VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential VRN 121321-004
Dec 04, 2024
Prepared For: City of Covina
Shawn Granger
444 North Citrus Avenue
Covina, CA 91723
Project Description: Covina Recreation Village Project
West Gymnasium Building – Phase I
Project No. P2202
Network Installation
Prepared By: Scott Shiffer
Senior Account Executive
(909) 303-7732
[email protected]
ATTACHMENT C
2 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Table of Contents
Company Overview.............................................................................................................................3 Infrastructure and Project Overview....................................................................................................4 Category 6A Cable Installation ...................................................................................................................4 Cable Pathway Installation.........................................................................................................................4 Fortinet Access Point Installation...............................................................................................................4 Fortinet Access-Switch Installation ............................................................................................................5 Scope of Work.....................................................................................................................................6 Deliverables................................................................................................................................................8 Assumptions...............................................................................................................................................9 Exclusions ...................................................................................................................................................9 Drawings...................................................................................................................................................10 Project Parameters / Caveats............................................................................................................11 Price Guarantee ................................................................................................................................12 Lead Time Disclaimer ........................................................................................................................12 Project Pricing...................................................................................................................................13 Warranty ..........................................................................................................................................14 Terms & Conditions...........................................................................................................................15 Signature & Acceptance ....................................................................................................................18
3 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Company Overview
VectorUSA’s corporate vision is to become the unsurpassed standard in “connecting people to information and the world.” We build our business one customer at a time through our family of dedicated employees providing reliable, high quality communications designs and solutions that exceed our customers’ expectations.
Headquartered in Torrance, CA, with offices in San Diego, CA, Rancho Cucamonga, CA, Scottsdale, AZ and Charlotte, NC, VectorUSA maintains an industry-wide reputation for delivering the highest quality products and services while executing projects on time and on budget in all types of production environments.
VectorUSA employs more than 350 people trained and certified to support the products and services we offer.
Through continuous training and education, we maintain numerous certifications in the areas of Data Center Design and implementation, Collaboration / Video Conferencing, Unified Communications / VoIP, Cloud, Network Infrastructure, Wireless Networking, Cyber Security, Physical Layer - Fiber and Copper Infrastructure, Surveillance & Analytics, Access Control as well as Commercial and Professional Audio-Visual Systems.
Customer service and support is paramount; to provide the best service possible, VectorUSA has two network operation centers one in California and another in North Carolina. This allows us to provide 24/7/365 coverage to our clients.
VectorUSA has established partnerships with the industry leading manufacturers included in our products and service portfolio. Our partnerships include Cisco Gold, Cisco Data Center Architecture, Cisco Collaboration Architecture, HP Enterprise / Aruba Platinum, Microsoft, VMWare, Veeam, Fortinet, Qognify, Milestone Gold, Avigilon, Axis, Hanwa Gold, Siemon Company, CommScope, Corning, Sumitomo, Hitachi, Crestron, Extron as well as other industry leading manufacturers.
4 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Infrastructure and Project Overview
Category 6A Cable Installation
VectorUSA will install, terminate, and test a total of thirty-eight (38) new Category 6A cables.
Included with the cable installations are the following items:
Qty: (6,000’) Siemon Company Category 6A cable
Qty: (2) Siemon Company 24-port unloaded patch panels
Qty: (2) Siemon Company 1U Horizontal Cable Managers
Qty: (32) Siemon Company Category 6A Cable Inserts
Qty: (16) Siemon Company 1-Port Faceplates
Qty: (16) Generic Brand 1FT Category 6A Patch Cables
Qty: (16) Generic Brand 3FT Category 6A Patch Cables
Cable Pathway Installation
VectorUSA will install up to (400’) of 1” EMT Conduit, and up to (250’) of 2” EMT Conduit. New conduit will provide cable pathways for the new Category 6A cabling, required for the new wireless access points.
Included with the pathway installation are the following items:
1” EMT Conduit Installation
Qty: (400’) 1” EMT Conduit
Qty: (40) 1” EMT Compression Coupler
Qty: (8) 1” EMT Compression Connector
Qty: (40) Conduit Beam Clamp
Qty: (15) 4S Single Gang Box
Qty: (15) 4S Single Gang 1” Raised Ring
2” EMT Conduit Installation
Qty: (125’) 2” EMT Conduit
Qty: (20) 2” EMT Compression Coupler
Qty: (16) 2” EMT Compression Connector
Qty: (20) 2” EMT Unistrut Clamp
Qty: (20’) Shallow Unistrut Slotted
Qty: (40) Unistrut End Cap
Qty: (2) 16”x16”x8” NEMA 1 Junction Box
Qty: (8) 6”x6”x6” NEMA 1 Junction Box
Fortinet Access Point Installation
VectorUSA will install a total of sixteen (16) Wireless Access Points, covering Gym locations and offices.
Included with the wireless access point installation are the following items:
Fortinet Wireless Hardware
Qty: (4) Fortinet FAP-231G-A – Fortinet FortiAP-231G Indoor AP Qty: (12) Fortinet FAP-433G-A – Fortinet FortiAP-433G Indoor AP w/ external antennas
5 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Fortinet Support
Qty: (4) Fortinet FC-10-PG231-247-02-60 – FortiAP-231G 5 Year FortiCare Premium Support Qty: (12) Fortinet FC-10-PG433-247-02-60 – FortiAP-433G 5 Year FortiCare Premium Support Fortinet Licensing
Qty: (16) Fortinet FC-10-90AP1-639-02-60 – 5 Year FortiEdge Cloud FortiAP Management License Fortinet Access-Switch Installation
VectorUSA will install a total of two (2) Fortinet Switches.
Included with the installation are the following items:
Fortinet Switch Hardware
Qty: (2) Fortinet FS-648F-FPOE – Fortinet FortiSwitch-648F-FPOE Switch, w/ dual hot swappable 1200W PSU Qty: (4) Fortinet FN-TRAN-SFP+LR - Long range 10 GE SFP+ transceiver module Qty: (2) Fortinet FN-CABLE-SFP28-3 - 25G SFP28 to SFP28 3m DAC Cables Fortinet Support
Qty: (2) Fortinet FC-10-648FF-247-02-60 – FortiSwitch-648F-FPOE 5 Year FortiCare Premium Support Fortinet Licensing
Qty: (2) Fortinet FC-10-FSW20-628-02-60 – 5 Year FortiSwitch 500-900 Series FortiEdge Cloud Management Pre-Installation Site Discovery
VectorUSA will perform an onsite survey of the site prior to commencing work. This will allow for the City of Covina and VectorUSA to go thought the installation in detail and address any changes that might be required or requested.
Staging & Documentation
VectorUSA will document all hardware serial number, Mac Address, and District asset tag (if applicable). VectorUSA will power on each piece of hardware to verify functionality prior to deployment. VectorUSA will provide the City of Covina with a complete hardware asset list as part of the closeout documentation package.
CAD
VectorUSA will provide updated CAD drawings as part of the closeout documentation package. CAD drawings will show the locations of the new wireless access points, cable pathways, and cable runs.
Project Management
VectorUSA will provide a Project Manager to oversee the installation. The VectorUSA Project Manager will act as a single point of contact between VectorUSA and the City of Covina. The VectorUSA Project Manager will provide the customer with project updates and will assist with project coordination needs throughout the installation process.
6 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Scope of Work
VectorUSA will provide the WLAN implementation for the Gymnasium location based upon the following phased breakdown below:
Phase 1: Kickoff Meeting
At the kickoff meeting, VectorUSA and the City of Covina will establish a clear understanding of project objectives and requirements. Discussions will include the delineation of WiFi coverage needs for each building and finalizing the project schedule. The gymnasium building's designated point of contact will be identified to facilitate smooth coordination and access during the survey process.
Phase 2: Technology Design, Implementation Planning, Documentation & Review Upon award of the project, VectorUSA will review the design with the City of Covina IT staff and inspect the current site conditions at the City of Covina MDF, and the gymnasium site. This effort will develop an implementation plan to implement the greenfield WLAN which will be a FortiEdge Cloud managed and administered solution. VectorUSA will use this time to set up the FortiEdge Cloud Tenancy and discuss the two (02) included GUI Templates in total, which will cover the WAPs, and Gymnasium switches.
As part of risk mitigation, we will have a cutover plan in place and interview relevant IT stakeholders to create a test plan based on agreed-validation criteria for post-implementation testing and network handoff.
Phase 3: Passive Wireless Survey
VectorUSA's Wireless Engineer will conduct a passive survey using Ekahau Pro, measuring signal strength and identifying sources of noise interference within the surveyed buildings. Each building slated for assessment will be systematically traversed, with thorough data collection ensuring comprehensive coverage analysis which will drive the predictive design to finalize the Bill of Materials. VectorUSA's CAD department will prepare the provided drawings for integration into Ekahau Pro, the designated Wi-Fi measurement tool. This process will ensure that all necessary details are included to accurately reflect the physical layout of each building. Any incomplete drawings will undergo augmentation to enhance survey accuracy.
The locations to be surveyed include the following buildings totaling (2) floors:
• Recreational Gym Floor 1: 18,331.6690 square ft.
• Recreational Gym Floor 2: 3,241.1253 square ft.
Phase 4: Predictive Heat Mapping
Following the passive survey (or utilizing the redacted survey provided) VectorUSA will leverage Ekahau Pro to generate predictive heat maps, offering insights into projected wireless coverage and performance. Utilizing the City of Covina's choice for access points, the software will model network behavior, considering various environmental factors and potential obstacles. The predictive wireless survey will lead to several strategic recommendations and design adaptations to optimize the wireless network performance:
• 2.4 GHz, 5GHz, and 6GHz (as applicable) Configuration • Emphasis on 5GHz and 6GHz Frequencies
• Enhancement of Secondary Signal Strength
• Optimized Channel Assignment and Arrangement
• Repositioning of Existing APs
• Rogue Device Elimination
These design elements and adjustments are tailored to enhance the efficiency and reliability of the wireless network at the gymnasium building, ensuring a robust and user-friendly connectivity experience. VectorUSA’s initial design suggested 12 WAPs per Gym (24 total) which was reduced to 6 WAPs per Gym (12 Total) by the client's request.
7 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Phase 5: Procurement and Burn-in Services
Once the network design and implementation process is approved, VectorUSA will work with the Client IT to coordinate procurement and receiving of the provided networking hardware for burn-in services at our Torrance location. Burn-in services include:
• Checking and documenting hardware condition upon arrival • Green light testing (power on/off)
• Updating to the latest stable drivers and firmware
• Inventory and labeling/asset tagging
• Boxing and packaging equipment for delivery to the site If the client requires the hardware to be burned in at the installation location, those services can be accommodated, and processed as a change request.
Phase 6: Network Configuration and Installation
Once the hardware has been received by the City of Covina, VectorUSA stage and asset tag the Foritnet equipment using best-practice standards within the client-provided storage area and execute the agreed-upon hardware implementation plan defined in Phase 2. Each switch and WAP will be placed within the client-provided IDF/Cabinets/Ceiling Space (WAPs) identified in earlier phases. The switches and WAPs will be configured as defined in the network design via FortiEdge Cloud GUI templates (2 templates included, WAPs, and Gym Switches).
During this time, VectorUSA will implement the cabling, pathway, and IDF work defined in the statement of work summary section.
Phase 7: System Testing & Commissioning
VectorUSA will test the newly configured network architecture system and pass test traffic from the switches and WAPs through to the City of Covina Layer 3 handoff provided (by the Client) for the gymnasium location. Once the configuration services are complete, a network test will be conducted following the agreed-upon testing and validation process developed in Phase 2. VectorUSA will then document the verification testing as a close-out deliverable to acknowledge system and sub-system operation before handoff.
As a portion of the cutover to the new network solution, VectorUSA will provide a half-day of morning-after cutover support to ensure the system is meeting the validation criteria and assist City of Covina with taking ownership of the network operation. The entire post-cutover support is not to exceed 4 standard work hours.
Phase 8: Network Acceptance, Project Closeout, and Documentation Handoff As part of the network acceptance, once the operation of the new network architecture is validated, VectorUSA will conduct a project closeout conference call to review the documentation package and conclude the network handoff.
VectorUSA will submit project closeout as-built documentation and deliver it to the City of Covina as an electronic submission. VectorUSA will provide the documentation to the assigned Client IT representatives for the client to officially authorize the acceptance of the network.
8 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Deliverables
Upon completion of work outlined in the Statement of Work, VectorUSA will provide the client with a closeout package containing the following documentation:
Closeout Documentation Checklist
Included Not Included Description Notes
☒ ☐ As-Built Drawings
☒ ☐ Category 6 Test Results
☒ ☐ Predictive Heatmap
☒ ☐ Configuration Files
☐ ☒ Manufacturer Cable Warranty
9 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Assumptions
• VectorUSA assumes the client will provide a point of contact prior to project start to work with VectorUSA’s project manager to confirm installation and project schedule. • VectorUSA assumes that permit and bond fees are not required for this project. • VectorUSA assumes that our installation team will have full and timely access to all related locations during normal working hours.
• VectorUSA assumes adequate space is available to complete the work required. • VectorUSA assumes labor and materials are included to perform the Scope of Work only as listed above.
Any additions will result in a written change order.
• VectorUSA assumes all UPS units to support the installation will be provided by the customer. • VectorUSA assumes conduit pathways can be installed in each Gym on concrete walls and structural beams. • VectorUSA assumes painting of conduit pathways and junction boxes is not required. • VectorUSA assumes there is on-premises parking available for technicians at no additional cost to VectorUSA.
• VectorUSA assumes a scissor lift can be operated in the Gym with proper floor protection.
If any of the above assumptions are found to be incorrect, the adjustments will need to be addressed via a written change order.
Exclusions
• VectorUSA excludes weekend and holiday from this project. • VectorUSA excludes permit and bond fees from this project. • VectorUSA excludes UPS units from this project.
• VectorUSA excludes painting of conduit and junction boxes from this project. • VectorUSA excludes additional parking fees from this project.
If any of the above exclusions are found to be incorrect, the adjustments will need to be addressed via a written change order.
10 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Drawings
11 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Project Parameters / Caveats
Change Order: Any work that is added to or deleted from the original scope of this proposal that alters the original costs or completion date must be agreed upon by both parties in the form of a written change order.
Proprietary Information: The information contained in this document is proprietary to VectorUSA and intended to be used as evaluative and / or bidding information only. No part of this document may be disclosed, reproduced and/or distributed to anyone except the listed recipients within this package without written permission from VectorUSA.
Add & Delete: Any additional work requested outside of the scope of work will be considered as separate work and addressed in
the form of a written change order. This proposal is not to be used as an "add & delete" schedule.
Defective Materials: If, due to problems with the existing hardware and / or materials provided by the client or other third parties, here is a delay and / or VectorUSA is unable to perform the work outlined in the scope of work it will be addressed in the form of a written change order.
Extraordinary Service: Certain additional charges related to extraordinary levels of support or out-of-pocket costs incurred by VectorUSA, through no fault of its own, shall be reimbursed to VectorUSA by the client under this agreement.
Examples of costs reimbursable under this section include, but are not limited to 1) shipping expenses related to unusual site handling fees (e.g., extra distance, no loading dock, extra stairs, extra demurrage charges); 2) storage or special handling expenses incurred if an installation site is not able to accept delivery as scheduled; 3) expenses incurred by VectorUSA to resolve network compatibility issues caused by a client’s election to substitute nonVectorUSA provided equipment or services; and 4) expenses incurred by VectorUSA for additional installation time and / or materials caused by a site not being prepared as called for in this proposal. VectorUSA shall promptly notify the client in writing of such charges. Notification will be provided, when feasible, prior to the incurrence of such charges, unless circumstances preclude such prior written notification (by way of example, but not limited to, unusual site handling charges). Provided the incurrence of such charges is not due to VectorUSA’s fault or negligence, VectorUSA shall be entitled to an equitable adjustment in the prices herein, the delivery schedule, or both, to reflect such charges and any related delay.
Schedule: VectorUSA plans to implement this project in a continuous fashion or following the baselined schedule if submitted as part of this project. If delays or changes are introduced that are outside of VectorUSA’s control, and those changes result in additional cost those costs will be addressed in the form of a written change order.
Delays: The client must provide five (5) working days advance notice of any delays that will impact this project. If proper notice is not provided VectorUSA reserves the right to issue a work stoppage change order. Additionally, idle time incurred due to the absence of required escorts, clearance, permits, inability to enter the workplace, delays by other trades or other factors beyond VectorUSA’s control will be addressed in the form of a written change order.
Workdays / Overtime: All work will be performed during VectorUSA's standard business hours of 7am - 5pm, Monday – Friday, or as specified in the statement / scope of work. If changes to the stated work hours are required due to conditions outside of VectorUSA’s control result in additional cost those costs will be addressed in the form of a written change order.
12 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Price Guarantee
Due to the volatility in markets affecting material costs across all product lines we can only guarantee material costs for 30 days unless otherwise specified. If a purchase order is not received within the guaranteed window any increases will be addressed through a new proposal.
Lead Time Disclaimer
At the time of this proposal the lead time for the materials specified was up to 30 Days.
Lead times on material orders are verified at the time we submit our proposals based on our understanding of the anticipated project period of performance. With the current volatility in the market driven by supply and demand those lead times cannot be guaranteed past the date of the proposal. Lead times will be refreshed once a purchase order is received and if any items have lead times that impact the project timeline a Stakeholder notification will be sent. If needed alternative “equivalent” products may be discussed and if agreed upon substituted to maintain the desired period of performance.
13 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Project Pricing
14 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Warranty
VectorUSA provides, for all work completed under this contract our Vector USA warranty. This warranty coverers all workmanship for a period of one year unless specifically extended in writing as part of this agreement.
While this agreement extends the manufacturer’s warranty for all items installed that warranty does not include labor required to replace, return, remove, install, or configure those items. If a product or item requires replacement under the manufacturer’s warranty VectorUSA will provide the labor to replace that item on a time & material basis. Materials covered under that warranty will be provided under the warranty, if any additional supporting materials are required that are not covered, they would be billed.
Please note that RMAstypically require the product to be returned in the original packaging. It is recommended that packaging be retained if possible.
This warranty does not include any damages or cost related to unforeseen environmental evens including but not limited to fire, water, rodents, construction, abuse, or misuse. VectorUSA can address and repair issues of this nature through a service request at an additional cost. If VectorUSA responds to a warranty request and upon arriving on site or at any time during that warranty call determines that the issue is related to an uncovered event or condition work will stop and the client shall be notified. If the client authorizes the repairs the warranty call will be converted to a service call and billed accordingly
15 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Terms & Conditions
Assumptions and Exclusions: The above stated assumptions and exclusions are fully integrated and incorporated within the below terms and conditions and are to be treated as one inclusive document.
Scope of Services: VectorUSA agrees to provide the services stated in this Agreement for all Customer Premise Equipment (“Equipment”). VectorUSA does not warrant that the operation of any listed Equipment shall be uninterrupted. The services to be supplied by VectorUSA for the total charge set forth on this Agreement shall consist of personnel services required to respond appropriately to Customer incidents and issues, and requests for additional professional services and materials as required.
Charges for materials and services outside the scope of this Agreement but still required to resolve Customer requests shall be due and payable upon receipt of an invoice after the completion of the installation, repair, or other service. The charges and all other charges payable to VectorUSA under this Agreement are exclusive of federal, state or local tax, other than a tax on net income now or hereafter in effect or become applicable to any payment due under this Agreement, or to the Customer’s equipment. The Customer shall file all necessary tax returns and shall pay all such taxes.
Access: Customer agrees to maintain, where required, a full time, dedicated Internet connection and to allow VectorUSA access to the Customer’s network via that Internet connection. Customer agrees to allow VectorUSA employees or subcontractors access to its facilities in order to perform services under this Agreement. Customer agrees to allow VectorUSA access to the covered Equipment. Customer agrees to allow VectorUSA to load any necessary management software on their systems and / or install a Vector-owned device on the Customer network as required. Customer agrees to furnish VectorUSA with Administrator-level password access for all covered Equipment and servers, where necessary. VectorUSA agrees not to prevent Customer from accessing any Equipment owned by the Customer. If persons other than VectorUSA representatives shall perform maintenance, or repair the Equipment, and as a result further repair by VectorUSA is required to restore the Equipment to good operating condition, such repair will be made at rates for additional onsite service established in this Agreement.
Limited Warranty: VectorUSA warrants to the Customer that the material, analysis, data, programs, and SERVICES to be delivered or rendered hereunder will be of the kind and quality designated and will be performed by qualified personnel. VECTOR USA MAKES NO OTHER WARRANTIES, WHETHER WRITTEN, ORAL, OR IMPLIED, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Limitation of Liability: The Customer agrees that VectorUSA will not be liable for any special, incidental, indirect, or consequential damages hereunder, including but not limited to the loss of profit, or liability to third parties, however caused, whether by the act or negligence of VectorUSA or otherwise. It is recognized that the Equipment contains memories or other devices which have accumulated substantial data. In no event shall VectorUSA be liable to the Customer if any such data is lost or rendered inaccurate, regardless of the cause of any such loss or inaccuracy.
VectorUSA’s liability on any claim of loss or liability, arising out of or connected with this Agreement (including, but not limited to, loss or liability arising from VectorUSA’s breach of contract of any alleged act or negligence of Vector) shall in no case exceed the total purchase price of services covered under this Agreement. In no event shall VectorUSA’s liability for any services under this Agreement exceed $25,000. VectorUSA will in no way be held responsible and / or liable for damages, monetary or otherwise, by customer, or any other affected party, in the event of a security breach or network security-related outages, damages, losses, etc.
In no event shall either VectorUSA or the Customer be liable to the other for any indirect, special, punitive, exemplary, incidental or consequential damages (including, but not limited to, lost profits, lost business
16 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential opportunities, or loss of use or equipment down time, and loss of or corruption to data) arising out of or relating to any portion of this Agreement, regardless of the legal theory under which such damages are sought, and even if VectorUSA has been advised on the possibility of such damages or loss.
Excusable Delays: VectorUSA shall not be liable for any failure or delay in furnishing maintenance or spare parts hereunder resulting from fire, explosion, flood, storm, Act of God, governmental acts, orders or regulations, hostilities, civil disturbances, strikes, labor difficulties, difficulty in obtaining parts, supplies, or shipping facilities, inability to obtain or delays in obtaining suitable material or facilities required for performance, temporary unavailability of qualified personnel, failure by Customer to provide full and appropriate access to the covered Equipment, failure of monitoring hardware or software, Customer Internet connection failure, or other causes beyond VectorUSA’s reasonable control.
Exclusions: THIS AGREEMENT DOES NOT INCLUDE THE REPAIR OR REPLACEMENT OF ANY HARDWARE PRODUCT,
OR ANY SOFTWARE LICENSING EXCEPT SOFTWARE INSTALLED AND USED EXCLUSIVELY BY VECTOR USA TO PROVIDE MONITORING AND REPORTING SERVICES. Charges for the above will be on a Time and Materials basis. The Customer is advised to maintain hardware warranties on covered equipment at their own discretion and expense.
Customer is responsible to assure all software used by the Customer is appropriately licensed.
Software and Operating System Errors: This Agreement is limited to services specifically defined in this Agreement.
It is the responsibility of the Customer to ensure that all of its files are adequately backed up and that all necessary materials are available, including manufacturer recovery media for software and other software to be reloaded. In no way is VectorUSA liable for defects or “bugs” in software, or for correcting errors introduced into the data, programs, or any other software due to hardware failure, or for any cost of reconstructing software or lost data.
Any technical support required to restore data integrity or to make the system function, such as, but not limited to, rebuilding corrupted records, examining files, re-installation of O / S or Software, or re-indexing databases, will be billed separately on a Time and Materials basis.
Indemnification: Both the Customer and VectorUSA agrees to defend, indemnify and hold harmless the other party, its vendors, and their respective directors, officers, employees and agents from and against all claims and expenses, including attorneys' fees, arising out of the Customer's use of the services in this Agreement.
Confidentiality, Publication and Non-Compete: VectorUSA and the Customer agree that any and all information identified by the other as "Confidential" and / or "Proprietary", or which, under all of the circumstances, ought reasonably to be treated as Confidential and / or Proprietary, will not be disclosed to any third person without the express written consent of the other party. Confidential Information includes, but is not limited to, information about the respective entities' products and services, information relating to purchasing, accounting, pricing, marketing and customers not generally known in the business in which the entity has been, is or may become engaged and which is developed by, disclosed to, or becomes known as a consequence of or through each party's relationship with the other. Confidential Information does not include any information or development: (i) which is or subsequently becomes available to the general public other than through a breach by the receiving party; (ii) which is already known to the receiving party before disclosure by the disclosing party; (iii) which is developed through the independent efforts of the receiving party; or (iv) which the receiving party rightfully receives from third parties without restriction as to use.
Upon the expiration of the term of this Agreement, VectorUSA shall, and shall instruct its agents to whom Confidential Information was disclosed pursuant hereto, continue to treat as confidential and preserve the confidentiality of all Confidential Information received from the Customer.
Neither VectorUSA nor Customer shall directly or indirectly, solicit, recruit or hire any Customer or VectorUSA personnel, whether or not such personnel performed work for the Customer, during the term of this agreement and for a period of one (1) year after the termination of this agreement. The provisions of this Section shall survive the termination or expiration of the Agreement.
17 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Applicable Law: This Agreement shall be governed by the laws of the State of California. It constitutes the entire Agreement between the Customer and VectorUSA. Its terms and conditions shall prevail should there be any variance with the terms and conditions of any order submitted by the Customer for the repair or maintenance of the Equipment in the Equipment.
Either party may terminate this Agreement at any time for failure of the other to comply with any of its Terms and Conditions. VectorUSA shall reimburse Customer for mutually agreed upon amounts paid in advance, prorated to the date of effective termination. The Customer represents that he is owner of the Equipment subject to this Agreement or if not the owner, he has authority to enter into the Agreement.
Scope of Agreement: If the scope of any of the provisions of the Agreement is too broad in any respect whatsoever to permit enforcement to its full extent, then such provisions shall be enforced to the maximum extent permitted by law, and both the Customer and VectorUSA hereto consent and agree that such scope may be judicially modified accordingly and that the whole of such provisions of this Agreement shall not hereby fail, but that the scope of such provisions shall be curtailed only to the extent necessary to conform to the law.
Assignment: This Agreement may not be assigned by either the Customer or VectorUSA without the prior written consent of the other party. Except for the prohibition on assignment contained in the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto.
Integration Clause: This instrument contains the entire agreement between the parties hereto and supersedes any and all prior written and / or oral agreements. This Agreement may be altered or modified only in writing signed by the parties hereto.
Prevailing Wage: Unless specifically stated in the scope of work VectorUSA has based this proposal on nonprevailing wage labor rates. If we are informed or it is determined later that the project is subject to prevailing wage rates for the performance of the public work portion of the contract, VectorUSA will submit those changes / additional costs that the project may incur will be address in the form of a written change order.
Sales Tax: Sales Tax shall be is calculated and billed based on the effective tax rates at the date of invoice.
Payment and Termination: All payments are due net 30 from the date of invoice. VectorUSA reserves the right to stop work, delay delivery of services and / or products for failure by customer to pay within terms of this agreement.
VectorUSA reserves the right to deem this contract in default immediately and terminate it if the payment is delinquent more than thirty (30) days. If customer is in default in the payment of the Agreement charge(s) and fails to cure such default within ten (10) days after receiving written notification of such default, the Customer agrees to pay reasonable collection costs, late charges and / or Attorney Fees. Late charges, if levied, shall be assessed at
1.5% monthly or 18% annually.
Acceptance of Order: This quote is valid for 30 days. The prices, specifications and conditions are satisfactory and are hereby accepted. VectorUSA is authorized to do the work as specified. Signature and Purchase Order due upon acceptance.
18 | Page
VectorUSA / 8647 E 9th St., Rancho Cucamonga, CA 91730 Confidential Signature & Acceptance
Acceptance of Order: This quote is valid for 30 days. Upon acceptance, a purchase order and deposit equal to 50% of the materials portion are required and due prior to any order for materials being placed. Monthly progress invoices will be generated based on the percentage of completion and due Net 30. The balance will be invoiced upon substantial completion and due Net 30. The prices, specifications and conditions are satisfactory and are hereby accepted. VectorUSA is authorized to do the work as specified. Signature and Purchase Order due upon acceptance.
Material Total $ 91,088.33
Labor Total $ 109,900.90
Tax Total $ 5,665.92
Proposal Total $ 206,655.15
Accepted and Approved for:
City of Covina VectorUSA
444 North Citrus Avenue 8647 East 9th Street
Covina, CA 91723 Rancho Cucamonga, CA 91730
December 04, 2024
(Date) (Date)
Scott Shiffer
(Printed Name) (Printed Name)
Senior Account Executive
(Printed Title) (Printed Title)
(Signature) (Signature)
CC Regular Meeting
AGENDA ITEM REPORT
ITEM NO. CC 10
Meeting: January 21, 2025
Title: Contract Agreements for On-Call Construction Contractors for the Period of January 21, 2025 – June 30, 2028 for a Not-to-Exceed Amount of $500,000 per Fiscal Year Presented by: Rafael M. Fajardo, Director of Public Works/City Engineer Recommendation: Authorize the City Manager to execute Contract Agreements between the City of Covina and Approved On-Call Construction Contractors.
EXECUTIVE SUMMARY/BACKGROUND:
The City utilizes a variety of specialized contractors and consultants to be able to respond to more complex maintenance or emergency situations affecting public infrastructure and facilities in the community. Historically, outside contractors have been used to supplement City staff to perform construction activities including but not limited to demolition/abatement/remediation services, environmental testing, asphalt paving, concrete, masonry, painting, water system improvements and sewer system improvements. City staff is requesting a continuation of these contractual opportunities to ensure the City is well-protected against any deficiencies, threats or dangers that may inherently impact public areas, infrastructure and facilities.
DISCUSSION:
On-call contract agreements allow City staff to retain maintenance and construction services for specific scenarios that in-house staff are unable to respond to in a timely matter either due to a lack of available personnel or material resources. Public agencies generally possess a list of on-call contractorsthat can assist with more complex projects or maintenance / construction emergencies that can arise at any given moment. The concept of having On-Call Construction Agreements will provide the City with a wide range of readily available trade services able to expeditiously and professionally respond to various types of maintenance and emergency situations involving City infrastructure and facilities.
A Request for On-Call Contractors was properly noticed through the San Gabriel Valley Examiner on December 26, 2024 and January 2, 2025. The Department of Public Works created an On-Call Contractor List Submittal Form which was made available to any interested parties requesting to be placed on the On-Call Contractor’s List for future project consideration. Completed forms were subsequently returned to the City by the Thursday, January 9, 2025 due date with thirteen (13) firms successfully completing the On-Call Contractor List Submittal Form. These companies have been compiled in “Attachment A” for consideration as On-Call Contractors to be utilized by the City for construction and/or maintenance services and City staff can reach out to these firms for assistance to address construction or maintenance needs when warranted.
City Council approval of this item will authorize City staff to receive project proposals from one or more of the approved On-Call Contractors. Pursuant to the proposals received, City staff will negotiate and execute an agreement with the most qualified firm and the cost of these services will be charged directly to specific project accounts or enterprise accounts. Procurement of services under these on-call services agreements will also continue to adhere to the City’s purchasing requirements.
FISCAL IMPACT:
On balance, the City is under no obligation to expend a specified dollar amount each fiscal year for construction/maintenance services and repairs nor using any of the companies identified on the On-Call
Contractors list; each on-call construction agreement will be handled independent of other on-call agreements, shall have a not-to-exceed value of $500,000 per fiscal year, and the requisite operating or capital budget must be programmed and approved by the City Council. Funding is provided through various sources including but not limited to General Fund, Internal Service Funds, Enterprise Funds, Special Revenue Funds, and Grant Funds.
CEQA (CALIFORNIA ENVIRONMENTAL QUALITY ACT):
Not applicable.
Respectfully submitted,
ATTACHMENT A
On-Call Contractor List
Department of Public Works
Effective: January 21, 2025 – June 30, 2026
Company Location Contact Services
ADEP Precision
Contracting
16782 Millikan Avenue
Irvine, CA 92606
Raul
Uriostegui
Demolition/Abatement/Remediation
Services
Belfor Property
Restoration
2920 E. White Star Ave
Anaheim, CA 92806
Ruby
Balcazar
Building Painting,
Demolition/Abatement/Remediation
Services
Stephen Doreck
Equipment Rentals,
Inc.
9075 Telegraph Road
Pico Rivera, CA 90660
Pablo
Viramontes
Asphalt Paving, Concrete, Water
System, Sewer System.
FS Contractors, Inc. 14838 Bledsoe Street
Sylmar, CA 91342
Ernesto
Fierros
Building Painting,
Demolition/Abatement/Remediation
Services, Asphalt Paving, Concrete,
Masonry.
Gentry Brothers, Inc. 384 E. Live Oak
Avenue
Jason M.
Roehrborn
Asphalt Paving, Concrete, Water
System, Sewer System.
GM Sager
Construction, Inc.
1380 S. East End Ave
Pomona, CA 91766
Francisco
Tovar
Building Painting,
Demolition/Abatement/Remediation
Services, Asphalt Paving, Concrete,
Masonry, Water System, Sewer
System.
GRBCON, Inc. 5114 Elton St
Baldwin Park, CA
91706
John
Gavigan
Water System, Sewer System.
Green Giant
Landscape, Inc.
941-A Macy St
La Habra, CA 90631
Donald L.
Henderson
Demolition/Abatement/Remediation
Services, Concrete, Masonry.
iBuild Construction
Corp, Inc.
18800 Amar Rd, Suite
B13
Walnut, CA 91789
Joaquin
Cervantes
Building Painting, Masonry.
Magnolia
Environmental, LLC
17226 ½ Jersey Ave
Artesia, CA 90701
Andrea
Pulsipher
Environmental Testing
C I T Y O F C O V I N A
125 East College Street Covina, California 91723-2199 www.covinaca.gov
Painting and Décor,
Inc.
530 Technology Dr,
Suite 100
Irvine, CA 92618
John
Buchner
Building Painting
Siterep Inspection
Services
8644 Autumn Path
Street
Chino, CA 91708
Andre Ortiz Building Painting,
Demolition/Abatement/Remediation
Services, Asphalt Paving, Concrete,
Masonry, Water System, Sewer
System.
Sky JTC Corporation
dba Sky Painting
1027 S. Park View
Street, Los Angeles,
CA 90006
Tiger Cho Building Painting
ATTACHMENT B
CONTRACT
CITY OF COVINA CONTRACT FOR
ON-CALL CONTRACTOR - CONSTRUCTION
THIS CONTRACT (“Contract”) is made and entered this _________________ (“Effective Date”), by and between the CITY OF COVINA, a California municipal corporation (“City”) and ______ ________, a California corporation (“Contractor”). Contractor’s California State Contractor’s license number is ___ _ ; Class _ __. Contractor’s DIR registration number is __ ___.
In consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Contract Documents. The Contract Documents consist of this Contract, the Notice Inviting Bids, Instructions to Bidders, Bid (including documentation accompanying the Bid and any postBid documentation submitted before the Notice of Award), the Bonds, permits from regulatory agencies with jurisdiction, General Provisions, Special Provisions, Plans, Standard Plans, Standard Specifications, Reference Specifications, Addenda, Change Orders, and Supplemental Agreements. The Contract Documents are attached hereto and incorporated herein by reference.
In the event of any conflict between the terms of this Contract and any incorporated documents, the terms of this Contract shall control.
2. Scope of Services. Contractor shall perform the Work in a good and workmanlike manner for the project identified as On-Call Contractor - Construction (“Project”), as described in this Contract and in the Contract Documents.
3. Compensation & Term. In consideration of the services rendered hereunder, City shall pay Contractor an amount not-to-exceed Five Hundred Thousand Dollars ($500,000) per fiscal year, in accordance with the prices as submitted in the Bid, attached hereto as Exhibit “A” and incorporated herein by this reference.
4. Incorporation by Reference. All of the following documents are attached hereto and incorporated herein by this reference: Workers’ Compensation Certificate of Insurance, Additional Insured Endorsement (Comprehensive General Liability), Additional Insured Endorsement (Automobile Liability), and Additional Insured Endorsement (Excess Liability).
5. Antitrust Claims. In entering into this Contract, Contractor offers and agrees to assign to City all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C. Sec. § 15) or under the Cartwright Act (Cal. Bus. & Prof. Code, § 16700 et seq.) arising from purchases of goods, services, or materials pursuant to the Contract. This assignment shall be made and become effective at the time City tenders final payment to Contractor without further acknowledgment by the parties.
6. Prevailing Wages. City and Contractor acknowledge that the Project is a public work to which prevailing wages apply.
7. Workers’ Compensation. California Labor Code Sections 1860 and 3700 provide that every contractor will be required to secure the payment of compensation to its employees. In accordance with the provisions of California Labor Code Section 1861, by signing this Contract, the Contractor certifies as follows:
ATTACHMENT B
“I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that Code, and I will comply with such provisions before commencing the performance of the Work of this Contract.”
8. Trenches and Other Excavations. If this Project involves the digging trenches or other excavations that will extend deeper than four (4) feet below the surface, Contractor shall promptly, and before the following conditions are disturbed, notify City, in writing, of any: (1) material that Contractor believes may be material that is hazardous waste, as defined in Section 25117 of the Health and Safety Code, that is required to be removed to a Class I, Class II, or Class III disposal site in accordance with provisions of existing law; (2) subsurface or latent physical conditions at the site differing from those indicated by information about the site made available to proposers prior to the deadline for submitting proposals; and (3) unknown physical conditions at the site of any unusual nature, different materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in this Contract.
9. Titles. The titles used in this Contract are for convenience only and shall in no way define, limit or describe the scope or intent of this Contract or any part of it.
10. Authority. Any person executing this Contract on behalf of Contractor warrants and represents that he or she has the authority to execute this Contract on behalf of Contractor and has the authority to bind Contractor to the performance of its obligations hereunder.
11. Entire Agreement. This Contract, including the Contract Documents and any other documents incorporated herein by specific reference, represents the entire and integrated agreement between City and Contractor. This Contract supersedes all prior oral or written negotiations, representations or agreements. This Contract may not be modified or amended, nor any provision or breach waived, except in a writing signed by both parties that expressly refers to this Contract.
12. Counterparts. This Contract may be executed in counterpart originals, duplicate originals, or both, each of which is deemed to be an original for all purposes.
IN WITNESS WHEREOF, the parties hereto have executed the Contract the day and year first above written.
[SIGNATURE PAGE FOLLOWS]
ATTACHMENT B
CITY OF COVINA
By:
City Manager
ATTEST:
By:
City Clerk
Dated:
(“CONTRACTOR”)
By:
Printed Name:
Title:
By:
Printed Name:
Title:
ATTACHMENT B
EXHIBIT A
ATTACHMENT B
PERFORMANCE BOND
KNOW ALL PERSONS BY THESE PRESENTS that:
WHEREAS the City of Covina (“City”), has awarded to
(“Principal”)
(Name and address of Contractor)
a contract (the “Contract”) for the Work described as follows:
ON-CALL CONTRACTOR - CONSTRUCTION
(Project Description/ Name)
WHEREAS, Principal is required under the terms of the Contract to furnish a Bond for the faithful performance of the Contract.
NOW, THEREFORE, we, the undersigned Principal, and
(Name and address of Surety)
(“Surety”) a duly admitted surety insurer under the laws of the State of California, as Surety, are held and firmly bound unto the City in the penal sum of
Dollars ($ ), this
amount being not less than the total Contract Price, in lawful money of the United States of America, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, successors executors and administrators, jointly and severally, firmly by these presents.
THE CONDITION OF THIS OBLIGATION IS SUCH THAT, if the hereby bounded Principal, his, her or its heirs, executors, administrators, successors or assigns, shall in all things stand to and abide by, and well and truly keep and perform the covenants, conditions and provisions in the Contract and any alteration thereof made as therein provided, on the Principal’s part, to be kept and performed at the time and in the manner therein specified, and in all respects according to their true intent and meaning, and shall indemnify and save harmless the City, its officers, agents and employees, as therein stipulated, then this obligation shall become null and void; otherwise, it shall be and remain in full force and effect.
As a part of the obligation secured hereby and in addition to the face amount specified therefor, there shall be included costs and reasonable expenses and fees, including reasonable attorneys’ fees, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in any judgment rendered. Surety hereby waives any statute of limitations as it applies to an action on this Bond.
The Surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Contract or of the Work to be performed thereunder or the specifications accompanying the same shall in anywise affect its obligations under this Bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Contract or to the Work or to the specifications.
Surety hereby waives the provisions of California Civil Code Sections 2845 and 2849. The City is the principal beneficiary of this Bond and has all rights of a party hereto.
IN WITNESS WHEREOF, two (2) identical counterparts of this instrument, each of which shall for all
ATTACHMENT B
purposes be deemed an original hereof, have been duly executed by Principal and Surety, on the date set forth below, the name of each corporate party being hereto affixed and these presents duly signed by its undersigned representative(s) pursuant to authority of its governing body.
Dated:
“Principal”
By:
Its
By:
Its
(Seal)
“Surety”
By:
Its
By:
Its
(Seal)
Note: This Bond must be executed in duplicate and dated, all signatures must be notarized, and evidence of the authority of any person signing as attorney-in-fact must be attached. DATE OF BOND MUST NOT BE BEFORE DATE OF CONTRACT. IF CONTRACTOR IS A PARTNERSHIP, ALL PARTNERS MUST EXECUTE BOND. DATE OF BOND MUST NOT BE PRIOR TO DATE OF CONTRACT. Surety companies executing Bonds must appear on the Treasury Department’s most current list (Circular 570 as amended) and be authorized to transact business in the State where the project is located.
ATTACHMENT B
EXHIBIT D
PAYMENT BOND
(LABOR AND MATERIALS)
KNOW ALL PERSONS BY THESE PRESENTS that:
WHEREAS the City of Covina (“City”), State of California, has awarded to
(“Principal”)
(Name and address of Contractor)
a contract (the “Contract”) for the Work described as follows:
ON-CALL CONTRACTOR - CONSTRUCTION
(Project Description/Name)
WHEREAS, under the terms of the Contract, the Principal is required before entering upon the performance of the Work, to file a good and sufficient payment Bond with the City to secure the claims to which reference is made in Title 3 (commencing with Section 9000) of Part 6 of Division 4 of the Civil Code.
NOW, THEREFORE, we, the undersigned Principal, and
(Name and address of Surety)
(“Surety”) a duly admitted surety insurer under the laws of the State of California, as Surety, are held and firmly bound unto the City and all contractors, subcontractors, laborers, material suppliers, and other persons employed in the performance of the Contract and referred to in Title 3 (commencing with Section 9000) of Part 6 of Division 4 of the Civil Code in the penal sum of Dollars
($ ), for materials furnished or labor thereon of any kind, or for amounts due under the Unemployment Insurance Act with respect to this Work or labor, that the Surety will pay the same in an amount not exceeding the amount hereinabove set forth, and also in case suit is brought upon this Bond, will pay, in addition to the face amount thereof, costs and reasonable expenses and fees, including reasonable attorneys’ fees, incurred by City in successfully enforcing this obligation, to be awarded and fixed by the court, and to be taxed as costs and to be included in the judgment therein rendered.
It is hereby expressly stipulated and agreed that this Bond shall inure to the benefit of any and all persons, companies, and corporations entitled to file claims under Title 3 (commencing with Section 9000) of Part 6 of Division 4 of the Civil Code, so as to give a right of action to them or their assigns in any suit brought upon this Bond.
Upon expiration of the time within which the California Labor Commissioner may serve a civil wage and penalty assessment against the principal, any of its subcontractors, or both the principal and its subcontractors pursuant to Labor Code Section 1741, and upon expiration of the time within which a joint labor management committee may commence an action against the principal, any of its subcontractors, or both the principal and its subcontractors pursuant to Labor Code Section 1771.2, if the condition of this Bond be fully performed, then this obligation shall become null and void, otherwise it shall be and remain in full force and effect.
The Surety hereby stipulates and agrees that no change, extension of time, alteration, or addition to the
ATTACHMENT B
terms of the Contract or the Specifications accompanying the same shall in any manner affect its obligations on this Bond, and it does hereby waive notice of any such change, extension, alteration or addition.
IN WITNESS WHEREOF, two (2) identical counterparts of this instrument, each of which shall for all purposes be deemed an original hereof, have been duly executed by Principal and Surety, on the date set forth below, the name of each corporate party being hereto affixed and these presents duly signed by its undersigned representative(s) pursuant to authority of its governing body.
Dated:
“Principal”
By:
Its
By:
Its
(Seal)
“Surety”
By:
Its
By:
Its
(Seal)
Note: This Bond must be executed in duplicate and dated, all signatures must be notarized, and evidence of the authority of any person signing as attorney-in-fact must be attached. DATE OF BOND MUST NOT BE BEFORE DATE OF CONTRACT. IF CONTRACTOR IS A PARTNERSHIP, ALL PARTNERS MUST EXECUTE BOND. DATE OF BOND MUST NOT BE PRIOR TO DATE OF CONTRACT. Surety companies executing Bonds must appear on the Treasury Department’s most current list (Circular 570 as amended) and be authorized to transact business in the State where the project is located.
CC Regular Meeting
AGENDA ITEM REPORT
ITEM NO. CC 11
Meeting: January 21, 2025
Title: First Amendment to the Minor Construction & Maintenance Services Agreement for the Covina Park Aquatic Center Pool Filter Replacement
Presented by: Rafael Fajardo, Director of Public Works/City Engineer Recommendation: Authorize the City Manager to execute the First Amendment to the Minor Construction & Maintenance Services Agreement between the City of Covina and Waterline Technologies, Inc. for the Covina Park Aquatic Center Pool Filter Replacement Project.
EXECUTIVE SUMMARY/BACKGROUND:
On October 15, 2024, the City Council approved award of a Minor Construction & Maintenance Services Agreement between the City of Covina and Waterline Technologies, Inc. for the Covina Park Aquatic Center Pool Filter Replacement Project in the amount of $32,285.06. Upon testing the functionality of the replacement system, it was discovered that the controller unit is incompatible with the new filter and the booster system is at the end of its useful life. Without all of these systems working in tandem, the pool filter operates at lower efficiency and requires manual treatment, leaving the pool vulnerable to chemical imbalances. As such, City staff recommends the approval of the First Amendment to the Agreement in order to amend the scope of work to include the replacement of the controller and booster systems and increase contract compensation in the amount of $12,894.75.
DISCUSSION:
Together the booster and controller systems work in tandem to feed chemicals, such as chlorine, into the pool to maintain optimum pH balance year-round. As part of the original agreement, the old filter was replaced however upon system testing it was discovered that additional repairs would be required to allow the new filter to function at its full potential. Currently, the filter is performing at minimal efficacy as the chemicals are unable to be fed into the water by the booster and controller systems. Chemical treatments are being performed manually by Public Works staff and will be required to continue as such if these additional replacements are not carried out. As the pool water must be consistently treated and filtered year-round, it is imperative that the system be fully operational without the daily need for manual treatment, ultimately providing further cost savings to the Facilities Maintenance operating budget.
The First Amendment (Attachment A) amends the scope of work to include the replacement of the booster and controller systems and increases the total compensation by $12,894.75, increasing the total agreement amount to $45,179.81.
FISCAL IMPACT:
Sufficient funding is available within the Building Maintenance Fund (Account No. 70206100-52400) as part of the City’s approved Fiscal Year 2024-2025 operating budget.
CEQA (CALIFORNIA ENVIRONMENTAL QUALITY ACT):
This project has been determined to be categorically exempt under CEQA in accordance with Title 14, Chapter 3, Class 1, Sections 15301 and 15302. This exemption includes the minor alteration of existing public facilities involving negligible or no expansion of use beyond that existing at the time of the lead agency's determination.
The project involves negligible or no expansion of an existing use.
Respectfully submitted,
FIRST AMENDMENT TO AGREEMENT BETWEEN THE CITY OF COVINA AND WATERLINE TECHNOLOGIES, INC., AMENDING THE MINOR
CONSTRUCTION AND MAINTENANCE SERVICES AGREEMENT FOR
COVINA PARK POOL FILTER REPLACEMENT PROJECT
THIS FIRST AMENDMENT is made and entered into as of January 21, 2025 by and between the City of Covina, a California municipal corporation (hereinafter referred to as “City”), and Waterline Technologies, Inc., a California Corporation (hereinafter referred to as "Contractor"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows:
1. This FIRST Amendment is made with the respect to the following facts and purposes:
a. On October 15, 2025, the City and Contractor entered into that certain Minor Constrution & Maintenance Services Agreement for the Covina Park Pool Filter Replacement Project in the amount of $32,285.06.
b. The parties now desire to amend the Agreement to include Replacement of the Controller and Booster System in the amount not-to-exceed $12,894.75 for a new agreement amount totaling $45,179.81.
2. Paragraph A of Section 2 of the Agreement entitled “COST OF WORK” is hereby amended to read as follows:
A. Cost of Work. For the Work described in Section 3 of this Agreement, Contractor shall receive the sum of exceed Forty Five Thousand One Hundred Seventy Nine Dollars and Eighty One Cents ($45,179.81) payable in accordance with the Schedule of Payments, attached hereto and incorporated herein as Exhibit A (Scope of Work and Payment Schedule). Any terms other than a description of the work to be performed, costs of the work, or the payment schedule contained in Exhibit A is null and void and not a part of this Agreement.
3. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect.
The parties, through their duly authorized representatives, are signing this First Amendment on the date stated in the introductory clause.
ATTACHMENT A
City:
City of Covina,
a California municipal corporation
By:
Name: Chris Marcarello
Title: City Manager
ATTEST:
By:
Name: Fabian Velez
Title: Chief Deputy City Clerk
Contractor:
Waterline Technologies, Inc.
a California corporation
By:
Name:
Title:
By:
Name:
Title:
(Two signatures of corporate officers required
for corporations under Corporations Code
Section 313, unless corporate documents
authorize only one person to sign this
Agreement on behalf of the corporation.)
ATTACHMENT A
Attached hereto and incorporated herein is the additional scope of work and associated cost as provided by the Contractor.
CC Regular Meeting
AGENDA ITEM REPORT
ITEM NO. CC 12
Meeting: January 21, 2025
Title: Annual Comprehensive Financial Report (ACFR) for Fiscal Year Ended June 30, 2024 Presented by: Theresa Franke, Interim Director of Finance Recommendation: Receive and file the following reports for Fiscal Year ended June 30, 2024: (1) Annual Comprehensive Financial Report (ACFR) and related Auditor Communications, (2) Independent Accountants’ Report on Agreed-Upon Procedures Applied to Appropriations Limit, and (3) the Single Audit of Federally Assisted Grant Programs.
EXECUTIVE SUMMARY:
Annually, following the completion of an independent and certified audit, the Finance Department prepares and publishes the City’s Annual Comprehensive Financial Report (ACFR). This is an extensive report summarizing the financial activities of the City that occurred from July 1, 2023 through June 30, 2024. Attached is the June 30, 2024 ACFR and related reports.
BACKGROUND:
The ACFR is prepared in compliance with the Governmental Accounting Standards Board (GASB) requirements and is 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, 2024. 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 performed 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”).
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. A Single Audit was required and performed by the independent auditors for Fiscal Year ended June 30, 2024.
The ACFR, the Independent Accountants’ Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheet No. 6, the Single Audit of Federally Assisted Grant Programs for Fiscal Year ended June 30, 2024, and related auditor communications are attached. Also attached is the Auditor Letter to the City Council which 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.
Respectfully submitted,
ATTACHMENT A
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF COVINA, CALIFORNIA
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
WITH REPORT ON AUDIT
BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
YEAR ENDED JUNE 30, 2024
PREPARED BY:
ADMINISTRATIVE SERVICES DEPARTMENT – FINANCE DIVISION
CITY OF COVINA
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
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) 5
FINANCIAL STATEMENTS
GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 23
STATEMENT OF ACTIVITIES 24
FUND FINANCIAL STATEMENTS
BALANCE SHEET – GOVERNMENTAL FUNDS 26
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION 27
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS 28
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 29
STATEMENT OF NET POSITION – PROPRIETARY FUNDS 30
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET
POSITION – PROPRIETARY FUNDS 31
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS 32
STATEMENT OF FIDUCIARY NET POSITION – FIDUCIARY FUNDS 34 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION –
FIDUCIARY FUNDS 35
NOTES TO FINANCIAL STATEMENTS 37
CITY OF COVINA
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND
RELATED RATIOS – MISCELLANEOUS 82
SCHEDULE OF CONTRIBUTIONS – MISCELLANEOUS 84
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION
LIABILITY – SAFETY 86
SCHEDULE OF CONTRIBUTIONS – SAFETY 88
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND
RELATED RATIOS 90
SCHEDULE OF CONTRIBUTIONS – OPEB 91
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND 92
BUDGETARY COMPARISON SCHEDULE – MEASURE W SPECIAL
REVENUE FUND 93
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 94
SUPPLEMENTARY INFORMATION
OTHER GOVERNMENTAL FUNDS
DESCRIPTION OF OTHER GOVERNMENTAL FUNDS 9
COMBINING BALANCE SHEET 101
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES 107
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – BUDGETARY COMPARISON SCHEDULES
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SPECIAL
REVENUE FUND 113
PROPOSITION A SPECIAL REVENUE FUND 114
LAW ENFORCEMENT SPECIAL REVENUE FUND 115
NARCOTICS SEIZURE SPECIAL REVENUE FUND 116
STATE GAS TAX SPECIAL REVENUE FUND 117
PROPOSITION C SPECIAL REVENUE FUND 118
AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND 119
CITY OF COVINA
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
MUNICIPAL PARKING SPECIAL REVENUE FUND 120
LIGHTING ASSESSMENT SPECIAL REVENUE FUND 121
LANDSCAPING ASSESSMENT SPECIAL REVENUE FUND 122
COMMUNITY FACILITIES DISTRICT ASSESSMENT SPECIAL
REVENUE FUND 123
SHOPPERS LANE PARKING DISTRICT SPECIAL REVENUE FUND 124 MEASURE M SPECIAL REVENUE FUND 125
TDA GRANT SPECIAL REVENUE FUND 126
ROAD MAINTENANCE AND REHABILITATION SPECIAL REVENUE FUND 127 PEG ACCESS TELEVISION SPECIAL REVENUE FUND 128
HOUSING AUTHORITY SPECIAL REVENUE FUND 129
MEASURE R SPECIAL REVENUE FUND 130
OTHER GRANTS SPECIAL REVENUE FUND 131
CAPITAL PROJECTS FUNDS
GENERAL PROJECTS FUND 132
COVINA REVITALIZATION PROJECTS FUND 133
TRANSPORTATION CAPITAL PROJECTS FUND 134
PARK DEVELOPMENT CAPITAL PROJECTS FUND 135
NONMAJOR ENTERPRISE FUNDS
DESCRIPTION OF NONMAJOR ENTERPRISE FUNDS 136
COMBINING STATEMENT OF NET POSITION 137
COMBINING STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN NET POSITION 138
COMBINING STATEMENT OF CASH FLOWS 139
INTERNAL SERVICES FUNDS
DESCRIPTION OF INTERNAL SERVICE FUNDS 141
COMBINING STATEMENT OF NET POSITION 142
CITY OF COVINA
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
COMBINING STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN NET POSITION 143
COMBINING STATEMENT OF CASH FLOWS 144
CUSTODIAL FUNDS
DESCRIPTION OF CUSTODIAL FUNDS 146
COMBINING STATEMENT OF FIDUCIARY NET POSITION 147
COMBINING STATEMENT OF CHANGES IN FIDUCIARY
NET POSITION 148
STATISTICAL SECTION (UNAUDITED)
DESCRIPTION OF STATISTICAL SECTION CONTENTS 152
NET POSITION BY COMPONENT 153
CHANGES IN NET POSITION 154
FUND BALANCES OF GOVERNMENTAL FUNDS 157
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS 158
GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE 160
ASSESSED VALUE OF TAXABLE PROPERTY 161
ASSESSED VALUE OF TAXABLE PROPERTY BY USE 162
PROPERTY TAX RATES 163
PRINCIPAL PROPERTY OWNERS 164
PROPERTY TAX LEVIES AND COLLECTIONS 165
RATIOS OF OUTSTANDING DEBT BY TYPE 166
RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING 167
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES BONDED DEBT 168 LEGAL DEBT MARGIN INFORMATION 169
PLEDGED-REVENUE BOND COVERAGE – WATER UTILITY FUND
INSTALLMENT AGREEMENT AND REVENUE BONDS 170
PLEDGED-REVENUE BOND COVERAGE – SEWER FUND REVENUE BONDS 171 DEMOGRAPHIC AND ECONOMIC STATISTICS 172
CITY OF COVINA
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
PRINCIPAL EMPLOYERS 173
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION 174 OPERATING INDICATORS BY FUNCTION 175
CAPITAL ASSET STATISTICS BY FUNCTION 177
CONTINUING DISCLOSURE – WATER SYSTEM 178
CONTINUING DISCLOSURE – WASTEWATER SYSTEM 179
INTRODUCTORY SECTION
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF COVINA, CALIFORNIA
ELECTED AND ADMINISTRATIVE OFFICIALS
2023-2024
i
Elected Officials Term Expires
Mayor:
John C. King June 2026
Mayor Pro Tem:
Victor Linares June 2026
Council Members:
Walter Allen, III March 2028
Patricia Cortez March 2028
Hector Delgado June 2026
City Clerk:
Andrew Aleman June 2026
City Treasurer:
Neil Polzin June 2026
Administrative Staff Date of Hire
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:**
Anthony C. Marrone February 2023
Public Works Director:
Andy Bullington June 2018
Rafael Fajardo – Interim Director June 2019
Parks and Recreation Director:
Lisa Evans July 1989
Community Development Director:
Brian Lee June 2015
Chief Deputy City Clerk:
Fabian Velez June 2018
*Appointed by City Council
**Appointed by Los Angeles County Fire District
ii
January 9, 2025
Honorable Mayor and City Council
City of Covina
Covina, California
The Annual Comprehensive Financial Report for the City of Covina (the City), California, as of June 30, 2024 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. CliftonLarsonAllen, Certified Public Accountants, have issued an unqualified (“clean”) opinion on the City’s financial statements for the fiscal year ended June 30, 2024. 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 obligated to conduct an annual single audit in accordance with the Single Audit Act of 1984 and the U.S. Office of Management and Budget's Uniform Guidance for 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 2023-24 it is 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 50,485 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 wellestablished San Gabriel Valley, Covina retains a small-town atmosphere. The City is connected to other areas of metropolitan Los Angeles by the nearby San Bernardino, Foothill, and Orange Freeways, as well as the Southern California Regional Rail Authority Metrolink Commuter Rail Line.
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:
Estimated Revenues
Estimated revenues will be identified by fund, program and activity Fund types include general, special revenue, debt service, capital projects, enterprise, agency and internal service funds
Identify recurring vs. nonrecurring revenues
Identify general revenues vs. restricted revenues
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
o Encumbrances and contractual commitments
o Grant, restricted donation and capital project appropriations are considered life-cycle appropriations
o All other appropriations shall lapse at year-end unless carried forward by City Council action
Fund Balances/Working Capital
Budget will calculate available fund balances and/or working capital available in the various funds
Budget will establish adequate reserves
o Capital needs
o Offset economic hard times
o Stabilize fluctuations in cash flow requirements
o Emergency situations
v
Fund Balances/Working Capital (continued)
General Fund
o Minimum of 20% of operating expenses-reserve shall be maintained o Excess reserves will be designated for nonrecurring activities or capital improvements
Internal Service Funds
o Maintain general liability and worker's compensation reserves based on actuarial recommendations.
o Maintain sufficient reserves to fund equipment replacement at the end of its useful life
Enterprise Funds
o Maintain reserves as recommended by applicable rate studies Restricted Funds
o Reserves can be used for only designated purposes
o Excess reserves can be designated for recurring and nonrecurring activities or capital improvements depending on the nature of the fund Community Needs Assessment, Monitoring and Reporting
Identifying community needs for essential services
o Describing the programs required to provide the essential services o Identifying the purpose of activities performed in delivering services Identifying resources required to perform program activities and accomplish goals and objectives
Monitoring standards to measure and evaluate
o Output and outcomes of program activities
o Accomplishment of program activities
o Staffing levels
o Program activity revenue and appropriations
Make budgetary and financial decisions on conservative estimates of revenues, expenditures and other financing sources and uses The greater the uncertainty and/or volatility of the budgetary and financial estimates, the more conservative the estimates
vi
Changes in Service Levels
The base budget is the required appropriation level needed to maintain the previous year’s budget service level
Change in service is the proposed increase or decrease in service level Increase in services shall be offset with new revenue or a corresponding decrease in other program services
Grants shall not have a negative impact on General Fund services Future operating grants will not be funded by the General Fund unless there is a new revenue source or decrease in other program services Budget Shall Be Balanced
Ongoing and recurring costs shall be funded with ongoing and recurring revenues
One-time and nonrecurring costs shall be funded with excess ongoing revenues, available one-time revenues or excess reserves
One-time or nonrecurring revenues shall not fund ongoing costs Current costs shall be recognized and funded in the current year, not deferred or funded in future years whenever possible
Budget sufficient funding levels to maintain current City services The General Fund shall try to maintain a minimum $100,000 operating contingency for unanticipated events
Make conscious decisions about cost recovery and/or general tax subsidy of those services that benefit only a portion of the tax paying public Formalize a five-year capital improvement program to identify priorities, service levels, funding sources and future impacts of decisions made today.
Infrastructure Maintenance
Identify preventive maintenance of infrastructure to minimize future expenditures o Make conscious effort to 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
City Council authorization is required except for:
o Emergencies
o Legal requirements
o Accounting changes and prior period adjustments
Implementation
The City Manager shall be responsible for the preparation and submission of the budget
The City Manager shall be authorized to make the appropriate changes to adhere to the budget policy
Staff shall report to the City Council periodically (quarterly or semi-annually at a minimum) with an update on actual revenues and expenditures as shown in the adopted budget
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 to 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
Christopher Marcarello Theresa Franke
City Manager Interim Director of Finance
viii
FINANCIAL SECTION
THIS PAGE INTENTIONALLY LEFT BLANK
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
(1)
INDEPENDENT AUDITORS’ REPORT
Honorable Mayor and
Members of City Council
City of Covina
Covina, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the businesstype 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, 2024, and the related notes to the financial statements, which collectively comprise the City of Covina’s basic financial statements as listed in the table of contents.
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, 2024, 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.
We did not audit the financial statements of the Covina Irrigating Company which represents 12% of the assets of the water enterprise fund and 9% of the assets of the business-type activities as of June 30, 2024. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amount included as an investment in the Covina Irrigating Company in the water enterprise fund, is based solely on the report of the other auditors.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Covina and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Honorable Mayor and
Members of City Council
City of Covina
(2)
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Covina’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Covina’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Covina’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Honorable Mayor and
Members of City Council
City of Covina
(3)
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 postemployment 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, and Measure W Fund be presented to supplement the basic financial statements. Such information, is the responsibility of management and although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Covina’s basic financial statements. The individual fund schedules and combining financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the individual fund schedules and combining financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Honorable Mayor and
Members of City Council
City of Covina
(4)
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 9, 2025, on our consideration of the City of Covina’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 of Covina’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 of Covina’s internal control over financial reporting and compliance.
CliftonLarsonAllen LLP
Irvine, California
January 9, 2025
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(5)
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, 2024.
This report is prepared in conjunction with the accompanying transmittal letter and basic financial statements and notes.
FINANCIAL HIGHLIGHTS
The assets and deferred outflows of the City exceeded its liabilities and deferred inflows at the close of the fiscal year by $143,870,291. The Governmental Activities have a deficit unrestricted net position of $32,082,117. Business-type Activities have unrestricted net position of $10,890,907.
The City’s net position for governmental and business-type activities increased by $18,240,201 or 14.52% from the previous fiscal year.
The total cost of all City activities was $85,057,806 for the current fiscal year. Net cost of all activities was $33,991,793.
During the current fiscal year, the City’s governmental activities net revenues exceeded net expenditures by $13,403,582.
In the City’s business-type activities, net revenues exceeded net expenditures by $4,836,619.
The total fund balance of the City’s governmental funds was $68,810,772 at the close of the fiscal year. This includes $39,288,907 fund balance of the General Fund, $22,984,173 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 $5,971,101 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.
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(6)
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 LongTerm Debt. The business-type activities include Water Utility, Environmental Protection, Theater and Sewer.
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-six 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 and Other Grants Fund which are considered to be major funds. 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.
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(7)
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, Theater 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, Building Maintenance 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, Building Maintenance 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”.
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.
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(8)
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 $143.9 million at the close of the fiscal year, which is an increase of $18.2 million or 14.52% from the previous fiscal year.
The largest portion of that net position, $133.7 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, $31.41 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 $21.2 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 62.21% of the City’s total net position. As reflected in the following table, restricted governmental activities net position increased by $6.3 million (25.27%) 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. 2024 2023
Current and other assets 102,549,897 $ 89,421,113 $
Capital assets 97,584,565 94,706,502
Deferred outflows 25,855,578 36,370,048
Total Assets and deferred outflows 225,990,040 220,497,663 Long-term liabilities outstanding 102,686,260 102,426,984 Other liabilities 12,395,347 12,906,748
Deferred inflows 21,413,837 29,072,917
Total Liabilities and deferred inflows 136,495,444 144,406,649 Net position:
Net Investment in capital assets 90,168,855 86,804,262
Restricted 31,407,858 25,072,625
Unrestricted (32,082,117) (35,785,873)
Total net position 89,494,596 $ 76,091,014 $
Governmental Activites Net Position
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.
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(9)
Revenues 2024 2023
Program revenues:
Charges for services 8,834,709 $ 8,951,403 $
Operating grants and contributions 20,963,432 22,818,540 Capital grants and contributions 1,697,052 2,206,174
General revenues:
Property taxes 17,707,380 16,429,930
General sales tax 10,701,878 11,493,906
Transaction and use tax 8,535,570 8,787,686
Utility users taxes 6,024,393 6,041,869
Other taxes 3,304,190 3,233,932
Investment earnings 4,149,726 712,611
Miscellaneous 88,194 (1,565,154)
Total Revenues 82,006,524 79,110,897
Expenses
General government 3,607,340 3,792,606
Public safety 38,426,544 49,481,727
Public works 12,272,245 5,227,281
Culture and recreation 6,428,184 5,974,501
Community development 4,229,689 3,582,145
Transit 1,595,151 1,399,960
Redevelopment and housing 728,375 786,051
Interest on long term debt 1,315,414 1,336,291
Total expenses 68,602,942 71,580,562
Increase in net position before transfers
Change in net position 13,403,582 7,530,335
Beginning net position 76,091,014 68,560,679
Ending net position 89,494,596 $ 76,091,014 $
Governmental Activities Change in Net Position
As reflected above, the City’s total revenues exceeded total expenses of governmental activities by $13.4 million. Compared to the previous year, 2024 revenues show an increase of $2.9 million while expenses decreased by $3.0 million.
The revenue decrease in Charges for Services of $116,700 includes a decrease of $117,000 in Public Works Engineering Services as well as a decrease in Street Development Impact Fee revenue of $123,000. The decrease in Development Impact Fees was anticipated, as the prior year’s revenue was higher than usual. In addition, Public Safety experienced a reduction of $138,000 in parking citation revenue, due to staffing challenges faced by the contracted service provider. Court fines decreased by $113,000 as there were a reduced number of citations issued. These reductions were partially offset by revenue increases in Community Development (includes Code Enforcement Fines increase of $52,000 and $88,000 increase in Quimby fees), Culture and Recreation (departmental net revenue increase of $30,000) and Public Safety’s crossing guard revenue increase of $124,000.
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(10)
Operating Grants decreased by $1.9 million. This difference is due in large part to a onetime $3 million grant received in FY 2022-23 for the Covina Theater. Grant revenue increases that offset this reduction include Public Works grant increases totaling $762,000, Culture and Recreation grant increases of $107,000 and Transit grant increases of $216,000. As in FY 2023, Public Safety utilized American Rescue Plan Act revenue replacement of $3 million for Fire Services.
Capital Grants decreased by $509,000. The decrease is due in part to the Covina Park Playground Equipment grant received in 2022-23, $304,400, as well as a $245,200 decrease in Transit grants and $103,300 decrease in Public Works grants.
Property tax revenue increased by $1.2 million. However, the City experienced a decrease of $792,000 in sales and transaction and use taxes. This decline is reflective of reduced purchases of consumer goods, attributable in part to higher interest rates. Utility users tax decreased slightly ($17,000), as FY 2022-23 experienced sharp spikes in utility costs.
Changes in other revenue sources include a $59,000 increase in transient occupancy taxes and a $20,000 decrease in property transfer taxes. In addition, there is a $59,000 increase in franchise taxes and investment earnings increase of $3.4 million (reflecting higher interest rates and increased market value of City investments).
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 program revenues were sufficient to cover related expenditures. General Government, Public Safety, Public Works, Community Development, Culture & Recreation and Redevelopment & Housing required general revenues to subsidize expenditures. Expenses and associated program revenues for each governmental function are reflected on the following table. $0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
General
Government
Public Safety Public Works Culture &
Recreation
Community
Development
Transit Redevelopment
& Housing
Interest on long
term debt
Expenses and Program Revenues-Governmental Activities
Expenses
Program
Revenues
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(11)
As reflected on the following graph, taxes, grants and contributions, and charges for services provide 100% of the overall revenue sources of the governmental activities. Taxes include property, sales, transaction & use, utility users and other taxes (transient occupancy, property transfer, business license and franchise).
The next graph demonstrates governmental activity expenses by function/program. Note that public safety and public works represent 73.9% of the governmental activities’ expenditures; this is consistent with the City’s highest priority of citizen safety and wellbeing. Culture and recreation represent 9.4% of governmental activities as the City is committed to providing valuable programs to the community.
Charges for
Service
10.77%
Operating Grants
and Contributions
25.56%
Capital Grants and
Contributions
2.07%
Property Taxes
21.59%
Sales Taxes
13.05%
Transaction and use
tax
10.41%
Utility Users Taxes
7.35%
Other Taxes
4.03%
Other Revenues
5.17%
Revenue Sources-Governmental Activities
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(12)
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, Theater, and Sewer functions.
The following table summarizes the business-type net position for fiscal years 2023 and 2024. Current year detail can be found in the Government-Wide Financial Statements, Statement of Net Position.
2024 2023
Current and other assets 26,159,205 $ 27,748,627 $
Capital assets 62,997,021 58,014,711
Deferred outflows of resources 2,329,262 2,970,227
Total assets and deferred outflows 91,485,488 88,733,565 Long-term liabilities outstanding 33, 35,546,789 651,218 Other liabilities 2, 2,935,775 786,407
Deferred inflows of resources 672,168 711,925
Total liabilities 37, 39,194,489 109,793
Net position
Net Investment in capital assets 43,484,788 35,390,399
Unrestricted 10,890,907 14,148,677
Total net position 54,375,695 $ 49,539,076 $
Business-Type Activities Net Position
General government
5.2%
Public safety
56.0%
Public works
17.9%
Culture and recreation
9.4%
Community development
6.2%
Transit
2.3%
Redevelopment and housing
1.1%
Interest on long term debt
1.9%
Functions/Program Expenses-Governmental Activities
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(13)
The net position of the business-type activities represents 37.79% of the City’s total net position and increased by $4.8 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. 2024 2023
Revenues
Program Revenues:
Charges for services 16,539,480 $ 15,774,880 $
Operating grants and contributions 31,572 1,154
Capital Grants and Contributions 2,999,768 -
General Revenues
Investment gain (loss) 1,611,110 (500,194)
Miscellaneous 93,959 75,222
Total Revenues 21,275,889 15,351,062
Expenses
Water Utility 12, 11,001,848 037,535
Environmental Protection 1,432,770 1,455,858
Theater 530,467 493,523
Sewer 2,454,092 2,301,782
Total Expenses 16,454,864 15,253,011
Change in net position before transfers 4, 98,051 821,025 Transfers in (out) 15,594 1,820,000
Change in net position 4, $ 1,918,051 836,619 $
Business-type Change in Net Position
As reflected above, the City’s business-type charges for services revenues exceeded program expenses by $85,000. Total business-type program revenues increased by $3.8 million from the prior fiscal year. Water sales increased by $825,000 and Sewer utility revenue increased by $20,000. Environmental Protection service charges were $105,000 less than the prior year, as the City did not have any land developments that paid applicable storm water fees in 2023-24. In addition, in FY 2022-23 Environmental Protection received catch-up payments for a rate change. Fiscal Year 2023-24 was the Theater’s first full year of operation with ticket sales of $171,000. The increase in capital grants and contributions of $2.9 million reflects the grant funded portion of the Theater transferred from the general fund to the Theater fund. General revenues increased by $2.1 million due predominately to increased investment earnings.
Water and Sewer charges for services/operating grants were sufficient to cover operating expenses for the respective functions during the fiscal year. Although Environmental Protection’s expenses remained relatively constant, reduced revenue caused program expenses to exceed program revenues by $305,000, with projects including trash enclosures and the addition of storm water infiltration systems.
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(14)
Business-type expenses attributable to Water increased by $1.0 million due in large part to increased water supply costs ($314,000), production and storage ($104,000) water transmission and distribution ($393,000) and general & administrative expenses ($212,000) which include negotiated wage/benefit increases. Sewer utilities increased by $152,000 from the previous fiscal year, reflecting $16,000 increased administrative expenses and $113,000 increased operating expenses (including a motor vehicle purchase).
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 business-type 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. Theater charges for services include fees for facility use, property rental, ticket sales and antenna rental. Sewer charges for services include fees established to recover the cost of operating the sewer system throughout the City. Other revenues reflect investment earnings.
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
Expenses
Program
Revenues
Expenses and Program Revenues-Business-type Activities
Water Utility Environmental
Protection
Theater Sewer
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(15)
The next chart demonstrates business-type activity expenses by function/program. Water comprises the majority of expenses, 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.
Charges for services
78%
Operating & Capital Grants
14%
Other revenues
8%
Revenues by Source - Business-type Activities
Water utility
73%
Environmental
protection
9%
Theater
3%
Sewer
15%
Expenses by Function/Program - Business-type Activities
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(16)
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, 2024, the City’s governmental funds reported combined fund balances of $68.8 million, an increase of $12.3 million from the prior fiscal year. There is $22.4 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.
The following is a summary of fund balances of the governmental funds for fiscal years 2019-2024:
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 2023-24 was $39.3 million and is classified as follows: $93,000 nonspendable, $15.9 million committed, $1,000 assigned, and $23 million unassigned. In keeping with the City Council’s Reserve Policy, the committed emergency contingency fund balance meets the City’s Emergency Contingency Reserve requirement of 20% of General Fund expenditures.
The fund balance of the General Fund increased by $6 million during the fiscal year.
Revenues and expenditures experienced steady growth, each increasing by approximately by $2.4 million.
2019 2020 2021 2022 2023 2024
Unassigned $(1,685,799) $2,335,441 $10,545,546 $6,323,201 $21,773,885 $22,389,443 Nonspendable, restricted,
committed or assigned $30,654,468 $29,018,838 $24,954,112 $35,852,451 $34,735,018 $46,421,329 Total $28,968,669 $31,354,279 $35,499,658 $42,175,652 $56,508,903 $68,810,772 -$10,000,000
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
Fund Balances of Governmental Funds
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(17)
Proprietary Funds
The City’s proprietary funds financial statements provide the same type of information found in the government-wide statements, but provide detail specific to the City’s water utility, environmental, theater and sewer enterprises.
Net position of the Water Utility fund is $39.7 million, an increase of $1,605,268 from the prior fiscal year. Of that, $12 million is unrestricted. Environmental Protection and Theater have combined net positions of $5.8 million with unrestricted net position decreasing to - $2.4 million from $-1.7 million in the prior year. The net position of the Sewer fund increased to $10.4 million from $9.9 million in the prior year. Of that, $2.8 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 $11.3 million which represents a 21% increase. The increase reflects additional funding appropriated for various projects including Covina Recreation Village ($3.1 million), Covina Skate Park ($1 million), as well as funding of internal service funds ($770,000). Community Development’s budgeted appropriations increased to reflect the anticipated net cost of acquiring Kia property ($2.7 million). In addition, Community Development budgeted an increase in consultant fees for plan check services ($250,000), and various community projects such as: the Job Creation Program ($250,000), Business Capital Improvement Program ($120,000), Hollenbeck Park Pickle Ball Project ($112,000), Unlicensed Food Vendor Enforcement ($115,000), and Covina Theater Improvements ($85,500). Mid-year budget adjustments included reductions to budgeted sales tax and engineering revenue, while increasing property tax and UUT revenue. Appropriations were increased reflecting changes to elected official’s salary and benefits, legal fees, code enforcement overtime for unlicensed vendor activities, and various professional services.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City’s investment in capital assets for governmental and business-type activities as of June 30, 2024, is $160.6 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, 2024 and 2023.
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(18)
Total capital assets, net of depreciation, increased from the prior year by $7.9 million.
Completed projects which contributed to this increase include Rowland Ave. Street Rehabilitation ($2.1 million), Covina Skate Park ($1.5 million), street resurfacing ($1.4 million), police department locker room renovation ($897,000) and a water main replacement ($1.6 million). Note 9 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 $138 million.
This includes notes, leases, 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, 2024 and 2023.
2024 2023
Governmental activities
Land $12,335,553 $12,335,553
Buildings and structures 25,257,168 28,502,366
Improvements other than buildings 9,844,678 8,259,225
Public domain infrastructure 39,833,645 37,126,099
Sanitary sewer infrastructure 1,583,343 1,648,080
Machinery and equipment 3,085,708 2,744,627
Construction in progress 5,286,758 3,623,307
Right to use assets 357,712 467,245
Total governmental activities $97,584,565 $94,706,502
Business-type activities
Land 377,408 377,408
Buildings and structures 14,718,952 12,050,600
Improvements other than buildings 2,961,521 2,417,779
Water system infrastructure 41,401,856 41,384,831
Machinery and equipment 1,698,387 1,654,758
Construction in progress 1,831,974 118,951
Right to use assets 6,923 10,384
Total business-type activities 62,997,021 58,014,711
Total capital assets $160,581,586 $152,721,213
Capital Assets
(net of depreciation)
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(19)
2024 2023
Governmental activities
Compensated absences 4,619,632 $ 4,414,980 $
Claims and judgments 8,476,693 7,920,000
Certificates of participation payable (COP) 4,433,391 4,659,950 Pension Obligation Bonds 50,101,430 52,529,291
Lease Payable 203,417 153,335
Subscriptions Payable 129,180 305,403
Section 108 loan 1,750,000 1,875,000
Postemployment benefit obligation 4,806,311 4,846,003
Net pension liability 28,166,206 25,723,022
Total governmental activities 102,686,260 102,426,984
Business-type activities
Compensated absences 742,837 643,568
Capital lease payable 7,076 10,531
Water Installment Agreement 14,828,173 15,991,560
Revenue bonds payable 5,645,000 6,515,000
Pension Obligation Bonds 7,163,570 7,510,709
Postemployment benefit obligation 1,694,719 1,708,693
Net pension liability 3,569,843 3,166,728
Total business-type activities 33,651,218 35,546,789
Total outstanding debt 136,337,478 $ 137,973,773 $
Outstanding Debt
(net of unamortized charges)
The $259,000 long-term debt increase in governmental activities from 2023 to 2024 is due to increases in compensated absences ($205,000), claims and judgements ($557,000), leases payable ($50,000) and net pension liability ($2.4 million). All other long-term debt in governmental activities decreased. Although increases were seen in business-type activities’ compensated absences ($99,000) and net pension liability ($403,000) all other business-type activities decreased, netting to a decrease of $1.9 million.
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 10, Note 13, and Note 16 of the Notes to the Financial Statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The City applied sound budgeting practices and considered new development, consumer spending, and other relevant factors in formulating a balanced budget for Fiscal Year 2024-
25. Prudent, cost-saving budget practices, including pro-active debt management, will continue into future years.
CITY OF COVINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2024
(20)
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 meets the 20% of General Fund expenditures requirements established as the Council’s goal 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 2024-25 budget projects an overall increase in revenues in comparison to Fiscal Year 2023-24. The increase includes increased tax revenues, with the exception of sales tax which is expected to slow based on consumer purchasing changes.
Increases to budgeted departmental expenditures reflect negotiated salary and benefit increases as well as increases to unfunded liability costs. In addition, activity of the former redevelopment agency results in reduced administrative funding, requiring that some staff costs be absorbed by the general fund. In addition, Community Development expenses reflect the purchase of property from the former redevelopment agency. Another contributing factor is that FY 2023-24 is the final year of ARPA funding, with a large share of fire service costs transitioning back to the general fund.
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 Department, 125 East College Street, Covina, California, 91723.
(21)
FINANCIAL STATEMENTS
(22)
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF COVINA
STATEMENT OF NET POSITION
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(23)
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and Investments 85,226,990 $ 24,513,069 $ 109,740,059 $ Cash and Investments - Restricted - 757,185 757,185
Cash With Fiscal Agent - 508 508
Receivables:
Accounts, Net 2,005,117 475,573 2,480,690
Due from Other Governments 12,858,669 47,773 12,906,442 Other 22,066 878,096 900,162
Loans and Notes 278,522 - 278,522
Leases 340,491 1,039,159 1,379,650
Internal Balances 1,581,138 - (1,581,138)
Inventories 47,013 63,876 110,889
Prepaid Items and Deposits 147,366 7,629 154,995
Capital Assets:
Not Being Depreciated/Amortized 17,622,311 2,209,382 19,831,693 Being Depreciated/Amortized, Net 79,962,254 60,787,639 140,749,893 Total Assets 200,134,462 89,156,226 289,290,688
DEFERRED OUTFLOWS OF RESOURCES
Deferred Amount on Refunding 62,352 - 62,352
OPEB Related 530,616 1,460,569 1,991,185
Pension Related 1,736,294 24,395,009 26,131,303
Total Deferred Outflows of Resources 25,855,578 2,329,262 28,184,840
LIABILITIES
Accounts Payable 1,408,502 2,927,378 4,335,880
Accrued Liabilities 44,063 940,832 984,895
Deposits Payable 1,107,231 4,145,145 5,252,376
Interest Payable 198,977 55,519 254,496
Due to Other Governments 278,522 - 278,522
Unearned Revenue 4,047,951 27,634 4,075,585
Noncurrent Liabilities:
Due Within One Year 2,672,104 6,414,766 9,086,870
Due in More Than One Year:
Long-Term Liabilities 63,298,977 25,714,552 89,013,529
Net Other Postemployment Benefit Liability 1,694,719 4,806,311 6,501,030 Net Pension Liability 3,569,843 28,166,206 31,736,049
Total Liabilities 115,081,607 36,437,625 151,519,232
DEFERRED INFLOWS OF RESOURCES
Deferred Amount on Refunding 106,961 - 106,961
Deferred Inflow Leases 1,022,716 331,021 1,353,737
OPEB Related 234,186 616,456 850,642
Pension Related - 19,774,665 19,774,665
Total Deferred Inflows of Resources 21,413,837 672,168 22,086,005
NET POSITION
Net Investment in Capital Assets 90,168,855 43,484,788 133,653,643 Restricted for:
Public Safety - 700,779 700,779
Public Works - 19,057,095 19,057,095
Community Development 276,800 - 276,800
Culture and Recreation 1,437,004 - 1,437,004
Transit - 6,875,434 6,875,434
Redevelopment and Housing - 3,060,746 3,060,746
Unrestricted (Deficit) 10,890,907 (32,082,117) (21,191,210) Total Net Position 89,494,596 $ 54,375,695 $ 143,870,291 $
CITY OF COVINA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(24)
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
GOVERNMENTAL ACTIVITIES
General Government 3,607,340 $ 2,166,584 $ 52,640 $ - $ Public Safety 38,426,544 2,307,522 4,877,949 -
Public Works 12,272,245 882,087 10,625,585 720,541
Culture and Recreation 6,428,184 774,565 242,454 413,289 Community Development 4,229,689 2,233,865 515,669 -
Transit 1,595,151 143,607 4,304,761 563,222
Redevelopment and Housing 728,375 326,479 344,374 -
Interest on Long-Term Debt 1,315,414 - - -
Total Governmental Activities 68,602,942 8,834,709 20,963,432 1,697,052
BUSINESS-TYPE ACTIVITIES
Water Utility 12,037,535 12,523,664 31,572 -
Environmental Protection 1,432,770 1,128,094 - -
Theater 530,467 191,693 - 2,999,768
Sewer Utility 2,454,092 2,696,029 - -
Total Business-Type Activities 16,454,864 16,539,480 31,572 2,999,768 Total 85,057,806 $ 25,374,189 $ 20,995,004 $ 4,696,820 $
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 (Loss)
Miscellaneous
Transfers
Total General Revenues
CHANGES IN NET POSITION
Net Position - Beginning of Year
NET POSITION - END OF YEAR
CITY OF COVINA
STATEMENT OF ACTIVITIES (CONTINUED)
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(25)
Governmental Business-Type
Activities Activities Total
$ - (1,388,116) $ (1,388,116) $
- (31,241,073) (31,241,073)
- (44,032) (44,032)
- (4,997,876) (4,997,876)
- (1,480,155) (1,480,155)
- 3,416,439 3,416,439
- (57,522) (57,522)
- (1,315,414) (1,315,414)
- (37,107,749) (37,107,749)
517,701 - 517,701
(304,676) - (304,676)
2,660,994 - 2,660,994
241,937 - 241,937
3,115,956 - 3,115,956
3,115,956 (37,107,749) (33,991,793)
- 17,707,380 17,707,380
- 10,701,878 10,701,878
- 8,535,570 8,535,570
- 252,508 252,508
- 194,695 194,695
- 404,183 404,183
- 6,024,393 6,024,393
- 2,452,804 2,452,804
1,611,110 4,149,726 5,760,836
93,959 103,788 197,747
15,594 (15,594) -
1,720,663 50,511,331 52,231,994
4,836,619 13,403,582 18,240,201
49,539,076 76,091,014 125,630,090
$ 54,375,695 89,494,596 $ 143,870,291 $
Net Revenue (Expense) and
Changes in Net Assets
CITY OF COVINA
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(26)
Other Total
General Park Governmental Governmental
Fund Measure W ARPA Development Funds Funds
ASSETS
Cash and Investments $ 40,955,093 $ 9,003,005 $ 543,355 $ 2,466,502 $ 14,055,924 $ 67,023,879 Cash and Investments With Fiscal Agent - - - - 508 508
Receivables:
Interest 318,440 - - - 7,369 325,809
Utility User Tax 552,287 - - - 552,287 -
Accounts 341,000 - - - 31,439 372,439
Leases 626,094 - - - 413,065 1,039,159
Loans - - - - 278,522 278,522
Due from Other Governments 3,738,719 7,130,084 - 614,953 1,374,478 12,858,234 Due from Other Funds 236,494 - - - 236,494 -
Prepaid Items 92,959 - - - 828 93,787
Total Assets $ 46,861,086 $ 16,133,089 $ 543,355 $ 3,081,455 $ 16,162,133 $ 82,781,118
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts Payable $ 1,451,079 $ 20,779 $ 102,445 $ 229,866 $ 609,608 $ 2,413,777 Accrued Liabilities 953,705 - - - 262 953,967
Deposits Payable 4,136,432 - - - 8,713 4,145,145
Due to Other Funds - - - - 236,494 236,494
Due to Other Governments - - - - 278,522 278,522
Unearned Revenue 401,825 - 440,910 2,688,510 516,706 4,047,951 Total Liabilities 6,943,041 20,779 543,355 2,918,376 1,650,305 12,075,856
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows - Leases 611,688 - - - 411,028 1,022,716 Unavailable Revenue 17,450 - - 547,443 306,881 871,774
Total Deferred Inflows of Resources 629,138 - - 547,443 717,909 1,894,490
FUND BALANCES
Nonspendable 92,959 - - - 828 93,787
Committed 15,878,181 - - - 15,878,181 -
Restricted 332,545 16,112,310 - - 14,003,457 30,448,312 Assigned 1,049 - - - - 1,049
Unassigned 22,984,173 - - (384,364) (210,366) 22,389,443 Total Fund Balances (Deficits) 39,288,907 16,112,310 - (384,364) 13,793,919 68,810,772 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $ 46,861,086 $ 16,133,089 $ 543,355 $ 3,081,455 $ 16,162,133 $ 82,781,118
CITY OF COVINA
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(27)
Total Fund Balances for Governmental Funds $ 68,810,772 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 $2,708,288 of internal service funds net capital assets.
Capital Assets Not Being Depreciated 16,670,775 $
Capital Assets Being Depreciated 212,477,807
Accumulated Depreciation (134,272,305) 94,876,277
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, 2024 are:
Loan Payable (1,750,000)
Bonds Payable (4,260,000)
Pension Obligation Bonds (48,009,932)
Bond Premium (173,391)
Leases (141,175)
Subscriptions (129,180)
Compensated Absences (4,409,843)
Accrued Interest (58,908,883) (35,362)
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 23,787,077 Deferred Inflows of Resources - Pension Related (19,774,665) Net Pension Liability (26,916,288)
Deferred Outflows of Resources - OPEB Related 1,282,852 Deferred Inflows of Resources - OPEB Related (541,674)
Net OPEB Liability (26,412,231) (4,249,533)
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. 10,256,887
Receivables that are measurable but not available are recorded as deferred inflows of resources under the modified accrual basis of accounting. 871,774 Net Position of Governmental Activities $ 89,494,596
CITY OF COVINA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(28)
Other Total
General Park Governmental Governmental
Fund Measure W ARPA Development Funds Funds
REVENUES
Property Taxes 17,520,212 $ - $ - $ - $ 187,168 $ 17,707,380 $ Sales Tax, Intergovernmental 19,237,448 - - - - 19,237,448 Transient Occupancy Taxes 252,508 - - - - 252,508
Property Transfer Taxes 194,695 - - - - 194,695
Business License Taxes 402,844 - - - 1,344 404,188
Utility User Taxes 6,024,393 - - - - 6,024,393
Franchise Taxes 2,452,804 - - - - 2,452,804
Licenses and Permits 1,866,645 - - - - 1,866,645
Intergovernmental 1,141,804 7,861,857 4,281,768 67,510 9,430,693 22,783,632 Charges for Services 4,011,448 - - - 344,496 4,355,944
Fines and Forfeits 1,108,302 - - - - 1,108,302
Special Assessments - - - - 853,971 853,971
Investment Earnings 3,371,912 353,131 - - 458,657 4,183,700 Other 421,608 - - - 172,627 594,235
Total Revenues 58,006,623 8,214,988 4,281,768 67,510 11,448,956 82,019,845
EXPENDITURES
Current:
General Government 2,820,455 - - - - 2,820,455
Public Safety - 31,954,594 3,182,925 - 664,614 35,802,133 Public Works 2,209,301 - - - 4,314,859 6,524,160
Culture and Recreation 4,871,349 - 9,089 - 210,237 5,090,675 Community Development 3,255,509 - 369,213 32,622 - 3,657,344 Transit - - - - 1,091,975 1,091,975
Redevelopment and Housing - - - - 670,497 670,497
Capital Outlay 854,304 - 720,541 2,176,449 4,443,722 8,195,016 Debt Service:
Principal Retirement 2,326,509 - - - 446,120 2,772,629
Interest and Fiscal Charges 1,114,449 - - - 214,246 1,328,695 Total Expenditures 48,552,166 854,304 4,281,768 2,209,071 12,056,270 67,953,579
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 7,360,684 9,454,457 - (2,141,561) 14,066,266 (607,314)
OTHER FINANCING SOURCES (USES)
Transfers In 300,000 - - 1,762,161 396,993 2,459,154
Transfers Out - (3,828,705) - - (546,315) (4,375,020)
Subscription Proceeds 3,991 - - - - 3,991
Lease Proceeds 41,358 - - - 106,120 147,478
Total Other Financing
Sources (Uses) - (3,483,356) - 1,762,161 (43,202) (1,764,397) NET CHANGE IN FUND BALANCES 7,360,684 5,971,101 - (379,400) 12,301,869 (650,516) Fund Balances (Deficits) - Beginning of Year 8,751,626 33,317,806 - 14,444,435 (4,964) 56,508,903
FUND BALANCES (DEFICITS) -
END OF YEAR $ 16,112,310 39,288,907 $ - $ (384,364) $ 13,793,919 $ 68,810,772 $
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, 2024
See accompanying Notes to Financial Statements.
(29)
Net Change in Fund Balances - Total Governmental Funds 12,301,869 $ 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 $ 10,089,226
Deletions (2,947,687)
Depreciation Expense 1,501,786 (5,639,753)
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.
Leases (90,375)
Subscriptions 176,223
Principal Payments 2,666,510
Amortization Premium on Bonds 2,763,917 11,559
Pension expenditures 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. (4,439,558) Other postemployment benefit expenditures 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. 52,068
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 1,722
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 1,488,668 internal service funds are included in the statement of activities.
Compensated absences are not reported in the governmental funds until such amounts become due and payable. (269,162)
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. 2,272
Change in Net Position of Governmental Activities $ 13,403,582
CITY OF COVINA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(30)
Governmental
Activities
Other Total Internal
Enterprise Enterprise Service
ASSETS Water Utility Sewer Funds Funds Funds
Current Assets:
Cash and Investments $ 19,035,751 $ 3,523,477 $ 1,953,841 $ 24,513,069 $ 18,203,111 Cash and Investments Restricted - 757,185 - 757,185 -
Accounts Receivable, Net 1,645,392 - 359,725 2,005,117 103,134 Interest Receivable - 21,736 330 22,066 -
Lease Receivable - - 47,847 47,847 -
Due from Other Governments - 47,773 - 47,773 435
Prepaid Items 3,257 3,255 1,117 7,629 53,579
Inventories 47,013 - - 47,013 63,876
Total Current Assets 20,731,413 4,353,426 2,362,860 27,447,699 18,424,135 Noncurrent Assets:
Advance to Theater Fund 2,631,892 - - 2,631,892 -
Lease Receivable - - 292,644 292,644 -
Capital Assets:
Capital Assets, Not Depreciated/Amortized 2,191,686 - 17,696 2,209,382 951,536 Capital Assets, Depreciated/Amortized, Net 41,144,469 11,490,582 8,152,588 60,787,639 1,756,752 Total Noncurrent Assets 43,336,155 14,122,474 8,462,928 65,921,557 2,708,288 Total Assets 64,067,568 18,475,900 10,825,788 93,369,256 21,132,423
DEFERRED OUTFLOWS OF RESOURCES
Deferred Amount on Refunding - 62,352 - 62,352 -
Deferred Amount on OPEB Plans 378,578 90,151 61,887 530,616 177,717 Deferred Amount on Pension Plans 1,171,127 336,205 228,962 1,736,294 607,932 Total Deferred Outflows of Resources 1,549,705 488,708 290,849 2,329,262 785,649
LIABILITIES
Current Liabilities:
Accounts Payable 1,194,733 75,763 138,006 1,408,502 497,626 Accrued Liabilities 4,063 - 40,000 44,063 2,840
Deposits Payable 568,219 - 539,012 1,107,231 -
Interest Payable 118,910 50,751 29,316 198,977 20,157
Unearned Revenue 27,634 - - 27,634 -
Compensated Absences 162,058 53,718 34,010 249,786 59,444 Lease Payable 3,510 - - 3,510 38,935
Claims Payable - - - 2,143,000 -
Pension Obligation Bonds Payable 232,425 77,558 38,407 348,390 101,717 Bonds Payable 1,185,418 885,000 - 2,070,418 -
Total Current Liabilities 3,496,970 1,142,790 818,751 5,458,511 2,863,719 Noncurrent Liabilities:
Compensated Absences 320,311 105,575 67,165 493,051 150,345 Advance from Sewer Fund - 2,631,892 - 2,631,892 -
Lease Payable 3,566 - - 3,566 23,307
Pension Bonds Payable 4,546,685 1,517,177 751,318 6,815,180 1,989,781 Bonds Payable 13,642,755 4,760,000 - 18,402,755 -
Claims Payable - - - - 6,333,693
Net OPEB Liability 1,232,241 261,201 201,277 1,694,719 556,778 Net Pension Liability 2,407,852 691,243 470,748 3,569,843 1,249,918 Total Noncurrent Liabilities 22,153,410 7,335,196 4,122,400 33,611,006 10,303,822 Total Liabilities 25,650,380 8,477,986 4,941,151 39,069,517 13,167,541
DEFERRED INFLOWS OF RESOURCES
Deferred Amounts on OPEB Plans 164,879 42,087 27,220 234,186 74,782 Deferred Amounts on Leases - - 331,021 331,021 -
Deferred Amount on Refunding 106,961 - - 106,961 -
Total Deferred Inflows of Resources 271,840 42,087 358,241 672,168 74,782
NET POSITION
Net Investment in Capital Assets 27,715,425 7,599,079 8,170,284 43,484,788 2,399,256 Unrestricted 11,979,628 2,845,456 (2,353,039) 12,472,045 6,276,493 Total Net Position $ 39,695,053 $ 10,444,535 $ 5,817,245 55,956,833 $ 8,675,749 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 (1,581,138) Net Position of Business-Type Activities $ 54,375,695
Business-Type Activities
CITY OF COVINA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(31)
Governmental
Activities
Other Total Internal
Enterprise Enterprise Service
Water Utility Sewer Funds Funds Funds
OPERATING REVENUES
Water Sales 11,868,255 $ - $ $ - $ 11,868,255 $ -
Charges for Services and Motor
Pool Charges - 191,693 - 191,693 7,657,273
Environmental Fees - 1,125,616 - 1,125,616 -
Sewer Fees - 2,914,954 - 2,914,954 -
Fire Line Fees 512,040 - - 512,040 -
Total Operating Revenues 12,380,295 2,914,954 1,317,309 16,612,558 7,657,273
OPERATING EXPENSES
General and Administrative 2,561,139 1,852,922 890,152 5,304,213 6,524,530 Vehicle and Equipment Operation - - - 1,211,210 -
Utility Billing 71,560 - - 71,560 -
Customer Service 416,196 - - 416,196 -
Sales Promotion 414 - - 414 -
Source and Supply 3,690,592 - 3,690,592 - -
Production and Storage 1,484,185 - 1,484,185 - -
Transmission and Distribution 1,768,174 - 1,768,174 - - Street Sweeping - 165,669 - 165,669 -
Environmental Services - 237,710 - 237,710 -
Industrial Waste - - 62,556 62,556 -
Waste Management - 325,973 - 325,973 -
Depreciation 1,638,002 406,018 220,770 2,264,790 356,737 Total Operating Expenses 11,630,262 2,258,940 1,902,830 15,792,032 8,092,477 OPERATING INCOME (LOSS) 750,033 656,014 (585,521) 820,526 (435,204)
NONOPERATING REVENUES (EXPENSES)
Investment Income (Loss) 1,329,202 199,712 82,196 1,611,110 - Interest Expense (407,273) (195,152) (60,407) (662,832) (49,478) Rental Income - - 93,959 93,959 -
Intergovernmental 31,572 - - 31,572 -
Total Nonoperating Revenues
(Expenses) 953,501 4,560 115,748 1,073,809 (49,478)
INCOME (LOSS) BEFORE TRANSFERS 1,703,534 660,574 (469,773) 1,894,335 (484,682)
TRANSFERS
Transfers In - 245,564 - 245,564 1,900,272
Transfers Out (98,266) (123,230) (8,474) (229,970) -
Capital Contributions - 2,999,768 - 2,999,768 -
Total Transfers (98,266) (123,230) 3,236,858 3,015,362 1,900,272 CHANGE IN NET POSITION 1,605,268 537,344 2,767,085 4,909,697 1,415,590 Net Position - Beginning of Year 38,089,785 9,907,191 3,050,160 7,260,159 NET POSITION - END OF YEAR $ 39,695,053 $ 10,444,535 $ 5,817,245 $ 8,675,749 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 (73,078) Net Position of Business-Type Activities $ 4,836,619
Business-Type Activities
CITY OF COVINA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(32)
Governmental
Activities
Other Total Internal
Enterprise Enterprise Service
Water Utility Sewer Funds Funds Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from customers 12,349,586 $ 2,930,362 $ 1,258,876 $ 16,538,824 $ - $ Cash Received from User Departments - - - 7,628,088
Cash Payments to Suppliers of Goods
and Services (5,772,985) (986,591) (736,522) (7,496,098) (5,033,266) Cash Payments to Employees for Services (3,464,636) (932,737) (660,109) (5,057,482) (1,612,261) Net Cash Provided (Used) by
Operating Activities 3,111,965 1,011,034 3,985,244 (137,755) 982,561
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash Received from Other Funds - 118,108 245,564 363,672 1,900,272 Cash Paid to Other Funds (98,266) (123,230) (8,474) - (229,970) Net Cash Provided (Used) by Noncapital
Financing Activities (98,266) 237,090 (5,122) 133,702 1,900,272
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Acquisition of Capital Assets (3,187,652) (429,095) (630,585) (4,247,332) (1,733,014) Intergovernmental grants 31,572 - - 31,572 -
Cash Received - Leases - 31,207 31,207 -
Principal Paid - Leases - (3,456) - (3,456) (40,293)
Principal Paid (1,394,977) (947,279) (156,377) (2,498,633) (101,351) Interest and Debt Issuance Costs (419,922) (186,796) (61,454) (668,172) (49,718) Net Cash Used by Capital and
Related Financing Activities (4,974,435) (1,563,170) (817,209) (7,354,814) (1,924,376)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income 1,329,202 199,712 82,332 1,611,246 -
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (631,534) (357,546) (635,542) 958,457 (1,624,622) Cash and Cash Equivalents -
Beginning of Year 19,667,285 4,638,208 2,589,383 26,894,876 17,244,654
CASH AND CASH EQUIVALENTS -
END OF YEAR $ 4,280,662 19,035,751 $ 1,953,841 $ 25,270,254 $ 18,203,111 $ Business-Type Activities
CITY OF COVINA
STATEMENT OF CASH FLOWS (CONTINUED)
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(33)
Governmental
Activities
Other Total Internal
Enterprise Enterprise Service
Water Utility Sewer Funds Funds Funds
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
Operating Income (Loss) $ 656,014 750,033 $ $ 820,526 (585,521) $ $ (435,204) Adjustments to Reconcile Operating Income (Loss)
to Net Cash Provided (Used) by Operating Activities:
Depreciation 1,638,002 406,018 220,770 2,264,790 356,737 Changes in Operating Assets, Deferred Outflows
of Resources, Liabilities, and Deferred Inflows of
Resources:
(Increase) Decrease in:
Accounts Receivable - (30,709) (58,433) (89,142) (29,219) Due from Other Governments - 15,408 - 15,408 34
Inventory 26,082 - - 26,082 (24,384)
Prepaid Items (2,972) 7,242 (3,255) 1,015 (35,230)
Deferred Outflows of Resources of
OPEB Plan 47,993 13,778 8,440 70,211 18,308
Deferred Outflows of Resources of
Pension Plans 366,933 147,358 44,394 558,685 264,904
Increase (Decrease) in:
Accounts Payable 553,252 36,615 (250,530) 339,337 357,599 Accrued Liabilities - (550,128) - - (550,128)
Deposits Payable 34,268 - 37,822 72,090 -
Unearned Revenue 1,235 - - 1,235 -
Deferred Inflows of Resources of
OPEB Plan (52,238) (14,996) (9,186) (76,420) (19,928)
Deferred Inflows of Resources of
Pension Plans (9,041) (2,843) (1,607) (13,491) (5,130)
Deferred Inflows of Resources Leases - - 56,636 56,636 - Compensated Absences 63,249 22,826 13,194 99,269 (64,510) Net OPEB Liability (9,553) (2,742) (1,679) (13,974) (3,644) Net Pension Liability 23,998 285,559 93,558 403,115 45,535 Claims Payable - - - - 556,693
Net Cash Provided (Used) by
Operating Activities 3,111,965 $ 1,011,034 $ (137,755) $ 3,985,244 $ 982,561 $
NONCASH FINANCING, CAPITAL OR
INVESTING ACTIVITIES
Capital Contributions - $ - $ 2,999,768 $ 2,999,768 $ - $ Business-Type Activities
CITY OF COVINA
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(34)
Other
Postemployment
Private- Benefit Custodial
Purpose Trust Trust Fund Funds
ASSETS
Cash and Investments $ 1,113,564 $ 1,394,676 $ 1,500
Accounts Receivable - - 787
Interest Receivable 6,302 - -
Land Held for Resale 2,391,502 - -
Capital Assets, Not Being Depreciated 148,765 - -
Total Assets 3,660,133 1,394,676 2,287
LIABILITIES
Accounts Payable and Accrued Liabilities 1,814 - 2,287
Noncurrent Liabilities:
Due Within One Year 14,382 - -
Due in More Than One Year 25,980 - -
Total Liabilities 42,176 - 2,287
NET POSITION
Held for OPEB - 1,394,676 -
Held for Dissolution of Community
Redevelopment Agency 3,617,957 - -
Total Net Position $ 3,617,957 $ 1,394,676 $ -
CITY OF COVINA
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(35)
Other
Postemployment
Private- Benefit Custodial
Purpose Trust Trust Fund Funds
ADDITIONS
Property Tax Revenue $ 33,405 $ - $ -
Charges for Services 169,742 - -
Contributions - Employer - 200,000 -
Contributions - Rollover - 1,089,281 -
Investment Earnings 650,194 107,600 -
Business Licenses Collected from
Property Owners - - 13,159
Total Additions 853,341 1,396,881 13,159
DEDUCTIONS
General and Administrative 259,723 2,205 13,159
Interest and Fiscal Charges 60,373 - -
Program Expenses 27,481 - -
Total Deductions 347,577 2,205 13,159
CHANGE IN NET POSITION 505,764 1,394,676 -
Net Position - Beginning of Year 3,112,193 - -
NET POSITION - END OF YEAR $ 3,617,957 $ 1,394,676 $ -
(36)
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(37)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Financial Reporting Entity
The financial statements of the City of Covina (the 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 (the 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, 2024
(38)
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 is a fiduciary component unit and is reported as a fiduciary fund (private-purpose trust fund).
The Covina Public Financing Authority (the 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 (the 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, 2024
(39)
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. 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. 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, 2024
(40)
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. 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 year-end. General capital asset acquisitions and debt service principal payments are reported as expenditures in governmental funds. Proceeds from long-term debt and acquisitions under leases are reported as other financing sources.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(41)
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.
Measure W Special Revenue Fund
This fund accounts for the tax collected to provide a safe, clean water program.
American Rescue Plan Act (ARPA) Special Revenue Fund
This fund accounts for monies provided to the City to assist with COVID pandemicrelated response activities supporting public health response, address negative economic impacts, replace public sector revenue loss, fund essential government services and certain water, sewer, and broadband infrastructure improvements.
Park Development Capital Projects Fund
This fund accounts for federal and state grant monies used for parkland acquisition and development.
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.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(42)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
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.
Enterprise Funds
These funds accounts for the general and administrative, environmental services, industrial waste, waste management operations, and theater operations.
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.
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.
Other Postemployment Benefit Trust Fund
The fund is to account for resources that are held in an irrevocable trust for the benefit of participants in the City’s other postemployment benefit plan.
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.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(43)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
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.
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.
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.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(44)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Receivables
All accounts receivable are shown net of an allowance for uncollectible amounts. The allowance is estimated based on historical collections and a review of account receivable.
I. 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 purchase’s 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.
J. 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.
K. 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 one year. 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 to 40 Years
Improvements Other Than Buildings 20 Years
Public Domain Infrastructure 15 to 50 Years
Water System Infrastructure 20 to 50 Years
Sanitary Sewer System Infrastructure 20 to 50 Years
Machinery and Equipment 5 to 20 Years
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(45)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Capital Assets (Continued)
Subscription-Based Information Technology Arrangements (SBITA) assets are initially measured as the sum of the present value of payments expected to be made during the subscription term, payments associated with the SBITA contract made to the SBITA vendor at the commencement of the subscription term, when applicable, and capitalizable implementation costs, less any SBITA vendor incentives received form the SBITA vendor at the commencement of the SBITA term. SBITA assets are amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying IT assets.
L. Leased Property
Lessee
The City is a lessee for noncancellable leases of equipment. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the applicable governmental activities or business-type activities in the government-wide and in the proprietary fund financial statements. The City recognizes lease liabilities with an initial individual value of $5,000 or more. At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over the shorter of the lease term or its useful life.
Lessor
The City recognizes a lease receivable and a deferred inflow of resources in the applicable governmental activities or business-type activities in the government-wide and in the governmental and proprietary fund financial statements. At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.
For both the lessee and lessor the City uses the interest rate stated on the agreement when available. When the interest rate is not provided the City uses its estimated incremental borrowing rate as the discount rate.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(46)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. 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, 2024 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.
N. 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.
O. 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.
P. 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.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(47)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position includes a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The category of deferred outflow of resources reported in the statement of net position is related to debt refunding, pensions, and other postemployment benefits. The deferred charge on refunding resulted from the difference between 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 on pension and other postemployment benefits are more fully discussed in Notes 10 and 17.
In addition to liabilities, the statement of financial position and the governmental funds balance sheet includes a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. In the government-wide financial statements. The City’s deferred inflows of resources reported on the statement of net position relate to pension and other postemployment benefits, which are more fully discussed in Notes 10 and 17. The statement of net position and the governmental funds balance sheet also reports a deferred inflow of resources related to leases.
Under the modified accrual basis of accounting, deferred inflows of resources also include revenues not collected within the availability period after the fiscal year-end. The City has reported deferred inflows of resources related to unavailable revenues for grants. These amounts are deferred and will be recognized as an inflow of resources in the period that amounts become available.
R. Adoption of New Accounting Standards
During the year ended June 30, 2024, the City implemented GASB Statement No. 100 Accounting Changes and Error Corrections – An Amendment to GASB Statement No. 62, which defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. The Statement prescribes the accounting and financial reporting for each type of accounting change and for error corrections. Implementation of GASB Statement No. 100 did not have any direct impact on the presentation of the City’s financial statements.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(48)
NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Excess of Charges over Appropriations
For the fiscal year ended June 30, 2024, expenditures exceeded appropriations in the following programs:
Variance with
Budget Actual Final Budget
Other Governmental Funds:
Special Revenue Funds:
Air Quality Improvement 217,073 $ 321,018 $ (103,945) $ Lighting Assessment 256,364 293,790 (37,426)
TDA Grant 37,574 37,872 (298)
Funds with deficit balances were as follows:
Amount
Park Development Capital Projects Fund 384,364 $
Other Governmental Funds:
Special Revenue Funds:
Lighting Assessment 69,764
Other Grants 68,339
Capital Project Funds:
Transportation 72,263
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, 2024
(49)
NOTE 3 CASH AND INVESTMENTS (CONTINUED)
Cash and investments as of June 30, 2024 are classified in the accompanying financial statements as follows:
Other
Business- Private- Postemployment
Governmental Type Purpose Trust Benefit Custodial
Activities Activities Fund Trust Fund Funds Total
Statement of Net Position:
Cash and Investments 85,226,990 $ 24,513,069 $ 1,113,564 $ 1,394,676 $ 1,500 $ 112,249,799 $ Cash and Investments -
Restricted - 757,185 - - - 757,185
Cash and Investments With
Fiscal Agent 508 - - - - 508
Total Cash and
Investments 85,227,498 $ 25,270,254 $ 1,113,564 $ 1,394,676 $ 1,500 $ 113,007,492 $ Cash and Investments as of
June 30, 2024:
Consist of the Following:
Cash on Hand $ 7,780
Deposits With Financial Institutions 7,222,308
Investments 105,777,404
Total Cash and
Investments $ 113,007,492
Fiduciary Funds
Authorized Investments
The table below 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.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(50)
NOTE 3 CASH AND INVESTMENTS (CONTINUED)
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table:
12 Months 13 to 36 37 to 60 More than 60
Fair Value or Less Months Months Months
Investment Type:
State Investment Pool (LAIF) $ 32,265,486 32,265,486 $ - $ - $ - $ U.S. Agency Securities 41,630,598 4,952,100 10,721,810 25,956,688 - Negotiable Certificates of Deposit 21,876,939 7,566,669 10,862,777 3,447,493 Money Market Mutual Funds 648,967 648,967 - - -
Held by OPEB Trust:
Money Market Mutual Funds 1,380,698 1,380,698 - - -
Held by Bond Trustee:
Money Market Mutual Funds 508 508 - - -
Total 97,803,196 46,813,920 $ 21,584,587 $ 29,404,181 $ - $ Not Subject to Investment Rate Risk:
Covina Irrigating Company 7,974,208
Total Investments 105,777,404 $
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:
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(51)
NOTE 3 CASH AND INVESTMENTS (CONTINUED)
Credit Risk (Continued)
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 - 32,265,486 $ - $ 32,265,486 $ - $ U.S. Agency Securities 41,630,598 N/A - 41,630,598 - -
Negotiable Certificates of Deposit 21,876,939 N/A - - 21,876,939 - Money Market Mutual Funds 648,967 A - 648,967 - -
Held by OPEB Trust:
Money Market Mutual Funds 1,380,698 N/A - - - 1,380,698 Held by Bond Trustee:
Money Market Mutual Funds 508 N/A 508 - - -
Total 97,803,196 649,475 $ 41,630,598 $ 54,142,425 $ 1,380,698 $ Not Subject to Credit Risk
Covina Irrigating Company 7,974,208
Total Investments 105,777,404 $
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.
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 deposit 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, 2024, all the City’s deposits with financial institutions in excess of federal depository insurance limits were held in collateralized accounts.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(52)
NOTE 3 CASH AND INVESTMENTS (CONTINUED)
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.
Investment in Covina Irrigating Company
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 in the Water Utility Enterprise Fund. The City’s equity share is 42.19%.
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.
The City pool investment has the following recurring fair value measurements as of June 30, 2024:
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 41,630,598 $ - $ 41,630,598 $ - $ Negotiable Certificates of Deposit 21,876,939 - 21,876,939 - Total Investments Measured
at Fair Value 63,507,537 - $ 63,507,537 $ - $
Investments:
State Investment Pool (LAIF)* 32,265,486
Money Market Mutual Funds* 2,030,173
Covina Irrigating Company* 7,974,208
Total Pooled Investments 105,777,404 $
* Not subject to fair value measurement hierarchy.
Fair Value Measurements Using
The annual money-weighted rate of return on fiduciary OPEB plan investments (calculated as the internal rate of return on plan investments, net of plan investment expense) for the year ended June 30, 2024, was 10.35%. The annual money-weighted rate of return expresses investment performance, net of OPEB plan investment expense, adjusted for the changing amounts actually invested.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(53)
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, 2024:
Receivable Fund Payable Fund Amount
General Other Governmental Funds 236,494 $
Advance
Advances were made to the Theater Enterprise Fund from the Sewer Enterprise Fund during fiscal year 2022-2023. The advance was used to assist in the purchase of the preforming arts center. Interest on the outstanding balance on advances payable is charged at an annual rate of 1.57%. Payments started in December 2023 and the advance will mature in December 2042. At June 30, 2024, the outstanding balance was $2,631,892.
Interfund Transfers
Transfers between funds are generally subsidies from one fund to another fund, funding of workers compensation and general liability reserves. The following are the interfund transfers for fiscal year ended June 30, 2024.
Transfers In Fund Transfers Out Fund Amount
General Other Governmental Funds 300,000 $
Other Governmental Funds General 396,993
Park Development General 1,762,161
Other Enterprise Funds General 245,564
Internal Service Water Fund 98,266
Internal Service Sewer Fund 123,230
Internal Service General 1,423,987
Internal Service Other Governmental Funds 246,315
Internal Service Other Enterprise Funds 8,474
Total $ 4,604,990
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 LEASE RECEIVABLE
The City, acting as lessor, leases wireless cell towers and land under long-term, noncancelable lease agreements. The leases expire at various dates through 2029 and do not provide for renewal options. During the year ended June 30, 2024, the City recognized $355,301 and $28,678 in lease revenue and interest revenue, respectively, pursuant to these contracts.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(54)
NOTE 6 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.
NOTE 7 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, 2024, the City has recorded an allowance for the balance of $5,350,915 for principal of $4,742,000 and accrued interest of $608,915 as management is not certain if this amount will be collected.
NOTE 8 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, 2024, of all loans was $1,815,737. Due to the forgiveness feature of these loans the City has established an allowance for uncollectible loans in the amount of $1,537,215.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(55)
NOTE 9 CAPITAL ASSETS
Governmental Activities
Capital asset activity for the fiscal year ended June 30, 2024 was as follows:
Balance Deletions/ Balance
June 30, 2023 Additions Transfers June 30, 2024
Governmental Activities:
Capital Assets, Not Depreciated/Amortization:
Land 12,335,553 $ - $ - $ 12,335,553 $
Construction in Progress 3,623,307 10,131,408 8,467,957 5,286,758 Total Capital Assets, Not
Depreciated/Amortization 15,958,860 10,131,408 8,467,957 17,622,311 Capital Assets, Depreciated/Amortized:
Buildings and Structures 43,648,352 562,952 3,009,208 41,202,096 Improvements Other Than Buildings 14,853,789 2,277,981 19,200 17,112,570 Public Domain Infrastructure 133,966,388 6,092,453 - 140,058,841 Sanitary Sewer Infrastructure 6,221,681 - - 6,221,681
Machinery and Equipment 11,931,717 1,102,910 206,013 12,828,614 Right-to-Use Assets 794,592 151,469 132,541 813,520
Total Capital Assets,
Depreciated/Amortization 211,416,519 10,187,765 3,366,962 218,237,322 Less: Accumulated Depreciation/Amortization for:
Buildings and Structures 15,145,986 831,787 32,845 15,944,928 Improvements Other Than Buildings 6,594,564 692,228 18,900 7,267,892 Public Domain Infrastructure 96,840,289 3,384,907 - 100,225,196 Sanitary Sewer Infrastructure 4,573,601 64,737 - 4,638,338 Machinery and Equipment 9,187,090 761,829 206,013 9,742,906 Right-to-Use Assets 327,347 261,002 132,541 455,808
Total Accumulated
Depreciation/Amortization 132,668,877 5,996,490 390,299 138,275,068 Total Capital Assets,
Depreciated/Amortization, Net 78,747,642 4,191,275 2,976,663 79,962,254 Total Capital Assets, Net 94,706,502 $ 14,322,683 $ 11,444,620 $ 97,584,565 $ Depreciation/Amortization expense was charged to the following categories:
Governmental Activities:
General Government 343,029 $
Public Safety 631,303
Public Works 3,877,420
Culture and Recreation 766,570
Transit 378,168
Total Governmental Activities 5,996,490 $
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(56)
NOTE 9 CAPITAL ASSETS (CONTINUED)
Business-Type Activities
Balance Additions/ Balance
June 30, 2023 Transfers Deletions June 30, 2024
Business-Type Activities:
Capital Assets, Not Depreciated/Amortization:
Land 377,408 $ - $ - $ 377,408 $
Construction in Progress 118,951 3,906,407 2,193,384 1,831,974 Total Capital Assets, Not
Depreciated/Amortization 496,359 3,906,407 2,193,384 2,209,382 Capital Assets, Depreciated/Amortization:
Buildings and Structures 16,382,150 3,059,940 - 19,442,090 Improvements Other Than Buildings 2,712,064 655,364 - 3,367,428 Water System Infrastructure 58,200,883 1,447,379 - 59,648,262 Machinery and Equipment 4,407,708 371,394 - 4,779,102
Right-to-Use Assets 17,306 - - 17,306
Total Capital Assets, Depreciated
Depreciated/Amortization 81,720,111 5,534,077 - 87,254,188 Less: Accumulated Depreciation/Amortization for:
Buildings and Structures 4,331,550 391,588 - 4,723,138
Improvements Other Than Buildings 294,285 111,622 - 405,907 Water System Infrastructure 16,816,052 1,430,354 - 18,246,406 Machinery and Equipment 2,752,950 327,765 - 3,080,715
Right-to-Use Assets 6,922 3,461 - 10,383
Total Accumulated
Depreciated/Amortization 24,201,759 2,264,790 - 26,466,549 Total Capital Assets,
Depreciated/Amortization, Net 57,518,352 3,269,287 - 60,787,639 Total Capital Assets, Net 58,014,711 $ 7,175,694 $ 2,193,384 $ 62,997,021 $ Depreciation/Amortization expense was charged to the following categories.
Business-Type Activities:
Water Utility 1,638,002 $
Sewer 406,018
Nonmajor Fund - Other Enterprise Funds 220,770
Total Business-Type Activities 2,264,790 $
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(57)
NOTE 10 PENSION PLANS
The following is a summary of pension related items for the year ended June 30, 2024:
Deferred Deferred
Pension Outflows of Inflows of Pension
Liability Resources Resources Expense
CalPERS Miscellaneous 13,527,254 $ 6,535,295 $ - $ 4,781,479 $ CalPERS Safety 19,596,008 18,208,795 19,774,665 3,772,507 Total 31,736,049 $ 26,131,303 $ 19,774,665 $ 8,553,986 $ 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 multiemployer 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 fulltime 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, 2024
(58)
NOTE 10 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, 2023, 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 8.13% 6.50%
Required Employer Contribution Rates:
Normal Cost Rate 11.870% 8.250%
Payment of Unfunded Liability - $ - $
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 8.99% 8.99% 14.50% Required Employer Contribution Rates:
Normal Cost Rate 29.090% 26.110% 14.500%
Payment of Unfunded Liability - $ - $ 5,758 $
Miscellaneous
Safety
Employees Covered
At the measurement date of June 30, 2023, the following employees were covered by the benefit terms for the Miscellaneous Plan:
Miscellaneous
Inactive Employees or Beneficiaries Currently
Receiving Benefits 279
Inactive Employees Entitled to But Not Yet
Receiving Benefits 319
Active Employees 109
Total 707
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(59)
NOTE 10 PENSION PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) Contributions
Section 20814 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, 2024, employer contributions of $1,093,602 and $1,734,540 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, 2023, using an annual actuarial valuation as of June 30, 2022 rolled forward to June 30, 2023 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, 2024
(60)
NOTE 10 PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
Actuarial Assumptions
The total pension liabilities in the June 30, 2022 actuarial valuations were determined using the following actuarial assumptions:
Miscellaneous Safety
Valuation Date June 30, 2022 June 30, 2022
Measurement Date June 30, 2023 June 30, 2023
Actuarial Cost Method Entry-Age Normal Entry-Age Normal Cost Method Cost Method
Actuarial Assumptions:
Discount Rate 6.90% 6.90%
Inflation 2.30% 2.30%
Projected Salary Increase (1) (1)
Mortality Rate Table (2) (2)
Postretirement Benefit Increase (3) (3)
(1) Varies by entry age and service.
(2)
(3) The less of contract COLA or 2.30% until Purchasing Power Protection Allowance Floor on purchasing power applies, 2.30% thereafter.
The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries.
For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.
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, 2024
(61)
NOTE 10 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
Asset Real Return
Allocation (a) (b)
Global Equity - Cap-Weighted 30.00 % 4.45 %
Global Equity - Non-Cap-weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-Backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High Yield 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
Total 100.00 %
(a) An expected inflation of 2.30% used for this period. (b) Figures are based on the 2021 Asset Liability Management study.
Leverage
Discount Rate
The discount rate used to measure the total pension liability was 6.9%. 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.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(62)
NOTE 10 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, 2022
(Measurement Date) 108,371,763 $ 96,435,357 $ 11,936,406 $ Changes in the Year:
Service Cost 1,633,504 - 1,633,504
Interest on the Total Pension
Liability 7,368,866 - 7,368,866
Differences between Expected
and Actual Experience 420,345 - 420,345
Changes in Assumptions - - -
Contribution - Employer - 1,440,158 (1,440,158)
Contribution - Employee - 740,739 (740,739)
Net Investment Income - 5,721,884 (5,721,884)
Administrative Expenses - (70,914) 70,914
Benefit Payments, Including
Refunds of Employee
Contributions (5,627,420) (5,627,420) -
Net Changes 3,795,295 2,204,447 1,590,848
Balance at June 30, 2023
(Measurement Date) 112,167,058 $ 98,639,804 $ 13,527,254 $ Increase (Decrease)
Proportionate Share of Net Pension Liability Safety Plan As of June 30, 2024 (measurement date of June 30, 2023), the City reported $18,208,795 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, 2023, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2022 rolled forward to June 30, 2023 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, 2024
(63)
NOTE 10 PENSION PLANS (CONTINUED)
C. Changes in the Net Pension Liability (Continued)
Proportionate Share of Net Pension Liability Safety Plan (Continued) The City’s proportionate share of the net pension liability for the Safety Plan as of the measurement dates ended June 30, 2022 and 2023 was as follows:
Safety
Proportion - June 30, 2022 0.246720%
Proportion - June 30, 2023 0.243600%
Change - Increase (Decrease) -0.003120%
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 1-percentage-point lower or 1-percentagepoint higher than the current rate:
Miscellaneous Safety
1% Decrease 5.90% 5.90%
Net Pension Liability 28,594,472 $ 38,548,441 $
Current Discount Rate 6.90% 6.90%
Net Pension Liability 13,527,254 $ 18,208,795 $
1% Increase 7.90% 7.90%
Net Pension Liability (Asset) 1,211,507 $ 1,579,686 $
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, 2024
(64)
NOTE 10 PENSION PLANS (CONTINUED)
D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2024, the City recognized pension expense of $4,781,479 and $3,772,507 for the Miscellaneous and Safety Plans, respectively. At June 30, 2024, 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 $ - 1,093,602 $ 1,734,540 $ - $
Differences Between Expected and
Actual Experience - 186,820 1,336,861 (114,449)
Change in Assumptions - - 1,062,690 -
Change in Employer’s Proportion and
Differences Between the Employer’s
Contributions and the Employer’s
Proportionate Share of Contributions - - 12,970,048 (19,660,216) Net Differences Between Projected and
Actual Earnings on Plan Investments - 5,254,873 2,491,869 - Total $ - 6,535,295 $ 19,596,008 $ (19,774,665) $
Miscellaneous Safety
$1,093,602 and $1,734,540 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, 2025. 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
2025 1,377,663 $ (1,752,109) $
2026 915,696 (1,453,240)
2027 2,988,698 1,222,600
2028 159,636 69,552
2029 - -
Thereafter - -
Payable to the Pension Plan
At June 30, 2024, the City had no outstanding amount of contributions to the pension plan required for the year ended June 30, 2024.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(65)
NOTE 11 COMPENSATED ABSENCES
For governmental funds, accumulated vacation and sick leave benefits payable at June 30, 2024, was $4,409,843. The short-term portion of $1,207,805 and long-term portion of $3,202,038 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 $209,789, of which $59,444 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 $742,837 of which $249,786 represents the current portion. The total amount is recorded within the respective proprietary funds and business-type activities of the government-wide statements.
Balance Current
June 30, 2024 Portion
Governmental Funds 4,409,843 $ 1,207,805 $
Internal Service 209,789 59,444
Total Governmental Activities 4,619,632 $ 1,267,249 $
Total Enterprise Funds 742,837 $ 249,786 $
NOTE 12 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 $4,282,950 and $7,612,015, respectively.
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 judgements. At June 30, 2024, total actual and estimated claims and judgments payable were as follows:
General Liability 3,894,657 $
Workers’ Compensation 4,582,036
Total 8,476,693 $
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(66)
NOTE 12 RISK MANAGEMENT (CONTINUED)
The following are changes in the claims and judgments liability for fiscal years 2024 and 2023:
2024 2023
Claims and Judgements - Beginning of Fiscal Year 7,920,000 $ 7,718,000 $ Claims Incurred (Including IBNRs) 1,801,357 891,609
Claims Paid (1,244,664) (689,609)
Claims and Judgements - End of Fiscal Year 8,476,693 $ 7,920,000 $ Fiscal Year Ended June 30
NOTE 13 LONG-TERM LIABILITIES
The following is a summary of changes in the long-term liabilities for the fiscal year ended June 30, 2024:
Balance Balance Current
June 30, 2023 Additions Deletions June 30, 2024 Portion Governmental Activities:
Other Long-Term Liabilities:
Compensated Absences 4,414,980 $ 1,803,982 $ 1,599,330 $ 4,619,632 $ 1,267,249 $ Claims and Judgments 7,920,000 1,801,357 1,244,664 8,476,693 2,143,000 Lease Payable 153,335 146,213 96,131 203,417 83,498
Other Debt:
Certificates of Participation Payable (COP) - 4,475,000 215,000 4,260,000 220,000 Unamortized Premium on COP 184,950 - 11,559 173,391 11,559 Pension Obligation Bonds 52,529,291 - 2,427,861 50,101,430 2,436,610 Direct Borrowings and Placements:
Subscriptions Payable 305,403 5,256 181,479 129,180 127,850 Section 108 Loan 1,875,000 - 125,000 1,750,000 125,000
Total Long-Term Liabilities, Net 71,857,959 $ 3,756,808 $ 5,901,024 $ 69,713,743 $ 6,414,766 $ Balance Balance Current
June 30, 2023 Additions Deletions June 30, 2024 Portion Business-Type Activities:
Other Long-Term Liabilities:
Compensated Absences $ 392,002 643,568 $ 292,733 $ 742,837 $ 249,786 $ Lease Payable 10,531 - 3,455 7,076 3,510
Direct Borrowings and Placements:
Water Installment Agreement - 15,991,560 1,163,387 14,828,173 1,185,418 Other Debt:
Revenue Bonds Payable - 6,515,000 870,000 5,645,000 885,000 Pension Obligation Bonds - 7,510,709 347,139 7,163,570 348,390 Total Long-Term Liabilities, Net 30,671,368 $ 392,002 $ 2,676,714 $ 28,386,656 $ 2,672,104 $ 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.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(67)
NOTE 13 LONG-TERM LIABILITIES (CONTINUED)
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, 2024, the outstanding balance of these bonds was $4,260,000. 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
2025 220,000 $ 145,688 $ 365,688 $
2026 225,000 140,738 365,738
2027 230,000 135,112 365,112
2028 235,000 129,650 364,650
2029 250,000 117,900 367,900
2030-2034 1,425,000 407,500 1,832,500
2035-2039 1,675,000 159,763 1,834,763
Total 4,260,000 $ 1,236,351 $ 5,496,351 $
Leases
The City leases equipment and vehicles for various terms under long-term, noncancelable lease agreements. The leases expire at various dates through 2029 and do not have renewal options.
Total future minimum lease payments are as follows:
Fiscal Year Ending June 30, Principal Interest Total
2025 83,498 $ 5,129 $ 88,627 $
2026 49,893 3,431 53,324
2027 31,645 2,131 33,776
2028 23,067 1,051 24,118
2029 15,314 279 15,593
Total 203,417 $ 12,021 $ 215,438 $
Right-to-use assets acquired through outstanding leases are shown below, by underlying asset class.
Governmental
Activities
Equipment 104,989 $
Vehicles 326,529
Less: Accumulated Amortization (202,680)
Total 228,838 $
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(68)
NOTE 13 LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
Subscription-Based Information Technology Arrangements
The City has entered into subscription based-information technology arrangements (SBITAs) for various software applications. The SBITA arrangements expire at various dates through 2026 and provide for renewal options.
As of June 30, 2024, SBITA assets and the related accumulated amortization totaled $382,002 and $253,128, respectively.
The future subscription payments under SBITA agreements are as follows:
Fiscal Year Ending June 30, Principal Interest Total
2025 127,850 $ 2,090 $ 129,940 $
2026 1,330 52 1,382
Total 129,180 $ 2,142 $ 131,322 $
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, 2024, the outstanding loan balance was $1,750,000.
Fiscal Year Ending June 30, Principal Interest Total
2025 125,000 $ 54,065 $ 179,065 $
2026 125,000 50,686 175,686
2027 125,000 47,188 172,188
2028 125,000 43,606 168,606
2029 125,000 39,947 164,947
2030-2034 625,000 139,703 764,703
2035-2038 500,000 35,413 535,413
Total 1,750,000 $ 410,608 $ 2,160,608 $
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(69)
NOTE 13 LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
Pension Obligation Bonds
The City issued $62,795,000 of Taxable Pension Obligation Bonds, Series 2021 (POB), dated August 1, 2021 to fund a portion of the City’s obligations to CalPERS for the unfunded actuarial accrued liability with respect to the City’s miscellaneous and safety defined benefit pension plans. The City allocated the POB between governmental activities and business-type activities as follows:
Governmental Activities 50,101,430 $
Business-Type Activities 7,163,570
Total 57,265,000 $
The POB is due from 2022 through 2046 in annual principal installments of $65,000 to $3,585,000. Interest rates range from 0.299% to 3.001% and interest is payable semiannually on February 1 and August 1. The total outstanding principal as of June 30, 2024, is $57,265,000. The total annual debt service requirements on the POB are as follows:
Fiscal Year Ending June 30, Principal Interest Total
2025 2,785,000 $ 1,308,903 $ 4,093,903 $
2026 2,805,000 1,284,896 4,089,896
2027 2,835,000 1,252,752 4,087,752
2028 2,870,000 1,211,853 4,081,853
2029 2,915,000 1,163,612 4,078,612
2030-2034 15,450,000 4,906,527 20,356,527
2035-2039 16,605,000 2,842,994 19,447,994
2040-2044 8,895,000 839,155 9,734,155
2045-2046 2,105,000 50,043 2,155,043
Total 57,265,000 $ 14,860,734 $ 72,125,734 $
The annual debt service requirements will be allocated 97% to governmental activities and 3% to business-type activities.
Business-Type Activities
Leases
The City leases equipment under a noncancelable lease agreement. The lease expires in 2026 and does not have a renewal option.
Total future principal and interest payments are as follows:
Fiscal Year Ending June 30, Principal Interest Total
2025 3,510 $ 85 $ 3,595 $
2026 3,566 30 3,596
Total 7,076 $ 115 $ 7,191 $
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(70)
NOTE 13 LONG-TERM LIABILITIES (CONTINUED)
Business-Type Activities (Continued)
Leases (Continued)
Right-to-use assets acquired through outstanding leases are shown below, by underlying asset class.
Business-Type
Activities
Equipment 17,306 $
Less: Accumulated Amortization (10,383)
Total 6,923 $
Revenue Bonds Payable, Sewer Enterprise Fund
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 $6,096,507. Principal and interest paid for the current fiscal year and customer net revenues were $1,020,861 and $1,062,032, respectively.
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
2025 885,000 $ 132,088 $ 1,017,088 $
2026 905,000 111,745 1,016,745
2027 930,000 89,301 1,019,301
2028 950,000 65,135 1,015,135
2029 975,000 39,808 1,014,808
2030 1,000,000 13,430 1,013,430
Total 5,645,000 $ 451,507 $ 6,096,507 $
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(71)
NOTE 13 LONG-TERM LIABILITIES (CONTINUED)
Business-Type Activities (Continued)
Revenue Bonds Payable, Water Enterprise Fund
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 customer net revenues were $1,472,747 and $2,388,035, respectively.
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
2025 1,185,418 $ 286,330 $ 1,471,748 $
2026 976,921 262,871 1,239,792
2027 763,400 245,786 1,009,186
2028 777,173 230,689 1,007,862
2029 792,577 215,301 1,007,878
2030-2034 4,209,367 834,627 5,043,994
2035-2039 4,642,062 401,175 5,043,237
2040-2041 1,481,255 29,255 1,510,510
Total 14,828,173 $ 2,506,034 $ 17,334,207 $
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, 2024, 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).
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(72)
NOTE 14 FUND BALANCES (CONTINUED)
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 (a) 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, 2024
(73)
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 Park Nonmajor
Fund Measure W ARPA Development Governmental Total
Nonspendable:
Prepaid Items 92,959 $ - $ - $ - $ 828 $ 93,787 $
Total 92,959 - - - 828 93,787
Restricted:
Culture and Recreation 265,624 - - - 1,171,380 1,437,004 Redevelopment and Housing - - - - 3,060,746 3,060,746
Community Development - - - - 276,800 276,800
Law Enforcement 66,921 - - - 546,086 613,007
Transportation and
Street Projects - - - - 6,875,434 6,875,434
Air Quality Projects - - - - 51,040 51,040
Assessment Districts - - - - 1,585,464 1,585,464
Storm Water - - - - 1,779 1,779
Other Capital Projects - 16,112,310 - - 434,728 16,547,038 Total 332,545 16,112,310 - - 14,003,457 30,448,312
Committed:
Emergency Contingency - 10,216,235 - - - 10,216,235
Community Development 5,446,552 - - - - 5,446,552
Engineering - 7,817 - - - 7,817
City Attorney - 3,431 - - - 3,431
Finance 14,965 - - - - 14,965
Law Enforcement 87,772 - - - - 87,772
Culture and Recreation 20,466 - - - - 20,466
Other Capital Projects 80,943 - - - - 80,943
Total 15,878,181 - - - - 15,878,181
Assigned:
Community Development 1,049 - - - - 1,049
Total 1,049 - - - - 1,049
Unassigned 22,984,173 - - (384,364) 22,389,443 (210,366) Total 39,288,907 $ 16,112,310 $ - $ (384,364) $ 13,793,919 $ 68,810,772 $ 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, 2024
(74)
NOTE 16 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, 2023 measurement date:
Active Plan Members 173
Inactive Employees or Beneficiaries Currently
Receiving Benefit Payments 146
Total 319
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. For fiscal year 2024, $444,595 was contributed as insurance premiums, $200,000 to the trust, and an implicit subsidy $104,613 totaling $749,208.
B. Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2023, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2023.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(75)
NOTE 16 OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) B. Net OPEB Liability (Continued)
Actuarial Assumptions
The total OPEB liability in the June 30, 2022 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 July 1, 2020 to June 30, 2022.
Valuation Date June 30, 2022
Funding Method Entry-age normal cost, level percent of pay Discount Rate 4.30%
Investment Rate of Return 4.50% per year net of expenses Inflation 2.75%
Aggregate Payroll Increases 2.75%
Mortality Rate - Miscellaneous Preretirement Mortality Rates for Public Agency Miscellaneous from 2021 CalPERS Experience Study.
Postretirement Mortality Rates for Public Agency
Miscellaneous from 2021 CalPERS Experience Study.
Mortality Rate - Safety Preretirement Mortality Rates for Public Agency Police and Fire from 2021 CalPERS Experience Study.
Postretirement Mortality Rates for Public Agency Police and Fire from 2021 CalPERS Experience Study.
Healthcare Trend Rate
6.00% for 2023, 5.50% for 2024, 5.25% for 2025-2029,
5.00% for 2030-2039, 4.75% for 2040- 2049, 4.50% for
2050-2069, and 4.00% for 2070 and later years; Medicare ages: 4.50% for 2023-2029 and 4.00% for 2030 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 1.80
Cash Equivalents 5 0.20
Total 100 %
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(76)
NOTE 16 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 4.30%, 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 3.86%.
Change in Assumptions
The discount rate was changed from 4.28% to 4.30%.
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, 2022 (Measurement Date) 7,610,279 $ 1,055,583 $ 6,554,696 $ Changes Recognized for the Measurement Period:
Service Cost 219,590 - 219,590
Interest on the Total OPEB Liability 323,307 - 323,307
Changes of Assumptions (15,932) - (15,932)
Contribution from the Employer - 557,768 (557,768)
Net Investment Income - 29,046 (29,046)
Administrative Expenses - (6,183) 6,183
Benefit Payments (557,768) (557,768) -
Net Changes During July 1, 2022 to
June 30, 2023 (30,803) 22,863 (53,666)
Balance at June 30, 2023 (Measurement Date) 7,579,476 $ 1,078,446 $ 6,501,030 $ Increase (Decrease)
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(77)
NOTE 16 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 1-percentagepoint lower (3.30%) or 1-percentage-point higher (5.30%) than the current discount rate:
Discount Rate Current Discount Rate
-1% Discount Rate +1%
Net OPEB Liability (Asset) 7,372,611 $ 6,501,030 $ 5,771,216 $ 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 $ 6,501,030 5,905,972 $ 7,258,278 $
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, 2024, the City recognized OPEB expense of $669,472. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
OPEB Contributions Subsequent to Measurement Date $ - 749,208 $ Differences Between Actual and Expected Experience (100,707) 915,874 Change in Assumptions (749,935) 209,809
Net Differences Between Projected and Actual Earnings - 116,294 Total $ (850,642) 1,991,185 $
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 2023 measurement period is 7.3 years.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(78)
NOTE 16 OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)
$749,208 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, 2025. 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
2025 156,235 $
2026 91,634
2027 72,982
2028 34,945
2029 19,853
Thereafter 15,686
E. Payable to the OPEB Plan
At June 30, 2024, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2024.
F. GASB 74
For the measurement date June 30, 2024, as prescribed by GASB 74, the Total OPEB liability is $7,524,677, the OPEB plan fiduciary net position is $1,394,677 and the Net OPEB liability is $6,130,002.
NOTE 17 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 $3,179,310 to the Covina Irrigating Company for the services of pumping, treating and delivery of water.
NOTE 18 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.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(79)
NOTE 18 ENCUMBRANCES (CONTINUED)
As of June 30, 2024, total governmental fund encumbrance balances for the City are as follows:
General Fund 144,547 $
Measure W 195,278
ARPA Fund 131,837
Park Development Fund 1,374,695
Nonmajor Governmental Fund 2,242,451
Total Governmental Funds 4,088,808 $
NOTE 19 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, 2024, was as follows:
Balance Balance Current
June 30, 2023 Additions Deletions June 30, 2024 Portion Compensated Absences 36,506 $ 3,856 $ - $ 40,362 $ 14,382 $ Tax Allocation Bonds 2,810,000 - 2,810,000 - -
Unamortized Premium on
Tax Allocation Bonds 523,813 - 523,813 - -
Total Long-Term Liabilities, Net 3,370,319 $ 3,856 $ 3,333,813 $ 40,362 $ 14,382 $ 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 were due and paid off on December 1, 2023.
CITY OF COVINA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(80)
NOTE 19 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.
The outstanding principal balance of the bonds were paid off during fiscal year 2023- 2024.
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 outstanding principal balance of the bonds were paid off during fiscal year 2023- 2024.
(81)
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF COVINA
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS –
MISCELLANEOUS
LAST TEN MEASUREMENT PERIODS
See accompanying Note to Required Supplementary Information. (8)
Fiscal Year Ended June 30, 2024 2023 2022 2021 2020
Measurement Period June 30, 2023 2022 2021 2020 2019
Total Pension Liability:
Service Cost $ 1,633,504 $ 1,576,526 $ 1,411,076 $ 1,493,026 $ 1,380,689 Interest on Total Pension Liability 7,368,866 7,125,461 6,951,248 6,728,565 6,507,596 Differences Between Expected and
Actual Experience 420,345 (107,352) 207,569 129,660 2,271,369 Changes in Assumptions - 3,217,843 - - -
Benefit Payments, Including Refunds
of Employee Contributions (5,627,420) (5,619,036) (5,397,430) (5,150,041) (4,817,247) Net Change in Total Pension Liability 3,795,295 6,193,442 3,172,463 3,201,210 5,342,407 Total Pension Liability - Beginning of Year 108,371,763 102,178,321 99,005,858 95,804,648 90,462,241 Total Pension Liability - End of Year (a) 112,167,058 108,371,763 102,178,321 99,005,858 95,804,648 Plan Fiduciary Net Position:
Contributions - Employer 1,440,158 28,388,909 2,994,204 2,794,762 2,386,884 Contributions - Employee 740,739 675,453 648,674 652,852 656,805 Plan to Plan Resource Movement - - - (1,599) -
Net Investment Income 5,721,884 (7,776,639) 15,110,547 3,264,202 4,117,352 Benefit Payments (5,627,420) (5,619,036) (5,397,430) (5,150,041) (4,817,247) Administrative Expense (70,914) (50,344) (67,457) (93,130) (45,355) Net Change in Plan Fiduciary Net Position 2,204,447 15,618,343 13,288,538 1,467,046 2,298,439 Plan Fiduciary Net Position - Beginning of Year 96,435,357 80,817,014 67,528,476 66,061,430 63,762,991 Plan Fiduciary Net Position - End of Year (b) 98,639,804 96,435,357 80,817,014 67,528,476 66,061,430 Net Pension Liability - Ending (a)-(b) $ 13,527,254 $ 11,936,406 $ 21,361,307 $ 31,477,382 $ 29,743,218 Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 87.94% 88.99% 79.09% 68.21% 68.95% Covered Payroll $ 8,786,730 $ 8,337,323 $ 7,882,583 $ 7,996,049 $ 7,646,268 Net Pension Liability as Percentage of
Covered Payroll 153.95% 143.17% 270.99% 393.66% 388.99% Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Changes in Assumptions:
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, 2022: There were no significant changes in assumptions.
From fiscal year June 30, 2022 to June 30, 2023: The discount rate and long-term rate of return decreased from 7.15% to 6.90% and the inflation rate decreased from 2.50% to 2.30%.
From fiscal year June 30, 2023 to June 30, 2024: There were no significant 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.
CITY OF COVINA
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS –
MISCELLANEOUS (CONTINUED)
LAST TEN MEASUREMENT PERIODS
See accompanying Note to Required Supplementary Information. (8)
Fiscal Year Ended June 30, 2019 2018 2017 2016 2015
Measurement Period June 30, 2018 2017 2016 2015 2014
Total Pension Liability:
Service Cost $ 1,347,039 $ 1,152,992 $ 1,486,092 $ 1,420,544 $ 1,399,079 Interest on Total Pension Liability 6,146,087 5,977,026 6,066,839 5,848,966 5,596,243 Differences Between Expected and
Actual Experience 90,424 (3,886,390) (362,755) 269,486 - Changes in Assumptions (479,050) 5,024,331 - (1,428,592) - Benefit Payments, Including Refunds
of Employee Contributions (4,633,255) (4,314,593) (4,154,693) (4,028,300) (3,984,640) Net Change in Total Pension Liability 2,471,245 3,953,366 3,035,483 2,082,104 3,010,682 Total Pension Liability - Beginning of Year 87,990,996 84,037,630 81,002,147 78,920,043 75,909,361 Total Pension Liability - End of Year (a) 90,462,241 87,990,996 84,037,630 81,002,147 78,920,043 Plan Fiduciary Net Position:
Contributions - Employer 2,064,731 1,424,175 1,410,961 1,599,026 1,453,480 Contributions - Employee 666,102 565,326 578,334 781,508 865,295 Plan to Plan Resource Movement (148) 24,693 - 9,481 -
Net Investment Income 5,103,206 6,234,088 296,745 1,328,803 8,890,960 Benefit Payments (4,633,255) (4,314,593) (4,154,693) (4,028,300) (3,984,640) Administrative Expense (274,830) (84,138) (35,892) (66,233) - Net Change in Plan Fiduciary Net Position 2,925,806 3,849,551 (1,904,545) (375,715) 7,225,095 Plan Fiduciary Net Position - Beginning of Year 60,837,185 56,987,634 58,892,179 59,267,894 52,042,799 Plan Fiduciary Net Position - End of Year (b) 63,762,991 60,837,185 56,987,634 58,892,179 59,267,894 Net Pension Liability - Ending (a)-(b) $ 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 70.49% 69.14% 67.81% 72.70% 75.10% Covered Payroll $ 6,130,981 $ 8,782,015 $ 8,497,600 $ 7,967,419 $ 7,967,419 Net Pension Liability as Percentage of
Covered Payroll 435.48% 309.20% 318.33% 277.50% 246.66%
CITY OF COVINA
SCHEDULE OF CONTRIBUTIONS –
MISCELLANEOUS
LAST TEN FISCAL YEARS
See accompanying Note to Required Supplementary Information. (8)
Fiscal Year Ended June 30, 2024 2023 2022 2021 2020
Actuarially Determined Contribution $ 1,093,602 $ 1,440,158 $ 3,287,810 $ 2,995,659 $ 2,794,762 Contributions in Relation to the Actuarially
Determined Contributions (1,093,602) (1,440,158) (28,389,913) (2,995,659) (2,794,762) Contribution Deficiency (Excess) $ - $ (25,102,103) - $ $ - $ - Covered Payroll $ 9,876,443 $ 8,786,730 $ 8,337,323 $ 7,882,583 $ 7,996,049 Contributions as a Percentage of
Covered Payroll 11.07% 16.39% 340.52% 38.00% 34.95%
Notes to Schedule:
Valuation Date June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 Methods and Assumptions Used to Determine
Contribution Rates:
Actuarial Cost Method Entry Age Entry Age Entry Age Entry Age Entry Age Amortization Method (1) (1) (1) (1) (1)
Asset Valuation Method Fair Value Fair Value Fair Value Fair Value Fair Value Inflation 2.30% 2.30% 2.50% 2.50% 2.63%
Salary Increases (2) (2) (2) (2) (2)
Investment Rate of Return 6.90% (3) 6.90% (3) 7.00% (3) 7.00% (3) 7.25% (3) Mortality (4) (4) (4) (4) (4)
(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) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
CITY OF COVINA
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS (CONTINUED)
LAST TEN FISCAL YEARS
See accompanying Note to Required Supplementary Information. (8)
Fiscal Year Ended June 30, 2019 2018 2017 2016 2015
Actuarially Determined Contribution $ 2,386,725 $ 1,424,175 $ 1,430,571 $ 1,599,026 $ 1,453,480 Contributions in Relation to the Actuarially
Determined Contributions (2,386,725) (2,078,674) (1,430,571) (1,599,026) (1,453,480) Contribution Deficiency (Excess) $ - $ (654,499) $ - $ - $ - Covered Payroll $ 7,646,268 $ 6,130,981 $ 8,782,015 $ 8,497,600 $ 7,967,419 Contributions as a Percentage of
Covered Payroll 31.21% 33.90% 16.29% 18.82% 18.24%
Notes to Schedule:
Valuation Date 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 Amortization Method (1) (1) (1) (1) (1)
Asset Valuation Method Fair Value Fair Value Fair Value Fair Value 15-Year Smoothed
Market Method
Inflation 2.75% 2.75% 2.75% 2.75% 2.75%
Salary Increases (2) (2) (2) (2) (2)
Investment Rate of Return 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3) Mortality (4) (4) (4) (4) (4)
(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) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
CITY OF COVINA
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY – SAFETY
LAST TEN MEASUREMENT PERIODS
See accompanying Note to Required Supplementary Information. (8)
Fiscal Year Ended June 30, 2024 2023 2022 2021 2020
Measurement Period June 30, 2023 2022 2021 2020 2019
Plan’s Proportion of the
Net Pension Liability 0.24360% 0.24672% 0.77033% 0.58950% 0.56627% Plan’s Proportionate Share
of the Net Pension Liability $ 18,208,795 $ 16,953,344 $ 27,034,631 $ 39,280,317 $ 35,349,515 Plan’s Covered Payroll $ 7,971,446 $ 7,155,333 $ 6,861,894 $ 6,490,821 $ 6,548,655 Plan’s Proportionate Share
of the Net Pension Liability
as a Percentage of Covered Payroll 228.43% 236.93% 393.98% 605.17% 539.80% Plan’s Proportionate Share
of the Fiduciary Net Position
as a Percentage of the Plan’s
Total Pension Liability 87.72% 79.78% 79.78% 75.26% 75.26% 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, 2022: There were no significant changes in assumptions.
From fiscal year June 30, 2022 to June 30, 2023: The discount rate and long-term rate of return decreased from 7.15% to 6.90% and the inflation rate decreased from 2.50% to 2.30%.
From fiscal year June 30, 2023 to June 30, 2024: There were no significant changes in assumptions.
CITY OF COVINA
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY –
SAFETY (CONTINUED)
LAST TEN MEASUREMENT PERIODS
See accompanying Note to Required Supplementary Information. (8)
Fiscal Year Ended June 30, 2019 2018 2017 2016 2015
Measurement Period June 30, 2018 2017 2016 2015 2014
Plan’s Proportion of the
Net Pension Liability 0.54852% 0.56064% 0.56696% 0.46197% 0.41430% Plan’s Proportionate Share
of the Net Pension Liability $ 32,026,302 $ 30,950,899 $ 26,302,740 $ 19,035,092 $ 15,540,223 Plan’s Covered Payroll $ 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 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 85.14% 85.14% 79.48% 81.50% 84.45%
CITY OF COVINA
SCHEDULE OF CONTRIBUTIONS –
SAFETY
LAST TEN FISCAL YEARS
See accompanying Note to Required Supplementary Information. (8)
Fiscal Year Ended June 30, 2024 2023 2022 2021 2020
Contractually Required Contribution
(Actuarially Determined) $ 1,734,540 $ 2,241,062 $ 4,346,122 $ 3,885,326 $ 2,758,911 Contributions in Relation to the Actuarially
Determined Contributions (1,734,540) (2,241,062) (36,196,719) (3,885,326) (2,758,911) Contribution Deficiency (Excess) $ - $ (31,850,597) - $ $ - $ - Covered Payroll $ 8,153,199 $ 7,971,446 $ 7,155,333 $ 6,861,894 $ 6,490,821 Contributions as a Percentage
of Covered Payroll 21.27% 28.11% 505.87% 56.62% 42.50%
Notes to Schedule:
Valuation Date June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 Methods and Assumptions Used to Determine
Contribution Rates:
Actuarial Cost Method Entry Age Entry Age Entry Age Entry Age Entry Age Amortization Method (1) (1) (1) (1) (1)
Asset Valuation Method Fair Value Fair Value Fair Value Fair Value Fair Value Inflation 2.30% 2.30% 2.50% 2.50% 2.63%
Salary Increases (2) (2) (2) (2) (2)
Investment Rate of Return 6.9% (3) 6.9% (3) 7.00% (3) 7.00% (3) 7.25% (3) Mortality (4) (4) (4) (4) (4)
(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) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
CITY OF COVINA
SCHEDULE OF CONTRIBUTIONS –
SAFETY (CONTINUED)
LAST TEN FISCAL YEARS
See accompanying Note to Required Supplementary Information. (9)
Fiscal Year Ended June 30, 2019 2018 2017 2016 2015
Contractually Required Contribution
(Actuarially Determined) $ 2,360,587 $ 1,969,480 $ 1,730,321 $ 1,549,717 $ 1,241,075 Contributions in Relation to the Actuarially
Determined Contributions (2,360,587) (1,969,480) (1,730,321) (1,549,717) (1,241,075) Contribution Deficiency (Excess) $ - $ - $ - $ - $ -
Covered Payroll $ 6,548,655 $ 6,325,051 $ 6,325,051 $ 6,672,936 $ 6,433,232 Contributions as a Percentage
of Covered Payroll 36.05% 31.14% 27.36% 23.22% 19.29%
Notes to Schedule:
Valuation Date 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 Amortization Method (1) (1) (1) (1) (1)
Asset Valuation Method Fair Value Fair Value Fair Value Fair Value 15-Year Smoothed
Market Method
Inflation 2.75% 2.75% 2.75% 2.75% 2.75%
Salary Increases (2) (2) (2) (2) (2)
Investment Rate of Return 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3) Mortality (4) (4) (4) (4) (4)
(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) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
CITY OF COVINA
OTHER POSTEMPLOYMENT BENEFITS (OPEB)
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS LAST TEN MEASUREMENT PERIODS*
See accompanying Note to Required Supplementary Information. (9)
Fiscal Year-End June 30, 2024 2023 2022 2021 2020 2019 2018 Measurement Date June 30, 2023 2022 2021 2020 2019 2018 2017 Total OPEB Liability:
Service Cost $ 252,323 219,590 $ 263,838 $ 315,436 $ 271,591 $ 173,634 $ 155,856 $ Interest on Total OPEB Liability 323,307 273,031 252,672 234,306 253,720 285,949 287,858 Difference Between Expected and
Actual Experience 737,525 - 770,579 - - (963,933) -
Change in Assumptions and Other
Inputs (15,932) (286,721) (348,629) (631,555) 355,233 1,264,415 - Benefit Payments, Including Refunds
and the Implied Subsidy Benefit
Payments (557,768) (554,251) (556,834) (510,755) (457,669) (411,596) (413,635) Net Change in Total OPEB Liability (30,803) 421,907 (388,953) 248,035 422,875 348,469 30,079 Total OPEB Liability - Beginning of Year 7,610,279 7,188,372 7,577,325 7,329,290 6,906,415 6,557,946 6,527,867 Total OPEB Liability - End of Year (a) 7,579,476 7,610,279 7,188,372 7,577,325 7,329,290 6,906,415 6,557,946 Plan Fiduciary Net Position:
Contributions - Employer 557,768 654,251 1,056,834 510,755 457,669 411,596 413,635 Net Investment Income 29,046 (127,979) 47,030 27,077 34,489 9,519 18,600 Administrative Expenses (6,183) (6,675) (3,353) (3,091) (2,728) (2,630) (2,372) Benefit Payments, Including Refunds
and the Implied Subsidy Benefit
Payments (557,768) (554,251) (556,834) (510,755) (457,669) (411,596) (413,635) Net Change in Plan Fiduciary Net Position 22,863 (34,654) 543,677 23,986 31,761 6,889 16,228 Plan Fiduciary Net Position -
Beginning of Year 1,055,583 1,090,237 546,560 522,574 490,813 483,924 467,696 Plan Fiduciary Net Position -
End of Year (b) 1,078,446 1,055,583 1,090,237 546,560 522,574 490,813 483,924 Net OPEB Liability - Ending (a)-(b) $ 6,501,030 $ 6,554,696 $ 6,098,135 $ 7,030,765 $ 6,806,716 $ 6,415,602 $ 6,074,022 Plan Fiduciary Net Position as a
Percentage of the Total OPEB Liability 14.23% 13.87% 15.17% 7.21% 7.13% 7.11% 7.38% Covered - Employee Payroll $ 21,814,848 $ 20,087,715 $ 19,596,677 $ 18,127,870 $ 17,042,879 $ 13,316,004 $ 12,959,615 Net OPEB Liability as Percentage of
Covered - Employee Payroll 29.80% 32.63% 31.12% 38.78% 39.94% 48.18% 46.87% Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Changes in Assumptions:
* Fiscal year 2018 was the first year of implementation and, therefore, only seven years are shown.
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. For fiscal year ended June 30, 2022, the discount rate was changed to 3.81% from 3.34% and the health care trend rate was changed to 4.0% for 2021-2023, 5.2% for 2024-2069 and 4.0% for 2070 and later. For fiscal year ended June 30, 2023, the discount rate was changed to 4.28% from 3.81% and the health care trend rate was changed to 6.50% for 2022, 6.00% for 2023, 5.50% for 2024, 5.25% for 2025-2029, 5.00% for 2030-2039, 4.75% for 2040-2049, 4.50% for 2050-2069, and
4.00% for 2070 and later years; Medicare ages: 4.50% for 2022-2029 and 4.00% for 2030 and later years. For fiscal year ended June 30, 2024, the discount rate was changed to 4.30% from 4.28% and the health care trend rate was changed to 6.00% for 2023, 5.50% for 2024, 5.25% for 2025-2029, 5.00% for 2030- 2039, 4.75% for 2040-2049, 4.50% for 2050-2069, and 4.00% for 2070 and later years; Medicare ages: 4.50% for 2023-2029 and 4.00% for 2030 and later years.
CITY OF COVINA
OTHER POSTEMPLOYMENT BENEFITS (OPEB)
SCHEDULE OF CONTRIBUTIONS
LAST TEN FISCAL YEARS*
See accompanying Note to Required Supplementary Information. (9)
Fiscal Year Ended June 30, 2024 2023 2022 2021 2020 2019 2018 Actuarially Determined Contribution $ 720,929 $ 701,634 $ 490,144 $ 556,834 $ 511,353 $ 497,668 $ 409,995 Contributions in Relation to the
Actuarially Determined Contributions (749,208) (559,989) (553,834) (477,026) (511,353) (497,668) (409,995) Contribution Deficiency
(Excess) $ (28,279) $ 141,645 $ (63,690) $ 79,808 $ - $ - $ - Covered Employee Payroll $ 22,483,367 $ 21,814,848 $ 20,087,715 $ 19,596,677 $ 18,127,870 $ 17,042,879 $ 13,316,004 Contributions as a Percentage
of Covered Employee Payroll 3.33% 2.57% 2.76% 2.43% 2.82% 2.92% 3.08% Notes to Schedule:
Valuation Date June 30, 2022 June 30, 2022 June 30, 2020 June 30, 2020 June 30, 2018 June 30, 2018 June 30, 2017 Methods and Assumptions Used to
Determine Contribution Rates:
Discount Rate 4.30% 4.28% 3.69% 2.45% 3.17% 3.65% 4.50% Inflation 2.75% 2.75% 2.75% 2.75% 3.00% 3.00% 2.75%
Mortality Rate (2) (2) (2) (2) (1) (1) (1)
Healthcare Trend Rate
(1) 2014 CalPERS Mortality Rate for Active Safety, Retired Safety and Active Miscellaneous. (2) 2017 CalPERS Mortality Rate for Active Safety, Retired Safety and Active Miscellaneous. * Fiscal year 2018 was the first year of implementation and, therefore, only seven years are shown.
CITY OF COVINA
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED JUNE 30, 2024
See accompanying Note to Required Supplementary Information. (9)
Variance with
Final Budget
Positive
Original Final Actual (Negative)
BUDGETARY FUND BALANCE - JULY 1 $ 33,317,806 $ 33,317,806 $ 33,317,806 $ - Resources (Inflows):
Property Taxes 15,464,000 16,164,000 17,520,212 1,356,212 Sales Tax, Intergovernmental 20,000,000 19,700,000 19,237,448 (462,552) Transient Occupancy Taxes 160,000 220,000 252,508 32,508 Property Transfer Taxes 200,000 200,000 194,695 (5,305) Business License Taxes 345,000 345,000 402,844 57,844
Utility User Taxes 5,065,000 5,734,000 6,024,393 290,393 Franchise Taxes 2,152,000 2,175,000 2,452,804 277,804
Licenses and Permits 1,368,500 1,823,897 1,866,645 42,748 Intergovernmental 848,500 952,044 1,141,804 189,760
Charges for Services 3,939,014 3,744,134 4,011,448 267,314 Fines and Forfeits 835,000 820,000 1,108,302 288,302
Investment Earnings 220,000 220,000 3,371,912 3,151,912 Miscellaneous 445,180 446,980 421,608 (25,372)
Subscriptions Proceeds - - 3,991 3,991
Lease Proceeds - - 41,358 41,358
Transfers In 300,000 300,000 300,000 -
Amounts Available for Appropriation 84,660,000 86,162,861 91,669,778 5,506,917 Charges to Appropriations (Outflows):
Current:
General Government 3,382,561 3,506,426 2,820,455 685,971 Public Safety 34,512,614 35,049,493 31,954,594 3,094,899 Public Works 2,585,898 2,585,898 2,209,301 376,597
Culture and Recreation 5,639,549 5,731,562 4,871,349 860,213 Community Development 2,808,399 6,653,379 3,255,509 3,397,870 Debt Service:
Principal Retirement 2,326,509 2,326,509 2,326,509 -
Interest and Fiscal Charges 1,108,108 1,108,108 1,114,449 (6,341) Transfers Out 1,598,684 8,336,179 3,828,705 4,507,474
Total Charges to Appropriation 53,962,322 65,297,554 52,380,871 12,916,683 BUDGETARY FUND BALANCE - JUNE 30 $ 30,697,678 $ 20,865,307 $ 39,288,907 $ 18,423,600 Budgeted Amounts
CITY OF COVINA
BUDGETARY COMPARISON SCHEDULE
MEASURE W FUND
YEAR ENDED JUNE 30, 2024
See accompanying Note to Required Supplementary Information. (
)
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
BUDGETARY FUND BALANCE - JULY 1 $ 8,751,626 8,751,626 $ - $ Resources (Inflows):
Intergovernmental 7,865,084 7,861,857 (3,227)
Investment Earnings 7,800 353,131 345,331
Amounts Available for Appropriation 16,624,510 16,966,614 342,104 Charges to Appropriations (Outflows):
Capital Outlay 15,909,465 854,304 15,055,161
Total Charges to Appropriation 15,909,465 854,304 15,055,161 BUDGETARY FUND BALANCE - JUNE 30 $ 16,112,310 715,045 $ 15,397,265 $
CITY OF COVINA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2024
(9)
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 other than the American Rescue Plan Act (ARPA) Fund which did not have an adopted budget. 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.