISCUSSION:

The City has previously used Community Facilities Districts (“CFD”s) to finance specified maintenance and services on improvements related to new development. Tract 83178 (707 N Barranca Ave), consisting of one large lot parcel that will be developed into 151 residential townhomes, will require the City to maintain the offsite stormwater facilities related to this project, which will be installed by the developer. Following the successful formation of CFD No. 2022-1 (Stormwater), funding necessary to maintain the improvements, including longterm capital replacement costs, will come from the special taxes levied on the future residential units within the CFD. The developer has provided funds for the establishment of the CFD.

The City’s special tax consultant, NBS, has prepared the attached Resolution of Intention which includes the Rate and Method of Apportionment (“RMA”) for CFD No. 2022-1 (Stormwater). The RMA was prepared by NBS and describes the rates and methods special taxes may be levied within the CFD beginning in Fiscal Year 2022/23 and defines the types of property that may be levied a special tax. The property included in the CFD at formation is Tract 83178 (707 N Barranca Ave), consisting of one large lot parcel that will be developed into 151 residential townhomes. The initial maximum special tax rate is $287 per dwelling unit, which will increase annually by 5.0%.

The Resolution of Intention sets a noticed public hearing for Tuesday, April 5, 2022, at 7:30 p.m.

FISCAL IMPACT:

Costs associated with the consultant services related to the CFD formation are to be paid by the developer. The annual levy and collection of special taxes and CFD administration will be charged to the CFD.

CEQA (CALIFORNIA ENVIRONMENTAL QUALITY ACT):

This activity will not result in a reasonably foreseeable change to the physical environment; it is exempt from CEQA under State CEQA Guidelines 15061 (b) (2) and (3) and does not constitute a project.

ATTACHMENTS:

Attachment A - Resolution CC 2022-20
Respectfully submitted,

RESOLUTION CC 2022-20

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

COVINA, CALIFORNIA, DECLARING ITS INTENTION TO

ESTABLISH A COMMUNITY FACILITIES DISTRICT AND TO

AUTHORIZE THE LEVY OF SPECIAL TAXES

CITY OF COVINA
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(STORMWATER)
WHEREAS, under the Mello-Roos Community Facilities Act of 1982 (Sections 53311 and following, California Government Code; hereafter referred to as the “Act”), the City Council of City of Covina (the “City Council”) may commence proceedings for the establishment of a community facilities district, and
WHEREAS, the City Council has received petitions (including waivers) satisfying all of the requirements of Section 53319 of the Government Code submitted on behalf of the landowners proposing to establish a community facilities district within the District under the terms of the Act, to provide for the costs of operating and maintaining stormwater and appurtenant facilities, and this City Council now desires to commence proceedings to establish a community facilities district (the “District”) as described herein; and WHEREAS, under the Act, the City Council is the legislative body for the proposed District and is empowered with the authority to establish the District and levy special taxes within the District; and
WHEREAS, the City Council now desires to proceed with the actions necessary to consider the establishment of the District.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF COVINA, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:

SECTION 1. The City Council proposes to begin the proceedings necessary to establish the District pursuant to the Act.

SECTION 2. The name of the proposed District is City of Covina, Community Facilities District No. 2022-1 (Stormwater).

SECTION 3. The proposed boundaries of the District are as shown on the map of the District on file with the City Clerk, a copy of which is attached hereto as Exhibit A, which Exhibit is by this reference incorporated herein. The proposed boundaries are hereby preliminarily approved. The City Clerk is hereby directed to record, or cause to be recorded, the map of the boundaries of the District in the office of the Los Angeles County Recorder as soon as practicable after the adoption of this Resolution.

SECTION 4. The type of services proposed to be financed by the District and pursuant to the Act shall consist of those services described in Exhibit B hereto, which Exhibit is by this reference incorporated herein (the “Services”).

Resolution CC 2022-20 Page 2 of 3
SECTION 5. Except where funds are otherwise available, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in the District, will be levied annually within the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within the District, in sufficient detail to allow each landowner within the proposed District to estimate the maximum amount such owner will have to pay, are described in Exhibit C attached hereto, which Exhibit is by this reference incorporated herein.

SECTION 6. The City Council finds that the provisions of Section 53313.6, 53313.7 and 53313.9 of the Act (relating to adjustments to ad valorem property taxes and schools financed by a community facilities district) are inapplicable to the District.

SECTION 7. The levy of said proposed special tax shall be subject to the approval of the qualified electors of the District at a special election. The proposed voting procedure shall be by mailed or hand-delivered ballot among the landowners in the proposed District, with each landowner having one vote for each acre or portion of an acre of land such landowner owns in the District.

SECTION 8. Except as may otherwise be provided by law or the rate and method of apportionment of the special tax for the District, the following properties are exempt from the Special Tax: (i) properties or entities of the state, federal, or local governments, except as provided in Section 53340(c) of the Government Code; (ii) properties receiving a welfare exemption under subdivision (g) of Section 214 of the Revenue and Taxation Code; and (iii) properties otherwise exempt by law.

SECTION 9. The Director of Finance of the City of Covina is hereby directed to study the proposed Services and to make, or cause to be made, and file with the City Clerk a report in writing, presenting the following:
(a) A brief description of the Services.
(b) An estimate of the fair and reasonable initial annual cost of providing the Services, including the incidental expenses in connection therewith, any City of Covina administration costs and all other related costs.

Said report shall be made a part of the record of the public hearing provided for below.

SECTION 10. Tuesday, April 5, 2022, at 7:30 p.m., or as soon thereafter as the matter may be heard, at the City Council Chambers, 125 East College Street, Covina, California, and the same are hereby appointed and fixed as the time and place when and where this City Council, as legislative body for the District, will conduct a public hearing on the establishment of the District and consider and finally determine whether the public interest, convenience and necessity require the formation of the District and the levy of said special tax.

SECTION 11. The City Clerk is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper published in the area of the

Resolution CC 2022-20 Page 3 of 3
District. The publication of said notice shall be completed at least seven days before the date herein set for said hearing. The notice shall be substantially in the form of Exhibit D hereto.

SECTION 12. This Resolution shall take effect upon its adoption.

APPROVED and PASSED this 1
st day of March, 2022.

City of Covina, California
BY:

JORGE A. MARQUEZ, Mayor
ATTEST:
___________________________________________

GEORGIANNA NICOLE ALVAREZ
Chief Deputy City Clerk

CERTIFICATION
I, Georgianna Nicole Alvarez, Chief Deputy City Clerk of the City of Covina, do hereby certify that Resolution CC 2022-20 was duly adopted by the City Council of the City of Covina at a regular meeting held on the 1
st day of March, 2022, by the following vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

Dated:

GEORGIANNA NICOLE ALVAREZ
Chief Deputy City Clerk

Resolution CC 2022-20 Exhibit A

EXHIBIT A

CITY OF COVINA
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(STORMWATER)

PROPOSED BOUNDARIES OF THE DISTRICT

Resolution CC 2022-20 Exhibit B

EXHIBIT B

CITY OF COVINA
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(STORMWATER)

DESCRIPTION OF SERVICES TO BE FINANCED BY THE DISTRICT
It is intended that the District will be eligible to fund all or a portion of the costs of operating and maintaining stormwater and appurtenant facilities within or adjacent to the District as follows:

Services:

The services to be funded, in whole or in part, by the District include all direct and incidental costs related to providing for the maintenance of public infrastructure within the area of District and areas adjacent to or in the vicinity of such areas. More specifically, the services shall include, but not be limited to, the maintenance of: (i) stormwater and appurtenant facilities. The District may fund any of the following related to the services described in the preceding sentence:
obtaining, constructing, furnishing, operating and maintaining equipment, apparatus or facilities related to providing the services and/ or equipment, apparatus, facilities or fixtures in areas to be maintained, paying the salaries and benefits of personnel necessary or convenient to provide the services, payment of insurance costs and other related expenses and the provision of reserves for repairs and replacements and for the future provision of services. It is expected that the services will be provided by the City of Covina, either with its own employees or by contract with third parties, or any combination thereof.

The services to be financed by District are in addition to those provided in the territory of District before the date of creation of District and will not supplant services already available within that territory when District is created.

Administrative Expenses:

The administrative expenses to be funded by District include the direct and indirect expenses incurred by the City of Covina in carrying out its duties with respect to District (including, but not limited to, the levy and collection of the special taxes) including the fees and expenses of attorneys, any fees of the County of Los Angeles related to District or the collection of special taxes, an allocable share of the salaries of the City of Covina staff directly related thereto and a proportionate amount of the City of Covina's general administrative overhead related thereto, any amounts paid by the City of Covina from its general fund with respect to District or the services authorized to be financed by District, and expenses incurred by the City of Covina in undertaking action to pursue payment of special taxes which are delinquent, and all other costs and expenses of the City of Covina related to the District.

Other:

The incidental expenses that may be funded by District include, in addition to the administrative expenses identified above, the payment or reimbursement to the City of Covina of all costs associated with the establishment and administration of District.

Resolution CC 2022-20 Exhibit C

EXHIBIT C

CITY OF COVINA
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(STORMWATER)

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX

CITY OF COVINA
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(STORMWATER)
A Special Tax shall be levied and collected in the City of Covina Community Facilities District No. 2022-1 (Stormwater) (“CFD 2022-1”) each Fiscal Year, in an amount determined by the application of the procedures described below. All taxable property (as defined below) in CFD 2022-1, unless exempted by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.

I. DEFINITIONS
The terms used herein shall have the following meanings:
“Accessory Dwelling Unit” or “ADU” means a secondary residential unit of limited size, as defined in California Government Code Section 65852.2 as that may be amended from time to time, that is accessory to a single-unit dwelling. The ADU may be on the same Assessor’s Parcel as the single-unit dwelling or on a separate Assessor’s Parcel. Accessory Dwelling Units are not considered Units for purposes of the Special Tax.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Act of the State of California. “Administrative Expenses” means the following actual or reasonably estimated costs directly related to the administration of CFD 2022-1: the costs of computing the Annual Special Tax Requirement, and the annual Special Tax and of preparing the annual Special Tax collection schedules; the costs of collecting the Special Tax, including any charges levied by the County Auditor’s Office, Tax Collector’s Office or Treasurer’s Office; the costs of the City or designee in complying with the disclosure requirements of the California Government Code (including the Act), including public inquiries regarding the Special Tax; the costs of the City or designee related to an appeal of the Special Tax; and the costs of commencing and pursuing to completion any action arising from any delinquent Special Tax in CFD 2022-1. “Annual Services Costs” means the amounts required to fund services authorized to be funded by CFD 2022-1.
“Annual Special Tax Requirement” means that amount with respect to CFD 2022-1 determined by the City Council or designee as required in any Fiscal Year to pay: (1) the Administrative Expenses, (2) the Annual Services Costs, (3) any amount required to establish or replenish any reserve or replacement fund established in connection with CFD 2022-1, and (4) any reasonably anticipated delinquent Special Tax based on the delinquency rate for any Special Tax levied in the previous Fiscal Year. “Assessor’s Data” means Dwelling Units or other information contained in the records of the County Assessor for each Assessor’s Parcel.
“Assessor’s Parcel” or “Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number.
“Assessor’s Parcel Map” means an official map of the Assessor of the County designating parcels by

Assessor’s Parcel Number.
“Assessor’s Parcel Number” means, with respect to an Assessor’s Parcel, that number assigned to such Assessment’s Parcel by the County Assessor for purposes of identification. “CFD 2022-1” means the City of Covina Community Facilities District No. 2022-1 (Stormwater), County of Los Angeles, State of California.
“CFD Administrator” means an official of the City, or designee or agent or consultant, responsible for administering the Special Tax in accordance with this Rate and Method of Apportionment. “City” means the City of Covina, County of Los Angeles, California. “City Council” means the City Council of the City, acting as the legislative body of CFD 2022-1. “County” means the County of Los Angeles, California.
“Developed Property” means, in any Fiscal Year, all Taxable Property in CFD 2022-1 for which a building permit for new construction was issued by the City prior to June 1 of the preceding Fiscal Year. “Dwelling Unit” means any individual single family detached or attached home, townhome, condominium, apartment, mobile home or other residential dwelling unit, including each separate living area within a half-plex, duplex, triplex, fourplex, or other residential structure. An Accessory Dwelling Unit shall not be considered a separate Dwelling Unit for purposes of calculating the Special Tax. “Exempt Property” means any property located within the boundaries of CFD 2022-1 which is exempt from the Special Tax pursuant to Section V below.
“Fiscal Year” means the period from July 1st of any calendar year through June 30th of the following calendar year.
“Maximum Special Tax” means the maximum Special Tax authorized to fund the Annual Services Costs in any Fiscal Year that may apply to Taxable Property as described in Section III. “Property Owner’s Association” means any property owner’s association. As used in this definition, a Property Owner’s Association includes any home-owner’s association, condominium owner’s association, master or sub-association.
“Property Owner’s Association Property” means any property within the boundaries of CFD 2022-1 which is (a) owned by a Property Owner’s Association or (b) designated with specific boundaries and acreage on a final subdivision map as property owner association property. “Proportionately” means, for Developed Property that the ratio of the Special Tax levy to the Maximum Special Tax are equal for all Assessors’ Parcels of Developed Property within CFD 2022-1. “Public Property” means any property within the boundaries of CFD 2022-1 owned by, irrevocably offered or dedicated to, or for which an easement for purposes of public or private road right-of-way making the property unusable for any other purpose has been granted to the federal government, the State of California, the County, the City, or any local government or other public agency. “Residential Property” means, in any Fiscal Year, all Parcels of Developed Property with one or more

permanent Dwelling Units, according to Assessor’s Data or as otherwise known by the CFD Administrator. “Special Tax(es)” means the amount levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Annual Special Tax Requirement.
“Tax Escalation Factor” means a factor equal to 5% that will be applied annually after Fiscal Year 2021/22 to increase the Maximum Special Tax shown in Section III. “Taxable Property” means all Parcels within the boundary of CFD 2022-1 that are not Exempt Property, or exempt from the Special Tax pursuant to the Act.
“Undeveloped Property” means all Parcels within CFD 2022-1 that are not Developed Property. “Welfare Exempt Property” means, in any Fiscal Year, all Parcels within the boundaries of CFD 2022-1 that have been granted a welfare exemption by the County pursuant to subdivision (g) of Section 214 of the Revenue and Taxation Code.

II. DETERMINATION OF TAXABLE PARCELS
On or about July 1 of each Fiscal Year, the CFD Administrator shall determine the valid Assessor’s Parcel Numbers for all Taxable Property within CFD 2022-1. If any Assessor’s Parcel Numbers are no longer valid, the CFD Administrator shall determine the new Assessor’s Parcel Number or Numbers in effect for the then-current Fiscal Year. To the extent a Parcel or Parcels of Taxable Property are subdivided, consolidated or otherwise reconfigured, the Maximum Special Tax shall be assigned to the new Assessor’s Parcels pursuant to Section III. The CFD Administrator shall also determine: (i) which Parcels are Developed Property and Undeveloped Property; (ii) the number of Dwelling Units each Parcel contains; (iii) the property type; and (iv) the Annual Special Tax Requirement for the Fiscal Year.

III. SPECIAL TAX - METHOD OF APPORTIONMENT
All Taxable Property shall be subject to a Special Tax defined as follows. The Special Tax shall be levied each Fiscal Year by the CFD Administrator.

The Annual Special Tax Requirement shall be apportioned to each Parcel within CFD 2022-1 by the method shown below.

First. Determine the Annual Special Tax Requirement.

Second. Levy the Special Tax on each Parcel of Developed Property, Proportionately, up to the Maximum Special Tax described in the Table 1 below to satisfy the Annual Special Tax Requirement.

Under no circumstances will the Special Tax on any Assessor’s Parcel of used for private residential purposes be increased by more than 10% as a consequence of delinquency or default by the owner of any other Assessor’s Parcel within CFD 2022-1.

TABLE 1

MAXIMUM SPECIAL TAX RATES
FISCAL YEAR 2022/23*
Property Type
Maximum Special
Tax Rate Per
Residential Property $287.00 Dwelling Unit
*On each July 1, commencing on July 1, 2023, the Maximum Special Tax Rate shall be increased by the Tax Escalation Factor.

IV. FORMULA FOR PREPAYMENT OF SPECIAL TAX OBLIGATIONS
The Special Tax may not be prepaid.

V. EXEMPTIONS
Notwithstanding any other provision of this Rate and Method of Apportionment of Special Tax, no Special Tax shall be levied on Property Owner’s Association Property, or Public Property, except as otherwise provided in Sections 53317.3 and 53317.5 of the Act.

Welfare Exempt Property shall be exempt from the Special Tax for as long as the property qualifies as Welfare Exempt Property in any Fiscal Year.

VI. INTERPRETATION OF RATE AND METHOD OF APPORTIONMENT
The City reserves the right to make minor administrative and technical changes to this document that do not materially affect the rate and method of apportioning the Special Tax. In addition, the interpretation and application of any section of this document shall be at the City’s discretion. Interpretations may be made by the City Council by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in this Rate and Method of Apportionment of Special Tax.

VII. MANNER AND DURATION OF SPECIAL TAX
The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided that the City may directly bill the Special Tax, may collect the Special Tax at a different time or in a different manner if needed to meet the financial obligations of CFD 2022-1, and may collect delinquent Special Taxes through other available methods.

A Special Tax shall continue to be levied and collected commencing in Fiscal Year 2022/23 to the extent necessary to satisfy the Annual Special Tax Requirement and shall be levied perpetually or for as long as required to satisfy the Annual Special Tax Requirement, as determined by the City.

VIII. APPEAL OF SPECIAL TAX LEVY
Any property owner may file a written appeal of the Special Tax with the CFD Administrator claiming that the amount or application of the Special Tax is not correct. The appeal must be filed not later than one calendar year after having paid the Special Tax that is disputed, and the appellant must be current in all payments of the Special Tax. In addition, during the term of the appeal process, all Special Tax levied must be paid on or before the payment date established when the levy was made.

The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination.

If the property owner disagrees with the CFD Administrator’s decision relative to the appeal, the owner may then file a written appeal with the City Council whose subsequent decision shall be final and binding on all interested parties. If the decision of the CFD Administrator or subsequent decision by the City Council requires the Special Tax to be modified or changed in favor of the property owner, the CFD administrator shall determine if sufficient Special Tax revenue is available to make a cash refund. If a cash refund cannot be made, then an adjustment shall be made to credit the Special Tax in future years.

This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to filing any legal action by such owner.

Resolution CC 2022-20 Exhibit D

EXHIBIT D

CITY OF COVINA
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(STORMWATER)

DRAFT NOTICE OF PUBLIC HEARING
Notice is hereby given that the City Council of City of Covina will conduct a public hearing on Tuesday, April 5, 2022, at 7:30 p.m. or as soon thereafter as the matter may be heard, at the City Council Chambers, 125 East College Street, Covina, California, to consider the following:

CITY OF COVINA
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(STORMWATER)
On March 1, 2022, the City Council of City of Covina adopted a Resolution entitled “A Resolution of the City Council of City of Covina, Declaring Its Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes” (the “Resolution of Intention”). Reference is hereby made to the Resolution of Intention on file in the office of the City Clerk of City of Covina for further particulars.

In the Resolution of Intention, the City Council declared its intention to form the City of Covina Community Facilities District No. 2022-1 (Stormwater) (the “District”) to finance the costs of operating and maintaining stormwater and appurtenant facilities as further identified in an exhibit to the Resolution of Intention. The proposed boundaries of the District were identified in another exhibit to the Resolution of Intention, and the Resolution of Intention identified a proposed special tax to be levied on real property to be included in the District to pay for costs of the services.

In the Resolution of Intention, the City Council provided that the levy of the special tax will be subject to a mailed ballot election among the owners of land in the District.

The City Council ordered the Director of Finance to prepare a report on the District, and the City Council called for a public hearing on the District.

At the hearing, the testimony of all interested persons or taxpayers for or against the establishment of the District, the extent of the District or the furnishing of specified types of services will be heard. Any person interested may file a protest in writing with the City Clerk. If fifty percent or more of the registered voters, or six registered voters, whichever is more, residing in the territory proposed to be included in the District, or the owners of one-half or more of the area of land in the territory proposed to be included in the District and not exempt from the special tax file written protests against the establishment of the District and the protests are not withdrawn to reduce the value of the protests to less than a majority, the City Council shall take no further action to establish the District or authorize the special taxes for a period of one

Resolution CC 2022-20 Exhibit D
year from the date of the decision of the City Council, and if the majority protests of the registered voters or the landowners are only against the furnishing of a type or types of services within the District, or against levying a specified special tax, those types of services, or the specified special tax, will be eliminated from the proceedings to form the District.

Any person interested in these matters is invited to attend and present testimony either for or against the above item. If you challenge the proposed action in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice or in written correspondence delivered to the City Council during or prior to the public hearing.

City Clerk
City of Covina

CC Regular Meeting

AGENDA ITEM REPORT
ITEM NO. CC 5
Meeting: CC Regular Meeting - Mar 01 2022
Title: Annual Comprehensive Financial Report (ACFR) for Fiscal Year Ended June 30, 2021 Presented By: Anita Agramonte, Administrative Services Director Theresa Franke, Finance Manager
Recommendation: Receive and file the following reports for Fiscal Year ended June 30, 2021:
• Annual Comprehensive Financial Report (ACFR) and related Auditor Communications
• Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit
EXECUTIVE SUMMARY:

Annually, the Finance Division of the Administrative Services Department prepares and publishes the City's Annual Comprehensive Financial Report (ACFR) following the completion of an independent and certified audit.

Attached is the June 30, 2021 ACFR and related reports. The ACFR is an extensive report summarizing the financial activities of the City that occurred from July 1, 2020 through June 30, 2021.

BACKGROUND:

The ACFR is prepared in compliance with the Governmental Accounting Standards Board (GASB) requirements and attached hereto as Attachment A. Pursuant to GASB guidelines, the City's ACFR is divided into three sections: Introductory, Financial, and Statistical. The Introductory Section provides a brief overview of the City and contains a Letter of Transmittal, Organizational Chart and List of Principal Officials. The Financial Section contains the Independent Auditors' Report, Management's Discussion and Analysis (MD&A), and the Basic Financial Statements including Notes to the Financial Statements. The Statistical Section presents a variety of reports useful in analyzing the City's financial and operational history as well as evaluating the City's financial stability.

DISCUSSION:

The audit firm of CliffordLarsonAllen LLP has issued an unmodified ("clean") opinion on the financial statements as presented in the ACFR for the fiscal year ended June 30, 2021. This means that their examination, testing and audit procedures allowed them to conclude that the financial statements present fairly the financial position of the City. This is the best opinion the City can receive from its auditors.

In addition, the independent auditors annually perform procedures to assist the City in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution which requires that California cities establish an annual appropriations limit (the "Gann Limit"). Their findings are reflected on the Appropriations Limit Worksheet No. 6 as detailed in Attachment B.

In conformity with the provisions of the Single Audit Act of 1984 and the U.S. Office of Management and Budget Uniform Guidance, the auditors also perform an annual single audit when required. In Fiscal Year ended June 30, 2021, a Single Audit was required and will be presented to the City Council upon completion.

Additionally, the Auditor Letter to the City Council attached hereto as Attachment C provides information about the auditor's responsibilities under generally accepted Government Auditing Standards, as well as information related to the planned scope and timing of the audit.

FISCAL IMPACT:

None.

CEQA (CALIFORNIA ENVIRONMENTAL QUALITY ACT):

Not applicable.

ATTACHMENTS:

Attachment A - 2021 Annual Comprehensive Financial Report Attachment B - 2021 Appropriations Limit Report
Attachment C - 2021 Auditor Letter to City Council
Respectfully submitted,

CITY OF COVINA, CALIFORNIA
Annual Comprehensive Financial Report
For The Fiscal Year Ended June 30, 2021
Jorge A. Marquez, Mayor
Patricia Cortez Victor Linares
Mayor Pro Tem Council Member
Walter Allen, III John C. King
Council Member Council Member
Chris Marcarello, City Manager
Prepared by the City of Covina Administrative Services Department-Finance Division

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CITY OF COVINA, CALIFORNIA
Annual Comprehensive Financial Report
For the fiscal year ended June 30, 2021
Jorge A. Marquez
Mayor
Patricia Cortez
Mayor Pro Tem
Walter Allen, III
Council Member
Chris Marcarello
City Manager
Prepared by the City of Covina
Administrative Services Department-Finance Division
Victor Linares
Council Member
John C. King
Council Member

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CITY OF COVINA, CALIFORNIA

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

WITH REPORT ON AUDIT

BY INDEPENDENT

CERTIFIED PUBLIC ACCOUNTANTS
YEAR ENDED JUNE 30, 2021
PREPARED BY:

ADMINISTRATIVE SERVICES DEPARTMENT – FINANCE DIVISION

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CITY OF COVINA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021

INTRODUCTORY SECTION

ELECTED AND ADMINISTRATIVE OFFICIALS I

LETTER OF TRANSMITTAL II

ORGANIZATION CHART VIII

FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS (REQUIRED
SUPPLEMENTARY INFORMATION) 4

FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 17
STATEMENT OF ACTIVITIES 18

FUND FINANCIAL STATEMENTS
BALANCE SHEET – GOVERNMENTAL FUNDS 20

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION 21

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS 22

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF

REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 23
STATEMENT OF NET POSITION – PROPRIETARY FUNDS 24

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET
POSITION – PROPRIETARY FUNDS 25
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS 26
STATEMENT OF FIDUCIARY NET POSITION – FIDUCIARY FUNDS 28 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION – FIDUCIARY FUNDS 29
NOTES TO FINANCIAL STATEMENTS 31

CITY OF COVINA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND
RELATED RATIOS – MISCELLANEOUS 77
SCHEDULE OF CONTRIBUTIONS – MISCELLANEOUS 78

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION
LIABILITY – SAFETY 79
SCHEDULE OF CONTRIBUTIONS – SAFETY 80

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS 81
SCHEDULE OF CONTRIBUTIONS – OPEB 82
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND 83
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 84

SUPPLEMENTARY INFORMATION

OTHER GOVERNMENTAL FUNDS
DESCRIPTION OF OTHER GOVERNMENTAL FUNDS 85
COMBINING BALANCE SHEET 88

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES 94

SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – BUDGET AND ACTUAL

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SPECIAL
REVENUE FUND 100
PROPOSITION A SPECIAL REVENUE FUND 101
LAW ENFORCEMENT SPECIAL REVENUE FUND 102
NARCOTICS SEIZURE SPECIAL REVENUE FUND 103
STATE GAS TAX SPECIAL REVENUE FUND 104
PROPOSITION C SPECIAL REVENUE FUND 105
AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND 106
MUNICIPAL PARKING SPECIAL REVENUE FUND 107

CITY OF COVINA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021
LIGHTING ASSESSMENT SPECIAL REVENUE FUND 108
LANDSCAPING ASSESSMENT SPECIAL REVENUE FUND 109

COMMUNITY FACILITIES DISTRICT ASSESSMENT SPECIAL REVENUE FUND 110
SHOPPERS LANE PARKING DISTRICT SPECIAL REVENUE FUND 111 MEASURE M SPECIAL REVENUE FUND 112
TDA GRANT SPECIAL REVENUE FUND 113
OTHER GRANTS SPECIAL REVENUE FUND 114
ROAD MAINTENANCE AND REHABILITATION SPECIAL REVENUE FUND 115 PEG ACCESS TELEVISION SPECIAL REVENUE FUND 116
HOUSING AUTHORITY SPECIAL REVENUE FUND 117
MEASURE W SPECIAL REVENUE FUND 118
MEASURE R SPECIAL REVENUE FUND 119

CAPITAL PROJECTS FUND
GENERAL PROJECTS FUND 120
COVINA REVITALIZATION PROJECTS FUND 121
PARK DEVELOPMENT CAPITAL PROJECTS FUND 122

INTERNAL SERVICES FUNDS
DESCRIPTION OF INTERNAL SERVICE FUNDS 123
COMBINING STATEMENT OF NET POSITION 124

COMBINING STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN NET POSITION 125
COMBINING STATEMENT OF CASH FLOWS 126

CUSTODIAL FUNDS
DESCRIPTION OF CUSTODIAL FUNDS 128
COMBINING STATEMENT OF FIDUCIARY NET POSITION 129

COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET
POSITION 130

CITY OF COVINA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021

STATISTICAL SECTION (UNAUDITED)
DESCRIPTION OF STATISTICAL SECTION CONTENTS 131
NET POSITION BY COMPONENT 133
CHANGES IN NET POSITION 134
FUND BALANCES OF GOVERNMENTAL FUNDS 137
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS 138
GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE 140
ASSESSED VALUE OF TAXABLE PROPERTY 141
ASSESSED VALUE OF TAXABLE PROPERTY BY USE 142
PROPERTY TAX RATES 143
PRINCIPAL PROPERTY OWNERS 144
PROPERTY TAX LEVIES AND COLLECTIONS 145
RATIOS OF OUTSTANDING DEBT BY TYPE 146
RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING 147
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES BONDED DEBT 148 LEGAL DEBT MARGIN INFORMATION 149
PLEDGED-REVENUE BOND COVERAGE – WATER UTILITY FUND
INSTALLMENT AGREEMENT AND REVENUE BONDS 150
PLEDGED-REVENUE BOND COVERAGE – SEWER FUND REVENUE BONDS 151 DEMOGRAPHIC AND ECONOMIC STATISTICS 152
PRINCIPAL EMPLOYERS 153
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION 154 OPERATING INDICATORS BY FUNCTION 155
CAPITAL ASSET STATISTICS BY FUNCTION 157
CONTINUING DISCLOSURE – WATER SYSTEM 158
CONTINUING DISCLOSURE – WASTEWATER SYSTEM 159

INTRODUCTORY SECTION

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CITY OF COVINA, CALIFORNIA

ELECTED AND ADMINISTRATIVE OFFICIALS
2020-2021
(i)
Elected Officials Term Expires
Mayor:

Jorge A. Marquez June 2022
Mayor Pro Tem:

Patricia Cortez March 2024
Council Members:

Walter Allen, III March 2024
John C. King June 2022
Victor Linares June 2022
City Clerk:

Mary Lou Walczak June 2022
City Treasurer:

Geoffrey Cobbett June 2022
Administrative Staff Hire Date
City Manager: *
Chris Marcarello January 2017
City Attorney: *
Candice Lee May 2015
Administrative Services Director:

Anita Agramonte July 2016
Police Chief:

David Povero July 1988
Fire Chief: **
Daryl L. Osby February 2011
Public Works Director:

Andy Bullington June 2018
Parks and Recreation Director:

Lisa Evans July 1989
Community Development Director:

Brian Lee June 2015
Chief Deputy City Clerk:

Nicole Alvarez Mary 2015
* Appointed by City Council
** Appointed by Los Angeles County Fire District

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ii
March 1, 2022
Honorable Mayor and City Council
City of Covina
Covina, California
The Annual Comprehensive Financial Report for the City of Covina (City), California, as of June 30, 2021 and for the year then ended, is submitted herewith. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position, results of operations and cash flows of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included.

The financial statements are the responsibility of the City’s management. Completeness and reliability of the information contained in this report is based upon a comprehensive framework of internal controls that is established for this purpose. The costs of internal control should not exceed the anticipated benefits. The objective of internal controls is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

The Management’s Discussion and Analysis (MD&A) interprets the financial reports by analyzing trends and by explaining changes, fluctuations, and variations in the financial data. In addition, the MD&A is intended to disclose any known significant events or decisions that affect the financial condition of the City. MD&A complements this letter of transmittal and should be read in conjunction with it.

Independent Audit. City policy requires that its financial statements be audited by a certified public accountant. CliffordLarsonAllen, Certified Public Accountants, have issued an unqualified (“clean”) opinion on the City’s financial statements for the fiscal year ended June 30, 2021. The auditor’s report on the basic financial statements and required supplementary information is included in the financial section of this report.

The City is legally required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and the U.S. Office of Management and Budget Uniform Guidance, Audits of State and Local Governments, if total federal grant expenditures exceed $750,000 in a single year. The City of Covina is a recipient of federal, state and county assistance, and for Fiscal Year 2020-21 it will be subject to the requirements of a Single Audit as it did have Federal expenditures greater than the $750,000 threshold.

iii
Profile of the City of Covina
The City is a mature, suburban city located twenty-three miles east of downtown Los Angeles in the eastern portion of the San Gabriel Valley. The City encompasses an area of approximately seven square miles and is virtually built out. The current population is 48,833 according to the State of California Department of Finance.

The City is a general law city, incorporated in 1901. The City Council is composed of five members elected biannually at large to four year alternating terms. The Mayor and Mayor Pro Tem are selected by the City Council annually.

The City has a Council/Manager form of government. The City Manager is appointed by the City Council to manage the daily affairs of the City and to implement policies established by the City Council.

This report includes all the funds of the City. The City provides a full range of services including police and fire protection (via a contract with the Los Angeles County Fire Department); construction and maintenance of highways, streets and infrastructure; library and recreational services; public transportation; planning and economic development; housing; and administrative services. In addition to general municipal activities, the City provides water and sewer services.

The Council is required to adopt a final budget by June 30th of each fiscal year. The annual budget serves as the foundation for the City’s financial planning and control. The budget is prepared by fund, program (e.g., public safety), and activity (e.g., police patrol). Department heads may transfer resources within each activity as needed. The City Manager may transfer resources between activities within a fund. Transfers between funds require approval from the City Council.

In accordance with the reporting entity definition of the Governmental Accounting Standards Board, the City has included the Covina Public Financing Authority, the Successor Agency for the former Covina Redevelopment Agency (as of February 1, 2012), and the Covina Housing Authority in the financial report.

Several state and county agencies, as well as school districts, provide services to the City but do not meet the established criteria for inclusion, and accordingly are excluded from this report.

Economic Condition and Outlook
Much of the local development of the City occurred during the post-World War II building boom, which took place from the late 1940’s through the 1960’s. Prior to the building boom, the City was a major citrus producing area.

The character of the City is one of predominantly low to medium density residential and lowintensity commercial and light industrial uses. Single-family residential properties are the most common use. In addition, there are many commercial establishments, particularly community and neighborhood shopping centers, and a relatively large number of small to medium-sized professional offices and light manufacturing operations. The local economy is based on a variety of service, retail, and light manufacturing businesses as well as government agencies.

iv
The City’s economy always has been healthy, though relatively small in population and area. The City consistently ranks high in retail sales tax generation and sales tax per capita among San Gabriel Valley cities. This is primarily due to the mix of retail businesses located in the City as well as a voter-approved transaction and use tax. Despite being in the middle of the well- established San Gabriel Valley, Covina retains a small-town atmosphere. The nearby San Bernardino, Foothill, and Orange Freeways, and the Southern California Regional Rail Authority Metrolink Commuter Rail Line link the City to other areas of metropolitan Los Angeles.

Long-term Financial Planning
As part of a financial strategic plan, the City Council developed the following budget policy guidelines for budgetary and financial planning purposes:

Program - Base Budget

1. Appropriations
 Each program will identify activities and the recommended appropriations  Identify recurring vs. nonrecurring appropriations
 Identify general vs. restricted appropriations
 Continuing appropriations for year-end
 Encumbrances and contractual commitments
 Grant, restricted donation and capital project appropriations are considered life- cycle appropriations
 All other appropriations shall lapse at year-end unless carried forward by City Council action

2. Estimated Revenues
 Estimated revenues will be identified by fund, program and activity  Fund types include general, special revenue, debt service, capital projects, enterprise and internal service
 Identify recurring vs. nonrecurring revenues
 Identify general revenues vs. restricted revenues

3. Fund Balances/Working Capital
 Program-base budget will calculate available fund balances and/or working capital available in the various funds
 Program-base budget will establish adequate reserves
 Capital needs
 Offset economic hard times

v
 Stabilize fluctuations in cash flow requirements
 Emergency Situations
 General Fund
 Minimum of 20% of operating expenses-reserve exclusive of risk management requirements
 Excess reserves will be assigned for nonrecurring activities or capital improvements  Maintain general liability and worker’s compensation reserves based on actuarial recommendations
 Restricted Funds
 Reserves can be used for only restricted purposes
 Excess reserves can be restricted for recurring and nonrecurring activities or capital improvements depending on the nature of the fund Program – Base Budget Will Link Resources with Results

1. Identifying community needs for essential services

2. Describing the programs required to provide the essential services

3. Identifying the purpose of activities performed in delivering services

4. Establishing goals and objectives which define the nature and level of services required

5. Identifying resources required to perform program activities and accomplish goals and objectives

6. Setting standards to measure and evaluate
 Output and outcomes of program activities
 Accomplishment of program activities
 Staffing levels
 Program activity revenue and appropriations
o Make budgetary and financial decisions on conservative estimates of revenues, expenditures and other financing sources and uses
o The greater the uncertainty and/or volatility of the budgetary and financial estimates, the more conservative the estimates

vi
Program Base Budget-Change in Service

1. The base budget is the required appropriation level needed to maintain the previous year budget service level

2. Change in service is the proposed increase or decrease in service level in the programbased budget activity

3. Increase in services shall be offset with new revenue or a corresponding decrease in other program services

4. Grants shall not have a negative impact on General Fund services

5. Future operating grants will not be funded by the General Fund unless there is a new revenue source or decrease in other program services Program – Base Budget Shall Be Balanced On a Long-Term Basis

1. Ongoing and recurring costs shall be funded with ongoing and recurring revenues

2. One-time and nonrecurring costs shall be funded with excess ongoing revenues, available one-time revenues or excess reserves

3. One-time or nonrecurring revenues shall not fund ongoing cost

4. Current costs shall be recognized and funded in the current year, not deferred or funded in future years

5. Maintain current full costs providing City services

6. The General Fund shall try to maintain a minimum $100,000 operating contingency for unanticipated events

7. Make conscious decisions about cost recovery and/or general tax subsidy of those services that benefit only a portion of the tax paying public Infrastructure Maintenance

1. Identify preventive maintenance of infrastructure to minimize future expenditure

2. Amortize capital costs
 Replacing or expanding existing facilities and equipment  With respect to equipment, rates shall be established to recover the replacement cost of each item at the end of its useful life
 Facilities shall be amortized to cover ongoing maintenance and cyclical repairs, and for the replacement or expansion of major structures

vii
Exceptions

3. City Council/Agency Board authorization required for  Emergencies
 Legal requirements
 Loans
 Accounting changes and prior period adjustments
Implementation

1. The City Manager shall be responsible for the preparation and submission of the programbased budget.

2. The City Manager shall be authorized to make the appropriate changes to adhere to the budget policy.

3. Staff shall report to the City Council 30 days after the end of each fiscal quarter with an update on actual revenues and expenditures as shown in the adopted budget.

A majority of the policy guidelines have been implemented to date.

The preparation of the Annual Comprehensive Financial Report was made possible by the dedicated service of the entire staff of the Administrative Services Department Finance Division with special recognition of Theresa Franke, Bessie Zou and Alan Sands. Credit also must be given to the Mayor and City Council for their support for maintaining the highest standards of professionalism in the management of the City of Covina's finances and to the Department Directors for their cooperation and support during the annual audit.

Sincerely,

CITY OF COVINA

ORGANIZATION CHART
FISCAL YEAR 2020-2021
viii

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FINANCIAL SECTION

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CliftonLarsonAllen LLP
CLAconnect.com
(1)
INDEPENDENT AUDITORS’ REPORT
The Honorable Mayor and
Members of City Council
of the City of Covina
Covina, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Covina (the City) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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.

Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements 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, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

The Honorable Mayor and
Members of City Council
of the City of Covina
(2)
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Covina as of June 30, 2021, 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.

Emphasis of Matter
As discussed in Note 23 to the financial statements, the City made a restatement to beginning net position. Our opinions are not modified with respect to this matter.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the miscellaneous plan schedule of changes in the net pension liability and related ratios and the schedule of contributions, the safety plan schedule of proportionate share of the net pension liability and the schedule of contributions, the other post-employment benefit plan schedule of changes in the net OPEB liability and related ratios and the schedule of contributions - OPEB and the budgetary comparison schedules for the General Fund be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the 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 financial statements, and other knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide any assurance on the required supplementary information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements. The introductory section, the combining and individual fund financial statements and schedules (supplementary information) and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements.

The supplementary information, as listed in the table of contents, is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America.

In our opinion, the supplementary information is fairly stated in all material respects in relation to the financial statements as a whole.

The Honorable Mayor and
Members of City Council
of the City of Covina
(3)
The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 14, 2022, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s 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.

CliftonLarsonAllen LLP
Irvine, California
February 14, 2022

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MANAGEMENT’S DISCUSSION AND ANALYSIS
(4)
The following discussion and analysis of the City of Covina’s (City) financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2021. This report is prepared in conjunction with the accompanying transmittal letter and basic financial statements and notes.

FINANCIAL HIGHLIGHTS
 The assets of the City exceeded its liabilities at the close of the fiscal year by $106,884,954. The Governmental Activities have a deficit unrestricted net position of $37,601,064. Business-type Activities have unrestricted net position of $14,518,926.
 The City’s net position for governmental and business-type activities increased by $7,231,966 or 7.26% from the previous fiscal year.
 The total cost of all City activities was $70,947,722 for the current fiscal year. Net cost of all activities was $35,975,218.
 During the current fiscal year, the City’s governmental activities net revenues exceeded net expenses by $4,151,787.
 In the City’s business-type activities, net revenues exceeded net expenses by $3,080,179.  The total fund balance of the City’s governmental funds was $35,499,658 at the close of the fiscal year. This includes $20,800,219 fund balance of the General Fund, $10,878,058 of which is unassigned and is available for spending at the City’s discretion (see note 14 of Notes to the Financial Statements).  General Fund revenues and other financing sources (uses) exceeded expenditures by $6,527,760 for the fiscal year.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The report also contains required supplementary information and other supplementary information in addition to the basic financial statements.

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

Statement of Net Position
The Statement of Net Position presents information on all of the City’s assets, deferred outflows, liabilities and deferred inflows, the difference between the two 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 showing how the City’s net position changed during the 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. Revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods.

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) and from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include General Government, Public Safety, Public Works, Culture and Recreation, Community Development, Transit, Redevelopment and Housing, and Interest on Long-Term Debt. The businesstype activities include Water Utility, Environmental Protection, and Sewer.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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The government-wide financial statements include not only the City itself (known as the primary government) but also the blending of the legally separate Covina Public Financing Authority, and Covina Housing Authority for which the City is financially accountable. These component units are therefore included as an integral part of the primary government.

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

Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike 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 the City’s near-term financing requirements.

The focus of governmental funds is narrower than that of the government-wide financial statements; it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. This will provide a better understanding of the long-term impact of the City’s near-term financing decisions. The Governmental Fund Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities.

The City maintains twenty-four individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances for the General fund which is considered to be a major fund. Information from the other non-major governmental funds is 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 in the supplementary information section of the report.

The City adopts an annual appropriated budget for all of the governmental funds. Budgetary comparison schedules have been provided in the required supplementary information section for the General fund to demonstrate compliance with the budget. Budgetary comparison schedules have been provided in the supplementary information section for the non-major governmental funds.

Proprietary Funds
The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City’s enterprise funds account for the Water Utility, Environmental Protection and Sewer. Internal service funds are used to accumulate and allocate costs internally among various City functions. The City’s internal service funds account for Information Technology, Central Equipment, Workers’ Compensation, and Public Liability. These services predominately benefit governmental and have been allocated within the governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water Utility, Environmental Protection and Sewer. Water and Sewer funds are considered to be major funds of the City. Conversely, all Central Equipment, Information Technology, Workers’ Compensation, and Public Liability internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in the supplementary information section of this report.

Fiduciary Funds
Fiduciary funds (private purpose trust fund and custodial fund) are used to account for the assets and activities for which the City acts as trustee. The Statement of Fiduciary Net Position reports the assets and liabilities of the fund and the net position is reported as “held in trust for others”.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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The government-wide financial statements exclude fiduciary funds.

Notes to the Financial Statements
The Notes to the Financial Statements provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
Total Net Position
Net position reflects the excess of assets and deferred outflows of resources over liabilities and deferred inflows of resources and may serve over time as a useful indicator of the City’s financial position.

As detailed in the Government-Wide Financial Statements-Statement of Net Position, the City’s total net position for governmental and business-type activities was $106.9 million at the close of the fiscal year, which is an increase of $7.2 million or 8.32% from the previous fiscal year.

The largest portion of that net position, $114.6 million, is in capital assets (land, buildings and structures, infrastructure, and machinery and equipment) less any related debt outstanding used to acquire those assets.

Capital assets are acquired for the purpose of providing services and infrastructure and are unavailable for future spending. Resources needed to repay related debt outstanding must be provided from other sources before liquidating capital assets to satisfy these liabilities.

Additionally, $15.4 million of the City’s total net position represents resources that are subject to external restrictions such as public safety, transit, and capital projects. Those restrictions are designated by certain federal, state, and local statutes and may not be used by the City for ongoing obligations to citizens and creditors.

This leaves the City with a deficit unrestricted net position of $19.1 million.

Governmental Activities
This analysis focuses on the net position and changes in net position of the City’s governmental activities, as presented in the Statement of Net Position.

The net position of the governmental activities represents 55.84% of the City’s total net position. As reflected in the following table, restricted governmental activities net position increased by $.9 million (6.5%) from the previous fiscal year. This portion of net position is subject to external restrictions relating to public safety, public works, community development, culture and recreation, transit and redevelopment and housing. 2021 2020
Current and other assets $ 49,819,905 $ 44,698,963
Capital assets 89,652,961 86,455,238
Deferred outflows 13,869,664 12,221,282
Total Assets and deferred outflows 153,342,530 143,375,483 Long-term liabilities outstanding 85,736,046 80,611,670 Other liabilities 4,436,593 4,239,811
Deferred inflows 3,483,069 3,983,279
Total Liabilities and deferred inflows 93,655,708 88,834,760 Net position:

Net Investment in capital assets 81,877,731 84,273,491
Restricted 15,410,155 14,469,628
Unrestricted (37,601,064) (44,202,396)
Total net position 59,686,822 $ $ 54,540,723
The following table compares fiscal year changes in revenues and expenses in governmental activities that comprise net position, as found in the Statement of Activities.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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Revenues 2021 2020
Program revenues:

Charges for services $ 8,155,187 $ 7,287,624
Operating grants and contributions 9,809,684 8,081,089
Capital grants and contributions 1,087,845 245,420
General revenues:

Property taxes 14,862,914 13,812,070
General sales tax 10,793,459 9,296,400
Transaction and use tax 8,098,540 6,579,486
Utility users taxes 4,847,226 4,523,187
Other taxes 2,797,678 2,601,067
Investment earnings (257,680) 620,835
Gain/(Loss) on sale of capital assets 54,268
Miscellaneous 478,063 49,645
Total Revenues 60,672,916 53,151,091
Expenses
General government 3,131,410 3,356,218
Public safety 34,239,989 33,529,788
Public works 8,476,656 8,539,877
Culture and recreation 4,393,945 4,630,583
Community development 2,481,925 2,382,311
Transit 2,646,439 2,068,390
Redevelopment and housing 912,707 598,363
Interest on long term debt 238,058 251,550
Total expenses 56,521,129 55,357,080
Increase (Decrease) in net position before transfers
Change in net position 4,151,787 (2,205,989)
Beginning net position 54,540,723 55,429,312
Restatements 994,312 1,317,400
Ending net position $ 59,686,822 $ 54,540,723
Governmental Activities Change in Net Position
As reflected above, the City’s net revenues exceeded net expenses of governmental activities by $4.1 million.

Compared to the previous year, 2021 revenues show an increase of $7.5 million while expenses increased by $1.2 million.

The revenue increase in Charges for Services of $868,000 includes Community Development activity, including building permits, plan review, and code enforcement activities which increased by $449,000, while animal control revenue increased by $108,000. Additionally, $412,000 of the increase is attributable to overnight parking permits and late fees which were suspended for much of the prior fiscal year. The overall increase in charges for services was slightly offset by a $201,000 reduction in Culture and Recreation revenues due to cancelled activities.

Other revenues that saw significant increases include transaction and use tax of $1.5 million as well as an increase in sales tax of $1.5 million. Property taxes increased by $1 million reflecting a robust real estate market.

In addition, operating grants reflect an increase of $1.7 million which includes COVID-19 Relief Funds totaling $660,000 from the Federal government and from Los Angeles County, and Measure W-Safe Clean Water Program revenue in the amount of $929,000. The increase in capital grants of $842,000 is attributable to $888,000 in grant revenue received for Banna Park development. The increase in Miscellaneous Revenue reflects $420,000 from the Prop A swap discussed in the following paragraph.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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The increase in general government expenses reflects $715,000 of increased cost of Public Safety and $578,000 increase in transit costs. The Public Safety increase reflects an increase in PERS unfunded liability. The transit cost increase reflects a Prop A swap with the City of Beverly Hills in which Covina was able to sell $600,000 of Prop A funds in exchange for $420,000 added to the City’s General Fund.

Net expenses reflected on the Statement of Activities are good indications of the extent to which the services provided by the City are financed from taxes paid by the citizens (general revenues) as opposed to recovering the cost of these services with user fees and other contributions (program revenues). Transit and Redevelopment and Housing program revenues are sufficient to cover related expenses. Community Development required $591,096 in contributions from the General Fund, which is substantially less than in the prior fiscal year. In addition, Public Safety, Public Works and Culture and Recreation expenses are financed primarily from general revenues.

Expenses and associated program revenues for each governmental function are reflected on the following table.

As reflected on the following graph, taxes, operating grants and contributions, and charges for services provide 100% of the overall revenue sources of the governmental activities. Taxes include property, sales, utility users and other taxes (transient occupancy, property transfer, business license and franchise). Other revenues experienced a net reduction, as interest earnings decreased. In addition, although the market value of the City’s investments increased, the cost basis increased by a larger amount resulting in recognition of a net decrease to unrealized gains.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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The next graph demonstrates governmental activity expenses by function/program. Note that public safety and public works represent 75.6% of the governmental activities’ expenditures; this is consistent with the City’s highest priority of citizen safety and well-being. Culture and recreation represent 7.8% of governmental activities as the City is committed to providing valuable programs to the community.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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Business-type Activities
The analysis of business-type activities focuses on the net position and changes in net position of the City’s Water Utility, Environmental Protection, and Sewer functions. The following table summarizes the business-type net position for fiscal years 2020 and 2021. Current year detail can be found in the Government-Wide Financial Statements, Statement of Net Position.
2021 2020
Current and other assets $ 35,611,102 $ 31,212,623
Capital assets 50,206,724 47,943,365
Deferred outflows of resources 1,685,998 1,635,944
Total assets and deferred outflows 87,503,824 80,791,932 Long-term liabilities outstanding 37,719,469 34,211,883 Other liabilities 2,164,435 2,153,532
Deferred inflows of resources 421,788 308,564
Total liabilities 40,305,692 36,673,979
Net position
Net Investment in capital assets 32,790,931 26,398,843
Restricted -
Unrestricted 14,407,201 17,719,110
Total net position $ 47,198,132 $ 44,117,953
Business-Type Activities Net Position
The net position of the business-type activities represents 44.16% of the City’s total net position and increased by $3.1 million from the previous year. Restricted net position reflects amounts established for emergency needs and bond proceeds which are restricted to capital projects. The revenue and expense activity which generated the change in business type net position is reflected on the following table. 2021 2020
Revenues
Program Revenues:

Charges for services $ 15,919,788 $ 14,583,000
Operating grants and contributions - -
Capital grants and contributions - -
General revenues-investment earnings 1,609,324 524,565
Total Revenues 17,529,112 15,107,565
Expenses
Water Utility 10,893,841 10,318,472
Environmental Protection 1,047,347 1,176,992
Sewer 2,485,405 2,829,014
Total Expenses 14,426,593 14,324,478
Change in net position before transfers 3,102,519 783,087 Transfers in (out) (22,340) -
Change in net position $ 3,080,179 $ 783,087
Business-type Change in Net Position

MANAGEMENT’S DISCUSSION AND ANALYSIS
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As reflected above, the City’s business-type program revenues (charges for services) exceeded program expenses by $1.5 million. Total business-type program revenues increased by $1.3 million from the prior fiscal year. This reflects a $1 million increase in water service charges as well as an increase in environmental protection service charges of $141,000. General revenues increased by $1.1 million due predominately to the increased earnings in the City’s investment in Covina Irrigating Company.

Water, Sewer, and Environmental charges for services were sufficient to cover both operating and interest expenses for the respective functions during the fiscal year.

Total business-type expenses increased by $102,115 from the previous fiscal year; a major factor is an increase of $575,000 in the Water Utility expenditures reflecting increased PERS contributions and in Water Source and Supply cost. Although there was an increase in salaries and benefits, there was a decrease in Other Professional Fees previously paid for contracted customer service and billing services which are now performed by City staff.

Expenses and associated program revenues for each business-type function are reflected on the following table.

As reflected on the following chart, charges for services are the major source of revenue to be used for businesstype activity operating and capital maintenance costs. Water Utility Charges for Services include water sales, service fees, connection fees and other miscellaneous charges. Environmental protection charges include fees for refuse and recycling services, compressed Natural Gas (CNG), and permit fees for storm water and industrial waste. Sewer charges for services include fees established to recover the cost of operating the sewer system throughout the City. Other revenues reflect investment earnings.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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The next chart demonstrates business-type activity expenses by function/program. Water comprises the majority of expenditures, which includes water source and supply resale, administration, and depreciation.

FINANCIAL ANALYSIS OF THE CITY FUNDS
The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

The fund financial statements focus on individual parts of City government, reporting City operations in more detail than government-wide statements.

Governmental Funds
The focus of governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. This information assesses the City’s financing requirements. Unassigned fund balance is a measure of the City’s net resources available for designation or spending at the end of the fiscal year.

As of June 30, 2021, the City’s governmental funds reported combined fund balances of $35.5 million, an increase of $4.1 million from the prior fiscal year. There is $10.5 million of Unassigned fund balance available for designation and/or future spending at the City’s discretion. The remaining fund balance is nonspendable, restricted, committed or assigned and is not available for spending at the City’s discretion, as detailed in Note 14 of Notes to the Financial Statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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The following is a summary of fund balances of the governmental funds for fiscal years 2016-2021:
*Certain balances have been restated due to prior period adjustments.

The General Fund is the chief operating fund of the City. As displayed in the Governmental Fund Financial Statements-Balance Sheet, the fund balance of the General Fund at the end of Fiscal Year 2020-21 was $20.8 million and is classified as follows: $1 million non-spendable, $8.5 million committed, $388,000 restricted, $17,117 assigned, and $10.9 million unassigned. In keeping with the City Council’s Reserve Policy, the $8.5 million in committed fund balance reflects the City’s Emergency Contingency Reserve and represents 20% of General Fund expenditures. Additionally, the unassigned fund balance in the General Fund represents 25.57% of total General Fund expenditures.

The fund balance of the General Fund increased by $6.5 million during the fiscal year which is primarily attributable to Property Tax increase of $1 million, Sales Tax and Transaction and Use Tax increase totaling $3 million and the increase in other taxes of $520,700. Increases in Licenses and Permits of $604,000, Intergovernmental Revenue of $356,000, and Charges for Services of $300,000.

Proprietary Funds
The City’s proprietary funds financial statements provide the same type of information found in the governmentwide statements, but provide detail specific to the City’s water utility, environmental and sewer enterprises.

Net position of the Water Utility fund is $38.6 million, an increase of $2.2 million from the prior fiscal year. Of that, $11.1 million is unrestricted. Environmental Protection fund unrestricted net position decreased to $874,000 from $984,000 in the prior year. The net position of the Sewer fund increased to $8.4 million from $7.5 million in the prior year. Of that, $4.4 million is unrestricted. Other factors concerning the finances of these three funds are addressed in the discussion of the business-type activities.

General Fund Budgetary Highlights
Appropriation differences between the original budget and the final budget are $258,000 which represents a .6% increase. The increases include appropriation carryovers from the prior fiscal year of $101,669 and mid-year adjustments of $1.3 million. Of those amounts, $80,000 was carried over for Public Safety and $20,000 was carried over for Literacy Support. Mid-year adjustments included $1.4 million to cover Internal Service Fund charges, which were initially projected to be unfunded, which would have necessitated the use of reserves to fund Workers Compensation, Central Equipment and Information Technology. The mid-year appropriation increases were offset by reduced appropriations to the Parks and Recreation department due to their inability to hold classes and programs due to COVID-19.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City’s investment in capital assets for governmental and business-type activities as of June 30, 2021, is $139.9 million (net of accumulated depreciation). Capital assets include buildings and structures, improvements other than buildings, domain infrastructure, water system infrastructure, sanitary sewer infrastructure, machinery and equipment, and construction in progress. The following table is a summary of capital assets (net of accumulated depreciation) at June 30, 2021 and 2020.
2021 2020
Governmental activities
Land $11,882,165 $10,887,853
Buildings and structures 26,507,216 26,918,363
Improvements other than buildings 7,768,211 5,338,546
Public domain infrastructure 35,461,243 36,403,407
Sanitary sewer infrastructure 1,777,554 1,842,291
Machinery and equipment 2,834,118 3,277,073
Construction in progress 3,422,454 1,787,705
Total governmental activities 89,652,961 86,455,238
Business-type activities
Land 377,408 377,408
Buildings and structures 8,914,113 9,005,735
Improvements other than buildings 569,803 536,742
Water system infrastructure 36,691,351 36,647,618
Machinery and equipment 1,945,882 1,288,804
Construction in progress 1,708,167 87,058
Total business-type activities 50,206,724 47,943,365
Total capital assets $ 139,859,685 $ 134,398,603
Capital Assets
(net of depreciation)
Total capital assets, net of depreciation, increased from the prior year by $5.5 million. This is due largely to Construction in progress increases as well as an increase in water system infrastructure in business-type activities. Note 8 of Notes to the Financial Statements provide additional capital asset information.

Debt Administration
At the end of the fiscal year, the City had total long-term debt outstanding of $123.5 million. This includes notes, capital lease, revenue bonds payable, other post-employment benefits and net pension liabilities. On the following page is a summary of the outstanding debt (net of unamortized charges) at June 30, 2021 and 2020.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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2021 2020
Governmental activities
Compensated absences $ 3,753,275 $ 3,762,261
Claims and judgments 7,682,000 7,247,000
Certificates of participation payable (COP) 5,083,068 5,279,627 Capital lease payable 244,087 -
Section 108 loan 2,125,000 2,250,000
Postemployment benefit obligation 5,186,444 5,025,398
Net pension liability 56,803,297 61,906,259
Total governmental activities 85,736,046 80,611,670
Business-type activities
Compensated absences 523,436 490,965
Capital lease payable - 2,206,909
Water Installment Agreement 18,290,271
Revenue bonds payable 8,210,000 21,443,255
Postemployment benefit obligation 1,844,321 1,781,318
Net pension liability 8,851,440 8,289,436
Total business-type activities 37,719,468 34,211,883
Total outstanding debt 123,455,514 $ 114,823,553 $
Outstanding Debt
(net of unamortized charges)
The increase in long-term debt from 2020 to 2021 in governmental activities was $5.1 million predominately due to increase net pension liability. Business-type activities liabilities increased by $3.5 million primarily due to entering into an installment purchase agreement to payoff water bonds and capital leases while at the same time increasing the debt to fund water capital projects.

The Covina Public Financing Authority maintains an “AA-” S&P Global rating for the wastewater revenue bonds.

Additional information on the City’s long-term debt and other long-term liabilities can be found in Note 9, 13 and 17 of the Notes to the Financial Statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The City applied sound budgeting practices and considered new residential and retail development in formulating a balanced budget for Fiscal Year 2021-22. Prudent, cost-saving budget practices, including pro-active debt management, will continue into future years.

The conservative budget policies put in place by Council direction, emphasized by the City Manager and supported by staff, as well as the voter approved transaction and use tax measure have enabled the City of Covina to remain fiscally solvent. As reflected on Note 14 of Notes to the Financial Statements, the City’s emergency contingency reserve is $8.5 million, or 20% of General Fund expenditures, which meets the Council’s goal as set forth in the City’s budget policy.

The City continues to be cautiously conservative in revenue and expenditure projections. With that in mind, the Fiscal Year 2021-22 budget projects an overall increase in revenues in comparison to Fiscal Year 2020-21. The bulk of the increase is in tax revenues and is mainly attributable to the reduced impact the COVID pandemic is anticipated to bear on the economy. This increase is partially offset by projected decreases in Other Revenues which included one-time revenues in the prior fiscal year.

Department budgets reflect slight increases attributed to increases in PERS unfunded liability costs and negotiated MOU adjustments, as well as the increase in the City's Fire Contract with Los Angeles County.

MANAGEMENT’S DISCUSSION AND ANALYSIS
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The City will receive approximately $11.4 million through the American Rescue Plan Act. The monies must be obligated for use by December 31, 2024 and fully expended by December 31, 2026. In August, 2021, the City Council accepted the first tranche of $5.7 million and allocated the funds to programs supporting the public health response to COVID and addressing related negative economic impacts.

REQUESTS FOR INFORMATION
This financial report is intended to provide a general overview of the City’s finances. A copy of the financial report is available for review at the Covina Public Library, 234 North Second Avenue, Covina, California, 91723. You may also find a copy of the report online at www.covinaca.gov. Questions concerning any of the information provided in this report should be addressed to City of Covina Finance Division, 125 East College Street, Covina, California, 91723.

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FINANCIAL STATEMENTS

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CITY OF COVINA

STATEMENT OF NET POSITION
JUNE 30, 2021
See accompanying Notes to Financial Statements.
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Governmental Business-Type
Activities Activities Total
ASSETS
Cash and Investments $ 40,179,809 $ 14,390,009 $ 54,569,818 Cash and Investments - Restricted - 11,122,771 11,122,771 Cash With Fiscal Agent 1,788 - 1,788
Receivables:

Interest 29,642 - 29,642
Accounts 739,628 2,157,648 2,897,276
Due from Other Governments 5,260,997 74,160 5,335,157
Other 402,718 - 402,718
Loans and Notes 335,743 - 335,743
Internal Balances 1,789,254 (1,789,254) -
Inventories 42,378 57,500 99,878
Prepaids and Deposits 1,037,948 7,418 1,045,366
Investment in Covina Irrigating Company: - 9,590,850 9,590,850 Capital Assets:

Not Being Depreciated 15,304,619 2,085,575 17,390,194
Being Depreciated, Net 74,348,342 48,121,149 122,469,491 Total Assets 139,472,866 85,817,826 225,290,692

DEFERRED OUTFLOWS OF RESOURCES
Deferred Amount on Refunding 98,557 - 98,557
OPEB Related 581,441 1,596,866 2,178,307
Pension Related 1,006,000 12,272,798 13,278,798
Total Deferred Outflows Of Resources 13,869,664 1,685,998 15,555,662

LIABILITIES
Accounts Payable 975,070 1,699,109 2,674,179
Accrued Liabilities 140,460 859,236 999,696
Deposits Payable 888,964 1,176,981 2,065,945
Interest Payable 138,710 41,417 180,127
Due to Other Governments 266,815 - 266,815
Unearned Revenue 21,231 393,035 414,266
Noncurrent Liabilities
Due Within One Year 2,181,310 1,430,788 3,612,098
Due in More Than One Year:

Long-Term Liabilities 17,212,555 24,842,398 42,054,953
Net Other Postemployment Benefit Liability 1,844,321 5,186,444 7,030,765 Net Pension Liability 8,851,440 61,906,259 70,757,699
Total Liabilities 90,172,639 39,883,904 130,056,543

DEFERRED INFLOWS OF RESOURCES
Deferred Amount on Refunding 126,408 - 126,408
Opeb Related 295,380 794,731 1,090,111
Pension Related - 2,688,338 2,688,338
Total Deferred Inflows of Resources 3,483,069 421,788 3,904,857

NET POSITION
Net Investment in Capital Assets 81,877,731 32,790,931 114,668,662 Restricted for:

Public Safety - 549,681 549,681
Public Works - 5,056,026 5,056,026
Community Development 1,576,348 - 1,576,348
Culture and Recreation 1,036,714 - 1,036,714
Transit 2,994,589 - 2,994,589
Redevelopment and Housing - 4,196,797 4,196,797
Unrestricted (Deficit) (37,601,064) 14,407,201 (23,193,863) Total Net Position 59,686,822 $ 47,198,132 $ 106,884,954 $

CITY OF COVINA

STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
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Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions

GOVERNMENTAL ACTIVITIES
General Government 3,131,410 $ 2,361,216 $ 94,180 $ - $ Public Safety 34,239,989 1,655,557 2,031,475 -
Public Works 8,476,656 754,691 3,720,958 -
Culture and Recreation 4,393,945 306,697 99,241 937,845 Community Development 2,481,925 1,845,242 45,587 -
Transit 2,646,439 107,574 3,192,041 150,000
Redevelopment and Housing 912,707 1,124,210 626,202 -
Interest on Long-Term Debt 238,058 - - -
Total Governmental Activities 56,521,129 8,155,187 9,809,684 1,087,845

BUSINESS-TYPE ACTIVITIES
Water Utility 10,893,841 11,681,271 - -
Environmental Protection 1,047,347 1,144,576 - -
Sewer Utility 2,485,405 3,093,941 - -
Total Business-Type Activities 14,426,593 15,919,788 - - Total $ 70,947,722 $ 24,074,975 $ 9,809,684 $ 1,087,845

GENERAL REVENUES
Taxes:

Property Taxes (Net of Pass-Through Payments)
General Sales Tax
Transaction and Use Tax
Transient Occupancy Taxes
Property Transfer Taxes
Business License Taxes
Utility Users Taxes
Franchise Taxes
Investment Earnings
Investment Gain in Covina Irrigating Company
Miscellaneous
Transfers
Total General Revenues

CHANGE IN NET POSITION
Net Position - Beginning of Year, as Restated

NET POSITION - END OF YEAR

CITY OF COVINA

STATEMENT OF ACTIVITIES (CONTINUED)
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(19)
Net (Expense) Revenue and
Changes in Net Assets
Governmental Business-Type
Activities Activities Total
$ - (676,014) $ (676,014) $
- (30,552,957) (30,552,957)
- (4,001,007) (4,001,007)
- (3,050,162) (3,050,162)
- (591,096) (591,096)
- 803,176 803,176
- 837,705 837,705
- (238,058) (238,058)
- (37,468,413) (37,468,413)
787,430 - 787,430
97,229 - 97,229
608,536 - 608,536
1,493,195 - 1,493,195
1,493,195 (37,468,413) (35,975,218)
- 14,862,914 14,862,914
- 10,793,459 10,793,459
- 8,098,540 8,098,540
- 3,661 3,661
- 216,776 216,776
- 357,655 357,655
- 4,847,226 4,847,226
- 2,219,586 2,219,586
236,885 (257,680) (20,795)
1,372,439 - 1,372,439
455,723 - 455,723
22,340 (22,340) -
41,620,200 1,586,984 43,207,184
4,151,787 3,080,179 7,231,966
55,535,035 44,117,953 99,652,988
$ 59,686,822 $ 47,198,132 $ 106,884,954

CITY OF COVINA

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(20)
Other Total
General Governmental Governmental
Fund Funds Funds
ASSETS
Cash and Investments $ 17,963,233 $ 14,515,616 $ 32,478,849 Cash and Investments With Fiscal Agent - 1,788 1,788
Receivables:

Interest 29,642 - 29,642
Utility User Tax 402,718 - 402,718
Accounts 472,236 229,796 702,032
Loans - 335,743 335,743
Due from Other Governments 3,821,707 1,439,290 5,260,997 Due from Other Funds 223,468 - 223,468
Prepaid Expenditures 1,008,903 22,553 1,031,456
Total Assets $ 23,921,907 $ 16,544,786 $ 40,466,693

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable $ 857,391 $ 789,479 $ 1,646,870
Accrued Liabilities 797,255 39,603 836,858
Deposits Payable 1,041,609 135,372 1,176,981
Due to Other Funds - 223,468 223,468
Due to Other Governments - 266,815 266,815
Unearned Revenue 392,460 575 393,035
Total Liabilities 3,088,715 1,455,312 4,544,027
DEFERRED INFLOWS OF RESOURCES:

Unavailable Revenue 32,973 390,035 423,008
FUND BALANCES:

Nonspendable 1,008,903 22,553 1,031,456
Committed 8,508,328 - 8,508,328
Restricted 387,764 14,909,282 15,297,046
Assigned 17,166 100,116 117,282
Unassigned 10,878,058 (332,512) 10,545,546
Total Fund Balances 20,800,219 14,699,439 35,499,658
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $ 23,921,907 $ 16,544,786 $ 40,466,693

CITY OF COVINA

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(21)
Total Fund Balances for Governmental Funds $ 35,499,658 Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets, net of accumulated depreciation, used in governmental activities are not current financial resources and, therefore are not reported in the fund financial statements. This amount does not include $1,053,416 of internal service funds net capital assets.

Capital Assets not Being Depreciated 15,304,619 $
Capital Assets Being Depreciated 192,315,711
Accumulated Depreciation (119,020,785) 88,599,545
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. Balances at June 30, 2020 are:

Loan Payable (2,125,000)
Bonds Payable (4,875,000)
Bond Premium (208,068)
Compensated Absences (3,546,088)
Accrued Interest (10,795,573) (41,417)
Pension and OPEB related debt applicable to the City’s governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to pensions and OPEB are only reported in the Statement of Net Position as the changes in these amounts affect only the government-wide statements for governmental activities.

Deferred Outflows of Resources - Pension Related 11,979,083 Deferred Inflows of Resources - Pension Related (2,688,338) Net Pension Liability (59,321,966)
Deferred Outflows of Resources - OPEB Related 1,415,172 Deferred Inflows of Resources - OPEB Related (703,709)
Net OPEB Liability (53,920,126) (4,600,368)
Internal Service funds are used by management to charge the costs of certain activities involved in rendering services to departments within the City. The assets and liabilities of the internal service funds are included in governmental in the Statement of Net Position. (119,690)
Receivables that are measurable but not available are recorded as deferred inflows of resources under the modified accrual basis of accounting. 423,008 Net Position of Governmental Activities $ 59,686,822

CITY OF COVINA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(22)
Other Total
General Governmental Governmental
Fund Funds Funds

REVENUES
Property Taxes $ 14,703,781 $ 159,133 $ 14,862,914
Sales Tax, Intergovernmental 18,891,999 - 18,891,999
Transient Occupancy Taxes 3,661 - 3,661
Property Transfer Taxes 216,776 - 216,776
Business License Taxes 356,532 1,233 357,765
Utility User Taxes 4,847,226 - 4,847,226
Franchise Taxes 2,219,586 - 2,219,586
Licenses and Permits 1,603,293 - 1,603,293
Intergovernmental 1,138,964 9,027,351 10,166,315
Charges for Services 3,959,192 237,065 4,196,257
Fines and Forfeits 890,254 - 890,254
Special Assessments - 1,469,594 1,469,594
Investment Earnings (238,563) 178,918 (59,645)
Other 785,778 39,678 825,456
Total Revenues 49,378,479 11,112,972 60,491,451

EXPENDITURES
Current:

General Government 2,561,757 - 2,561,757
Public Safety 32,154,768 258,900 32,413,668
Public Works 2,219,373 4,742,690 6,962,063
Culture and Recreation 3,373,265 83,647 3,456,912
Community Development 2,232,247 45,587 2,277,834
Transit - 2,277,196 2,277,196
Redevelopment and Housing - 890,178 890,178
Capital Outlay - 4,894,860 4,894,860
Debt Service:

Principal Retirement - 310,000 310,000
Interest and Fiscal Charges 229 250,715 250,944
Total Expenditures 42,541,639 13,753,773 56,295,412

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 6,836,840 (2,640,801) 4,196,039
OTHER FINANCING SOURCES (USES):

Transfers In 180,000 445,625 625,625
Transfers Out (489,080) (187,205) (676,285)
Total Other Financing Sources (Uses) (309,080) 258,420 (50,660) NET CHANGE IN FUND BALANCE 6,527,760 (2,382,381) 4,145,379 Fund Balances - Beginning of Year 14,272,459 17,081,820 31,354,279 FUND BALANCES - END OF YEAR $ 20,800,219 $ 14,699,439 $ 35,499,658

CITY OF COVINA

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(23)
Net Change in Fund Balances - Total Governmental Funds $ 4,145,379 Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures and do not include capital contributions. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense and capital contributions are recognized as revenue. This is the amount by which capital outlay exceeded depreciation expense in the current period and the amount of capital contributions received.

Capital Outlay $ 7,813,707
Deletions (211,914)
Depreciation Expense (5,190,543) 2,411,250
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and similar items when the debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. These amounts are the net effect of these differences in the treatment of long-term debt and related items.

Principal Payments 310,000
Amortization Premium on Bonds 11,559 321,559
Pension expense reported in the governmental funds includes the annual required contributions. In the Statement of Activities, pension expense includes the change in the net pension liability, and related changes in pension amounts for deferred outflows of resources and deferred inflows of resources. (3,049,372) Other postemployment benefit expense reported in the governmental funds includes payment of premiums for the current year. In the Statement of Activities, OPEB expense includes the change in the net other postemployment benefit liability and OPEB related deferred inflows of resources. (100,797) Accrued interest is interest due on long-term debt payable. This is the net change in accrued interest for the current period.

Changes in Interest Payable for the Current Year 1,328
Internal service funds are used by management to charge costs of activities involved in rendering services to departments within the City. The changes in net position of the internal service funds are included in the Statement of Activities. 286,939 Compensated absences are not reported in the governmental funds until such amounts become due and payable. (23,624)
Certain revenues in the governmental funds are deferred because they are not collected within the prescribed time period after year-end. However, the revenues are included on the accrual basis used in the government-wide statements. This amount represents the change during the fiscal year. 159,125
Change in Net Position of Governmental Activities $ 4,151,787

CITY OF COVINA

STATEMENT OF NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(24)
Governmental
Activities
Total Internal
Nonmajor Enterprise Service
ASSETS Water Utility Sewer Funds Funds Funds

CURRENT ASSETS
Cash and Investments $ 5,834,027 $ 6,349,912 $ 2,206,070 $ 14,390,009 $ 7,700,960 Cash and Investments Restricted 7,996,956 3,125,815 11,122,771 - - Accounts Receivable, Net 1,922,700 - 234,948 2,157,648 37,596 Due from Other Governments - 72,177 1,983 74,160 -
Prepaid Expenses - - 7,418 7,418 6,492
Inventories 57,500 - - 57,500 42,378
Total Current Assets 15,811,183 9,547,904 2,450,419 27,809,506 7,787,426

NONCURRENT ASSETS
Investment in Covina Irrigating Company - 9,590,850 - 9,590,850 - Capital Assets:

Capital Assets, not Depreciated 788,838 1,099,051 197,686 2,085,575 - Capital Assets, Depreciated, Net 38,851,582 8,290,841 978,726 48,121,149 1,053,416 Total Noncurrent Assets 49,231,270 9,389,892 1,176,412 59,797,574 1,053,416 Total Assets 65,042,453 18,937,796 3,626,831 87,607,080 8,840,842

DEFERRED OUTFLOWS OF RESOURCES
Deferred Amount on Refunding 98,557 - - 98,557 -
Deferred Amount on OPEB Plans 413,004 99,817 68,620 581,441 181,694 Deferred Amount on Pension Plans 671,144 223,953 110,903 1,006,000 293,715 Total Deferred Outflows of Resources 1,084,148 422,327 179,523 1,685,998 475,409

LIABILITIES

CURRENT LIABILITIES
Accounts Payable 589,674 312,824 72,572 975,070 52,239
Accrued Liabilities 117,531 13,767 9,162 140,460 22,378 Deposits Payable 492,840 - 396,124 888,964 -
Interest Payable 90,080 48,630 - 138,710 -
Unearned Revenue 20,912 - 319 21,231 -
Compensated Absences 124,002 29,347 30,006 183,355 67,817 Revenue Bonds Payable 1,157,955 840,000 1,997,955 - -
Total Current Liabilities 2,592,994 1,244,568 508,183 4,345,745 142,434

NONCURRENT LIABILITIES
Compensated Absences 236,241 70,083 33,757 340,081 139,370 Revenue Bonds Payable 17,132,317 7,370,000 24,502,317 - - Claims Payable - - - 7,682,000 -
Net OPEB Liability 292,421 1,330,542 221,358 1,844,321 586,076 Net Pension Liability 1,970,484 5,905,157 975,799 8,851,440 2,584,293 Total Noncurrent Liabilities 24,604,257 9,702,988 1,230,914 35,538,159 10,991,739 Total Liabilities 27,197,251 10,947,556 1,739,097 39,883,904 11,134,173

DEFERRED INFLOWS OF RESOURCES
Deferred Amounts on OPEB Plans 207,119 53,885 34,376 295,380 91,022 Deferred Amount on Refunding - 126,408 - 126,408 -
Total Deferred Inflows of Resources 333,527 53,885 34,376 421,788 91,022

NET POSITION
Net Investment in Capital Assets 27,525,182 4,107,267 1,158,482 32,790,931 1,053,416 Unrestricted 11,070,641 4,251,415 874,399 16,196,455 (2,962,360) Total Net Position 38,595,823 $ 8,358,682 $ 2,032,881 $ 48,987,386 (1,908,944) $ Some amounts reported for business-type activities in the Statement of Activities are different to reflect the consolidation of internal service fund activities related to enterprise funds (1,789,254) Net Position of Business-Type Activities $ 47,198,132
Business-Type Activities

CITY OF COVINA

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(25)
Governmental
Activities
Total Internal
Nonmajor Enterprise Service
Water Utility Sewer Funds Funds Funds

OPERATING REVENUES
Water Sales $ 11,339,986 $ - $ 11,339,986 - $ $ -
Charges for Services and Motor Pool
Charges - - - 5,005,506 -
Environmental Fees - 1,144,576 - 1,144,576 -
Sewer Fees 3,093,941 - 3,093,941 - -
Fire Line Fees 341,285 - 341,285 - -
Total Operating Revenues 11,681,271 3,093,941 1,144,576 15,919,788 5,005,506

OPERATING EXPENSES
General and Administrative 2,407,823 1,848,785 394,339 4,650,947 3,651,306 Vehicle and Equipment Operation - - - 977,462 -
Utility Billing 235,295 - 235,295 - -
Customer Service 368,084 - 368,084 - -
Sales Promotion 414 - - 414 -
Source and Supply 3,561,787 - 3,561,787 - -
Production and Storage 1,155,010 - 1,155,010 - -
Transmission and Distribution 1,046,562 - 1,046,562 - - Street Sweeping - - 4,389 4,389 -
Environmental Services - 290,089 - 290,089 -
Industrial Waste - - 28,564 28,564 -
Waste Management - 301,487 - 301,487 -
Depreciation 1,443,409 225,865 27,997 1,697,271 282,872 Total Operating Expenses 10,218,384 2,074,650 1,046,865 13,339,899 4,911,640 OPERATING INCOME (LOSS) 1,462,887 1,019,291 97,711 2,579,889 93,866

NONOPERATING REVENUES (EXPENSES)
Investment Income 124,618 92,306 19,961 236,885 -
Interest Expense (751,779) (210,644) (962,423) - (4,198) Investment Loss - CIC 1,372,439 - 1,372,439 - -
Total Nonoperating Revenues
(Expenses) 745,278 (118,338) 19,961 646,901 (4,198)
INCOME BEFORE TRANSFERS 2,208,165 900,953 117,672 3,226,790 89,668

TRANSFERS
Transfers In - - - - 73,000
Transfers Out (14,789) (4,745) (2,806) (22,340) -
Total Transfers (14,789) (4,745) (2,806) (22,340) 73,000 CHANGE IN NET POSITION 2,193,376 896,208 114,866 3,204,450 162,668 Net Position - Beginning of Year 36,402,447 7,462,474 1,918,015 (2,071,612) NET POSITION - END OF YEAR $ 38,595,823 $ 8,358,682 $ 2,032,881 $ (1,908,944) Some amounts reported for business-type activities in the Statements of Activities are different to reflect the consolidation of internal service fund activities related to enterprise funds (124,271) $ 3,080,179
Business-Type Activities

CITY OF COVINA

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(26)
Governmental
Activities
Total Internal
Nonmajor Enterprise Service
Water Utility Sewer Funds Funds Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from customers $ 13,185,081 $ 3,054,773 $ 1,128,054 $ 17,367,908 $ - Cash Received from User Departments - - - 5,048,916
Cash Payments to Suppliers of Goods
and Services (5,748,976) (287,173) (365,605) (6,401,754) (2,935,337) Cash Payments to Employees for Services (2,724,111) (1,245,255) (527,546) (4,496,912) (1,331,084) Net Cash Provided by
Operating Activities 4,711,994 1,522,345 234,903 6,469,242 782,495

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Cash Received from Other Funds - - - - 73,000
Cash Paid to Other Funds (14,789) (4,745) (2,806) (22,340) - Cash Receipts from Joint Venture 1,372,439 - 1,372,439 - - Net Cash Provided by Noncapital
Financing Activities 1,357,650 (4,745) (2,806) 1,350,099 73,000

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES
Acquisition of Capital Assets (2,619,884) (2,342,191) (270,424) (5,232,499) (75,033) Debt Issued 18,883,578 - 18,883,578 -
Debt Refunded (14,615,164) - (14,615,164) -
Principal Paid (593,307) (825,000) - (1,418,307) (244,087) Interest and Debt Issuance Costs (779,390) (202,631) - (982,021) (8,396) Net Cash Used by Capital And
Related Financing Activities 275,833 (3,369,822) (270,424) (3,364,413) (327,516)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income 124,618 92,306 19,961 236,885 -

NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 6,470,095 (1,759,916) (18,366) 4,691,813 527,979 Cash and Cash Equivalents -
Beginning of Year 7,360,888 11,235,643 2,224,436 20,820,967 7,172,981

CASH AND CASH EQUIVALENTS -
END OF YEAR $ 13,830,983 $ 9,475,727 $ 2,206,070 $ 25,512,780 $ 7,700,960 Business-Type Activities

CITY OF COVINA

STATEMENT OF CASH FLOWS (CONTINUED)

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(27)
Governmental
Activities
Total Internal
Nonmajor Enterprise Service
Water Utility Sewer Funds Funds Funds

RECONCILIATION OF OPERATING INCOME

TO NET CASH PROVIDED BY

OPERATING ACTIVITIES
Operating Income (Loss) $ 1,019,291 1,462,887 $ 97,711 $ 2,579,889 $ 93,866 $ Adjustments to Reconcile Operating Income (Loss)
to Net Cash Provided by Operating Activities:

Depreciation 1,443,409 225,865 27,997 1,697,271 282,872 Changes in Operating Assets, Deferred Outflows
of Resources, Liabilities, and Deferred Inflows of
Resources:
(Increase) Decrease in Accounts Receivable 1,503,810 - (16,522) 1,487,288 43,410 (Increase) Decrease in Due from Other
Governments - (39,168) 1,278 (37,890) -
(Increase) Decrease in Inventory (5,009) - - (5,009) (207) (Increase) Decrease in Prepaid Items 59 59 (3,575) (3,457) (3,294) (Increase) Decrease in Deferred Outflows
of Resources on OPEB Plan (89,984) (30,026) (14,869) (134,879) (39,381) (Increase) Decrease in Deferred Outflows
of Resources on Pension Plans 42,995 5,191 24,571 72,757 51,936 Increase (Decrease) in Accounts Payable (192,407) (9,578) 25,484 (176,501) (1,294) Increase (Decrease) in Accrued Liabilities 54,296 108,148 391 162,835 - Increase (Decrease) in Deposits Payable (5,179) - 139,419 134,240 (495) Increase (Decrease) in Unearned Revenue 5,610 - 319 5,929 - (Increase) Decrease in Deferred Inflows
of Resources of OPEB Plan 77,651 25,912 12,832 116,395 33,982 (Increase) Decrease in Deferred Inflows
of Resources Pension Plans (57,663) (18,502) (10,939) (87,104) (27,910) Increase (Decrease) in Compensated Absences 11,955 11,442 9,074 32,471 (32,610) Increase (Decrease) in Net Opeb Liability 14,026 42,031 6,946 63,003 18,396 Increase (Decrease) in Net Pension Liability 209,685 417,533 (65,214) 562,004 (71,776) Increase (Decrease) in Claims Payable - - - - 435,000
Net Cash Provided by
Operating Activities 4,711,994 $ 1,522,345 $ 234,903 $ 6,469,242 $ 782,495 $ Business-Type Activities

CITY OF COVINA

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(28)
Private- Custodial
Purpose Trust Funds
ASSETS
Cash and Investments $ 1,348,069 $ 1,050
Cash and Investments - Fiscal Agent 2,978,979 -
Accounts Receivable 475 779
Interest Receivable 1,245 -
Prepaid Expenses 8,272 -
Land Held for Resale 2,391,502 -
Capital Assets, not Being Depreciated 148,765 -
Total Assets 6,877,307 1,829

DEFERRED OUTFLOWS OF RESOURCES
Deferred Amount on Refunding 53,009 -
Total Deferred Outflows 53,009 -

LIABILITIES
Accounts Payable and Accrued Liabilities 2,087 1,829
Accrued Liabilities 3,832 -
Interest Payable 34,519 -
Noncurrent Liabilities (Note 21):

Due Within One Year 2,757,467 -
Due in More Than One Year 6,232,621 -
Total Liabilities 9,030,526 1,829

DEFERRED INFLOWS OF RESOURCES
Deferred Amount on Refunding 120,634 -
Total Deferred Inflows of Resources 120,634 -

NET POSITION
Held for Dissolution of Community Redevelopment Agency (2,220,844) - TOTAL NET POSITION $ (2,220,844) $ -

CITY OF COVINA

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(29)
Private- Custodial
Purpose Trust Funds

ADDITIONS
Property Tax Revenue $ 3,260,788 $ -
Charges for Services 160,218 -
Investment Earnings 141,238 -
Business Licenses Collected from Property Owners - 14,447 Total Additions 3,562,244 14,447

DEDUCTIONS
General and Administrative 247,022 14,447
Interest and Fiscal Charges 477,369 -
Program Expenses 547 -
Loss on Sale of Property 299,500 -
Total Deductions 1,024,438 14,447
CHANGE IN NET POSITION 2,537,806 -
Net Position - Beginning of Year as Restated (4,758,650) - NET POSITION - END OF YEAR $ (2,220,844) $ -

(30)

THIS PAGE INTENTIONALLY LEFT BLANK

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(31)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Financial Reporting Entity
The financial statements of the City of Covina (City) include the financial activities of the City, the Covina Public Financing Authority and the Covina Housing Authority. Their financial operations are closely related, and the City Council has a continuing responsibility over the entities. The responsibility is determined based on budget adoption, taxing authority, funding and appointments of the governing board. Blended component units, although legally separate entities, are part of the City’s operations and therefore data from these units are combined with data of the City.

Since the City Council acts as the Board of Directors and can impose its will on the Covina Public Financing Authority and the Covina Housing Authority, the City is the primary government and the other two entities are component units. Additionally, since the governing boards of the City and the two other component units are the same, there is a potential for the component units to provide specific financial benefits to or impose specific financial burdens on the City. Therefore, the financial statements of the City and the two component units are blended.

The City of Covina was incorporated in 1901 as a General Law City. The City provides a broad range of services to its citizens, including general government, public safety, streets, sanitation and health, culture and park facilities and social services.

The Covina Redevelopment Agency (Agency) was established in 1969, pursuant to the State of California, Health and Safety Code, Section 33000. Its purpose is to prepare and carry out plans for the improvement, rehabilitation and development of blighted areas within the territorial limits of the City of Covina. On June 28, 2011, Assembly Bill X1 26 (AB X1 26), the Dissolution bill was enacted. On December 29, 2011, the California Supreme Court upheld the constitutionality of AB X1 26, and all redevelopment agencies in California were dissolved by operation of law effective February 1, 2012. The legislation provides for successor agencies and oversight boards that are responsible for overseeing the dissolution process and wind down of redevelopment activity. On January 11, 2012, the City adopted a resolution declaring its intent to serve as the Successor Agency and on January 30, 2012, the City Council adopted a resolution to retain the Housing assets and functions of the former redevelopment agency and the Housing Authority of the City will serve as the Housing Successor Agency.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(32)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. Financial Reporting Entity (Continued)
The Successor Agency to the Covina Redevelopment Agency (SACRA) was created to serve as a custodian for the assets and to wind down the affairs of the former Agency.

The SACRA is a separate public entity from the City, subject to the direction of an Oversight Board. In general, the SACRA’s assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments). In future fiscal years, the SACRA will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former Agency until all enforceable obligations of the former Agency have been paid in full and all assets have been liquidated. The SACRA’s is a fiduciary component unit and is reported as a fiduciary fund (private-purpose trust fund).

The Covina Public Financing Authority (Authority) is a joint powers authority organized pursuant to the State of California Government Code, Section 6500. The Authority exists under a Joint Exercise of Power Agreement between the City of Covina and the Covina Redevelopment Agency. Its purpose is to facilitate financing for public capital improvements of the City and the Agency. Separate financial statements are not prepared for the Authority.

The Covina Housing Authority (Housing Authority) was formed January 25, 2011, in order to continue to achieve the goals established by the Housing Element of the general plan. A housing authority collaborates with public, private and nonprofit entities agencies for the purpose of providing sanitary and safe housing for people of very low, low or moderate income within a city or county’s territorial jurisdiction. The core activities of many housing authorities are primarily to build, acquire, own, manage and maintain residential rental units and to provide financial assistance for rentals or ownership in the private real estate market. A housing authority is governed by the state Housing Authority Law, and for purposes of major federal funding, if any is received, regulations of the U.S. Department of Housing and Urban Development (HUD). Further, a housing authority is not required under the Housing Authority Law to seek HUD or any other type of outside funding. On January 30, 2012, the City Council adopted a resolution to retain the Housing assets and functions of the dissolved Agency and the Housing Authority of the City will serve as the Housing Successor Agency. The activity is reflected in the Housing Authority Special Revenue Fund. Separate financial statements are not prepared for the Housing Authority.

The accounting policies of the City, the Authority and the Housing Authority conform to accounting principles generally accepted in the United States of America as applicable to governments. The following is a summary of the more significant policies.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(33)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government-Wide and Fund Financial Statements
The accompanying financial statements are presented on the basis prescribed in Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. The financial statements of the City are as follows:

Government-Wide Financial Statements
The Statement of Net Position and Statement of Activities report information on all the activities of the primary government (including its blended component units). The City of Covina has no discretely presented component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes, intergovernmental revenues and other nonexchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a function or segment. Taxes and other items not properly included among program revenues are reported as general revenues.

Fund Financial Statements
Separate financial statements of the City, including blended component units, are provided for major individual governmental, proprietary and fiduciary funds, which include the private-purpose trust fund and custodial fund. The fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(34)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and fiduciary funds statements. With this measurement focus, all assets, deferred outflows of resources, liabilities and deferred inflows of resources associated with the operation of the City are included on the statement of net position. Net position (assets plus deferred outflows of resources less liabilities less deferred inflows of resources) are segregated into net investment in capital assets (net of related debt), restricted and unrestricted components. The Statement of Activities and Statement of Revenues, Expenses and Changes in Fund Net Position of Proprietary Funds present increases (revenues) and decreases (expenses) in net total position. Revenues are recorded when earned and expenses are recorded when a liability is incurred regardless of the timing of the related cash flows. Under this determination, unbilled service receivables are recorded at fiscal year-end.

Nonexchange transactions are typically described as taxes, fines and certain grants and donations. In a nonexchange transaction, a government gives (or receives) value without directly receiving (or giving) equal value in return. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Government fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus, only current assets, current liabilities and current deferred inflows of resources generally are included on the balance sheet. Operating statements of these funds’ present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in fund balance. Under the modified accrual basis of accounting, revenues are recognized when they become susceptible to accrual (i.e., when they become measurable and available to finance expenditures of the current period or soon enough thereafter to be used to pay liabilities of the current period). For this purpose, the City considers revenues including property taxes to be available if they are collected within 60 days of the end of the current fiscal period. Certain grant revenues are available if they are collected within months of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for unmatured principal and interest on long-term debt, claims and judgments and compensated absences, which are recognized only when due and payable at fiscal yearend. General capital asset acquisitions and debt service principal payments are reported as expenditures in governmental funds. Proceeds from long-term debt and acquisitions under capital leases are reported as other financing sources.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(35)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Property taxes, charges for services, grant revenues and investment earnings are susceptible to accrual and have been recognized as revenues of the current fiscal period. Licenses and permits and fines and forfeitures are not susceptible to accrual because they are not measurable until received in cash. Grant revenues earned but not received are recorded as a receivable, and grants received before the related revenue recognition criteria have been met are reported as unearned revenues.

The City reports the following major governmental funds:

General Fund
This fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The City reports the following major proprietary funds:

Water Utility Fund
This enterprise fund is used to account for general and administrative, utility billing, customer service, sales promotion, source and supply, production and storage and transmission and distribution operations.

Sewer Fund
This enterprise fund accounts for the operation and maintenance of the wastewater system within the City’s boundaries.

Nonmajor Fund
This enterprise fund accounts for the general and administrative, environmental services, industrial waste and waste management operations.

Additionally, the City reports the following fund types:

Special Revenue Funds
These funds are used to account for specific revenue sources that are legally restricted or otherwise assigned for specific purposes.

Capital Projects Funds
These funds are used to account for capital expenditures funded by various sources Internal Service Funds
These funds account for the central equipment, management information systems, workers’ compensation and general liability services provided to other departments of the City.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(36)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Fiduciary Funds
Private-Purpose Trust Fund
This fund is to account for custodial responsibilities that are assigned to SACRA with the passage of AB X1 26 and was established on February 1, 2012. The fund accounts for the receipt of property tax revenues pursuant to the dissolution of the Agency and expenses incurred pursuant to the recognized obligation payment schedule (ROPS) approved by the State Department of Finance. This fund follows the accrual basis of accounting.

Custodial Funds
These funds are used to account for funds in which the City is acting as an agent for another entity. These funds are reported using the accrual basis of accounting.

As a rule, the effect of interfund activity has been eliminated from the government-wide statements. Exceptions to this general rule are charges for the City water utility, sewer services and environmental services and indirect general government expenses to other functions and funds of the City. Elimination of the water utility, sewer service charges and environmental service charges would distort the direct costs and program revenues reported for the various functions concerned. Expenses reported in various funds include allocated indirect general government expenses.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses from operations generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Water Utility, Sewer and nonmajor (Environmental) enterprise funds and the City’s internal service funds are charges to customers for sales and services. The Water Utility recognizes as operating revenue capital improvement fees intended for construction and rehabilitation of the water system. Operating expenses for enterprise and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

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

D. Encumbrances
Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditures of funds are recorded, is employed in governmental funds. Amounts encumbered in the current year are treated as restricted, committed or assigned fund equity since they do not constitute expenditures or liabilities. At fiscal year-end, encumbrances outstanding are shown as restricted or assigned fund balance.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(37)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Use of Estimates
The preparation of the financial statements in conformity 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.

F. Cash and Cash Equivalents
The City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All cash and investments, except for cash and investments with fiscal agents, are pooled with the City’s pooled cash and investments and are therefore considered cash equivalents.

G. Investments
Investments are stated at fair value using quoted market prices. 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. Investment elements, including interest and changes in fair value, are aggregated and reported as investment earnings in the financial statements.

H. Inventories and Prepaid Items
Inventories are priced at the lower of cost or market on a first-in, first-out basis. The inventories consist primarily of water parts, vehicle and equipment parts and gasoline.

Inventories of governmental funds are considered immaterial and are recorded as expenditures when purchased under the purchases method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements utilizing the consumption method.

I. Compensated Absences
The City permits employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay and a portion of the sick pay are accrued when incurred in the government-wide and proprietary fund financial statements.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(38)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)J J. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (roads, bridges, sidewalks, water, sewer and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with a cost of more than $5,000 (more than $1,000 for certain vehicles and information technology equipment) and an estimated useful life of more than two years. Such assets are recorded at historical or estimated historical cost. Contributed and donated capital assets are recorded at acquisition value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized.

Major capital outlays and improvements are capitalized as projects are constructed.

Property, plant and equipment of the City is depreciated using the straight-line method over the following estimated useful lives:

Type of Asset Life in Years
Buildings and Structures 20 - 40 Years
Improvements Other than Buildings 20 Years
Public Domain Infrastructure 15 - 50 Years
Water System Infrastructure 20 - 50 Years
Sanitary Sewer System Infrastructure 20 - 50 Years
Machinery and Equipment 5 - 20 Years
K. Leased Property
The City receives some of its operating revenues in the form of rent payments from lessees of the parcels of land. The period of these leases could range from three to five years. The rent paid by each lessee is a set monthly amount determined by the lease agreement. All leases are cancellable.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(39)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Leased Property (Continued)
The City owns and leases certain properties located in the City to various tenants. The following is a list of properties and tenants:

Lease Term
Lessee Address Leased Type of Property Beginning/Ending Rent Verizon Wireless 3047 N. Roycove Dr. Communications Site 7/1/20-6/30/25 $ 3,500 Sprint/Nextel** 3047 N. Roycove Dr. Communications Site 4/30/19-4/30/24 3,328 T-Mobile 3047 N. Roycove Dr. Communications Site 11/14/19-11/14/24 2,596 The Mena co. dba Giovanni's 114 E. Italia Commercial Month-month 1,524 Bank of America 212 E. Badillo St. ATM Site 12/4/18-12/3/23 4,312 AT&T 559 N. Citrus Communications Site 9/3/18-9/3/23 3,290 Verizon Wireless 701 N. Sunflower Communications Site 8/23/18-8/23/23 3,214 **Sprint/Nextel actually 1 company
L. Claims and Judgments
The accrual for workers’ compensation and general liability claims is based upon an actuarial review of the past experience which has been modified for current trends and information. While the ultimate amount of losses incurred through June 30, 2021 is dependent on future developments, based on information from the plan administrators, City management believes that the aggregate accrual is adequate to cover such losses, including amounts for incurred but not reported.

M. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported as fair value. CalPERS audited financial statements are publicly available reports that can be obtained on the CalPERS’s website under Forms and Publications.

N. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms.

Investments are reported at fair value.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(40)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. Net Position
Net position in the statement of net position is categorized as net investment in capital assets, restricted and unrestricted.

Net Investment in Capital Assets. This category groups all capital assets into one component of net position. Accumulated depreciation and the outstanding balances of debt (including discounts and premiums) that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.

Restricted Net Position. This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law or enabling legislation.

Unrestricted Net Position. This category represents net position of the City not restricted for any project or other purpose.

P. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position reports 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 will not be recognized as an outflow of resources (expense) until that time.

The City has the following items that qualify for reporting in this category:
 Deferred loss on refunding, net of accumulated amortization, results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.
 Deferred outflows related to pensions and OPEB equal to employer contributions made after the measurement date of the net pension liability.  Deferred outflows related to pensions and OPEB for differences between expected and actual experience. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.  Deferred outflows from OPEB resulting from changes in assumptions. These amounts are amortized over a closed period equal to the average expected remaining service lives of all employees that are provided with pensions and retiree healthcare benefits through the plans.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(41)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) P. Deferred Outflows/Inflows of Resources (Continued)
 Deferred outflows from pensions from changes in proportion and differences between the employer’s contributions and the employer’s proportionate share of contributions. These amounts are amortized over a closed period equal to the average expected remaining service lives of all employees that are provided with pensions through the plan.
 Deferred outflows related to pensions resulting from the net difference in projected and actual earnings on investments of the pension plans net position.

These amounts are amortized over five years.

In addition to liabilities, the statement of net position and the governmental funds balance sheet will 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 City has the following items that qualify for reporting in this category:
 Deferred gain on refunding, net of accumulated amortization, results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.
 Deferred inflows from grants that are reported as unavailable as these amounts are not available to pay current expenditures in governmental funds  Deferred inflows related and OPEB for differences between expected and actual experience. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.
 Deferred inflows from pensions and OPEB for changes in assumptions and for pensions from changes in proportion and differences between the employer’s contributions and the employer’s proportionate share of contributions. These amounts are amortized over a closed period equal to the average expected remaining service lives of all employees that are provided with pensions through the plan.
 Deferred inflows from pensions from changes in proportion and differences between the employer’s contributions and the employer’s proportionate share of contributions. These amounts are amortized over a closed period equal to the average expected remaining service lives of all employees that are provided with pensions through the plan.
 Deferred inflows related to OPEB resulting from the net difference in projected and actual earnings on investments of the pension plans net position. These amounts are amortized over five years.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(42)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. Implementation of New GASB Pronouncements
The City adopted GASB Statement No. 84, Fiduciary Activities as of July 1, 2020. The adoption of the standard did not result in a restatement of net position.

NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Excess of Charges over Appropriations
For the fiscal year ended June 30, 2021, expenditures exceeded appropriations in the following programs:

Variance with
Budget Actual Final Budget
Other Governmental Funds:

Lighting Assessment District Special
Revenue Fund 243,146 $ 245,075 $ (1,929) $
Shopper's Lane Parking District Special
Revenue Fund 7,500 8,704 (1,204)
Funds with deficit balances were as follows:

Amount
Other Governmental Funds:

TDA Grant Special Revenue Fund 8,620 $
Other Grants Special Revenue Fund 24,629
Internal Service Funds
Management Information Systems 165,587
Workers Compensation 1,262,086
General Liability 1,507,559
The deficit in these funds will be reduced by transfers from the general fund or from receipt of grant revenues.

NOTE 3 CASH AND INVESTMENTS
The City is following the requirements associated with GASB Statement No. 40, Deposit and Investment Risk Disclosures. More commonly referred to as GASB 40, this statement adds to and changes financial statement disclosure requirements for cash and investments of local governments. GASB 40 amends GASB Statement No. 3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements, to address common deposit and investment risks related to credit risk, interest rate risk and foreign currency risk. As an element of interest rate risk, this statement requires certain disclosures of investments that have fair values with a high sensitivity to interest rate changes.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(43)
NOTE 3 CASH AND INVESTMENTS (CONTINUED)
Cash and investments as of June 30, 2020, are classified in the accompanying financial statements as follows:

Business- PrivateGovernmental Type Purpose Trust Cusodial Activities Activities Fund Funds Total
Statement of Net Position:

Cash and Investments 40,179,809 $ 14,390,009 $ 1,348,069 $ 1,050 $ 55,918,937 $ Cash and Investments - Restricted - 11,122,771 - - 11,122,771 Cash and Investments With Fiscal Agent 1,788 2,978,979 - 2,980,767 - Total Cash and Investments $ 40,181,597 $ 25,512,780 $ 4,327,048 $ 1,050 $ 70,022,475 Cash and Investments as of June 30, 2021
Consist of the Following:

Cash on Hand $ 7,935
Deposits With Financial Institutions 2,670,748
Deposits With Fiscal Agent 2,125,056
Investments 65,218,736
Total Cash and Investments $ 70,022,475
Fiduciary Funds
Authorized Investments
The table on the following page identifies the investment types that are authorized for the City by the California Government Code and the City’s investment policy. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, if 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 trustees 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.

Covina Covina Covina Covina
CGC Policy CGC Policy CGC Policy CGC Policy
Mutual Funds (Money Market Funds) N/A N/A 20% 10% 10% None AAA AAA Bankers Acceptance 180 days 180 days 40% 20% 30% None None Prime Commercial Paper 270 days 180 days 25% 15% 10% None A Prime Certificates and Time Deposits 5 years 2 years 30% 10% None None None None Corporate Notes 5 years 2 years 30% 10% None None A AAU.S. Treasury Securities 5 years 5 years None 30% None None None None U.S. Agency Securities 5 years 5 years None 30% None 10% None None Local Agency Investment Fund (LAIF) N/A N/A None None None None None None Maximum Maturity Portfolio Issuer Rating
Maximum Maximum
Percentage of Investment in One Minimum Credit
Investments Authorized by Debt Agreements
Investment of debt proceeds and reserves held by bond trustees are governed by the debt agreements, rather than the general provisions of the California Government Code. The City and SACRA bond reserves are held in money market mutual funds.

Interest Rate Risk
Changes in interest rates could adversely affect the fair market values of an investment. The interest rate risk is monitored by the City by measuring the weighted average maturity of its portfolio. Generally, the longer the maturity of an investment, the greater sensitivity of its fair market value to changes in market interest rates.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(44)
NOTE 3 CASH AND INVESTMENTS (CONTINUED)
Interest Rate Risk (Continued)
The City manages its exposure to declines in market values by limiting the weighted average maturity of its investments to less than 24 months. The investments held by bond trustees are primarily invested in highly liquid money market mutual funds, and thus are not highly sensitive to interest rate fluctuations. The following table provides information concerning interest rate risk as of June 30, 2021.
12 Months 13 to 36 25 to 60 More than 60
Fair Value or Less Months Months Months
Investment Type:

State Investment Pool (LAIF) 41,771,475 $ 41,771,475 $ - $ - $ - $ U.S. Agency Securities 2,969,985 611,372 2,358,613 - -
U.S. Treasury Securities 13,714,927 10,267,355 3,447,572 - - Money Market Mutual Funds 3,781,582 3,781,582 - - -
Held by Bond Trustee:

Money Market Mutual Funds 2,980,767 2,980,767 - - -
Total 65,218,736 $ 59,412,551 $ 5,806,185 $ - $ - $
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligations to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Certain investments, such as obligations, which are backed by the full faith and credit of the United States Government, are exempt from credit rating disclosures. 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 from Standard & Poor’s as of fiscal year-end for each investment type:

Minimum
Credit Not Required
Fair Value Rating AAA AA+ Not Rated to be Rated
Investment Type:

State Investment Pool (LAIF) $ N/A - 41,771,475 $ - $ 41,771,475 $ - $ U.S. Agency Securities 2,969,985 N/A 2,969,985 - - -
U.S. Treasury Securities 13,714,927 N/A - - 13,714,927 - Money Market Mutual Funds 3,781,582 A - 3,781,582 - -
Held by Bond Trustee:

State Investment Pool (LAIF) N/A - - - -
U.S. Treasury Securities N/A - - - - -
Money Market Mutual Funds 2,980,767 A - 2,980,767 - -
Total 65,218,736 $ N/A 6,762,349 $ 2,969,985 $ 41,771,475 $ 13,714,927 $ Concentration of Credit Risk
The investment policy of the City contains limitations on the amount that can be invested in any one issuer. There are no investments in any one issuer (other than U.S. Treasury securities, money market mutual funds and external investment pools) that represent 5% or more of total City investments.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(45)
NOTE 3 CASH AND INVESTMENTS (CONTINUED)
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 California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law. The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

As of June 30, 2021, all the City’s deposits with financial institutions in excess of federal depository insurance limits were held in collateralized accounts.

Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code 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 its pro rata share of the fair value provided by LAIF for the entire LAIF portfolio. The balance available for withdrawal is based on LAIF accounting records and recorded on an amortized basis.

Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are quoted prices for similar assets in active markets and Level 3 inputs are significant unobservable inputs.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(46)
NOTE 3 CASH AND INVESTMENTS (CONTINUED)
Fair Value Measurements (Continued)
The City pool investment has the following recurring fair value measurements as of June 30, 2021:

Quoted Prices in Significant
Active Markets Other Significant
for Identical Observable Unobservable
Investment by Fair Value Level Fair Value Assets (Level 1) Input (Level 2) Inputs (Level 3) Debt Securities:

U.S. Agency Securities $ 2,969,985 $ 2,969,985 - $ $ -
U.S. Treasury Securities 13,714,927 13,714,927 - -
Total Investments Measured
at Fair Value 16,684,912 $ 16,684,912 - $ $ -
Investments:

State Investment Pool (LAIF)* 41,771,475
Money Market Mutual Funds* 6,762,349
Total Pooled Investments $ 65,218,736
* Not subject to fair value measurement hierarchy.

Fair Value Measurements Using
NOTE 4 INTERFUND TRANSACTIONS
A. Interfund Balances
Operating receivables between funds are classified as due from or due to other funds.

Negative individual fund cash and investment balances are offset by a due from other funds in the General Fund with a due to other funds set up in those funds owing the General Fund.

The following are due from and due to balances as of June 30, 2021:

Receivable Fund Payable Fund Amount
General Other Governmental Funds $ 223,468

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(47)
NOTE 4 INTERFUND TRANSACTIONS (CONTINUED)
A. Interfund Balances (Continued)
Interfund Transfers
Transfers between funds are generally subsidies from one fund to another fund, funding of workers compensation and general liability reserves and reimbursement for expenditures incurred. The following are the interfund transfers for fiscal year ended June 30, 2021.

Transfers In Fund Transfers Out Fund Amount
General Other Governmental Funds $ 180,000
Other Governmental Funds Other Governmental Funds 7,205 Other Governmental Funds General 438,420
Internal Service General 50,660
Internal Service Water Fund 14,789
Internal Service Sewer Fund 4,745
Internal Service Other Enterprise Funds 2,806
Total $ 698,625
B. Internal Balances
Internal balances represent the net interfund receivables and payables remaining after elimination of all such balances within governmental and business-type activities.

NOTE 5 PROPERTY TAXES
Property taxes are attached as an enforceable lien on property as of January 1. Taxes are levied in September and are payable in two installments on November 1 and February 1 and are delinquent after December 10 and April 10, respectively. Any unpaid amounts at the end of the fiscal year are recorded as property taxes receivable. The County of Los Angeles bills and collects the property taxes and subsequently remits the amount due to the City of Covina in installments during the year. Historically, the City has received substantially all of the taxes levied within two years from the date they are levied.

The County is permitted by State Law (Article XIII A of the California Constitution) to levy taxes at 1% of full market value (at time of purchase) and can increase the property’s value no more than 2% per year. The City receives a share of this basic levy proportionate to what it received in the 1976 to 1978 period.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(48)
NOTE 6 NOTES RECEIVABLE
The former Agency entered into agreement with Covina Gardens, KBS, L.P., a California Limited Partnership (Developer) to effectuate the Redevelopment Plan for the Covina Revitalization Project No. 1 by providing for the rehabilitation of residential rental housing development existing on a site acquired by the Developer which will maintain the supply and availability of low and moderate income housing, including very low-income units. The former Agency provided assistance to the Developer in the form of notes secured by a second deed of trust in the amount not to exceed $4,742,000. The interest rate range is 2% per year, and notes receivable are due in 55 years. At June 30, 2021, the City has recorded an allowance for the balance of $5,263,208 for principal of $4,742,000 and accrued interest of $521,208 as management is not certain if this amount will be collected.

NOTE 7 LOANS RECEIVABLE
The City’s Community Development Block Grant (CDBG) program provides low-income housing and economic assistance to qualifying households and businesses. The loans do not require monthly repayment. In addition to CDBG loans, first-time homebuyer loans made by the former Covina Redevelopment Agency are now administered by the Housing Authority. The loans for the first-time homebuyer and for down payment assistance bear interest from 1.5% to 6.875%. The first-time home buyer loans are forgiven after 45 consecutive years of occupying the home purchased, while the down payment assistance is forgiven after 20 years of occupying the home purchased. The housing rehabilitation program loan is secured by a deed of trust on the property and is due upon sale or transfer of the title of the property. The outstanding balance as of June 30, 2021, of all loans was $1,854,467. Due to the forgiveness feature of these loans the City has established an allowance for uncollectible loans in the amount of $1,587,652.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(49)
NOTE 8 CAPITAL ASSETS
Governmental Activities
Capital asset activity for the fiscal year ended June 30, 2021, was as follows:

Balance
July 1, 2020 Balance
as restated Additions Deletions June 30, 2021
Governmental Activities:

Capital Assets, not Depreciated:

Land $ 11,882,165 $ - $ 11,882,165 - $
Construction in Progress 1,787,705 7,362,488 5,727,739 3,422,454 Total Capital Assets, not
Depreciated 13,669,870 7,362,488 5,727,739 15,304,619
Capital Assets, Depreciated:

Buildings and Structures 39,648,330 371,057 40,019,387 - Improvements Other than Buildings 10,572,840 3,124,986 255,208 13,442,618 Public Domain Infrastructure 123,198,692 2,423,566 125,622,258 - Sanitary Sewer Infrastructure 6,221,681 - 6,221,681 -
Machinery and Equipment 11,515,016 334,381 202,397 11,647,000 Total Capital Assets, Depreciated 191,156,559 6,253,990 457,605 196,952,944 Less Accumulated Depreciation for:

Buildings and Structures 12,729,967 782,204 13,512,171 - Improvements Other than Buildings 5,234,294 483,408 43,295 5,674,407 Public Domain Infrastructure 86,795,285 3,365,730 90,161,015 - Sanitary Sewer Infrastructure 4,379,390 64,737 4,444,127 - Machinery and Equipment 8,237,943 777,336 202,397 8,812,882 Total Accumulated Depreciation 117,376,879 5,473,415 245,692 122,604,602 Total Capital Assets,
Depreciated, Net 73,779,680 780,575 211,913 74,348,342
Total Capital Assets, Net $ 87,449,550 $ 8,143,063 $ 5,939,652 $ 89,652,961 Depreciation expense was charged to the following categories:

Governmental Activities:

General Government 289,164 $
Public Safety 365,245
Public Works 3,627,088
Culture and Recreation 565,796
Transit 343,250
Internal Service Funds Charged to Programs 282,872
Total Governmental Activities 5,473,415 $

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(50)
NOTE 8 CAPITAL ASSETS (CONTINUED)
Business-Type Activities
Balance Balance
July 1, 2020 Additions Deletions June 30, 2021
Business-Type activities:

Capital Assets, not Depreciated:

Land $ 377,408 $ - $ - $ 377,408
Construction in Progress 87,058 3,093,364 1,472,255 1,708,167 Total Capital Assets, not
Depreciated 464,466 3,093,364 1,472,255 2,085,575
Capital Assets, Depreciated:

Buildings and Structures 12,543,077 158,641 12,701,718 - Improvements Other than Buildings 668,532 57,260 - 725,792 Water System Infrastructure 49,605,619 1,256,335 50,861,954 - Machinery and Equipment 3,328,283 867,285 4,195,568 -
Total Capital Assets, Depreciated 66,145,511 2,339,521 68,485,032 - Less Accumulated Depreciation for:

Buildings and Structures 3,537,342 250,263 3,787,605 -
Improvements Other than Buildings 131,790 24,199 - 155,989 Water System Infrastructure 12,958,001 1,212,602 14,170,603 - Machinery and Equipment 2,039,479 210,207 2,249,686 -
Total Accumulated Depreciation 18,666,612 1,697,271 20,363,883 - Total Capital Assets,
Depreciated, Net 47,478,899 642,250 48,121,149 -
Total Capital Assets, Net $ 47,943,365 $ 3,735,614 $ 1,472,255 $ 50,206,724 Depreciation expense was charged to the following categories.

Business-Type Activities:

Water Utility 1,443,409 $
Sewer 225,865
Nonmajor Fund - Environmental Protection 27,997
Total Business-Type Activities 1,697,271 $
NOTE 9 PENSION PLANS
The following is a summary of pension related items for the year ended June 30, 2021:

Deferred Deferred
Pension Outflows Inflows Pension
Liability of Resources of Resources Expense
CalPERS Miscellaneous $ 31,477,382 $ 3,577,525 $ 4,710,434 - $ CalPERS Safety 39,280,317 9,701,273 2,688,338 5,719,832 Total $ 70,757,699 $ 13,278,798 $ 2,688,338 $ 10,430,266

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(51)
NOTE 9 PENSION PLANS (CONTINUED)
Pension liabilities are liquidated from the related employees home program, with the majority funded out of the General Fund.

A. General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City’s Safety (police) cost sharing defined benefit plan and the Miscellaneous (all other) Plan, agent multiple-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. 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.

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 five years of service.

PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least five years of service. All members are eligible for nonduty disability benefits after five 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 for each plan are applied as specified by the Public Employees’ Retirement Law.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(52)
NOTE 9 PENSION PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) Benefits Provided (Continued)
The Plans’ provisions and benefits in effect at the measurement date of June 30, 2020 are summarized as follows:

Prior to On or After
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.5%@55 2.0%@62
Benefit Vesting Schedule 5 Years of service 5 Years of service Benefit Payments Monthly for life Monthly for life
Retirement Age 50 - 55 50 - 62
Monthly Benefits, as A %
of Eligible Compensation 2.0% - 2.7% 2.0% - 2.7%
Required Employee Contribution Rates 8.00% 6.50%
Required Employer Contribution Rates:

Normal Cost Rate 11.483% 7.250%
Payment of Unfunded Liability $ 2,125,328 $ -
On or After
January 1, 2011
Prior to and prior to On or After
Hire Date December 31, 2010 January 1, 2013 January 1, 2013 Benefit Formula 3.0%@50 3%@55 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 - 55 50 - 55 50 - 57
Monthly Benefits, as A %
of Eligible Compensation 3% 2.4% - 3% 2.0% - 2.7%
Required Employee Contribution Rates 9.00% 9.00% 13.75% Required Employer Contribution Rates:

Normal Cost Rate 25.540% 23.558% 13.884%
Payment of Unfunded Liability $ 2,460,366 $ 4,572 $ 4,736 Miscellaneous
Safety
Employees Covered
At the measurement date of June 30, 2020, the following employees were covered by the benefit terms for the Miscellaneous Plan:

Miscellaneous
Inactive Employees or Beneficiaries Currently Receiving Benefits 264 Inactive Employees Entitled to but not yet Receiving Benefits 308 Active Employees 113
Total 685

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(53)
NOTE 9 PENSION PLANS (CONTINUED)
A. General Information about the 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’s annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. City contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. For the fiscal year ended June 30, 2021, employer contributions of $2,995,659 and $3,885,326 were made for the miscellaneous and safety plans, respectively.

B. Net Pension Liability
The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2020, using an annual actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown on the following page.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(54)
NOTE 9 PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
Actuarial Assumptions
The total pension liabilities in the June 30, 2019, actuarial valuations were determined using the following actuarial assumptions:

Miscellaneous Safety
Valuation Date June 30, 2019 June 30, 2019
Measurement Date June 30, 2020 June 30, 2020
Actuarial Cost Method Entry-Age Normal Entry-Age Normal Cost Method Cost Method
Actuarial Assumptions:

Discount Rate 7.15% 7.15%
Inflation 2.50% 2.50%
Projected Salary Increase (1) (1)
Mortality Rate Table (2) (2)
Postretirement Benefit Increase (3) (3)
(1) Varies by entry age and service.
(2) 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 postretirement morality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website. (3) The less of contract COLA or 2.50% until Purchasing Power Protection Allowance Floor on purchasing power applies, 2.50% thereafter.

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

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(55)
NOTE 9 PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
Long-Term Expected Rate of Return (Continued)
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, expected 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 rounded 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 rates of return by assets class are as follows:

Assumed Real Return Real Return
Asset Years Years
Allocation 1 - 10 (b) 11+ (c)
Global Equity 50.00 % 4.80 % 5.98 %
Fixed Income 28.00 1.00 2.62
Inflation Assets - 0.77 1.81
Private Equity 8.00 6.30 7.23
Real Assets 13.00 0.04 4.93
Liquidity 1.00 - (0.92)
Total 100.00 %
(a) In the CalPERS ACFR, fixed income is included in global debt securities; liquidity is included in short-term investments; and inflation assets are included in both global equity securities and global debt securities.
(b) An expected inflation of 2.0% was used for this period. (c) An expected inflation of 2.92% was used for this period.

Asset Class (a)
Discount Rate
The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at 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 investments was applied to all periods of projected benefit payments to determine the total pension liability.

Subsequent Events
There were no subsequent events that would materially affect the results in this disclosure.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(56)
NOTE 9 PENSION PLANS (CONTINUED)
C. Changes in the Net Pension Liability
The changes in the net pension liability for the Miscellaneous Plan are as follows:

Total Plan Net Pension
Pension Fiduciary Liability
Liability Net Position (Asset)
Balance at June 30, 2019
(Measurement Date) $ 66,061,430 95,804,648 $ 29,743,218 $ Changes in the Year:

Service Cost 1,493,026 - 1,493,026
Interest on the Total Pension Liability 6,728,565 - 6,728,565 Differences between Expected
and Actual Experience 129,660 - 129,660
Changes in Assumptions - - -
Changes in Benefit Terms - - -
Plan to Plan Resource Movement - (1,599) 1,599
Contribution - Employer - 2,794,762 (2,794,762)
Contribution - Employee - 652,852 (652,852)
Net Investment Income - 3,264,202 (3,264,202)
Administrative Expenses - (93,130) 93,130
Other Miscellaneous Expense - - -
Benefit Payments, Including Refunds
of Employee Contributions (5,150,041) (5,150,041) -
Net Changes 3,201,210 1,467,046 1,734,164
Balance at June 30, 2020.
(Measurement Date) $ 67,528,476 99,005,858 $ 31,477,382 $ Increase (Decrease)
Proportionate Share of Net Pension Liability
As of June 30, 2021 (measurement date of June 30, 2020), the City reported $39,280,317 for its proportionate share of the net pension liability for the Safety Plan.

The City’s net pension liability for the Safety 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, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. 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.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(57)
NOTE 9 PENSION PLANS (CONTINUED)
C. Changes in the Net Pension Liability (Continued)
Proportionate Share of Net Pension Liability (Continued) The City’s proportionate share of the net pension liability for the Safety Plan as of the measurement dates ended June 30, 2019 and 2020 was as follows:

Safety
Proportion - June 30, 2019 0.566270%
Proportion - June 30, 2020 0.589590%
Change - Increase (Decrease) 0.023320%
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Miscellaneous Safety
1% Decrease 6.15% 6.15%
Net Pension Liability $ 44,553,003 $ 56,877,791
Current Discount Rate 7.15% 7.15%
Net Pension Liability $ 31,477,382 $ 39,280,317
1% Increase 8.15% 8.15%
Net Pension Liability $ 20,749,658 $ 24,839,924
Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(58)
NOTE 9 PENSION PLANS (CONTINUED)
D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2021, the City recognized pension expense of $4,710,434 and $5,719,832 for the Miscellaneous and Safety Plans, respectively. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred Deferred Deferred
Outflows of Inflows of Outflows of Inflows of
Resources Resources Resources Resources
Pension Contributions Subsequent
to Measurement Date $ 2,995,659 $ 3,885,326 - $ $ -
Differences Between Expected and
Actual Experience 61,418 3,045,989 - -
Change in Assumptions - - (130,843) -
Change in Employer’s Proportion and
Differences Between the Employer’s
Contributions and the Employer’s
Proportionate Share of Contributions - 1,916,231 - (2,557,495) Net Differences Between Projected and
Actual Earnings on Plan Investments 520,448 853,727 - - Total $ 3,577,525 $ 9,701,273 - $ $ (2,688,338)
Miscellaneous Safety
$2,995,659 and $3,885,326 reported as deferred outflows of resources related to contributions subsequent to the measurement date, for the Miscellaneous and Safety Plans, respectively, will be recognized as a reduction of the net pension liability in the year ending June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ending June 30, Miscellaneous Safety
2022 (215,761) $ 638,392 $
2023 176,100 1,179,799
2024 346,381 881,653
2024 275,146 427,765
2026 - -
Thereafter - -
Payable to the Pension Plan
At June 30, 2021, the City had no outstanding amount of contributions to the pension plan required for the year ended June 30, 2021.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(59)
NOTE 10 COMPENSATED ABSENCES
For governmental funds, accumulated vacation and sick leave benefits payable at June 30, 2021, was $3,546,088. The short-term portion of $1,031,471 and long-term portion of $2,514,617 is not accounted in the governmental funds but is included in the governmental activities of the government-wide statements. Accumulated vacation and sick leave of $207,187, of which $67,817 represents the current portion, is recorded in the individual internal service funds and governmental activities of the government-wide financial statements. For enterprise funds, accumulated vacation and sick leave amounted to $523,436 of which $183,355 represents the current portion. The total amount is recorded within the respective proprietary funds and business-type activities of the government-wide statements.

NOTE 11 RISK MANAGEMENT
Workers’ Compensation and General Liability
The City has a program of insurance for any liability to City employees arising under the workers’ compensation laws for the State of California. By this action, the City will pay all claims up to $500,000. Amounts in excess of $500,000, up to $150,000,000, are covered through an excess commercial insurer. There are no claims that exceed insurance coverage over the last three years.

The City established general liability and workers’ compensation internal service funds. The funds have cash and investments of $4,394,146 and $1,193,147, respectively, which have been internally restricted for payment of outstanding workers’ compensation and general liability claims.

Actual settlements accrued are accounted for in the appropriate fund. Estimates for all remaining outstanding claims, including an estimate for incurred but not reported claims (IBNR), are not accounted for in the individual funds but are reported in the governmental activities of the government-wide statements under claims and judgments. At June 30, 2021, total actual and estimated claims and judgments payable were as follows:

General Liability $ 2,437,000
Workers’ Compensation 5,245,000
Total $ 7,682,000
The following are changes in the claims and judgments liability for fiscal years 2021 and 2020:
2021 2020
Claims and Judgements - Beginning of Fiscal Year $ 7,247,000 $ 7,138,000 Claims Incurred (Including IBNRs) 1,522,559 696,013
Claims Paid (1,087,559) (587,013)
Claims and Judgements - End of Fiscal Year $ 7,682,000 $ 7,247,000 Fiscal Year Ended June 30

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(60)
NOTE 12 CAPITALIZED LEASE OBLIGATIONS
Water Equipment
The City entered into a capital lease with Bank of America for water equipment. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of future minimum lease payments as of the inception date in the City’s capital assets. The capital lease was paid off with proceeds received from the BBVA Mortgage Corporation in December 2020.

The value of the assets acquired by the capital lease was $1,430,152 as of June 30, 2021, net of accumulated depreciation of $3,337,020.

Public Safety Radio
The City entered into a capital lease with Motorola Solutions, LLC for radio equipment. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of future minimum lease payments as of the inception date in the City’s capital assets. The final payment was made in fiscal year ended June 30, 2021.

The value of the assets acquired by the capital lease was $332,771 as of June 30, 2021, net of accumulated depreciation of $173,800.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(61)
NOTE 13 LONG-TERM LIABILITIES
The following is a summary of changes in the long-term liabilities for the fiscal year ended June 30, 2021:

Balance Balance Current
July 1, 2020 Additions Deletions June 30, 2021 Portion
Governmental Activities:

Other Long-Term Liabilities
Compensated Absences $ 3,762,261 $ 1,145,247 $ 1,154,233 $ 3,753,275 $ 1,099,228 Claims and Judgments 7,247,000 1,522,559 1,087,559 7,682,000 - Other Debt
Certificates of Participation Payable (COP) - 5,060,000 185,000 4,875,000 195,000 Unamortized Premium on COP 219,627 - 11,559 208,068 11,560 Direct Borrowings and Placements
Capital Lease Payable 244,087 244,087 - - -
Section 108 Loan 2,250,000 125,000 - 2,125,000 125,000
Total Long-Term Liabilities, Net $ 18,782,975 $ 2,667,806 $ 2,807,438 $ 18,643,343 $ 1,430,788 Balance Balance Current
July 1, 2020 Additions Deletions June 30, 2021 Portion
Business-Type Activities:

Other Long-Term Lliabilities
Compensated Absences $ 267,285 490,965 $ 234,814 $ 523,436 $ 183,355 $ Direct Borrowings and Placements
Capital Lease Payable - 2,206,909 2,206,909 - -
Water Installment Agreement 18,883,578 - 593,307 18,290,271 1,157,955 Other Debt
Revenue Bonds Payable - 21,325,000 13,115,000 8,210,000 840,000 Unamortized Premium on Revenue Bonds - 118,255 118,255 - - Unamortized Discount on Revenue Bonds - - - - -
Total Long-Term Liabilities, Net 24,141,129 $ 19,150,863 $ 16,268,285 $ 27,023,707 $ 2,181,310 $ Internal service funds predominately serve the governmental funds. Accordingly, long-term liabilities for these funds are included as part of the above totals for governmental activities.

Claims and judgments, compensated absences, net pension liability and net OPEB liability for the governmental activities are generally liquidated by the General Fund and Internal Service Funds.

Governmental Activities
Transportation Revenue Certificates of Participation, Series 2017 A In August 2017, $5,625,000 of 2017 Series A certificates of participation bonds were issued to provide funding to repair, upgrade or re-construct residential streets that are in poor to fair condition. The bonds mature annually through 2039, in amounts ranging from $175,000 to $355,000. Interest rates vary from 2.0% to a maximum of 5.0% and are payable semiannually on December 1 and June 1. At June 30, 2021, the outstanding balance of these bonds was $4,875,000.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(62)
NOTE 13 LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
Transportation Revenue Certificates of Participation, Series 2017 A (Continued) The total debt service requirements to maturity with respect to the certificates included in the governmental-type activities are as follows:

Fiscal Year Ending June 30, Principal Interest Total
2022 $ 195,000 $ 169,988 $ 364,988
2023 205,000 160,238 365,238
2024 215,000 149,988 364,988
2024 220,000 145,688 365,688
2026 225,000 140,738 365,738
2027-2031 1,250,000 580,462 1,830,462
2032-2036 1,530,000 304,150 1,834,150
2037-2040 1,035,000 65,312 1,100,312
Total $ 4,875,000 $ 1,716,564 $ 6,591,564
Section 108 Loan Payable
The County of Los Angeles provided funds under an interim agreement to loan $2,500,000 to the City to provide funds for Covina Senior and Community Center. The advance under the interim agreement was replaced by a Section 108 loan under the Community Development Block Grant Program of the Department of Housing and Urban Development. The City makes annual principal amount of $125,000 commencing August 1, 2018 and annually thereafter and semiannual interest payments on August 1 and February 1 each Year. At June 30, 2021, the outstanding loan balance was $2,125,000.

Fiscal Year Ending June 30, Principal Interest Total
2022 $ 125,000 $ 63,795 $ 188,795
2023 125,000 60,596 185,596
2024 125,000 57,369 182,369
2025 125,000 54,065 179,065
2026 125,000 50,686 175,686
2027-2031 625,000 198,909 823,909
2032-2036 625,000 98,015 723,015
2037-2039 250,000 8,931 258,931
Total $ 2,125,000 $ 592,366 $ 2,717,366
Business-Type Activities
Revenue Bonds Payable, Sewer Enterprise Fund

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(63)
NOTE 13 LONG-TERM LIABILITIES (CONTINUED)
Business-Type Activities (Continued)
Revenue Bonds Payable, Sewer Enterprise Fund (Continued) Wastewater Sewer Revenue Bonds – 2019 Taxable Wastewater Revenue Refunding Bonds
In August 2020, the City, issued $9,930,000 2019 Taxable Wastewater Revenue Refunding Bonds (2019 Bonds) for the purpose of refunding the Sewer Revenue Bonds issued in 2009 and paying issuance costs related to the 2019 Bonds.

Proceeds from the 2019 Bonds and reserve funds from the 2009 Bonds were deposited in a redemption fund to redeem the outstanding amount of $10,740,000 2009 Bonds on October 1, 2019.

Interest on the 2019 Bonds is payable semi-annually on October 1 and April 1 of year at rates ranging from 1.966% to 2.686% with principal payable October 1 commencing October 1, 2019. The 2019 Bonds are not subject to optional redemption prior to their stated maturities. A reserve fund has not been established for the 2019 Bonds.

The bonds are secured by a pledge of the net revenues received by the City for the sewer fees. Net Revenues will be equal to 120% of the fiscal year debt service if there is a transfer from a rate stabilization fund. Net revenues without the inclusion of a transfer from the rate stabilization fund will be at least equal to 100% of the fiscal year debt service requirement. Total principal and interest remaining to be paid on the bonds is $9,167,189. Principal and interest paid for the current fiscal year and total customer net revenues were $1,027,631 and $1,245,156.

The total debt service requirements to maturity with respect to the certificates included in the business-type activities are as follows:

Fiscal Year Ending June 30, Principal Interest Total
2022 $ 840,000 $ 186,054 $ 1,026,054
2023 855,000 168,768 1,023,768
2024 870,000 150,861 1,020,861
2026 885,000 132,088 1,017,088
2027 905,000 111,745 1,016,745
2027-2030 3,855,000 207,673 4,062,673
Total $ 8,210,000 $ 957,189 $ 9,167,189

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 13 LONG-TERM LIABILITIES (CONTINUED)
Business-Type Activities (Continued)
Revenue Bonds Payable, Water Enterprise Fund
On December 10, 2010, the City issued $15,000,000 of Revenue Bonds with an interest rate of 2.0% - 5.0% to refund $1,290,000 outstanding 1999 Certificate of Participation bonds and to finance various capital projects amounting to $12,715,285.

The 2010 Water Bonds were refunded with proceeds received from the issuance of the BBVA Mortgage Corporation debt.

BBVA Mortgage Corporation Note Payable
On December 1, 2020, the City through a private placement financed debt in the amount of $18,883,578 to provide $5,500,000 in funds for capital projects related to the water enterprise, deposit $13,284,326 in an escrow fund to refund in advance the 2010 Water Revenue Bonds and the 2010 Lease payable with the remaining funds were used for costs of issuance. The interest rate on the debt is 1.97% with interest and principal payable April 1 and October 1 each year commencing April 1, 2021 through October 1, 2040. In consideration for the BBVA Mortgage Corporation (the Corporation) assistance in refinancing the City’s prior obligations, the City sold water capital improvements to the Corporation and concurrently, the Corporation resold
Under the agreement, the City has covenanted that it will prescribe, revise and collect such charges for the services and facilities of its municipal water system which will produce gross revenues that will generate net revenues equal to 1.25 times the maximum debt service. Principal and interest paid for the current year for all water related debt and total customer net revenues were $1,596,894 and $2,906,296, respectively.

The advance refunding resulted in a cash flow savings of $5,340,026 and a net present value savings of $4,343,066.

The total debt service requirements to maturity with respect to the note payable included in the business-type activities are as follows:

Fiscal Year Ending June 30, Principal Interest Total
2022 $ 1,157,955 $ 354,474 $ 1,512,429
2023 1,140,756 331,945 1,472,701
2024 1,163,388 309,359 1,472,747
2025 1,185,418 286,330 1,471,748
2026 976,921 262,871 1,239,792
2027-2031 3,968,016 1,074,963 5,042,979
2032-2036 4,377,865 666,298 5,044,163
2037-2041 4,319,952 215,572 4,535,524
Total $ 18,290,271 $ 3,501,812 $ 21,792,083

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(65)
NOTE 14 FUND BALANCES
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific Purposes for which amounts in the funds can be spent. As of June 30, 2021, fund balances for governmental funds are made up of the following:

Nonspendable Fund Balance. Nonspendable fund balance includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The not in spendable form criterion includes items that are not expected to be converted to cash (for example, inventories, prepaid amounts and due from successor agency in the General Fund).

Restricted Fund Balance. Restricted fund balance includes amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers.

Committed Fund Balance. Committed fund balance includes amounts that can only be used for the specific purposes determined by a formal action of the City’s highest level of decision-making authority, the City Council. Commitments may be changed or lifted only by the City Council taking the same formal action that imposed the constraint originally (for example: resolution and ordinance). Ordinance is the highest level of the City Council’s approval.

Assigned Fund Balance. Assigned fund balance comprises amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by (1) the City Council or (b) a body (for example: a budget or finance committee) or official to which the City Council has delegated through its fund balance policy the authority to assign amounts to be used for specific purposes. Assigned amounts also include all residual amounts in governmental funds (except negative amounts) other than the General Fund, that are not classified as nonspendable, restricted or committed.

Unassigned Fund Balance. Unassigned fund Balance is the residual classification for the General Fund and includes all amounts not contained in the other classifications.

Unassigned amounts are technically available for any purpose.

In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is depleted in the order of restricted, committed, assigned and unassigned.

The City Council adopted a Reserve Policy. The policy aims to help reduce the negative impact on the City in times of economic uncertainty and potential losses of funding from other governmental agencies. City reserves are restricted for one-time purposes. The policy establishes minimum requirements for General Fund nondepartmental reserves and provides guidelines for the use of these funds.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(66)
NOTE 14 FUND BALANCES (CONTINUED)
General Fund Nondepartmental Reserve Requirements
Appropriation for contingencies is maintained at 20% of total General Fund net appropriations for one-time emergencies and economic uncertainties. Excess fund balance at year-end must first be used to replenish the reserve amount at the 20% level.

General Nonmajor
Fund Governmental Total
Nonspendable:

Prepaid Expenses 1,008,903 $ 22,553 $ 1,031,456 $
Total 1,008,903 22,553 1,031,456
Restricted:

Culture and Recreation 316,402 696,003 1,012,405
Redevelopment and Housing - 4,181,662 4,181,662
Community Development - 1,690,170 1,690,170
Law Enforcement 71,362 688,329 759,691
Street and Transportation Projects - 4,992,078 4,992,078 Air Quality Projects - 101,151 101,151
Assessment Districts - 1,298,102 1,298,102
Culture and Recreation - - -
Other Capital Projects - 1,261,787 1,261,787
Total 387,764 14,909,282 15,297,046
Committed:

Emergency Contingency 8,508,328 - 8,508,328
Assigned:

Culture and Recreation - 100,116 100,116
Other Capital Projects 17,166 - 17,166
Total 17,166 100,116 117,282
Unassigned 10,878,058 (332,512) 10,545,546
Total 20,800,219 $ 14,699,439 $ 35,499,658 $
NOTE 15 CONTINGENCIES
The City is involved in several pending lawsuits of a nature common to many similar jurisdictions. City management estimates that potential claims against the City, not covered by insurance, will not have a material adverse effect on the financial position of the City.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 16 JOINT VENTURE
The Covina Irrigating Company (the Company) is a nonprofit mutual water company. The purpose of the Company is to develop, distribute, supply or deliver water at cost for irrigation and domestic uses of its stockholders. The governing board of directors consists of nine directors which are elected by the stockholders.

The City’s investment in the Company has been recorded on the equity method of accounting and is shown as an “investment in joint venture” in the Water Utility Enterprise Fund. The City invested in the Company’s shares solely to ensure that present and future water supply will be maintained at an adequate level. The City’s equity share is 42.18%.

Complete financial statements for Covina Irrigating Company can be obtained from the Company. Summarized audited information for the fiscal year ended June 30, 2021, is as follows:

Operating Revenues $ 12,363,664
Operating Expenses (8,931,510)
Operating Income 3,432,154
Nonoperating Income (Loss) (179,157)
Net Income $ 3,252,997
Total Assets $ 31,071,588
Total Liabilities $ 9,216,818
Total Fund Equity 21,854,770
Total Liability and Fund Equity $ 31,071,588
The difference of the acquisition cost of shares by the City over the corresponding percentage of net position acquired at the time of acquisition is considered goodwill.

The City is also a participant in several cost-sharing agreements with other governmental units. There is no significant financial interest or ongoing financial responsibility on the part of the City with these agreements.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(68)
NOTE 17 OTHER POSTEMPLOYMENT BENEFITS (OPEB)
A. General Information about the OPEB Plan
Plan Description
The City provides retiree medical benefits under the CalPERS health plan which provides medical insurance benefits to eligible retirees and their spouses in accordance with various labor agreements. This plan is a single-employer defined benefit plan and does not issue separate financial statements. Copies of the CalPERS’s annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95814. Eligible employees that do not participate in the CalPERS health plan are eligible to receive monthly payments from the City. These benefits are accounted for under the OPEB liability.

Eligibility
Employees are eligible for retiree health benefits if they retire from the City on or after age 50 (unless disabled) and are eligible for a PERS pension. The benefits are available only to employees who retire from the City. Membership of the plan consisted of the following at the June 30, 2020, measurement date:

Active Plan Members 171
Inactive Employees or Beneficiaries Currently Receiving Benefit Payments 151 Inactive Employees Entitled to but not Yet Receiving Benefit Payments - Total 322
Contributions
The contribution requirements of plan members and the City are established and may be amended by the City and the City Council. The City must agree to make a defined monthly payment toward the cost of each retiree’s overage.

B. Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2020, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2020.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(69)
NOTE 17 OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) B. Net OPEB Liability (Continued)
Actuarial Assumptions
The total OPEB liability in the June 30, 2020 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified. The actuarial assumptions were based on a review of plan experience during the period June 30, 2018 to June 30, 2020.

Valuation Date June 30, 2020
Funding Method Entry-age normal cost, level percent of pay Discount Rate 3.34%
Investment Rate of Return 4.50% per year net of expenses Inflation 2.75%
Aggregate Payroll Increases 2.75%
Mortality Rate Preretirement mortality rates from Calpers Experience Study (1997 -2015)
Postretirement mortality rates for healthy recipients from Calpers Experience Study (1997-2015)
Healthcare Trend Rate

4.0% for 2020-2023: 5.2% for 2024-2069; and 4% for 2070 and later years. Medicare ages: 4% for 2020-2023 and 3.5% for 2024 and later years
Long-Term Expected Rate of Return
The long-term expected rate of return on OPEB plan investments was determined using a building block method in which expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. The calculated investment rate of return was set equal to the expected ten-year compound (geometric) real rate of return plus inflation (rounded to the nearest 25 basis point where appropriate).

The table below reflects the long-term expected real rate of return by asset class (based on published capital market assumptions).

Assumed Asset Real Rate
Asset Class Allocation of Return
Broad U.S. Equity 20 % 4.40 %
U.S. Fixed 75 1.50
Cash Equivalents 5 0.10
Total 100 %

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 17 OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) B. Net OPEB Liability (Continued)
Discount Rate
GASB 75 generally requires that a blended discount rate be used to measure the Total OPEB Liability. The long-term expected return on plan investments may be used to discount liabilities to the extent that the plan’s Fiduciary Net Position (fair market value of assets) is projected to cover benefit payments and administrative expenses. A 20-year high quality (AA/Aa or higher) municipal bond rate must be used for periods where the Fiduciary Net Position is not projected to cover benefit payments and administrative expenses. Determining the discount rate under GASB 75 will often require that the actuary perform complex projections of future benefit payments and asset values. This has resulted in a blended discount rate of 3.34%, which takes into account the long-term expected rate of return of 4.5% and the Bond Buyer 20-Bond GO Index municipal bond rate of 2.45%.

Change in Assumptions
The discount rate was changed from 3.17% to 3.34% and the healthcare trend rate was changed to 4.0% in 2020-2023, 5.2% for 2024-2069 and decreasing to 3.5% for 2070 and later years. Medicare age healthcare trend was 4.0% for 2020-2023 and 3.5% for 2024 and later years.

C. Change in the Net OPEB Liability
The changes in the net OPEB liability are as follows:

Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2019 (Measurement Date) 7,329,290 $ 522,574 $ 6,806,716 $ Changes Recognized for the Measurement Period:

Service Cost 315,436 - 315,436
Interest on the Total OPEB Liability 234,306 - 234,306
Changes of Benefit Terms 70,024 - 70,024
Differences Between Expected and Actual
Experience 770,579 - 770,579
Changes of Assumptions (631,555) - (631,555)
Contribution from the Employer - 510,755 (510,755)
Net Investment Income - 27,077 (27,077)
Administrative Expenses - (3,091) 3,091
Benefit Payments (510,755) (510,755) -
Net Changes During July 1, 2019 to June 30, 2020 248,035 23,986 224,049 Balance at June 30, 2020 (Measurement Date) 7,577,325 $ 546,560 $ 7,030,765 $ Increase (Decrease)

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 17 OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) C. Change in the Net OPEB Liability (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.34%) or one percentage point higher (4.34%) than the current discount rate:

Discount Rate Current Discount Rate
-1% Discount Rate +1%
$ 7,860,857 $ 7,030,765 $ 6,329,346
Plan’s Net OPEB Liability (Asset)
The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using a healthcare cost trend rate that is one percentage point lower or one percentage point higher than the current discount rate:
1% Decrease Current Trend 1% Increase
Net OPEB Liability $ 7,030,765 6,536,307 $ 7,653,748 $
Subsequent Events
There were no subsequent events that would materially affect the results presented in this disclosure.

D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2020, the City recognized OPEB expense of $604,620. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Deferred
Outflows Inflows
of Resources of Resources
OPEB Contributions Subsequent to Measurement Date $ 556,834 $ - Differences Between Actual and Expected Experience 673,037 (532,320) Change in Assumptions 942,481 (551,611)
Net Differences Between Projected and Actual Earnings - (226) Total $ 2,172,352 $ (1,084,157)
The change in assumptions and differences between actual and expected experience are amortized over the expected average remaining service life. The expected average remaining service life for the 2020 measurement period is 7.9 years.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 17 OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)
$556,834 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

Year Ending June 30, Amount
2022 118,900 $
2023 118,898
2024 115,923
2025 104,403
2026 39,801
Thereafter 33,436
E. Payable to the OPEB Plan
At June 30, 2021, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2021.

NOTE 18 REBATABLE ARBITRAGE
The Successor Agency of the former Covina Redevelopment Agency is obligated to calculate arbitrage rebates on all tax allocation bonds. There was no rebatable arbitrage liability.

NOTE 19 RELATED PARTY TRANSACTIONS
The City entered into an agreement with Covina Irrigating Company (CIC) for the pumping, treating and delivering the water to City reservoirs. During the fiscal year, the City paid $3,010,703 to the Covina Irrigating Company for the services of pumping, treating and delivery of water.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 20 ENCUMBRANCES
The City uses encumbrances to control expenditure commitments for the year and to enhance cash management. Encumbrances represent commitments related to contracts not yet performed and purchase orders not yet filled (executory contracts; and open purchase orders). Commitments for such expenditure of monies are encumbered to reserve a portion of applicable appropriations. Encumbrances still open at year-end are not accounted for as expenditures and liabilities but, rather, as restricted or assigned governmental fund balance.

As of June 30, 2021, total governmental fund encumbrance balances for the City are as follows:

Park Development Fund $ 6,950
Transportation Fund 250,000
Nonmajor Governmental Fund 1,947,000
Total Governmental Funds $ 2,203,950
NOTE 21 SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT

AGENCY (SACRA)
The assets and liabilities of the former Redevelopment Agency were transferred to the Successor Agency of the Covina Redevelopment Agency on February 1, 2012, as a result of the dissolution of the former Redevelopment Agency. The City is acting in a fiduciary capacity for the assets and liabilities. Disclosure related to long-term liabilities are as follows:

Long-Term Liabilities
Long-term liability activity for the year ended June 30, 2020, was as follows:

Balance Balance Current
July 1, 2020 Additions Deletions June 30, 2021 Portion
Advances from City of Covina $ 2,107,307 $ 2,107,307 - $ $ - $ - Compensated Absences 47,233 - 16,369 30,864 12,262
Tax Allocation Bonds 10,690,979 2,485,979 - 8,205,000 2,630,000 Accreted Interest 22,376 - 22,376 - -
Unamortized Premium on
Tax Allocation Bonds 869,429 115,205 - 754,224 115,205
Total Long-Term Liabilities, Net $ 13,737,324 $ 4,747,236 - $ $ 8,990,088 $ 2,757,467 Tax Allocation Revenue Bonds of 2004 Series B
On November 1, 2004, the Agency issued $9,610,000 Tax Allocation Revenue Bonds of 2004, Series B. Interest is payable semiannually on June 1 and December 1 of each year at rates of interest ranging from 2.74% to 3.94%. The bonds are taxable and payment of principal on the bonds began December 1, 2005, and they are due on December 1 each year until 2023. The outstanding principal balance as of June 30, 2021 was $1,075,000.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(74)
NOTE 21 SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT

AGENCY (SACRA) (CONTINUED)
Long-Term Liabilities (Continued)
Tax Allocation Revenue Refunding Bonds of 2013, Series E On December 24, 2013, the Successor Agency of the former Covina Redevelopment Agency issued (through the County of Los Angeles Redevelopment Refunding Authority) 2013E Tax Allocation Revenue Refunding Bonds in the amount of $12,151,600. The purpose of the issue was to refund and defease the 1997 B Revenue Bonds and 2002 A Revenue Bonds plus accreted interest thereon. The proceeds from this issue plus any reserve funds remaining for the 1997 B and 2002 A bonds was used to fund an escrow account which were used to redeem the 1997 B and 2002 A bonds on January 22, 2014.

The redemption price was equal to 100% of the 1997 B and 101% of the accreted value of the 2002 E.

The 2013 bonds are issued as $9,460,000 in serial bonds with a maturity date of December 1, 2023. These bonds carry interest at 3-5%. Also issued was $1,756,600 in Capital Appreciation Bonds with final maturity of December 1, 2020. Interest rates are

3.5-4%.

The bonds are secured by tax revenues generated within the project area and as allocated for the payment of the debt by the County of Los Angeles per recognized obligation schedule.

As a result of the refunding the Agency realized a net savings in the amount of $3,136,892 and an economic gain (difference between present value of new debt versus old debt) of $1,441,851.

The outstanding principal balance of the bonds at June 30, 2021, is $6,820,000.

Tax Allocation Revenue Refunding Bonds of 2014, Series E On December 17, 2014, the Successor Agency of the former Covina Redevelopment Agency issued (through the County of Los Angeles Redevelopment Refunding Authority) 2014A Tax Allocation Revenue Refunding Bonds in the amount of $6,985,000. The purpose of the issue was to refund and defease the 1997 A Revenue Bonds and 2004 A Revenue Bonds. The proceeds from this issue plus any reserve funds remaining for the 1997 A and 2004 A bonds was used to fund an escrow account which was used to redeem the 1997 A and 2004 A bonds on January 8, 2015. The redemption price was equal to 100% of the 1997 A Revenue Bonds 2004 A Revenue Bonds.

The 2014 bonds were issued as $6,985,000 in serial bonds with a maturity date of December 15, 2023. These bonds carry interest at 2-5%.

The bonds are secured by tax revenues generated within the project area and as allocated for the payment of the debt by the County of Los Angeles per recognized obligation schedule.

CITY OF COVINA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 21 SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT

AGENCY (SACRA) (CONTINUED)
Long-Term Liabilities (Continued)
Tax Allocation Revenue Refunding Bonds of 2014, Series E (Continued) As a result of the refunding the Agency realized a net savings in the amount of $2,014,490 and an economic gain (difference between present value of new debt versus old debt) of $464,664.

The outstanding principal balance of the bonds at June 30, 2021, is $310,000.

Debt Service requirements to maturity with respect to SACRA’s Tax Allocation Bonds are as follows:

Fiscal Year Ending June 30, Principal Interest Total
2022 $ 2,630,000 $ 347,849 $ 2,977,849
2023 2,765,000 211,679 2,976,679
2024 2,810,000 70,944 2,880,944
Total $ 8,205,000 $ 630,472 $ 8,835,472
NOTE 22 CONTINGENCIES
On January 30, 2020, the World Health Organization (WHO) announced a global health emergency because of an outbreak of a new strain of coronavirus (the COVID-19 outbreak) and the risks that is posed to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic will have on the City’s financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on the City’s financial condition, liquidity, operations and workforce. The City cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time; however, if the pandemic continues, it may have a material effect on the City’s results of future operations and financial position in fiscal year 2022.

NOTE 23 RESTATEMENT OF NET POSITION
The City restated the net position of the governmental activities from $54,540,723 to $55,535,035 to adjust for land contributed to the City in the amount of $994,312 in prior years.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(76)
NOTE 24 SUBSEQUENT EVENT
The City issued $62,795,000 Taxable Pension Bonds, Series 2021 dated August 1, 2021 to refund a portion of the City’s obligations under the CalPERS Contract consisting of the City’s current unfunded actuarial liability to the California Public Employee’s Retirement System (CalPERS) as reported by CalPERS as of July 28, 2021 and to pay the costs of issuance of the bonds. Principal amounts are due annually on August 1 commencing August 1, 2022 and Interest at rates ranging from .299 percent to 3.001 percent is payable semi-annually on February 1 and August 1 commencing February 1, 2022.

REQUIRED SUPPLEMENTARY INFORMATION

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CITY OF COVINA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

MISCELLANEOUS
LAST TEN FISCAL YEARS*
(77)
Fiscal year ended June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Measurement period June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Total Pension Liability:

Service cost $ 1,493,026 $ 1,380,689 $ 1,347,039 $ 1,152,992 $ 1,486,092 $ 1,420,544 $ 1,399,079 Interest on total pension liability 6,728,565 6,507,596 6,146,087 5,977,026 6,066,839 5,848,966 5,596,243 Differences between expected and
actual experience 129,660 2,271,369 90,424 (3,886,390) (362,755) 269,486 - Changes in assumptions - - (479,050) 5,024,331 (1,428,592) - - Changes in benefits - - - - - - -
Benefit payments, including refunds
of employee contributions (5,150,041) (4,817,247) (4,633,255) (4,314,593) (4,154,693) (4,028,300) (3,984,640) Net Change in Total Pension Liability 3,201,210 5,342,407 2,471,245 3,953,366 3,035,483 2,082,104 3,010,682 Total Pension Liability - Beginning of Year 95,804,648 90,462,241 87,990,996 84,037,630 81,002,147 78,920,043 75,909,361 Total Pension Liability - End of Year (a) $ 99,005,858 $ 95,804,648 $ 90,462,241 $ 87,990,996 $ 84,037,630 $ 81,002,147 $ 78,920,043 Plan Fiduciary Net Position:

Contributions - employer $ 2,794,762 $ 2,386,884 $ 2,064,731 $ 1,424,175 $ 1,410,961 $ 1,599,026 $ 1,453,480 Contributions - employee 652,852 656,805 666,102 565,326 578,334 781,508 865,295 Plan to plan resource movement (1,599) - (148) 24,693 - 9,481 - Net investment income 3,264,202 4,117,352 5,103,206 6,234,088 296,745 1,328,803 8,890,960 Benefit payments (5,150,041) (4,817,247) (4,633,255) (4,314,593) (4,154,693) (4,028,300) (3,984,640) Administrative expense (93,130) (45,355) (274,830) (84,138) (35,892) (66,233) - Net Change in Plan Fiduciary Net Position 1,467,046 2,298,439 2,925,806 3,849,551 (1,904,545) (375,715) 7,225,095 Plan Fiduciary Net Position - Beginning of Year 66,061,430 63,762,991 60,837,185 56,987,634 58,892,179 59,267,894 52,042,799 Plan Fiduciary Net Position - End of Year (b) $ 67,528,476 $ 66,061,430 $ 63,762,991 $ 60,837,185 $ 56,987,634 $ 58,892,179 $ 59,267,894 Net Pension Liability - Ending (a)-(b) $ 31,477,382 $ 29,743,218 $ 26,699,250 $ 27,153,811 $ 27,049,996 $ 22,109,968 $ 19,652,149 Plan fiduciary net position as a percentage
of the total pension liability 68.21% 68.95% 70.49% 69.14% 67.81% 72.70% 75.10% Covered payroll 7,996,049 7,646,268 6,130,981 $ 8,782,015 $ 8,497,600 $ 7,967,419 $ 7,967,419 Net pension liability as percentage of
covered payroll 393.66% 388.99% 435.48% 309.20% 318.33% 277.50% 246.66% Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

From fiscal year June 30, 2015 to June 30, 2016:

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

From fiscal year June 30, 2016 to June 30, 2017:

There were no changes in assumptions.

From fiscal year June 30, 2017 to June 30, 2018:

The discount rate was reduced from 7.65% to 7.15%.

From fiscal year June 30, 2018 to June 30, 2019:

There were no significant changes in assumptions.

From fiscal year June 30, 2019 to June 30, 2020:

There were no changes in assumptions.
* Fiscal year 2015 was the first year of implementation and therefore only seven years are shown.

CITY OF COVINA
SCHEDULE OF CONTRIBUTIONS – MISCELLANEOUS
LAST TEN FISCAL YEARS*
(78)
Fiscal year ended June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Actuarially determined contribution $ 2,995,659 $ 2,794,762 $ 2,386,725 $ 1,424,175 $ 1,430,571 $ 1,599,026 $ 1,453,480 Contributions in relation to the
actuarially determined
contributions (2,995,659) (2,794,762) (2,386,725) (2,078,674) (1,430,571) (1,599,026) (1,453,480) Contribution deficiency (excess) $ - $ - $ - $ (654,499) $ - $ - $ - Covered payroll $ 7,882,583 $ 7,996,049 $ 7,646,268 $ 6,130,981 $ 8,782,015 $ 8,497,600 $ 7,967,419 Contributions as a percentage of
covered payroll 38.00% 34.95% 31.21% 33.90% 16.29% 18.82% 18.24% Notes to Schedule:

Valuation date June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 Methods and Assumptions Used to Determine Contribution Rates:

Actuarial cost method Entry age Entry age Entry age Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1) (1) (1) (1)
Asset valuation method Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value 15-Year Smoothed
Market Method
Inflation 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75%
Salary increases (2) (2) (2) (2) (2) (2) (2)
Investment rate of return 7.375% (3) 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement age (4) (4) (4) (4) (4) (4) (4)
Mortality (5) (5) (5) (5) (5) (5) (5)
(1) Level percentage of payroll, closed
(2) Depending on age, service and type of employment
(3) Net of pension plan investment expense, including inflation (4) The valuation for June 30, 2012, 2013, 2014 and 2015 (applicable to fiscal years ended June 30, 2015, 2016, 2017 and 2018, respectively) included the same actuarial assumptions; 50 years (2%@55, 2.7%@55), 52 years (2%@62) (5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
* Fiscal year 2015 was the first year of implementation and therefore only seven years are shown.

CITY OF COVINA

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY SAFETY
LAST TEN FISCAL YEARS*
(79)
Fiscal year ended June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Measurement period June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Plan’s proportion of the
net pension liability 0.58950% 0.56627% 0.54852% 0.56064% 0.56696% 0.46197% 0.41430% Plan’s proportionate share
of the net pension liability $ 39,280,317 $ 35,349,515 $ 32,026,302 $ 30,950,899 $ 26,302,740 $ 19,035,092 $ 15,540,223 Plan’s covered payroll $ 6,490,821 $ 6,548,655 $ 6,325,051 $ 6,325,051 $ 6,672,936 $ 6,433,232 $ 6,575,024 Plan’s proportionate share
of the net pension liability
as a percentage of covered payroll 605.17% 539.80% 506.34% 489.34% 394.17% 295.89% 236.35% Plan’s proportionate share
of the fiduciary net position
as a percentage of the Plan’s
total pension liability 75.26% 75.26% 85.14% 85.14% 79.48% 81.50% 84.45% Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

From fiscal year June 30, 2015 to June 30, 2016:

From fiscal year June 30, 2016 to June 30, 2017:

There were no changes in assumptions.

From fiscal year June 30, 2017 to June 30, 2018:

The discount rate was reduced from 7.65% to 7.15%.

From fiscal year June 30, 2018 to June 30, 2019:

There were no significant changes in assumptions.

From fiscal year June 30, 2019 to June 30, 2020:

There were no changes in assumptions.

From fiscal year June 30, 2020 to June 30, 2021:

There were no changes in assumptions.
* Fiscal year 2015 was the first year of implementation and therefore only seven years are shown.

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

CITY OF COVINA
SCHEDULE OF CONTRIBUTIONS – SAFETY
LAST TEN FISCAL YEARS*
(80)
Fiscal year ended June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution
(actuarially determined) $ 3,885,326 $ 2,758,911 $ 2,360,587 $ 1,969,480 $ 1,730,321 $ 1,549,717 $ 1,241,075 Contributions in relation to the
actuarially determined
contributions (3,885,326) (2,758,911) (2,360,587) (1,969,480) (1,730,321) (1,549,717) (1,241,075) Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - Covered payroll $ 6,861,894 $ 6,490,821 $ 6,548,655 $ 6,325,051 $ 6,325,051 $ 6,672,936 $ 6,433,232 Contributions as a percentage
of covered payroll 56.62% 42.50% 36.05% 31.14% 27.36% 23.22% 19.29% Notes to Schedule:

Valuation Date 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012 Methods and Assumptions Used to Determine Contribution Rates:

Actuarial cost method Entry age Entry age Entry age Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1) (1) (1) (1)
Asset valuation method Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value 15-Year Smoothed
Market Method
Inflation 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75%
Salary increases (2) (2) (2) (2) (2) (2) (2)
Investment rate of return 7.375% (3) 7.375% (3) 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement age (4) (4) (4) (4) (4) (4) (4)
Mortality (5) (5) (5) (5) (5) (5) (5)
(1) Level percentage of payroll, closed
(2) Depending on age, service and type of employment
(3) Net of pension plan investment expense, including inflation (4) 3% at 50/55 and 2.7% at 57
(5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board. * Fiscal year 2015 was the first year of implementation and therefore only seven years are shown.

Safety

CITY OF COVINA

OTHER POSTEMPLOYMENT BENEFITS (OPEB)

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS LAST TEN FISCAL YEARS*
(81)
Fiscal year-end 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Measurement date 6/30/2020 6/30/2019 6/30/2018 6/30/2017 Total OPEB Liability:

Service cost $ 315,436 $ 271,591 $ 173,634 $ 155,856
Interest on total OPEB liability 234,306 253,720 285,949 287,858 Changes in benefit terms 70,024 - - -
Difference between expected and actual experience 770,579 - (963,933) - Change in assumptions and other inputs (631,555) 355,233 1,264,415 - Benefit payments, including refunds and the
implied subsidy benefit payments (510,755) (457,669) (411,596) (413,635) Net Change in Total OPEB Liability 248,035 422,875 348,469 30,079 Total OPEB Liability - Beginning of Year 7,329,290 6,906,415 6,557,946 6,527,867 Total OPEB Liability - End of Year (a) 7,577,325 7,329,290 6,906,415 6,557,946 Plan Fiduciary Net Position:

Contributions - employer 510,755 457,669 411,596 413,635 Net investment income 27,077 34,489 9,519 18,600
Administrative expenses (3,091) (2,728) (2,630) (2,372) Benefit payments, including refunds and the
implied subsidy benefit payments (510,755) (457,669) (411,596) (413,635) Net Change in Plan Fiduciary Net Position 23,986 31,761 6,889 16,228 Plan Fiduciary Net Position - Beginning of Year 522,574 490,813 483,924 467,696 Plan Fiduciary Net Position - End of Year (b) 546,560 522,574 490,813 483,924 Net OPEB Liability - Ending (a)-(b) $ 7,030,765 $ 6,806,716 $ 6,415,602 $ 6,074,022 Plan fiduciary net position as a percentage of the
total OPEB liability 7.21% 7.13% 7.11% 7.38%
Covered - employee payroll 18,127,870 17,042,879 13,316,004 $ 12,959,615 Net OPEB liability as percentage of
covered - employee payroll 38.78% 39.94% 48.18% 46.87%
Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

The fiscal year ended June 30, 2018 is the first year of implementation. For fiscal year ended June 30, 2020, discount rate was changed to 3.17% from 3.65%, inflation rate remained 3.0% and health care trend was changed to 5.9% in 2019 decreasing to 5% in 2028. For fiscal year ended June 30, 2021, the discount rate was changed to 3.34% from 3.17% and the health care trend rate was changed to 4% decreasing to 3.5% for 2024 and later years. * Fiscal year 2018 was the first year of implementation and therefore only four years are shown.

CITY OF COVINA

OTHER POSTEMPLOYMENT BENEFITS (OPEB)

SCHEDULE OF CONTRIBUTIONS
LAST TEN FISCAL YEARS*
(82)
Fiscal year ended 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Actuarially determined contribution $ 556,834 $ 511,353 $ 497,668 $ 409,995 Contributions in relation to the actuarially determined contributions (477,026) (511,353) (497,668) (409,995) Contribution deficiency (excess) $ 79,808 $ - $ - $ -
Covered employee payroll 19,596,677 18,127,870 17,042,879 $ 13,316,004 Contributions as a percentage of covered employee payroll 2.43% 2.82% 2.92% 3.08% Notes to Schedule:

Valuation Date 6/30/2020 6/30/2018 6/30/2018 6/30/2017
Methods and Assumptions Used to Determine Contribution Rates:

Actuarial cost method
Amortization method
Discount rate 2.45% 3.17% 3.65% 4.50%
Inflation 2.75% 3.00% 3.00% 2.75%
Mortality rate (1) (1) (1) (1)
Healthcare trend rate (2) (2) (2) (2)
(1) 2014 CalPERS Mortality Rate for Active Safety, Retired Safety and Active Miscellaneous (2) 5.9% for 2019, trending to 5% by 2028 and later
* Fiscal year 2018 was the first year of implementation and therefore only four years are shown.

CITY OF COVINA

BUDGETARY COMPARISON SCHEDULE

GENERAL FUND
YEAR ENDED JUNE 30, 2021
(83)
Variance with
Final Budget
Positive
Original Final Actual (Negative)
BUDGETARY FUND BALANCE - JULY 1 $ 14,272,459 $ 14,272,459 $ 14,272,459 $ - Resources (Inflows):

Property Taxes 12,783,000 12,783,000 14,703,781 1,920,781 Sales Tax, Intergovernmental 12,885,000 15,000,000 18,891,999 3,891,999 Transient Occupancy Taxes 120,000 6,000 3,661 (2,339)
Property Transfer Taxes 150,000 150,000 216,776 66,776
Business License Taxes 256,000 306,000 356,532 50,532
Utility User Taxes 4,275,000 4,275,000 4,847,226 572,226 Franchise Taxes 1,741,000 1,768,000 2,219,586 451,586
Licenses and Permits 947,300 1,065,800 1,603,293 537,493 Intergovernmental 635,380 1,164,752 1,138,964 (25,788)
Charges for Services 3,804,053 3,399,953 3,959,192 559,239 Fines and Forfeits 760,000 625,000 890,254 265,254
Investment Earnings 133,000 133,000 (238,563) (371,563) Sale of Property - - - -
Miscellaneous 1,027,600 1,015,200 785,795 (229,405)
Transfers In 1,872,089 1,872,089 75,271 (1,796,818)
Amounts Available for Appropriation 55,661,881 57,836,253 63,726,226 5,889,973 Charges to Appropriations (Outflows):

Current:

General Government 1,866,911 2,230,877 2,561,757 (330,880) Public Safety 31,991,954 32,371,640 32,154,768 216,872
Public Works 2,519,408 2,619,860 2,219,373 400,487
Culture and Recreation 4,506,070 3,881,235 3,373,265 507,970 Community Development 2,195,179 2,289,608 2,232,247 57,361 Debt Service:

Principal Retirement 100,000 100,000 100,000 -
Interest and Fiscal Charges 500 500 229 271
Transfers Out 545,023 489,080 384,351 104,729
Total Charges to Appropriation 43,725,045 43,982,800 42,925,990 1,056,810 BUDGETARY FUND BALANCE - JUNE 30 $ 11,936,836 $ 13,853,453 $ 20,800,236 $ 6,946,783 Budgeted Amounts

CITY OF COVINA

NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2021
(84)
NOTE 1 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
The City follows these procedures in establishing the budgetary data reflected in the financial statements:

1. City departments submit budget and service requests to the City Manager. The City Manager prepares a recommended budget to be presented to the City Council.

2. The annual budget is adopted by the City Council on or before June 30 of each fiscal year after holding public hearings to receive input for the general operation of the City. The operating budget includes proposed expenditures and the means of financing them.

3. The appropriated budget is prepared by fund, program and activity. Departments may make appropriation transfers within activities. The City Manager is authorized to make appropriation transfers between activities within funds excluding the contingency appropriation. The City Council approves total budgeted appropriations and any amendments between funds and the use of contingency appropriation. This appropriated budget covers City expenditures in all governmental funds. Actual expenditures may not exceed budgeted appropriations at the fund level. Budget figures used in the accompanying financial statements are the original budget including prior year carryovers and the final budget including current year amendments.

4. Formal budgetary integration is employed as a management control device during the year. Commitments for materials and services, such as purchase orders and contracts, are recorded as encumbrances to assist in controlling expenditures.

Encumbrances at year-end lapse, and then are added to the following year’s budgeted appropriations.

5. Annual budgets for governmental funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America.

Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. No budgetary comparisons are presented for the proprietary funds, as the City is not legally required to adopt budgets for this fund type.

6. Appropriation for capital projects and certain grants and contributions authorized but not constructed or completed during the year lapse at year-end, and then are included as part of appropriations in the following years’ annual budget.

7. Under Article XIIIB of the California Constitution (the Gann Spending Limitation), the City is restricted as to the amount of annual appropriations from proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller or returned to the taxpayers through revised tax rates, revised fee schedules or other refund arrangements.

SUPPLEMENTARY INFORMATION

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CITY OF COVINA

OTHER GOVERNMENTAL FUNDS

NONMAJOR GOVERNMENTAL FUNDS
(85)
Special revenue funds account for revenues derived from specific taxes or other earmarked revenue sources. They are usually required by statute or local ordinance and /or resolution to finance particular functions, or activities. Non-major special revenue governmental funds of the City are as follows:

Community Development Block Grant Fund is a special revenue fund that accounts for the funding from the Department of Housing and Urban Development (HUD) in the form of a Community Block Grant (CDBG) program. The program has specific federal guidelines and all CDBG fund expenditures are monitored for compliance with both federally mandated rules and regulations and County of Los Angeles regulations.

Proposition A Transit Fund accounts for the receipts of the City’s share of the 1/2 cent sales tax levied in Los Angeles County for local transit uses.

Law Enforcement Fund accounts for federal and state local law enforcement grants and subventions to finance certain police activities.

Narcotic Seizure Fund accounts for receipts and disbursements associated with the federal, state and local narcotic seizure programs.

State Gas Tax Fund accounts for money apportioned by state statutes of the State of California to provide financing for street maintenance and improvements.

Proposition C Local Return Fund accounts for financial activities for the City’s share of Proposition C monies; designated for transportation related activities.

Air Quality Improvement Fund accounts for the motor vehicle fee for air and environmental improvements.

Municipal Parking District Fund accounts for receipts and expenditures for electricity, lot maintenance and engineering services in the various municipal parking lots.

Lighting Assessment District Fund accounts for special assessment collections from benefited properties for street lighting energy and maintenance.

Landscaping Assessment District Fund accounts for special assessment collections from benefited properties for landscape maintenance activities.

Community Facilities District Fund accounts for special assessment collections from benefited properties for community facilities maintenance activities.

Shoppers Lane Parking District Fund accounts for certain business tax registrations to finance parking maintenance and improvements in Shoppers Lane.

Measure M Fund accounts for monies received from Measure M allocation, which can be used to major street resurfacing, rehabilitation and reconstruction; pothole repair; left turn signals; bikeway; pedestrian improvements; streetscapes; signal synchronizations; and transit operations.

CITY OF COVINA

OTHER GOVERNMENTAL FUNDS

NONMAJOR GOVERNMENTAL FUNDS
(86)
TDA Grant Fund accounts for monies received from the California State Transit Development Act of 1971 on a per capita basis to California cities for transit and non-transit related purposes that comply with regional transition plans, which can be used for construction of pedestrian and bicycle facilities.

Other Grants Fund accounts for the various state grant monies for various programs of the City.

Road Maintenance and Rehabilitation Act Fund accounts for the deferred maintenance on the state highway system and the local street and road system.

PEG access Television Fund accounts for the fees received from the cable operators for administration and improvement to any public, educational, and government access television.

Housing Authority Fund administers the housing assets, liabilities, duties, and obligations related to the housing activities retained by the City following the dissolution of the Covina Redevelopment Agency.

This fund receives the majority of its revenues form collections and interest on loans.

Measure W accounts for the tax collected to provide a safe, clean water program.

Measure R Fund accounts for monies received from Measure R allocation, which can be used for major street resurfacing, rehabilitation and reconstruction; pothole repair; left turn signals; bikeway; pedestrian improvements; streetscapes; signal synchronizations; and transit operations.

Capital projects funds are used to finance and account for the acquisition and construction of major capital facilities other than those financed by other governmental type and proprietary funds. Non-major capital projects governmental funds of the City are as follows:

General Capital Fund accounts for major infrastructure and general improvements not accounted for in other governmental and proprietary funds.

Covina Revitalization Projects Fund accounts for the proceeds from the issuance of 2004 Taxable Tax Allocation Bonds used for the Covina Revitalization Project No. One project cost.

Park Development Fund accounts for federal and state grant monies used for parkland acquisition and development.

(87)

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CITY OF COVINA

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2021
(88)
Community
Development Law
Block Grant Proposition A Enforcement
ASSETS
Cash and Investments - $ 1,165,004 $ 221,558 $
Cash and Investments - Restricted - - -
Receivables:

Accounts 155 - -
Loans - 266,815 -
Due from Other Governments 60,216 - 198,733
Prepaid Expenditures 7,418 - -
Total Assets 327,031 $ 1,172,577 $ 420,291 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable 18,636 $ 70,238 $ 6,987 $
Accrued Liabilities 435 3,107 9,970
Deposits Payable - - -
Due to Other Governments 266,815 - -
Due to Other Funds 41,145 - -
Unearned Revenue - - -
Total Liabilities 327,031 73,345 16,957

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - - 191,371

FUND BALANCES (DEFICITS)
Nonspendable - 7,418 -
Restricted for:

Redevelopment and Housing - - -
Community Development - - -
Law Enforcement - - 421,973
Transportation and Street Projects - 1,091,814 -
Air Quality Projects - - -
Assessment Districts - - -
Culture and Recreation - - -
Other Capital Projects - - -
Assigned:

Culture and Recreation - - -
Other Capital Projects - - -
Unassigned - - (210,010)
Total Fund Balances (Deficits) - 1,099,232 211,963
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $ 327,031 $ 1,172,577 $ 420,291

CITY OF COVINA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2021
(89)
Air Municipal Lighting
Narcotics State Gas Quality Parking Assessment
Seizure Tax Proposition C Improvement District District $ 191,671 $ 365,448 $ 1,079,394 $ 85,073 $ 724,236 $ 36,226 - - - - - -
- - - 16,218 308 -
- - - - - -
- - - - 3,797 1,790
- - - - - -
$ 191,671 $ 365,448 $ 1,079,394 $ 101,291 $ 728,341 $ 38,016 $ - $ 63,284 $ 41,332 $ 140 $ 19,562 $ 17,007
- - 10,288 - 38 -
- - - - - 18,125
- - - - - -
- - - - - -
- - - - - -
- 63,284 51,620 140 19,600 35,132
- - - - - -
- - - - - -
- - - - - -
- - - - - -
191,671 - - - - -
- 302,164 1,027,774 - - -
- - - 101,151 - -
- - - - 708,741 2,884
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
191,671 302,164 1,027,774 101,151 708,741 2,884
$ 191,671 $ 365,448 $ 1,079,394 $ 101,291 $ 728,341 $ 38,016

CITY OF COVINA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2021
(90)
Landscaping Community Shoppers Lane
Assessment Facilities Parking
District District District
ASSETS
Cash and Investments $ 372,610 $ 219,347 $ 24,884
Cash and Investments - Restricted - - -
Receivables:

Accounts - - -
Loans - - -
Due from Other Governments 1,834 4,951 -
Prepaid Expenditures - - -
Total Assets $ 374,444 $ 224,298 $ 24,884

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable $ 6,078 $ 73 $ -
Accrued Liabilities 1,798 - -
Deposits Payable 18,125 10,500 -
Due to Other Governments - - -
Due to Other Funds - - -
Unearned Revenue - - 575
Total Liabilities 26,001 10,573 575

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - - -

FUND BALANCES (DEFICITS)
Nonspendable - - -
Restricted for:

Redevelopment and Housing - - -
Community Development - - -
Law Enforcement - - -
Transportation and Street Projects - - -
Air Quality Projects - - -
Assessment Districts 348,443 213,725 24,309
Culture and Recreation - - -
Other Capital Projects - - -
Assigned:

Culture and Recreation - - -
Other Capital Projects - - -
Unassigned - - -
Total Fund Balances (Deficits) 348,443 213,725 24,309
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $ 374,444 $ 224,298 $ 24,884

CITY OF COVINA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2021
(91)
Road PEG
TDA Other Maintenance and Access Housing
Measure M Grant Grants Rehabilitation Television Authority $ 727,921 $ - $ - $ 92,782 $ 451,812 $ 4,204,629
- - - - - -
- 150,000 44,095 - 19,020 -
- - - - - 68,928
- - 98,094 165,014 - -
- - - - - 15,135
$ 727,921 $ 150,000 $ 142,189 $ 257,796 $ 470,832 $ 4,288,692 $ 68,501 $ 7,500 $ 9,367 $ 45,448 $ 1,199 $ 28,575
6,000 - 2,850 - - 4,134
- - - - - 59,186
- - - - - -
- 142,500 14,461 - - -
- - - - - -
74,501 150,000 26,678 45,448 1,199 91,895
- 8,620 140,140 - - -
- - - - - 15,135
- - - - - 4,181,662
- - 89,253 - - -
- - - - - -
653,420 - - 212,348 - -
- - - - - -
- - - - - -
- - - - 469,633 -
- - - - - -
- - - - - -
- - - - - -
- (8,620) (113,882) - - -
653,420 (8,620) (24,629) 212,348 469,633 4,196,797
$ 727,921 $ 150,000 $ 142,189 $ 257,796 $ 470,832 $ 4,288,692

CITY OF COVINA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2021
(92)
Total
Special
Measure W Measure R Revenue Funds
ASSETS
Cash and Investments $ 55,741 $ 221,080 $ 10,239,416
Cash and Investments - Restricted - 1,788 1,788
Receivables:

Accounts - - 229,796
Loans - - 335,743
Due from Other Governments 728,709 - 1,263,138
Prepaid Expenditures - - 22,553
Total Assets $ 784,450 $ 222,868 $ 12,092,434

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable $ 143,433 $ 85 $ 547,445
Accrued Liabilities 983 - 39,603
Deposits Payable - - 105,936
Due to Other Governments - - 266,815
Due to Other Funds - - 198,106
Unearned Revenue - - 575
Total Liabilities 144,416 85 1,158,480

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - - 340,131

FUND BALANCES (DEFICITS)
Nonspendable - - 22,553
Restricted for:

Redevelopment and Housing - - 4,181,662
Community Development - - 89,253
Law Enforcement - - 613,644
Transportation and Street Projects - 222,783 3,510,303
Air Quality Projects - - 101,151
Assessment Districts - - 1,298,102
Culture and Recreation - - 469,633
Other Capital Projects 640,034 - 640,034
Assigned:

Culture and Recreation - - -
Other Capital Projects - - -
Unassigned - - (332,512)
Total Fund Balances (Deficits) 640,034 222,783 10,593,823 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $ 784,450 $ 222,868 $ 12,092,434

CITY OF COVINA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2021
(93)
Total
Covina Total Nonmajor
General Revitalization Park Capital Governmental
Projects Projects Development Projects Funds
$ 2,443,158 $ 1,833,042 $ - $ 4,276,200 $ 14,515,616
- - - - 1,788
- - - - 229,796
- - - - 335,743
- - 176,152 176,152 1,439,290
- - - - 22,553
$ 2,443,158 $ 1,833,042 $ 176,152 $ 4,452,352 $ 16,544,786 $ 9,139 $ 232,125 $ 770 $ 242,034 $ 789,479
- - - - 39,603
29,436 - - 29,436 135,372
- - - - 266,815
- - 25,362 25,362 223,468
- - - - 575
38,575 232,125 26,132 296,832 1,455,312
- - 49,904 49,904 390,035
- - - - 22,553
- - - - 4,181,662
- 1,600,917 - 1,600,917 1,690,170
74,685 - - 74,685 688,329
1,481,775 - - 1,481,775 4,992,078
- - - - 101,151
- - - - 1,298,102
226,370 - - 226,370 696,003
621,753 - - 621,753 1,261,787
- - 100,116 100,116 100,116
- - - - -
- - - - (332,512)
2,404,583 1,600,917 100,116 4,105,616 14,699,439
$ 2,443,158 $ 1,833,042 $ 176,152 $ 4,452,352 $ 16,544,786

CITY OF COVINA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2021
(94)
Community
Development Law
Block Grant Proposition A Enforcement

REVENUES
Property Taxes $ - - $ - $
Business License Taxes - - -
Intergovernmental 500,978 1,033,023 257,009
Charges for Services - 68,096 -
Special Assessments - - -
Investment Earnings - 11,986 3,320
Miscellaneous - 39,478 -
Total Revenues 500,978 1,152,583 260,329

EXPENDITURES
Current:

Public Safety - - 258,900
Public Works - - -
Culture and Recreation - - -
Community Development - - -
Transit - 2,277,196 -
Redevelopment and Housing 308,982 - -
Capital Outlay - 82,721 -
Principal Retirement 125,000 - -
Interest 66,996 - -
Total Expenditures 500,978 2,359,917 258,900

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES - (1,207,334) 1,429

OTHER FINANCING SOURCES (USES)
Transfers In - - -
Transfers Out - - -
Total Other Financing Sources (Uses) - - -
NET CHANGE IN FUND BALANCES - (1,207,334) 1,429
Fund Balances (Deficits) - Beginning of Year - 2,306,566 210,534 FUND BALANCES (DEFICITS) - END OF YEAR $ - $ 1,099,232 $ 211,963

CITY OF COVINA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2021
(95)
Air Municipal Lighting
Narcotics State Gas Quality Parking Assessment
Seizure Tax Proposition C Improvement District District $ - $ - $ - $ - $ 159,133 $ -
- - - - - -
828 1,061,780 815,687 83,782 - -
- - - - 77,568 -
- - - - - 130,753
1,758 4,982 12,783 837 - -
- - - - - -
2,586 1,066,762 828,470 84,619 236,701 130,753
- - - - - -
- 1,557,756 - 88,471 162,780 245,075
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - 1,468,233 6,910 127,181 -
- - - - - -
- - - - - -
- 1,557,756 1,468,233 95,381 289,961 245,075
2,586 (490,994) (639,763) (10,762) (53,260) (114,322)
- - - - - 100,000
- - - - - -
- - - - - 100,000
2,586 (490,994) (639,763) (10,762) (53,260) (14,322)
189,085 793,158 1,667,537 111,913 762,001 17,206
$ 191,671 $ 302,164 $ 1,027,774 $ 101,151 $ 708,741 $ 2,884

CITY OF COVINA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2021
(96)
Landscaping Community Shoppers Lane
Assessment Facilities Parking
District District District

REVENUES
Property Taxes $ - $ - $ -
Business License Taxes - - 1,233
Intergovernmental - - -
Charges for Services - - 13,676
Special Assessments 196,314 222,783 -
Investment Earnings - - -
Miscellaneous - - -
Total Revenues 196,314 222,783 14,909

EXPENDITURES
Current:

Public Safety - - -
Public Works 167,803 6,905 8,704
Culture and Recreation - - -
Community Development - - -
Transit - - -
Redevelopment and Housing - - -
Capital Outlay - - -
Principal Retirement - - -
Interest - - -
Total Expenditures 167,803 6,905 8,704

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 28,511 215,878 6,205

OTHER FINANCING SOURCES (USES)
Transfers In - - -
Transfers Out - (180,000) -
Total Other Financing Sources (Uses) - (180,000) -
NET CHANGE IN FUND BALANCES 28,511 35,878 6,205
Fund Balances (Deficits) - Beginning of Year 319,932 177,847 18,104 FUND BALANCES (DEFICITS) - END OF YEAR $ 348,443 $ 213,725 $ 24,309

CITY OF COVINA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2021
(97)
Road PEG
TDA Other Maintenance and Access Housing
Measure M Grant Grants Rehabilitation Television Authority $ - $ - $ - $ - $ - $ -
- - - - - -
694,114 141,380 128,225 905,534 - 56,284
- - - - 77,725 -
- - - - - -
9,886 - - 6,044 - 108,116
- - 200 - - -
704,000 141,380 128,425 911,578 77,725 164,400
- - - - - -
- - 7,607 2,497,589 - -
- - 61,877 - 21,770 -
- - 45,587 - - -
- - - - - -
- - - - - 581,196
1,122,342 150,000 70,071 - - -
- - - - - -
- - - - - -
1,122,342 150,000 185,142 2,497,589 21,770 581,196
(418,342) (8,620) (56,717) (1,586,011) 55,955 (416,796) - - - - - 338,420
- - - - - -
- - - - - 338,420
(418,342) (8,620) (56,717) (1,586,011) 55,955 (78,376)
1,071,762 - 32,088 1,798,359 413,678 4,275,173
$ 653,420 $ (8,620) $ (24,629) $ 212,348 $ 469,633 $ 4,196,797

CITY OF COVINA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2021
(98)
Total
Special
Measure W Measure R Revenue Funds

REVENUES
Property Taxes $ - $ - $ 159,133
Business License Taxes - - 1,233
Intergovernmental 1,657,851 612,613 7,949,088
Charges for Services - - 237,065
Special Assessments - - 549,850
Investment Earnings 148 1,950 161,810
Miscellaneous - - 39,678
Total Revenues 1,657,999 614,563 9,097,857

EXPENDITURES
Current:

Public Safety - - 258,900
Public Works - - 4,742,690
Culture and Recreation - - 83,647
Community Development - - 45,587
Transit - - 2,277,196
Redevelopment and Housing - - 890,178
Capital Outlay 773,642 63,864 3,864,964
Principal Retirement - 185,000 310,000
Interest - 183,719 250,715
Total Expenditures 773,642 432,583 12,723,877

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 884,357 181,980 (3,626,020)

OTHER FINANCING SOURCES (USES)
Transfers In - - 438,420
Transfers Out - - (180,000)
Total Other Financing Sources (Uses) - - 258,420
NET CHANGE IN FUND BALANCES 884,357 181,980 (3,367,600) Fund Balances (Deficits) - Beginning of Year (244,323) 40,803 13,961,423 FUND BALANCES (DEFICITS) - END OF YEAR $ 640,034 $ 222,783 $ 10,593,823

CITY OF COVINA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2021
(99)
Total
Covina Total Nonmajor
General Revitalization Park Capital Governmental
Projects Projects Development Projects Funds
$ - $ - $ - $ - $ 159,133
- - - - 1,233
- 322 1,077,941 1,078,263 9,027,351
- - - - 237,065
919,744 - - 919,744 1,469,594
- 17,108 - 17,108 178,918
- - - - 39,678
919,744 17,430 1,077,941 2,015,115 11,112,972
- - - - 258,900
- - - - 4,742,690
- - - - 83,647
- - - - 45,587
- - - - 2,277,196
- - - - 890,178
172,737 407,793 449,366 1,029,896 4,894,860
- - - - 310,000
- - - - 250,715
172,737 407,793 449,366 1,029,896 13,753,773
747,007 (390,363) 628,575 985,219 (2,640,801)
- - 7,205 7,205 445,625
- (7,205) - (7,205) (187,205)
- (7,205) 7,205 - 258,420
747,007 (397,568) 635,780 985,219 (2,382,381)
1,657,576 1,998,485 (535,664) 3,120,397 17,081,820
$ 2,404,583 $ 1,600,917 $ 100,116 $ 4,105,616 $ 14,699,439

CITY OF COVINA

SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2021
(100)
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
BUDGETARY FUND BALANCE - JULY 1 $ - - $ - $
Resources (Inflows):

Intergovernmental 806,354 500,978 (305,376)
Amounts Available for Appropriation 806,354 500,978 (305,376) Charges to Appropriations (Outflows):

Redevelopment and Housing 614,358 308,982 305,376
Debt Service:

Principal 125,000 125,000 -
Interest and Fiscal Charges 66,996 66,996 -
Total Charges to Appropriation 806,354 500,978 305,376
BUDGETARY FUND BALANCE - JUNE 30 $ - - $ - $