CITY OF FONTANA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2023
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
City of Fontana
California
Acquanetta Warren, Mayor
Peter Garcia, Mayor Pro Tem
Phillip W. Cothran, Council Member
John B. Roberts, Council Member
Jesus “Jesse” Sandoval, Council Member
(at date of issuance)
Matthew C. Ballantyne, City Manager
PREPARED BY THE CITY OF FONTANA FINANCE DEPARTMENT
Jessica Brown, Chief Financial Officer
CITY
OF
FONTANA
ANNUAL
COMPREHENSIVE
FINANCIAL
REPORT
Year
Ended
June
30,
202
3 TABLE
OF
CONTENTS
INTRODUCTORY
SECTION
Page
Number
Letter
of
Transmittal
i
List
of
Principal
Officials
x
Organizational
Chart
xi
FINANCIAL
SECTION
Independent
Auditors’
Report
1 Management’s
Discussion
and
Analysis
6 Basic
Financial
Statements
Government
-
Wide
Financial
Statements
Exhibit
A
-
Statement
of
Net
Position
2 1
Exhibit
B
-
Statement
of
Activities
2 2
CITY
OF
FONTANA
ANNUAL
COMPREHENSIVE
FINANCIAL
REPORT
Year
Ended
June
30,
202
3 TABLE
OF
CONTENTS
FINANCIAL SECTION (continued)
Basic
Financial
Statements
(continued)
Fund
Financial
Statements
Page
Number
Exhibit
C
-
Balance
Sheet
–
Governmental
Funds
2 3
Exhibit
D
-
Reconciliation
of
the
Balance
Sheet
of
Governmental
Funds
to
the
Statement
of
Net
Position
2 4
Exhibit
E
-
Statement
of
Revenues,
Expenditures
and
Changes
in
Fund
Balances
–
Governmental
Funds
2 5
Exhibit
F
-
Reconciliation
of
the
Statement
of
Revenues,
Expenditures
and
Changes
in
Fund
Balances
of
Governmental
Funds
to
the
Statement
of
Activities
2 6
Exhibit
G
-
Statements
of
Revenues,
Expenditures,
and
Changes
in
Fund
Balances
--
Budget and Actual
General
Fund
2 7
Fire
Protection
District
-
Special
Revenue
Fund
2 8
Housing
Authority
Low/Mod
Housing
-
Special
Revenue
Fund
2 9
Economic Stimulus
-
Special Revenue Fund
30 Exhibit
H
-
Statement
of
Net
Position
–
Proprietary
Funds
3 1
CITY
OF
FONTANA
ANNUAL
COMPREHENSIVE
FINANCIAL
REPORT
Year
Ended
June
30,
202
3 TABLE
OF
CONTENTS
FINANCIAL SECTION (continued)
Basic
Financial
Statements
(continued)
Page
Number
Exhibit
I
-
Statement
of
Revenues,
Expenses
and
Changes
in
Fund
Net
Position
–
Proprietary Funds
32 Exhibit
J
-
Statement
of
Cash
Flows
-
Proprietary
Funds
3 3
Exhibit
K
-
Statement
of
Fiduciary
Net
Position
3 4
Exhibit
L
-
Statement
of
Changes
in
Fiduciary
Net
Position
3 5
Notes
to
the
Financial
Statements
Note
1:
Organization
and
Summary
of
Significant
Accounting
Policies
3 6
Note
2:
Stewardship, Compliance
and
Accountability
4 8
Note
3:
Cash
and
Investments
50 Note
4:
Leases
5 5
Note
5:
Receivables
5 6
Note
6:
Capital
Assets
5 7
Note
7:
Interfund
Receivables,
Payables
and
Transfers
5 9
Note
8:
Long
-
Term
Debt
6 2
Note
9:
Risk
Management
6 6
Note
10:
Litigation
6 7
CITY OF FONTANA
ANNUAL
COMPREHENSIVE
FINANCIAL
REPORT
Year
Ended
June
30,
202
3 FINANCIAL SECTION (continued)
Basic
Financial
Statements
(continued)
TABLE
OF
CONTENTS
Page
Number
Notes
to
the
Financial
Statements
(continued)
Note
11:
Jointly
Governed
Organization
6 8
Note
12:
Other
Post
-
Employment
Benefits
6 8
Note
13:
Pensions
72 Note
14:
Public Agency Retirement Services
83 Note
15:
Classification of Fund Balances
84 Note
16:
Fontana Fire Protection District
86 Note
17:
S
uccessor Agency Trust for Assets of Former Redevelopment Agency
8 9
Note
18:
Tax Abatement
94 Note
19:
Prior Period Adjustments
95 Required
Supplementary
Information
Schedule
of
Changes
in
Net
Pension
Liability
and
Related
Ratios
during
the
96 Measurement
Period
-
Safety
Plan
Schedule
of
Changes
in
Net
Pension
Liability
and
Related
Ratios
during
the
9 7
Measurement
Period
-
Miscellaneous
Plan
Schedule
of
Plan
Contributions
–
Safety
Plan
9 8
Schedule
of
Plan
Contributions
–
Miscellaneous
Plan
9 9
Schedule
of
Changes
in
Total
OPEB
Liability
and
Related
Ratios
100
Page
Number
145
146
148
CITY OF FONTANA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
Year Ended June 30, 2023
TABLE OF CONTENTS
FINANCIAL SECTION (continued)
Basic Financial Statements (continued)
Supplementary Information
Combining and Individual Fund Statements and Schedules Schedule 1 - Combining Balance Sheet – Non-Major Governmental Funds Schedule 2 - Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Non-Major Governmental Funds
Schedule 3 - Budgetary Comparison Schedules - Governmental Funds Schedule 4 - Combining Statement of Fiduciary Ne t Po sition Schedule 5 - Combining Statement of Changes in Fiduciary Net Position
STATISTICAL SECTION
Net Position by Component – Last Ten Fiscal Years Changes in Net Position– Last Ten Fiscal Years
Fund Balances – Governmental Funds – Last Ten Fiscal Years 105
110
115
141
142
CITY
OF
FONTANA
ANNUAL
COMPREHENSIVE
FINANCIAL
REPORT
Year
Ended
June
30,
202
3 TABLE
OF
CONTENTS
Page
Number
STATISTICAL
SECTION
(continued)
Changes
in
Fund
Balances
of
Governmental
Funds
–
Last
Ten
Fiscal
Years
14 9
Assessed
Value
and
Estimated
Actual
Value
of
Taxable
Property
–
Last
Ten
Fiscal
Years
1 51
Direct
and
Overlapping
Property
Tax
Rates
-
Last
Ten
Fiscal
Years
1 52
Principal
Property
Taxpayers
–
Current
Year
and
Nine
Years
Ago
1 53
Property
Tax
Levies
and
Collections
–
Last
Ten
Fiscal
Years
1 54
Ratio
of
Outstanding
Debt
by
Type
–
Last
Ten
Fiscal
Years
1 55
Ratio
of
General
Bonded
Debt
Outstanding
–
Last
Ten
Fiscal
Years
1 56
Direct
and
Overlapping
Bonded
Debt
15 7
Legal
Debt
Margin
Information
–
Last
Ten
Fiscal
Years
15 8
Demographic
and
Economic
Statistics
–
Last
Ten
Fiscal
Years
15 9
Principal
Employers
–
Current
Year
and
Nine
Years
Ago
1 60
Full
-
time
City
Government
Employees
by
Function
–
Last
Ten
Fiscal
Years
1 61
CITY OF FONTANA
ANNUAL
COMPREHENSIVE
FINANCIAL
REPORT
Year
Ended
June
30,
202
3 TABLE
OF
CONTENTS
STATISTICAL
SECTION
(continued)
Page
Number
Operating
Indicators
by
Function/Program
–
Last
Ten
Fiscal
Years
1 62
Capital
Asset
Statistics
by
Function/Program
–
Last
Ten
Fiscal
Years
1 63
Miscellaneous
Statistical
Information
1 64
i
City of Fontana
C A L I F O R N I A
February 20, 2024
The Honorable Mayor and City Council
State law requires that all general-purpose local governments publish a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the annual comprehensive annual financial report of the City of Fontana for the fiscal year ended June 30, 2023.
This report consists of management’s representations concerning the finances of the City of Fontana. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Fontana has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse, and to compile sufficient reliable information for the preparation of the City of Fontana’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Fontana’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.
The City of Fontana’s financial statements have been audited by Davis Farr LLP, a firm of licensed certified public accountants.
The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Fontana for the fiscal year ended June 30, 2023, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and ii
significant
estimates
made
by
management;
and
evaluating
the
overall
financial
statement
presentation.
The
independent
auditor
concluded,
based
upon
the
audit,
that
there
was
a
reasonable
basis
for
rendering
an
unmodified
opinion
that
the
City
of
Fontana’s
financial statements for the fiscal year ended June 30, 2023, are fairly presented in conformity with GAAP.
The independent
auditor’s report is presented as the first component of the financial section of this report.
The
independent
audit
of
the
financial
statements
of
the
City of
Fontana
was
part of
a
broader,
federally
mandated
“Single
Audit”
designed to meet the special needs of federal grantor agencies.
The standards governing Single Audit engagements require the independent auditor to report not only on the fair
presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving
the
administration
of
federal awards.
These
reports
are
available
in
the
City
of
Fontana’s
separately
issued
Single
Audit
Report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A).
This letter of transmittal is designed to complement
the MD&A and should be read in conjunction with it.
The City of Fontana’s MD&A can be found immediately following the report of the independent auditors.
Profile
of
the
Government
The City of Fontana is located about 50 miles east of Los Angeles.
The City spans approximately 52.4 square miles and has an estimated population of 213,851.
The City was first developed as an organized rural community through the vision of Mr. A. B.
Miller.
Although self
-
sufficient, the farming community was abruptly reshaped to accommodate the industrial revolution in 1942 with the transformation of Mr. Miller’s farm into a steel mill by Henry J. Kaiser.
The area became Southern California’s leading
producer of steel and steel
-
related products.
The steel industry dominated the City’s economy until 1984 when the steel mill closed.
Today, Fontana has emerged as an affordable suburb, attracting both residents and businesses.
The City was incorporated on June 25, 1952, under the laws of the State of California and enjoys all the rights and privilege s
applicable to a general law city.
The City is governed by a five member City Council under the Council -
Manager form of
government.
Policy
-
making and legislative authority are vested in a governing council consisting of the mayor and four other members.
The council is elected on a non
-
partisan basis.
Council members serve four
-
year staggered terms, with two council
members elected every two years.
The mayor is elected to serve a four
-
year term.
The mayor is elected at large and the four
council
members
are
elected
by
district.
The
governing
council
is
responsible
for,
among
other
things,
passing
ordinances,
adopting
the budget, appointing committees, and hiring both the City Manager and City Attorney.
The City Manager is responsible for
carrying out the policies and ordinances of the governing council, for overseeing the day -
to
-
day operations of the government,
and for appointing the heads of the various departments.
The
City
of
Fontana
employs
approximately
600
full
-
time
employees.
Services
provided
include
police
protection;
contract
for
fire
services; the construction and maintenance of highways, streets, and other infrastructure; wastewater and sanitation services ;
and
recreational
activities
and
cultural
events.
In
addition
to
general
government
activities,
the
City
Council
also
serves
as
the
iii
Board of Directors of the Fontana Industrial Development Authority, the Fontana Public Financing Authority, the Fontana Publi c
Facilities Financing Authority, the Fontana Housing Authority, the Fontana Community Foundation, the Fontana Fire Protection District as well as the Successor Agency for the Former Fontana Redevelopment Agency.
Therefore, these activities have been
included
as
an
integral
part of
the
City of
Fontana’s
financial
statements.
Additional
information
on
these
entities
can be
found
in
Note 1 in the notes to the financial statements.
The annual budget serves as the foundation for the City of Fontana’s financial planning and control.
Each year the City Council
reviews
budget
development
guidelines
for
use
in
preparing
the
next
year’s
budget.
These
guidelines
are
structured
to
reflect
the
City Council’s goals and objectives and to provide the framework in which the Operating Budget is prepared.
The Finance
Department is responsible for compiling the estimated revenues and appropriations for the City Manager.
Prior to the beginning
of the new fiscal year, the City Council adopts the annual Operating Budget at a public meeting.
The City’s budget policy is that all appropriations lapse at fiscal year -
end.
Outstanding encumbrance balances at fiscal year
-
end
require
re
-
approval
by
the
City
Council
at
the
First
Quarterly
Budget
Review.
The
City
Council
may
amend
the
budget
at
any
time
during the fiscal year.
Budget reports are presented to the City Council and the public on a quarterly basis.
They include
appropriation
adjustments
and
revised
revenue
projections
as
needed.
The
legal
level
of
budgetary
control
is
set
at
the
department
level.
Budget
-
to
-
actual comparisons are provided in this report for each individual governmental fund for which an appropriate annual budget has been adopted.
Factors
Affecting
Financial
Condition
The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Fontana operates.
Local economy.
The Inland Empire continued to recover from the COVID
-
19 pandemic, which disrupted lives and businesses
alike.
The
Inland
Empire’s
housing
markets
are
strengthening,
new
home
developers
are
continuing
to
build,
job
growth
is
stable
and
consumer
spending
is
continuing
to
grow.
Despite
the
increase
in
the
interest
rates
by
the
Federal
reserve,
the
Inland
Empire’s
economy does not expect an economic slowdown.
Balanced
Growth.
After experiencing
significant job
reductions
in the
wake of
the
State
government COVID
-
19 shut
down of
the
non
-
essential
portions of the
economy with unemployment reaching
a high rate
of 14.7%
in
May
2020.
Despite
the
high
interest
rate, Fontana has experienced an increased in unemployment rate from 4.2% in February 2023 to 4.5% to June 2023
Retail Sales Are Increasing.
Taxable sales are a major revenue source for cities.
Due to the State government COVID
-
19 shutdown, taxable retail sales declined 3.9% from June 2019 to June 2020 within the City.
During fiscal year 2021
-
22 sales tax
increase
by
10%
from
June
2021
to
June
2022.
For
FY
2023,
the
City
of
Fontana
taxable
sales
were
up
6%
higher
than
the
same
quarter one year ago
iv
Housing
Market
Steady
Prices,
Modest
Sales.
The
Inland
Empire’s
housing
markets,
as
a
whole,
remain
stuck
in
a
narrow
band
of
home sales that has gone on nine years.
Lack of supply combined with increased demand and barriers for consumers to obtain financing continue to drive price escalation in San Bernardino County, where home prices increased 1% from June 2022 to June 2023.
Affordability remains high in the Inland Empire, when compared to other southern California communities.
coastal
communities, where 43
-
54 percent of home buyers can afford the median priced home. Lack of affordability in the coastal communities, where only 24
-
27 percent of wage earners can afford a median priced home, will continue to drive homebuyers inland.
The median home prices for the City of Fontana declined slightly in Fiscal Year 2023 and were down slightly 1.65% for existin g
homes with average price around $601,965.
Fontana
has competitive
advantages
related to
its
neighbors
in the
Inland
Empire as it continues
to
be the westernmost city with
available space to accommodate both residential and industrial development.
It offers new residents housing cost advantages
and companies locating here can benefit from lower labor costs.
Fontana continues to experience a robust level of new housing permits
for
the
last
3 years
and,
based
on
the
availability
of
land
and
redevelopment
opportunities,
expects
that
trend
to
continue
over the next decade.
The Ventana Specific Plan is coming to
fruition. Planning Area 6 of the Ventana Specific Plan brings
a taste
of Europe
to
Fontana.
The
project
consists
of
257
units
and
will
have
many
recreational
amenities
including
a
fitness
center,
pool
area,
recreation
room,
and open plazas. Paseos and walkways will weave through the project to give it an old -
world feel. The project is located at the
Interstate 15 and Duncan Canyon Road.
The center of San Bernardino County’s growth is moving west into
Fontana.
The
population
has
grown
7 percent
over
the
past
ten years and, at 213,851 Fontana is the second largest city in San Bernardino County, the third largest in the Inland Empire, and twentieth in the State.
With the ever
-
increasing demand for housing and ongoing
addition of new residential units in the City, it is expected that the City’s population will exceed 280,900 by the year 2040.
The City of Fontana continued to see a number of significant events during the past year
Population
Growth
220,000
5%
190,000
4%
160,000
3%
130,000
2%
100,000
1%
70,000
0%
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
POPULATION
GROWTH
RATE
v
Significant
Events
of
FY
2022
-
23 ■
Downtown Parking Structure:
The City will construct a parking
structure within the existing parking lot of the City’s Human Resources Department Building located at 8491 Sierra Avenue, Fontana, CA 92335 which shall consist of a 4
-
tier parking structure
allowing for approximately 320 parking spaces and two elevators.
The
project
will
also
include
various
onsite
and
offsite
improvements
to include driveway approaches, RV parking and pull through area, landscaping,
and
other
improvements.
The
intent
of
the
structure
is
to serve as both public and employee parking for the civic campus as
well
as
the
planned
downtown
area
which
is
to
be
revitalized.
The
estimated completion date is November 2024.
■
Energy Services Project (Parks):
The city completed the energy
services project a $3.6 million in FY 2023 that included upgrading and replacing lighting at 30 different parks with new Light Emitting Diode (LED) fixtures.
.
■
South
Fontana
Sports
Park:
Construction
is
underway
on
this
18 -
acre
sports
park
with
four
lighted
artificial
turf
fields
for
football
and
soccer
use.
The
project
will
include
parking,
restroom, snack bar, playground and storage
facilities.
It’s
located
on
Santa
Ana
Avenue
between
Cypress
Avenue
and
Juniper Avenue. Construction begins March 2022, and was completed in FY2022/23.
■
9/11
Memorial
Monument:
City
Council
identified
funds
for the 9/11 memorial monument project. The actual steel beam recovered from the World Trade Center site will be used as a main piece of the monument. The 18’ long beam will
be
resurrected
to
its
upright
position
as
it
once
stood
at
the World Trade Center. The upright position of the beam speaks to resilience, perseverance, and strength against tragedy.
The conceptual design has
been approved and the
detailed design is currently underway. The project design has
been
completed.
Construction
is
projected
to
begin
in
FY
2024
-
2025.
■ Fire Station #80: The training center (Phase 1) will be approximately 3,300 square feet with a training tower that will be incorporated into a future Fire Station #80 (Phase 2) planned for the same site (Cherry and So. Highland Avenues). Design and environmental phases began in March 2021 with construction expected to commence in late 2023. ■ American Rescue Plan Act (ARPR) Grant: To aid the country in the recovery from the government imposed COVID-19 lockdown, the U.S. Treasury issued the $350 billion American Rescue Plan Act (ARPA). The City of Fontana was allocated $50.3 million which includes various spending categories such as: support public health expenditures; address negative economic impacts; serve the hardest-hit communities and families; replace lost public sector revenue; provide premium pay for essential workers; and invest in water, sewer, and broadband infrastructure. The City Council has approved various eligible projects within these categories.
■ Pavement Rehabilitation Program: Based on the new Citywide 7-Year Pavement Management Plan, several pavement projects are expected to be completed in 2023/24 using various funds, including Road Maintenance and Rehabilitation Act (RMRA) funding.
■ City Hall Renovation Project - Phase I (Fire Annex): The City will demolish the existing Fire administration Building located at 17001 Upland Avenue, Fontana, CA 92335 and shall construct a two-story municipal building with first tier parking structure and second tier office spaces. Each tier will have a footprint of approximately 30,000 square feet with one vehicle entrance and exit located on Upland Ave. just west of Wheeler Ave. The City anticipates 65 parking spaces to be within the parking structure portion of the building. The intent of the building is to serve as office space for city staff as well as both public and employee parking for the civic campus. The estimated completion date is March 2025.
Financial Challenges Ahead
While the City recovers from the COVID-19 pandemic, there are other challenges that lie ahead. The following is a summary of challenges that the City will face over the next few years. Inflation. After decades of relatively low inflation, the prices of many goods and services experienced rapid increases beginning in 2021. The Riverside-San Bernardino-Ontario Metropolitan Statistical Area (MSA) Consumer Price Index for All Urban Consumers (CPI-U) saw increases of 8.6% and 7.3% in 2022 and 2023 respectively. Although opinions differ with respect to the forecasted inflation, the consensus is a general cooling of inflation over the next year State Budget. The Governor’s May Revision for the fiscal year 2023/24 budget of $306 billion, forecasts an estimated deficit of up to $34.5 billion, a drastic difference as compared to the windfalls in recent years. The administration proposes to resolve the shortfall through a series of spending reductions and cuts, delays or deferrals of spending authorized in earlier years, as vi
vii
well
as
through
internal
borrowing
and
fund
shifts.
California’s
recovery
in
total
jobs
as
well
as
its
unemployment
rate
continue
to lag the nation. According to the U.S. Bureau of Labor Statistics and the California Employment Development Department, as of May 2023 the golden state has an unemployment rate of 4.5% or 883 thousand people. California is listed in the top 10% of highest unemployment in the country. The state is facing a labor shortage as employers struggle to hire qualified candidates
California Public Employees Retirement System (CalPERS).
At the July 2021 board meeting, CalPERS further reduced the discount rate assumption from 7.15% to 6.9% due to the Funding Risk Mitigation Policy, requiring the reduction of the discount
rate
in years of
high
investment
returns.
CalPERS
also
adopted
new
actuarial
assumptions
which
included
longer
life
expectancies and earlier retirement ages. the City’s PERS Rate Stability Reserve has a balance of $10.7 million.
Housing Market & Interest Rates.
Housing prices increased dramatically at the beginning of the pandemic by 41% from February 2020 to April 2022. However, higher prices coupled with higher mortgage rates caused the demand for home purchases
to
dramatically
decrease
to
nearly
40%
below
pre
-
pandemic
levels
while
house
prices
remain
27%
above
their
pre
-
pandemic levels. These factors all contribute to a forecasted decrease in home prices through 2023.
Unfunded Liability.
The City’s CalPERS net pension and OPEB liabilities are $204.4 million and $18.9 million, respectively, as of June 30, 2023. The Annual required contribution to fund the City’s retiree health program for both current and future retiree
has
been
calculated
to
be
$2.4
million
(excludes
implicit
subsidy
amount).
The
retiree
health
program
has
been
closed
to new hires since 1990.
Property Value
Reassessments.
The
annual
Consumer
Price
Index
(CPI) adjustment which provides
the
basis for changes
in
assessed
valuations
state
-
wide
continues
at
the
2%
level,
although
properties
that
have
enjoyed
Prop
8 valuation
reductions
are not subject to this limit.
Capital
Reinvestment
Program.
Since
1996/1997,
the
City
Council
has
been
investing
a
portion
of
the
annual
General
Fund
Budget back into the community in the
form of capital projects including streets
and sidewalks, with a goal of 10%. Amounts
allocated in the FY 2023/24 and 2024/25 Operating Budgets from various funds to this critical area total of $13.8 million and
$11.8
million,
respectively.
Proposition 218.
On November 5, 1996, the California electorate approved Proposition 218 affecting a change to the California State Constitution by making numerous changes to local government finance law. This measure impacts the generation and use of many fundamental revenue sources including fees, charges, assessments, and taxes. This proposition also
changes
the
methods
by
which
certain
assessments
and
taxes
are
challenged
by
the
electorate.
Both
the
FY
2023/24
and
the FY 2024/25 Operating Budget fully comply with the provisions of Proposition 218.
Services
and
Growth.
The
City
of
Fontana
has
experienced
significant
growth
over
the
past
several
years.
With
this
growth
comes the need to service a growing community.
The funding sources for these additional services are revenue growth and the Municipal Services Fiscal Impact Fee Program (MSFIF).
Financial Information.
Management of the City is responsible for establishing and maintaining internal control designed to ensure
that the
assets of
the
government are
protected from
loss,
theft, or
misuse,
and
to
ensure
that
adequate
accounting data
are
compiled
to
allow
for
the
preparation
of
financial
statements
in
conformity
with
U.S.
generally
accepted
accounting
principles.
vii
i
In
ternal control is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurances recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.
This report consists of management’s representations concerning the finances of the City. As a result, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. Management asserts that, to the best of their knowledge and belief, this financial report is complete and reliable in all material respects.
Budgetary controls. The City maintains budgetary controls, the objective of which is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund, special revenue funds, debt service funds, capital project funds, and all the proprietary funds are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the department level. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbrances generally are re-appropriated as part of the following year’s budget.
Regarding long-term financial planning, as of June 22, 2021, the City Council adopted the City’s first biennial budget for fiscal years 2021-2022 and 2022-2023. Additionally, as a companion to approving the budget plan, a seven-year Capital Improvement Plan was presented to the City Council. The seven-year plan links anticipated expenditures for infrastructure development with community needs and desires and provides a citywide perspective of recommended projects and proposed funding sources. The Capital Improvement Plan was finalized in June 2021 and totaled $806.8 million for the seven-year fiscal period ending June 30, 2028. The seven-year Capital Improvement Plan has been submitted and annually updated, in its present form, since 1991, for effective long-range planning purposes. It is City Management’s belief that these two plans give City Council members an expanded opportunity to set policy and provide direction for implementation, resulting in improved management efficiency and improved financial results.
Debt administration. At June 30, 2023, the City had a number of debt issues outstanding as shown in detail in the notes to the financial statements. The City’s ratios of net bonded debt to assessed valuation and the amount of net general bonded debt per capita are useful indicators of our debt position to management, citizens, and investors.
At June 30, 2023, the City has $51.3 million in authorized, outstanding tax supported general obligation bonds with no authorized but unissued general obligation bonds. This level of general obligation debt is well below the legal limit of $4,053 million, or 15% of assessed valuation.
A
wards and Acknowledgements
Th
e Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for the fiscal year ended June 30, 2020. This was the twenty-eighth consecutive year that the City has received this award. The Certificate of Achievement is the highest form of recognition in governmental accounting and financial reporting, and its attainment represents a significant accomplishment by a government unit and its management. In order to be awarded this certificate, a governmental unit must publish an easily readable and efficiently organized annual comprehensive financial report, with contents that conform to program standards. These reports must satisfy both generally accepted accounting principles and applicable legal requirements. We believe our current Annual Comprehensive Financial Report conforms to the Certificate of Achievement program requirements The Government Finance Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the City for its Popular Annual Financial Report for the fiscal year ended June 30, 2019. This was the twentieth consecutive year the city has received this award. This is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. The Award is for a period of one year only.
The City's Statement of Investment Policy was awarded a Certification of Excellence Award by the Association of Public Treasurers of the United States and Canada (APT US&C) in 2000, 2003 and 2006. The award is issued in recognition of written investment policies which meet specific criteria set forth by the Association such as selection of suitable investment instruments, custody and safekeeping, internal controls, and reporting.
Preparation of this annual comprehensive financial report could not have been accomplished on without the support and cooperation of all City of Fontana staff. These dedicated members assisted and contributed to its preparation. Special recognition is given to the Finance staff. Their efforts made it possible to improve the quality of the information being reported to the citizens, the City Council, and other users on a timely basis. Appreciation is also expressed to the Mayor, the City Council, the City Treasurer and the City Manager for their interest and support in planning and conducting the financial activities of the City in a responsible and responsive manner.
Sincere! -�-
Jessica Brown
Chief Financial Officer
ix
Matthew C. Ballantyne City Manager
Phillip Burum Deputy City Manager / Development Services Ramon Ebert Deputy City Manager / Administrative Services Jennifer Barcenas Innovation & Technology Director
Jeffrey Baughman Director of Building & Safety
Jeffrey Birchfield Fire Chief
Jessica Brown Chief Financial Officer
Michael Dorsey Chief of Police
Gia Kim Public Works Director / City Engineer
Patty Nevins Director of Planning
Daniel Schneider Community Services Director
Rakesha Voss Director of Human Resources & Risk Management Vacant Deputy City Clerk
CITY OF FONTANA
LIST OF PRINCIPAL OFFICIALS
ELECTED OFFICIALS
Acquanetta Warren, Mayor
Peter Garcia, Mayor Pro Tem
Phillip Cothran, Council Member
John B. Roberts, Council Member
Jesus Sandoval, Council Member
Janet Koehler-Brooks, City Treasurer
Germaine Key, City Clerk
ADMINISTRATIVE STAFF
X
Citizens of Fontana
Elected Officials
Mayor
City Council
City Treasurer
City Clerk
City Manager
Matthew C. Ballantyne
City Attorney
Administrative
Services
Ramon Ebert
Deputy City Manager
Police
Michael Dorsey
Police Chief
Development
Services
Phillip Burum
Deputy City Manager
Human Resources
Rakesha Thomas
Finance
Jessica Brown
Community Development
Patty Nevins
Community Services
Daniel Schneider
Building & Safety
Jeffrey Baughman
Public Works/City Engineer
Gia Kim
Fire Protection
District
Jeffrey Birchfield
Fire Chief
Office of the City Clerk
Vacant
Innovation Technology
Jennifer Barcenas
2022/2023
Organizational Chart
C
ity-wide
xi
Independent Auditor’s Report
City Council
City of Fontana
Fontana, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Fontana (the “City”), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, the Budget to Actual Statement of the General Fund, the Budget to Actual Statement of the Fire Protection Special Revenue Fund, the Budget to Actual Statement of the Housing Authority Low/Mod Housing Fund Special Revenue Fund, and the Budget to Actual Statement of the Economic Stimulus Special Revenue Fund, of the City of Fontana as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
1 Empasis of Matter
The financial statements for the year ended June 30, 2023, reflect a prior period adjustment as described further in Note 19 to the financial statements. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
The City’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for one year after the date that the financial statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control.
Accordingly, no such opinion is expressed.
2 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Schedules of Changes in Net Pension Liability and Related Ratios During the Measurement Period, Schedules of Pension Plan Contributions, Schedule of Changes in Net OPEB Liability and Related Ratios during the Measurement Period, and Schedules of Plan Contributions be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements and budget to actual schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and budget to actual schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and budget to actual schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
3 Report on Summarized Comparative Information
We have previously audited the City of Fontana’s 2022 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated July 13, 2023. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2022 is consistent, in all material respects, with the audited financial statements from which it has been derived.
Other Information
Management is responsible for the other information included in the Annual Comprehensive Financial Report. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated February 20, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Irvine, California
February 20, 2024
4 5
MANAGEMENT’S DISCUSSION AND ANALYSIS
This narrative overview and analysis of the City of Fontana’s financial activities for the fiscal year ended June 30, 2023 is presented by the management of the City of Fontana to readers of the City’s financial statements. Management encourages readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report and the City’s basic financial statements in the financial section of this report.
FINANCIAL HIGHLIGHTS
The City’s governmental and business-type activities resulted in total assets and deferred outflows of resources exceeding its liabilities and deferred inflows of resources by $1,172.0 million as of June 30, 2023 (“current fiscal year”). Of this amount, $280.6 million represents the portion for restricted uses as specified by entities outside of the City government, the amount for unrestricted uses in accordance with finance-related legal requirements as reflected in the City’s fund structure is in a positive position at $122.6 million, and $768.8 million accounts for investments in capital assets in excess of related debt.
The City’s total net position increased $86.6 million during the current fiscal year. The increase is primarily due to the $11.7 million increase in property taxes, $2.4 million increase in sales tax and $30.2 million increase in operation contributions and grants. In addition, our overall expenses decreased by $5.7 million compared to FY2022.
As of the fiscal year end, the City’s Governmental Funds ending fund balances were $575.2 million, an increase of approximately $15.9 million or 2.84% from the prior fiscal year. Of this balance, $45.7 million is in nonspendable, $280.6 million restricted for use set by various legal requirements, $32.4 million is committed for economic uncertainty and $216.4 million is either assigned or unassigned based on the nature of the funding source.
The General Fund’s fund balance at the close of the current fiscal year was $117.3 million, a decrease of approximately $6.8 million or 5.5% from the previous year. The General Fund’s fund balance consists of $24.1 million in nonspendable and $12.4 million in restricted fund balance, $32.4 million in committed for the purposes of Economic uncertainty, and $48.4 million in assigned and unassigned fund balances.
See note 15 for further discussion.
The City’s business-type activities yielded operating revenues of $27.4 million, while operating expenses amounted to of $26.3 million.
General Fund revenues were $9.9 million more than the final budget, and expenditures were $15.4 million less than the final budget.
6 OVERVIEW OF THE BASIC FINANCIAL STATEMENTS
Management’s Discussion and Analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements include three components: government-wide financial statements; fund financial statements; and notes to the basic financial statements.
Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges ( business-type activities ). The governmental activities of the City include general government, public safety, public works, community development, community services and engineering. The business-type activities of the City include sewer and water operations. 7 Component units are included in the basic financial statements and consist of legally separate entities for which the City is financially accountable and that have the same governing board as the City. The blended component units include the Successor Agency of the Former Fontana Redevelopment Agency, the Fontana Public Financing Authority, the Fontana Public Facilities Financing Authority, the Fontana Housing Authority, the Fontana Industrial Development Authority, the Fontana Community Foundation and the Fontana Fire Protection District. The redevelopment agency was dissolved as of January 31, 2012 through the California Supreme Court decision on Assembly Bill 1X26. See Note 17 of the notes to the financial statements for more information on the dissolution.
The government-wide financial statements can be found on pages 21 and 22 of this report.
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 the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year.
Such information may be useful in evaluating the City’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to the government- wide financial statements in order to facilitate this comparison between governmental funds and governmental activities.
The City maintains 53 individual governmental funds for financial reporting purposes. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the General Fund, the Fire Protection District Special Revenue Fund, the Housing Authority Special Revenue Fund, the Economic Stimulus Special Revenue Fund, the Capital Reinvestment Fund, the Future Capital Projects Fund, the Sewer Expansion Fund, the Community Facility Districts Fund, and the Traffic Mitigation Capital Project Fund, which are considered to be major funds. Data for the other 44 governmental funds are combined in a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the non-major funds supplementary section of this report.
The City adopts an annual appropriated budget for its general fund, special revenue funds, debt service funds, and capital project funds. A budgetary comparison statement has been provided for the General Fund, the Fire Protection District Special Revenue Fund, the Housing Authority Low/Mod Housing Special Revenue Fund, and the Economic Stimulus Special Revenue Fund in the basic financial statements and for the remaining special revenue funds, the debt service funds, and the capital project funds in the supplementary information.
The governmental fund financial statements can be found on pages 23-30 of this report. 8 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 uses enterprise funds to account for its Sewer and Water Operations. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions.
The City uses an internal service fund to account for its fleet of vehicles; because this service predominantly benefits governmental rather than business-type functions, it has been included with 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 can be found on pages 31-33 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs.
The accounting used for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statements can be found on page 34-35 of this report.
Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 36-95 of this report.
Government-wide Financial Analysis
Invested in capital
assets, net of related
debt 65%
Restricted:
Community
development 13%
Restricted: Public
safety 4%
Restricted: Public
works 3%
Restricted: Debt
Service 0%
Restricted:
Government-access
channel 0%
Pension Trust 1%
Restricted: Capital
projects 4%
NET ASSETS BY TYPE
9 As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. The City’s net position is comprised of Net Investment in Capital Assets, Restricted Net Position, and Unrestricted Net Position. As of June 30, 2023, assets exceeded liabilities by $1,172.0 million.
The City’s net investment in capital assets (land, buildings, infrastructure, machinery, equipment, and vehicles), less any related debt used to acquire those assets that is still outstanding, is $768.8 million. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position ($280.6 million) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position $122.62 million may be used to meet the government’s ongoing obligations to citizens and creditors, unrestricted net position is in a positive position at the end of the fiscal year.
Net Position
(000 omitted)
2023 2022 2023 2022 2023 2022
729,081$ 697,543 $ 30,918 $ 31,702 $ 759,999 $ 729,245 $ 746,447 715,583 64,431 59,324 810,878 774,907 1,475,528 1,413,126 95,349 91,026 1,570,877 1,504,152 79,409 44,198 2,294 1,114 81,703 45,312 311,143 278,868 10,952 10,962 322,095 289,830 101,667 101,018 5,193 4,438 106,860 105,456 412,810 379,886 16,145 15,400 428,955 395,286 50,555 66,879 1,062 1,845 51,617 68,724 709,182 675,179 59,589 53,603 768,771 728,782 280,619 272,038 - 280,619 272,038 101,771 63,342 20,847 21,292 122,618 84,634 1,091,572$ 1,010,559 $ 80,436 $ 74,895 $ 1,172,008 $ 1,085,454 $ Net investment in capital assets
Restricted
Unrestricted
Total net position
Deferred outflows of resources
Long-term liabilities outstanding
Other liabilities
Total liabilities
Deferred inflows of resources
Net position:
Total assets
Governmental Activities Business-Type Activities Total
Current and other assets
Capital assets
10 Changes in Net Position
(000 omitted)
2023 2022 2023 2022 2023 2022
Revenues:
Program Revenues:
Charges for services 73,478 $ 73,330 $ 27,542 $ 26,819 $ 101,020 $ 100,149 $ Operating grants and contributions 51,038 20,860 - 51,038 20,860 Capital grants and contributions 22,714 27,263 7,630 337 30,344 27,600 General Revenues:
Property taxes 95,731 84,070 - 95,731 84,070 Sales tax 59,102 56,727 - 59,102 56,727 Franchise taxes 11,118 9,749 - 11,118 9,749 Business license taxes 8,396 7,584 - 8,396 7,584 Transient occupancy taxes 1,303 1,374 - 1,303 1,374 Motor vehicle in lieu 301 459 - 301 459 Investment earnings 9,229 (10,525) 270 (749) 9,499 (11,274) Other 4,275 11,901 118 (177) 4,393 11,724 Contributions not restricted to specific programs 17,104 - - - 17,104 - Total revenues 353,789 282,792 35,560 26,230 389,349 309,022 Expenses:
General Government 32,753 40,459 - 32,753 40,459 Public Safety 109,638 111,899 - 109,638 111,899 Public Works 42,050 49,008 - 42,050 49,008 Community Development 24,088 5,492 - 24,088 5,492 Engineering 33,348 37,814 - 33,348 37,814 Community Services 10,394 13,344 - 10,394 13,344 Interest on long-term debt 2,134 2,134 112 2,134 2,246 Gain/(Loss) on sale of capital assets - - - - Sewer - 26,360 24,542 26,360 24,542 Water - - - - Total expenses 254,405 260,150 26,360 24,654 280,765 284,805 Change in net position before transfers 99,384 22,642 9,200 1,576 108,584 24,218 Transfers 3,659 2,949 (3,659) (2,949) - - Change in net position 103,043 2,951 5,541 (1,373) 108,584 24,218 Net Position - beginning of year as restated 988,529 984,968 74,895 76,268 1,063,424 1,061,236 Net Position - end of year 1,091,572 $ 1,010,559 $ 80,436 $ 74,895 $ 1,172,008 $ 1,085,454 $ Governmental Activities Business-Type Activities Total
11 Governmental activities
The most significant revenues of the governmental activities are general taxes (49.6%), which include property taxes (27.1%), sales and use taxes (16.7%), and various other taxes (5.9%), and general revenues (8.7%), which include various other revenues (6.1%) and investment earnings (2.6%). Program revenues are 41.6% of the total revenues of the governmental activities, which include charges for services (20.8%), operating grants and contributions (14.4%), and capital grants and contributions (6.4%).
Public safety (police and fire) is the most significant (43.1%) of all governmental activities’ expenses, followed by Public works (16.5%), Engineering (13.1%), General government (12.9%), Community development (9.5%), Community services (4.1%) and interest on long-term debt (0.8%).
Included in these amounts is depreciation expense, which is 14.8% of the total expenses for governmental activities.
Governmental activities revenues increased by $71.0 million (25.1%) in the current fiscal year. The changes in revenues are a result of the following:
General tax revenues increased by $16.1 million (10.1%) which is primarily due to increase in property tax revenue by $11.6 millions as a higher property valuation in FY 2023. Sale tax revenues increased by $2.4 (4.2%) million due to the rise in business activities within the city and inflation as well.
General revenues (not including general taxes) increased by $29.0 million in FY 2023. This is primarily due to the donation of the Community Facilities District infrastructure by the developer which increased the other revenue by $9.3 million and $19.7 million increase Property taxes,
27.1%
Sales taxes,
16.7%
Franchise taxes,
3.1%
Business license
taxes, 2.4%
Transient
Occupancy
Taxes, 0.4%
Other, 6.1%
Charges for
services, 20.8%
Operating
contributions
and grants,
14.4% Capital
contributions
and grants,
6.4%
REVENUES BY SOURCE -
GOVERNMENTAL
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
Program Revenues
2023 Expenses
EXPENSES AND PROGRAM REVENUES -
GOVERNMENTAL ACTIVITIES
12 in our investment earnings as the City purchased more treasury securities at a higher yield interest rate and the Federal Reserve has put a pause on the rising interest.
Charges for services increased by $0.1 million (0.20%) which is in alignment with the city projection Operating contributions and grants increased by $30.2 million due to the City receiving more than 10 million dollar in federal Seizure grant, and the city recognizing more than 12 million worth ARPR grant from the unearned revenue. Capital contributions and grants decreased by $4.5 million due to the decrease in capital grants received by the city.
Governmental activities expenses decreased by $5.7 million (2.2%) in the current fiscal year. The most significant changes in governmental expenses were:
Community Services, Engineering, General government and public works, which were decreased by $22 million in total. This decrease is due to the OPEB contribution (government wide adjustment $26 million) the City made in FY 2022, for which it significant reduces our OPEB liability and OPEB expenses for FY 2023 across all our function expenses.
Business-type activities
Business-type activities net position increased by $5.5 million (7.4 percent)
Business-type activities revenues for current year is in-line with prior year, showing an increase of $9.3 million. Investment earnings increased by $1.31 million as a result of the Federal Reserve Board pause the rise in interest rate and the City bought some of the treasury securities at a higher interest rate yield. Charges for services increased by $0.7 million primarily due to an increase in rates charged by other entities such as IEUA and City of Rialto that are collected by the city and passed through to the proper entities. Capital contributions increased by $7.3 million due to the one time donation of the sewer system by the CFD developer for FY 2023..
Total expenses increased by $1.7 million is due to the increase in EDU (Equivalent Dwelling Unit) charge fees compared to prior year.
13 Investment
earnings
1%
Charges for
services
77%
Capital
contributions and
grants
22%
REVENUES BY SOURCE -
BUSINESS-TYPE ACTIVITIES
Financial Analysis of the City’s Funds
The City of Fontana employs Fund Accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, assigned and unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $575.2 million, a decrease of $15.9 million (2.8%) from the previous year. Of this total amount, $216.4 million constitutes assigned or unassigned fund balance, which is available for spending at the government’s discretion. The remainder of fund balance is either nonspendable ($45.7 million), restricted ($280.6 million) or committed ($32.4 million) and is not available for new spending. The nonspendable fund balance consists of 1) land held for resale of $10.0 million, 2) deposits on account of $0.1 million, 3) inventories held ($1.3 million), and 4) loan receivables ($34.3 million). Restricted fund balance includes amounts that are constrained on the use of the resources by outside parties and committed fund balance includes amounts that are constrained on the use of the resources pursuant to City Council formal action. For additional details of the City’s fund balances, please refer to Note 15 in the Notes to the Basic Financial Statements.
-
10,000,000
20,000,000
30,000,000
Sewer Water
Program Revenues
Expenses
EXPENSES AND PROGRAM REVENUES -
BUSINESS-TYPE ACTIVITIES
14 The general fund is the chief operating fund of the City. At the end of the current fiscal year, the assigned fund balance of the general fund was $3.1 million, while total fund balance reached $117.3 million, which was $6.8 million or 5.5% lower than the prior year. The City’s management assigns fund balance to a particular function, project or activity and may also be assigned for purposes beyond the current year. However, assigned fund balance is available for appropriation at any time. The General Fund has committed fund balance of $32.4 million for economic uncertainty.
General fund revenues increased by $15.7 million (11.5%) from the previous fiscal year; this increase is primarily due to:
Property Tax in Lieu of VLF was increased by $3.0 million due to the increase in assessed valuation and continued growth in the city. Sales tax revenue increased by $2.4 million (4.2%) due to a robust and resurgent economy emerge as the city saw sale tax increase from rising business development within the city
Franchise fee revenue increased by $1.4 million because of increase in both residential and commercial development activities in the city Investment earnings decreased by $6.3 million due to Federal Reserve Board put a pause on the rise of the interest rate and the city was able to purchase treasury securities that has a much higher interest yield resulting an increase in unrealized gain.
General fund expenditures increased by $6.3 million (4.7%) from the previous fiscal year, the increased costs were primarily due to:
Due to the increase in personnel cost under public safety (police) and the return of part-time staff as facilities reopen and programs resume.
The Fire Protection District special revenue fund has a fund balance of $26.4 million. The Fire Protection District accounts for all of the operating activities of the Fire District. The fund balance decreased by $12.0 million during the current fiscal year; current year revenues and transfer in were $61.8 million and total expenditures and transfers out were $73.8 million. Revenues increased $9.9 million (19.6%) primarily as a result of a higher property valuation assessment. Expenditures increased $3.1 million (7.7%) primarily as a result in increased contract costs with the San Bernardino County Fire Department for fire protection services due to inflation. Transfers out increased by $25.7 million during the year due to the one-time transfer for the fire annex project in the amount of $8 million and the one-time transfer for the Fontana Cap Closure project in the amount of $9 million. In addition, there was a lease agreement established for the use of the fire station by the fire protection district in which $5 million dollar was transferred from the fire protection district to city capital project fund to repay the lease amount that was owed in the past.
The Housing Authority special revenue fund has a fund balance of $85.9 million. The fund balance decreased by $0.3 million during the fiscal year. which is in aligned with the City’s expectations.
The Capital Reinvestment fund has a total fund balance of $26.0 million. The fund balance increased during the current fiscal year by $10.8 million due a one-time transfer in of $1.5 million for the center project, $3.2 million for downtown parking structure as well as $2.4 million for various projects.
The Future Capital Projects fund has a total fund balance of $42.0 million. The fund balance decreased during the current fiscal year by $0.6 million due to the normal cost allocation which is in aligned with the city’s expectation.
The Sewer Expansion Fund has a total fund balance of $0.35 million. The fund balance decreased slightly during the current fiscal year by $0.02 million which is in aligned with the city expectations.
15 The Traffic Mitigation capital project fund has a fund balance of $21.8 million. The fund balance increased during the current fiscal year by $6.4 million as a result of increased investment earning as the federal reserve put a pause on the interest rate hike and the city was able to purchase treasury securities at much higher interest rate.
Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the Sewer and Water Operations at the end of the year amounted to $18.9 million. The total increase in net position was $5.4 million, primarily due to one-time donated CFD infrastructure asset in the amount of $6.8 million.
General Fund Budgetary Highlights
Over the course of the year, the City Council revised the City’s budget on a quarterly basis. The Council approves supplemental appropriations throughout the year based on individual items that are brought forward by various departments.
Revenues:
During the year, the original General Fund revenue budget was amended to increase revenues by $15.6 million. The increase is primarily due to:
an increase in sales tax of $2.4 million, because of the conservative budget originally adopted due to COVID-19, the increase in inflation as well as continue growth of business in Fontana
an increase in Franchise tax of 1.4 million was due to increase in both residential and commercial activities within the City an increase in property tax revenue of $0.4 million due to increased assessed property valuation Property Tax in Lieu of VLF was increased by $3.0 million due to the increase in assessed valuation and continued growth in the City
General Fund actual revenues of $151.5 million were $9.9 million more than the final budget of 141.6 million. The positive variance to the final budget was primarily due to:
higher than expected tax revenues ($10.4 million) compared to the final budget, which was increased by $10.7 million from the adopted budget as a result of higher sale tax, franchise tax and property tax higher than expected investment earnings ($1.0 million) compared to the final budget, which was increased by $0.1 million from the adopted budget due to Federal Reserve putting a pause on the rising interest rate and the city was able to purchase more treasury securities at a higher interest rate thus resulting a higher investment unrealized gain. higher than expected fine and forfeitures ($0.2 million) lower than expected Licenses and permit ($0.5 Million lower than expected intergovernmental revenue ($0.2 million) lower than expected charges for services ($0.5 million)
16 Expenditures:
During the year, the original General Fund expenditure budget was amended to increase appropriations by $21.1 million, the increase in appropriations was due to various requests throughout the fiscal year such as:
increase of police department personnel cost $3.3 million and an increase 1.1 million of the other professional service cost increase of $2 million for IT department for various computer hardware, Audio/Visual holding and $0.4 million increase in other professional services such as digital service.
increase of $0.8 million for Human resources under other professional services and $0.5 increase in various settlement claims increase of $1.2 million for engineering for additional capital acquisition and other professional services
General Fund expenditures were less than budgeted. Of the total appropriations of $157.2 million, approximately 9.8%, or $15.4 million were unspent. The budgetary savings included IT department personnel cost, computer hardware cost, application cost, other professional service cost (total $4.1 million), personnel cost and capital cost in the police department (total $3.9 million), personnel cost in the community development (total $1.6 million) and HR admin cost and risk management cost (total $1.6 million). The aforementioned savings will be carried over to next fiscal year.
Capital Asset and Debt Administration
Capital assets. The City’s investment in capital assets for governmental and business-type activities as of June 30, 2023, amounts to $810.9 million (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment, vehicles and infrastructure (roads, highways, sewer and storm drain systems). The total change in the City’s investment in capital assets net of accumulated depreciation for the current fiscal year was an increase of $36.0 million (4.6%). Major capital asset events during the current fiscal year included the following:
Donated asset from the developer such as the CFD 71 Sierra Crest, CFD 80 Bella Strada, CFD 81 Gabriella, CFD 88 Sierra Crest II and CFD89 Belrose in the amount of $9.7 million were received by the City. There was an increase in activities in various CIP projects such as the Sierra: Foothill-Baseline ($7.5 million) and Fire station #81 ($4.4 million).
The City had a onetime purchase of various new lands in the amount of $9.2 million. Accumulated depreciation at year-end is $38.8 million higher than the prior year.
17 Capital Assets
(Net of depreciation)
(000 omitted)
2023 2022 2023 2022 2023 2022
Land 175,066 $ 161,362 $ - $ 175,066$ 161,362 $ Building and improvements 171,502 162,291 1,060 1,106 172,562 163,397 Machinery and equipment 4,491 4,248 13 7 4,504 4,254 Vehicles 14,442 13,968 - 14,442 13,968 Infrastructure 309,816 313,297 61,844 57,735 371,661 371,032 Intangibles 2,864 2,929 - - 2,864 2,929 Right to use assets 106 106 - - 106 106 Construction in progress 61,819 52,383 1,514 477 63,333 52,860 Easements 6,340 4,996 - 6,340 4,996 Total 746,447 $ 715,581 $ 64,431 $ 59,324 $ 810,878 $ 774,905 $ Governmental Activities Business-Type Activities Total
Additional information on the City’s capital assets can be found in Note 6 in the footnote disclosure.
18 Long-term debt. At the end of the current fiscal year, the City’s total long-term debt outstanding is $316.0 million. This amount is comprised of $204.4 million net pension liability, $18.9 million other post-employment benefits liability, $51.3 million of lease revenue bonds which are secured by future revenue sources from the lease of City property and $41.4 million of various other loans and obligations payable.
Outstanding Debt
(000 omitted)
2023 2022 2023 2022 2023 2022
51,255$ 53,015 $ - $ 51,255$ 53,015 $ 199,151 118,172 5,275 2,674 204,426 120,847 22,585 20,654 - - 22,585 20,654 11,213 11,099 237 242 11,450 11,341 18,295 66,534 598 2,325 18,893 68,859 2,531 2,959 4,842 5,721 7,373 8,679 Total outstanding debt 305,029$ 272,433 $ 10,952 $ 10,962 $ 315,982 $ 283,395 $ Other post employment benefits liability
Other debt
Governmental Activities Business-Type Activities Total
Lease revenue bonds
Net pension liability
Claims and judgments
Compensated absences
Additional information on the City’s long-term debt can be found in Note 8 in the footnote disclosure.
Economic Factors and Next Year’s Budget and Rates
In preparing the budget for Fiscal Year 2023-24, management’s goal was to produce an operating budget that adhered to City Council goals and objectives with an emphasis on cost containment. Expansion of the City’s economic base continues to be a City Council priority.
The Operating Budget for Fiscal Year 2023-24 is financially balanced and includes:
- General Fund designation of fund balance for contingencies of 25% of recurring appropriations. - A net increase in budgeted revenues of $7.5 million (or +5.4%) in the General Fund as compared to the prior year’s final budget is primarily attributed to the following:
An increase in sale tax revenue of $1.8 million projecting a robust recovery from pandemic projections An increase in property tax revenue of $6.5 million assuming an anticipated growth of 19.5 percent in assessed valuations An increase in recreation revenue of $0.1 million projecting facilities and programs will be opened its entirety 19 - A net increase in budgeted expenditures of $2.9 million or (+2.3%) in the General Fund as compared to the prior year’s final budget is primarily attribute to contractual obligations related to full-time City staff and the return of part-time staff as facilities reopen and programs resume.
Requests for Information
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City of Fontana’s finances and to show the City’s accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the City’s Finance Department at the City of Fontana, 8353 Sierra Avenue, Fontana, CA 92335.
20 Exhibit A
Governmental Business-Type
Activities Activities Total
Assets:
Cash and investments 470,736,779 $ 23,515,307 $ 494,252,086 $ Receivables:
Accounts 4,068,963 1,232,244 5,301,207 Assessments 540,011 - 540,011 Interest 7,234,943 146,152 7,381,095 Loans 82,673,369 3,943,383 86,616,752 Loans to Successor Agency 23,599,749 3,305,829 26,905,578 Allowance for doubtful accounts (358,838) (3,305,829) (3,664,667) Leases 17,926,621 - 17,926,621 Prepaid expenses - 3,888 3,888 Internal balances (1,909,088) 1,909,088 - Due from other governments 32,002,972 137,474 32,140,446 Inventories 1,422,307 30,953 1,453,260 Deposits 141,317 - 141,317 Land held for resale 10,029,872 - 10,029,872 Restricted assets:
Cash with fiscal agent 80,971,629 - 80,971,629 Capital assets not being depreciated 243,224,955 1,513,666 244,738,621 Capital assets, net of depreciation 503,222,125 62,916,953 566,139,078 Total assets 1,475,527,686 95,349,108 1,570,876,794 Deferred Outflows of Resources:
Deferred outflows of resources - pension related 65,675,635 1,844,643 67,520,278 Deferred outflows of resources - OPEB related 13,733,421 449,063 14,182,484 Total deferred outflows of resources 79,409,056 2,293,706 81,702,762 Liabilities:
Accounts payable 18,253,130 4,313,599 22,566,729 Deposits payable 5,930,046 805,131 6,735,177 Interest payable 584,817 30,538 615,355 Due to other governments 33,553,032 - 33,553,032 Unearned revenue 42,633,331 - 42,633,331 Retentions payable 712,369 43,611 755,980 Noncurrent liabilities:
Due within one year 15,298,421 941,917 16,240,338 Due in more than one year
Net pension liability 199,150,942 5,274,891 204,425,833 OPEB liability 18,294,557 598,205 18,892,762 Other 78,399,120 4,137,412 82,536,532 Total liabilities 412,809,765 16,145,304 428,955,069 Deferred Inflows of Resources:
Deferred inflows of resources - pension related 1,160,109 9,323 1,169,432 Deferred inflows of resources - OPEB related 32,183,030 1,052,338 33,235,368 Deferred inflows of resources - Leases 17,211,456 - 17,211,456 Total deferred inflows of resources 50,554,595 1,061,661 51,616,256 Net Position:
Net investment in capital assets 709,182,502 59,588,417 768,770,919 Restricted for:
Community development 144,022,279 - 144,022,279 Public safety 43,204,205 - 43,204,205 Public works 35,292,911 - 35,292,911 Debt service - - - Government-access channel 1,703,897 - 1,703,897 Pension Trust 10,694,317 - 10,694,317 Capital projects 45,701,294 - 45,701,294 Unrestricted 101,770,977 20,847,432 122,618,409 Total net position 1,091,572,382 $ 80,435,849 $ 1,172,008,231 $ See accompanying notes to financial statements
CITY OF FONTANA
Statement of Net Position
June 30, 2023
21 Exhibit B
Operating Capital
Charges for Contributions Contributions Governmental Business-type Expenses Services and Grants and Grants Total Activities Activities Total General government:
City council and commissions 1,364,715 $ - $ - $ - $ - $ (1,364,715)$ - $ (1,364,715)$ City administration 2,777,150 - 190,360 1,250,894 1,441,254 (1,335,896) - (1,335,896) Management services 10,118,658 1,708,105 8,862,911 54,625 10,625,641 506,983 - 506,983 Information technology 5,693,347 - 379,144 - 379,144 (5,314,203) - (5,314,203) Human resources 12,798,987 6,448,137 - - 6,448,137 (6,350,850) - (6,350,850) Public safety:
Police 65,854,441 1,290,125 17,512,543 - 18,802,668 (47,051,773) - (47,051,773) Fire 43,783,899 1,163,728 - - 1,163,728 (42,620,171) - (42,620,171) Public works 42,050,361 24,873,278 11,088,820 12,549,995 48,512,093 6,461,732 - 6,461,732 Community development 24,087,763 24,009,166 5,340,857 1,256,453 30,606,476 6,518,713 - 6,518,713 Community services 10,394,270 3,823,376 6,509,682 - 10,333,058 (61,212) - (61,212) Engineering 33,348,492 10,162,983 1,153,991 7,601,622 18,918,596 (14,429,896) - (14,429,896) Interest on long-term debt 2,133,651 - - - - (2,133,651) - (2,133,651) Total governmental activities 254,405,734 73,478,898 51,038,308 22,713,589 147,230,795 (107,174,939) - (107,174,939) Business-type activities:
Sewer 26,260,033 27,542,299 - 7,630,458 35,172,757 - 8,912,724 8,912,724 Interest on long-term debt 101,463 - - - - - (101,463) (101,463) Total business-type activities 26,361,496 27,542,299 - 7,630,458 35,172,757 - 8,811,261 8,811,261 Total functions/programs 280,767,230 $ 101,021,197 $ 51,038,308 $ 30,344,047 $ 182,403,552 $ (107,174,939) 8,811,261 (98,363,678) General revenues:
Taxes:
Property taxes, levied for general purpose 95,730,662 - 95,730,662 Sales taxes 59,102,489 - 59,102,489 Franchise taxes 11,118,103 - 11,118,103 Business license taxes 8,395,990 - 8,395,990 Transient occupancy taxes 1,302,569 - 1,302,569 Total taxes 175,649,813 - 175,649,813 Intergovernmental, unrestricted:
Motor vehicle in lieu 301,474 - 301,474 Investment earnings 9,228,551 270,136 9,498,687 Other 4,274,678 117,885 4,392,563 Contributions not restricted to specific programs 17,103,880 - 17,103,880 Transfers 3,659,260 (3,659,260) -
Total general revenues and transfers 210,217,656 (3,271,239) 206,946,417 Change in net position 103,042,717 5,540,022 108,582,739 988,529,665 74,895,827 1,063,425,492
Net position at end of year 1,091,572,382 $ 80,435,849 $ 1,172,008,231 $ Governmental activities:
See accompanying notes to financial statements
CITY OF FONTANA
Statement of Activities
Year Ended June 30, 2023
Program Revenues Net (Expense) Revenue and Changes in Net Assets Functions/Programs
Net position at beginning of year, as restated (see note 19) 22 Exhibit C
Fire Future Community Other Total
Protection Housing Economic Capital Capital Sewer Facilities Traffic Governmental Governmental General District Authority Stimulus Reinvestment Projects Expansion Districts Mitigation Funds Funds Assets:
Cash and investments 58,277,222 $ 26,206,288 $ 14,616,541 $ 38,182,155 $ 20,354,496 $ 6,941,116 $ 25,257,788 $ 22,089 $ 48,676,325 $ 215,906,503 $ 454,440,523 $ Receivables:
Accounts 3,861,306 46,525 - - 12,065 - 25,929 - 2,087 118,366 4,066,278 Assessments - - - - - - - - - 540,011 540,011 Interest 428,870 132,195 4,106,248 - 102,926 35,013 127,409 - 245,540 1,974,538 7,152,739 Loans - - 71,852,645 - 125,000 - - - - 10,695,724 82,673,369 Loans to Successor Agency 23,599,749 - - - - - - - - - 23,599,749 Allowance for doubtful accounts (207,573) - - - - - - - - (151,265) (358,838) Leases 10,220,102 - - - - - - - - 7,706,519 17,926,621 Deposits 100,384 - - 5,667 - - - - - 35,266 141,317 Due from other funds 24,075,880 - - - - - - - - - 24,075,880 Due from other governments 11,503,386 283,637 - - - - - - - 20,213,986 32,001,009 Inventories 407,053 - - - - - - - - 871,931 1,278,984 Land held for resale - - - - 5,650,178 4,379,694 - - - - 10,029,872 Advances to other funds - - - - - 30,703,911 - - - - 30,703,911 Restricted assets:
Cash with fiscal agent 11,071,217 - 203,033 - - - - 46,783,629 78,502 22,835,248 80,971,629 Total assets 143,337,596 $ 26,668,645 90,778,467 38,187,822 26,244,665 42,059,734 25,411,126 46,805,718 49,002,454 280,746,827 769,243,054 Liabilities, Deferred Inflows and Fund Balances:
Liabilities:
Accounts payable 7,804,236 $ 194,178 $ 47,373 $ 924,394 $ 261,211 $ - $ - $ 79,853 $ 405,025 $ 8,048,151 $ 17,764,421 $ Deposits payable 5,923,999 - 6,047 - - - - - - - 5,930,046 Retentions payable - - - - 12,302 21,757 - - 104,382 573,928 712,369 Due to other funds - - - - - - - 14,216,633 - 9,859,247 24,075,880 Due to other governments - - - - - - 25,065,670 - - 8,487,362 33,553,032 Unearned revenue 150,200 - - 37,148,029 - - - - - 5,335,102 42,633,331 Advances from other funds - - - - - - - - 26,691,542 4,012,369 30,703,911 Total liabilities 13,878,435 194,178 53,420 38,072,423 273,513 21,757 25,065,670 14,296,486 27,200,949 36,316,159 155,372,990 Deferred inflows of resources:
Unavailable revenues 2,494,088 42,268 4,848,263 - 10,835 - - - - 14,092,657 21,488,111 Leases 9,703,689 - - - - - - - - 7,507,767 17,211,456 Total deferred inflows of resources 12,197,777 42,268 4,848,263 - 10,835 - - - - 21,600,424 38,699,567 Fund balances:
Nonspendable 24,107,186 - - - 5,650,178 4,379,694 - - - 11,602,921 45,739,979 Restricted 12,398,214 26,432,199 85,876,784 115,399 - - - 30,257,097 15,444,197 110,095,013 280,618,903 Committed 32,411,496 - - - - - - - - - 32,411,496 Assigned 3,143,811 - - - 20,310,139 37,658,283 345,456 - - 113,943,770 175,401,459 Unassigned 45,200,677 - - - - - - 2,252,135 6,357,308 (12,811,460) 40,998,660 Total fund balances 117,261,384 26,432,199 85,876,784 115,399 25,960,317 42,037,977 345,456 32,509,232 21,801,505 222,830,244 575,170,497 Total liabilities, deferred inflows of
resources and fund balances 143,337,596 $ 26,668,645 $ 90,778,467 $ 38,187,822 $ 26,244,665 $ 42,059,734 $ 25,411,126 $ 46,805,718 $ 49,002,454 $ 280,746,827 $ 769,243,054 See accompanying notes to financial statements
CITY OF FONTANA
Balance Sheet
Governmental Funds
June 30, 2023
Capital ProjectSpecial Revenue
23 Exhibit D
Fund balances of governmental funds 575,170,497 $
Amounts reported for governmental activities in the Statement of Net Position are different because:
737,064,380
79,409,056
(311,143,040)
Accrued interest payable from the current portion of interest due on long-term debt has not been reported in the governmental funds. (584,817) (33,343,139)
An Internal Service Fund is used by management to charge the costs of fleet management to individual funds. The assets and liabilities of the Internal Service Fund must be added to the Statement of Net Position. 23,511,334 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. 21,488,111 Net position of governmental activities 1,091,572,382 $ See accompanying notes to financial statements
CITY OF FONTANA
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2023
Deferred inflows of resources related to pensions and other postemployment benefits are applicable to future reporting periods and, therefore, are not reported in the funds.
Deferred outflows of resources related to pensions and other postemployment benefits are applicable to future reporting periods and, therefore, are not reported in the funds.
Long-term liabilities, including net pension liability, OPEB liability and compensated absences, are not due and payable in the current period and, therefore, is not recognized in the funds.
Capital assets, net of depreciation, have not been included as financial resources in governmental fund activity (excluding internal service funds).
24 Exhibit E
Fire Future Community Other
Protection Housing Economic Capital Capital Sewer Facility Traffic Governmental General District Authority Stimulus Reinvestment Projects Expansion Districts Mitigation Funds Totals Revenues:
Taxes 116,384,679$ 58,710,064$ $ - $ - $ - $ - $ - $ - $ - 563,564$ 175,658,307$ Licenses and permits 7,872,926 1,185,187 - - - - - - - 9,359,285 18,417,398 Intergovernmental 1,283,694 - - 12,851,534 - - - - 871,840 40,552,785 55,559,853 Charges for services 16,174,908 - - - - - - - 8,924,428 6,367,335 31,466,671 Fines and forfeitures 703,886 - - - - - - - - 66,389 770,275 Special assessments - - - - - - - 46,992 - 19,226,076 19,273,068 Investment earnings (loss) 4,381,331 577,026 122,979 - (100,975) 72,403 (17,761) 730,803 231,174 2,109,210 8,106,190 Contribution from property owners - - - - - - - 10,815,577 - - 10,815,577 Other revenue 4,737,365 - 127,939 - 48,087 - - - - 744,198 5,657,589 Total revenues 151,538,789 60,472,277 250,918 12,851,534 (52,888) 72,403 (17,761) 11,593,372 10,027,442 78,988,842 325,724,928 Expenditures:
Current:
General government:
City council and commissions 1,339,208 - - - 24,019 - - - - - 1,363,227 City administration 3,936,406 - - - - - - - - 979,183 4,915,589 Management services 3,804,859 - 477,479 7,805,788 1,431 - - - - 120,467 12,210,024 Information technology 9,114,829 - - - 76,863 - - - - 3,812 9,195,504 Human resources 11,485,046 - - - - - - - - 15,184 11,500,230 Public safety:
Police 72,166,973 - - - - - - - - 4,258,081 76,425,054 Fire - 42,937,266 - - - - - - - 922,272 43,859,538 Public works 14,972,455 - - 2,427,310 858,859 133,312 - 424,199 - 22,327,805 41,143,940 Community development 7,676,951 - - - 3,570,140 - - - - 13,726,654 24,973,745 Community services 12,845,952 - - - - - - - - 5,631,727 18,477,679 Engineering 4,319,998 - - 838,873 404,697 110,143 - 8,430,629 3,485,004 22,890,044 40,479,388 Debt Service:
Principal 58,822 - - - - - - - - 1,760,000 1,818,822 Interest 1,567 - - - - - - - - 2,248,950 2,250,517 Total expenditures 141,723,066 42,937,266 477,479 11,071,971 4,936,009 243,455 - 8,854,828 3,485,004 74,884,179 288,613,257 Excess (deficiency) of revenues
over (under) expenditures 9,815,723 17,535,011 (226,561) 1,779,563 (4,988,897) (171,052) (17,761) 2,738,544 6,542,438 4,104,663 37,111,671 Other Financing Sources (Uses):
18,272,319 1,295,100 - - 15,929,494 - - - - 23,461,106 58,958,019 (13,380,541) (30,861,695) (56,600) (1,779,564) (124,342) (462,470) - - (185,130) (10,924,067) (57,774,409) - - - - - - - (748,199) - - (748,199) Premium (discount) on bonds issued - - - - - - - 261,790 - - 261,790 Sale of capital assets 45,946 - - - - - - - - 31,940 77,886 Total other financing sources (uses) 4,937,724 (29,566,595) (56,600) (1,779,564) 15,805,152 (462,470) - (486,409) (185,130) 12,568,979 775,087 Net change in fund balances 14,753,447 (12,031,584) (283,161) (1) 10,816,255 (633,522) (17,761) 2,252,135 6,357,308 16,673,642 37,886,758 Fund Balances:
102,507,937 38,463,783 86,159,945 115,400 15,144,062 42,671,499 363,217 30,257,097 15,444,197 206,156,602 537,283,739 End of fiscal year 117,261,384$ 26,432,199$ 85,876,784$ 115,399$ 25,960,317$ 42,037,977$ 345,456$ 32,509,232$ 21,801,505$ 222,830,244$ 575,170,497$ See accompanying notes to financial statements
CITY OF FONTANA
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
Year Ended June 30, 2023
Special Revenue Capital Projects
Transfers in
Transfers out
Proceeds of refunding bonds
Beginning of fiscal year, as restated
(see note 19)
25 Exhibit F
Net change in fund balances - total governmental funds 37,886,758 $ Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlay as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over 50,038,280 their estimated useful lives as depreciation expense. This is the amount of capital assets recorded in the current period.
In the Statement of Activities, only the gain/loss on the sale of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the cost of the capital assets sold. (45,946) Donations of capital assets increase net position in the Statement of Activities, but do not appear in the governmental funds because they are not financial resources. 17,103,880
Depreciation expense on capital assets is reported in the Statement of Activities, but they do not require the use of current financial resources. (37,200,204) Therefore, depreciation expense is not reported as expenditures in governmental funds.
Revenues in the Statement of Activities that do not provide current financial resources are not reported as unavailable revenues in the funds. 10,468,081 The issuance of long-term debt provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of bond principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. 2,488,567 The recognition of lease payables and the net change in lease payables are not recognized in the funds 20,353 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures (1,927,826) in governmental funds.
The Internal Service Fund is used by management to charge the costs of fleet management to individual funds. The net gain of the Internal Service 5,457,861 Fund is reported with governmental activities.
Adjustments made to the OPEB liability do not use current financial resources and, therefore, are not recognized in the funds. 26,680,131 Adjustments made to the Net Pension Liability do not use current financial resources and, therefore, are not recognized in the funds. (7,927,218) Change in net position of governmental activities 103,042,717 $ See accompanying notes to financial statements
CITY OF FONTANA
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities
Year Ended June 30, 2023
26 Exhibit G
Variance with
Actual Final Budget -
Original Final Amounts Positive (Negative)
Revenues:
Taxes 95,321,100 $ 105,986,750 $ 116,384,679 $ 10,397,929 $ Licenses and permits 6,949,800 8,390,123 7,872,926 (517,197) Intergovernmental 1,395,500 1,531,915 1,283,694 (248,221) Charges for services 14,226,820 16,657,367 16,174,908 (482,459) Fines and forfeitures 511,200 503,200 703,886 200,686 Investment earnings (loss) 3,272,850 3,418,880 4,381,331 962,451 Other revenue 4,374,130 5,137,669 4,737,365 (400,304) Total revenues 126,051,400 141,625,904 151,538,789 9,912,885 Expenditures:
Current:
General government:
City council and commissions 1,262,310 1,443,936 1,339,208 104,728 City administration 2,719,040 4,418,402 3,936,406 481,996 Management services 3,261,390 4,497,719 3,804,859 692,860 Information technology 8,813,530 13,202,856 9,114,829 4,088,027 Human resources 10,482,130 13,051,521 11,485,046 1,566,475 Public safety:
Police 70,140,290 75,917,229 72,166,973 3,750,256 Public works 13,819,610 15,696,216 14,972,455 723,761 Community development 6,515,190 8,434,836 7,676,951 757,885 Community services 15,188,300 15,043,195 12,845,952 2,197,243 Engineering 3,897,220 5,299,304 4,319,998 979,306 Debt Service:
Principal - 163,994 58,822 105,172 Interest - 200 1,567 (1,367) Total expenditures 136,099,010 157,169,408 141,723,066 15,446,342 Excess (deficit) of
revenues over expenditures (10,047,610) (15,543,504) 9,815,723 25,359,227 Other Financing Sources (Uses):
Transfers in 31,128,200 34,623,944 18,272,319 (16,351,625) Transfers out (21,107,310) (29,625,330) (13,380,541) 16,244,789 Sale of capital assets 1,500 1,500 45,946 44,446 Total other financing sources (uses) 10,022,390 5,000,114 4,937,724 (62,390) Net change in fund balances (25,220) (10,543,390) 14,753,447 25,296,837 Fund balances - beginning, as restated (see note 19) 102,507,937 102,507,937 102,507,937 - Fund balances - ending 102,482,717 $ 91,964,547 $ 117,261,384 $ 25,296,837 $ See accompanying notes to financial statements
Budget Amounts
CITY OF FONTANA
General Fund
Year Ended June 30, 2023
Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 27 Exhibit G
Variance with
Actual Final Budget -
Original Final Amounts Positive (Negative)
Revenues:
Taxes 50,923,200 $ 50,923,200 $ 58,710,064$ 7,786,864 $ Licenses and permits 890,000 875,000 1,185,187 310,187 Investment earnings 109,000 109,000 577,026 468,026 Total revenues 51,922,200 51,907,200 60,472,277 8,565,077 Expenditures:
Public safety:
Fire 41,173,340 44,192,778 42,937,266 1,255,512 Total expenditures 41,173,340 44,192,778 42,937,266 1,255,512 Excess (deficit) of
revenues over expenditures 10,748,860 7,714,422 17,535,011 9,820,589 Other Financing Sources (Uses):
Transfers in 1,295,100 1,295,100 1,295,100 - Transfers out (5,392,640) (30,861,695) (30,861,695) - Total other financing sources (uses) (4,097,540) (29,566,595) (29,566,595) - Net change in fund balances 6,651,320 (21,852,173) (12,031,584) 9,820,589 Fund balances - beginning 38,463,783 38,463,783 38,463,783 - Fund balances - ending 45,115,103 $ 16,611,610 $ 26,432,199 $ 9,820,589 $
CITY OF FONTANA
Fire Protection District - Special Revenue
Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year Ended June 30, 2023
Budget Amounts
See accompanying notes to financial statements
28 Exhibit G
Variance with
Actual Final Budget -
Original Final Amounts Positive (Negative)
Revenues:
Investment earnings (loss) 399,000 $ 399,000 $ 122,979 $ (276,021) $ Other revenue 196,000 201,000 127,939 (73,061) Total revenues 595,000 600,000 250,918 (349,082) Expenditures:
Current:
General government:
Management services 332,290 4,342,816 477,479 3,865,337 Total expenditures 332,290 4,342,816 477,479 3,865,337 Excess (deficit) of
revenues over expenditures 262,710 (3,742,816) (226,561) 3,516,255 Other Financing Sources (Uses):
Transfers out (56,600) (56,600) (56,600) - Total other financing sources (uses) (56,600) (56,600) (56,600) - Net change in fund balances 206,110 (3,799,416) (283,161) 3,516,255 Fund balances - beginning 86,159,945 86,159,945 86,159,945 - Fund balances - ending 86,366,055 $ 82,360,529 $ 85,876,784 $ 3,516,255 $ Budget Amounts
See accompanying notes to financial statements
CITY OF FONTANA
Housing Authority Low/Mod Housing Fund - Special Revenue Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year Ended June 30, 2023
29 Exhibit G
Variance with
Actual Final Budget -
Original Final Amounts Positive (Negative)
Revenues:
Intergovernmental $ - $ - 12,851,534 $ 12,851,534 $ Total revenues - - 12,851,534 12,851,534 Expenditures:
Current:
General government:
Management services - 15,037,271 7,805,788 7,231,483 Public works - 6,579,892 2,427,310 4,152,582 Engineering - 26,962,675 838,873 26,123,802 Total expenditures - 48,579,838 11,071,971 37,507,867 Excess (deficit) of
revenues over expenditures - (48,579,838) 1,779,563 50,359,401 Other Financing Sources (Uses):
Transfers out - - (1,779,564) (1,779,564) Total other financing sources (uses) - - (1,779,564) (1,779,564) Net change in fund balances - (48,579,838) (1) 48,579,837 Fund balances - beginning 115,400 115,400 115,400 - Fund balances - ending 115,400 $ (48,464,438)$ 115,399 $ 48,579,837 $ See accompanying notes to financial statements
CITY OF FONTANA
Economic Stimulus - Special Revenue
Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year Ended June 30, 2023
Budget Amounts
30 Exhibit H
Governmental
Activities
Non-Major Internal Service
Enterprise Fund - Fund -
Sewer Water Fleet
Operations Operations Totals Operations
Assets:
Current Assets:
Cash and investments 22,774,003 $ 741,304 $ 23,515,307 $ 16,296,256 $ Accounts receivables 1,232,244 - 1,232,244 2,685 Interest receivable 142,413 3,739 146,152 82,204 Loans receivable 2,777,191 1,166,192 3,943,383 - Loans to Successor Agency 3,305,829 - 3,305,829 - Allowance for doubtful accounts (3,305,829) - (3,305,829) - Prepaid expenses 3,888 - 3,888 - Due from other governments 137,474 - 137,474 1,963 Inventories 30,953 - 30,953 143,323 Total current assets 27,098,166 1,911,235 29,009,401 16,526,431 Noncurrent Assets:
Capital assets, not being depreciated 1,513,666 - 1,513,666 615,245 Capital assets, net of depreciation 62,916,953 - 62,916,953 8,767,455 Total noncurrent assets 64,430,619 - 64,430,619 9,382,700 Total assets 91,528,785 1,911,235 93,440,020 25,909,131 Deferred Outflows of Resources:
Deferred outflows of resources - pension related 1,844,643 - 1,844,643 - Deferred outflows of resources - OPEB related 449,063 - 449,063 - Total deferred outflows of resources 2,293,706 - 2,293,706 - Liabilities:
Current Liabilities:
Accounts payable 4,313,599 - 4,313,599 488,709 Deposits payable 805,131 - 805,131 - Interest payable 30,538 - 30,538 - Retentions payable 43,611 - 43,611 - Compensated absences payable - current 47,454 - 47,454 - Loans payable - current 894,463 - 894,463 - Total current liabilities 6,134,796 - 6,134,796 488,709 Noncurrent Liabilities:
Compensated absences payable 189,673 - 189,673 - Loans payable 3,947,739 - 3,947,739 - Net pension liability 5,274,891 - 5,274,891 - Net OPEB liability 598,205 - 598,205 - Total noncurrent liabilities 10,010,508 - 10,010,508 - Total liabilities 16,145,304 - 16,145,304 488,709 Deferred Inflows of Resources:
Deferred inflows of resources - pension related 9,323 - 9,323 - Deferred inflows of resources - OPEB related 1,052,338 - 1,052,338 - Total deferred inflows of resources 1,061,661 - 1,061,661 - Net Position:
Net investment in capital assets 59,588,417 - 59,588,417 9,382,700 Unrestricted 17,027,109 1,911,235 18,938,344 16,037,722 Total net position 76,615,526 $ 1,911,235 $ 78,526,761 25,420,422 $ Reconciliation of Net Position to the Statement of Net Position Net Position per Statement of Net Position - Proprietary Funds 78,526,761 1,909,088
Net position per Statement of Net Position 80,435,849 $ See accompanying notes to financial statements
June 30, 2023
CITY OF FONTANA
Business-type Activities
Enterprise Funds
Statement of Net Position
Proprietary Funds
Accumulated adjustment to reflect the consolidation of internal service fund activities related to enterprise funds
31 Exhibit I
Governmental
Activities
Non-Major Internal Service
Enterprise Fund - Fund -
Sewer Water Fleet
Operations Operations Totals Operations
Operating Revenues:
Charges for services 27,383,676 $ - $ 27,383,676 $ 8,576,160 $ Total revenues 27,383,676 - 27,383,676 8,576,160 Operating Expenses:
Personnel costs 2,202,636 - 2,202,636 1,047,499 Operating costs 467,214 - 467,214 1,851,784 Contractual 20,642,224 - 20,642,224 748,408 Depreciation 2,947,959 - 2,947,959 2,123,720 Total operating expenses 26,260,033 - 26,260,033 5,771,411 Operating income (loss) 1,123,643 - 1,123,643 2,804,749 Non-Operating Revenues (Expenses):
Investment earnings 265,687 4,449 270,136 33,112 Interest payments (101,463) - (101,463) - Other revenue (expenses) 117,885 - 117,885 46,583 Gain (loss) on sale of capital assets - - - 256,390 Total non-operating revenues (expenses) 282,109 4,449 286,558 336,085 Income (loss) before contributions
and transfers 1,405,752 4,449 1,410,201 3,140,834 Capital contributions - connection fees 811,632 - 811,632 - Contributions from property owners 6,818,826 - 6,818,826 - Transfers in - - - 2,475,650 Transfers out (3,659,260) - (3,659,260) - Change in net position 5,376,950 4,449 5,381,399 5,616,484 Net Position:
Beginning of fiscal year 71,238,576 1,906,786 73,145,362 19,803,938 Net position at end of year 76,615,526 $ 1,911,235 $ 78,526,761 25,420,422 $ Reconciliation of Changes in Net Position to the Statement of Activities:
5,381,399
Adjustment to reflect the consolidation of internal service activities related to enterprise funds 158,623 Changes in Net Position of Business-Type Activities per Statement of Activities 5,540,022 $ Changes in Net Position, per the Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds
See accompanying notes to financial statements
CITY OF FONTANA
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
Year Ended June 30, 2023
Business-type Activities
Enterprise Funds
32 Exhibit J
Governmental
Activities
Non-Major Internal Service
Enterprise Fund - Fund -
Sewer Water Fleet
Operations Operations Totals Operations
Cash Flow from Operating Activities:
Cash received from customers 27,573,878 $ - $ 27,573,878 $ 8,728,072 $ Cash payments to suppliers of goods and services (20,332,421) - (20,332,421) (3,155,677) Cash payments to employees for services (3,295,799) - (3,295,799) (1,047,499) Net cash provided by (used for) operating activities 3,945,658 - 3,945,658 4,524,896 Cash Flows from Noncapital Financing Activities:
Transfers received - - - 2,475,650 Transfers paid (3,659,260) - (3,659,260) - Net cash provided by (used for) noncapital financing activities (3,659,260) - (3,659,260) 2,475,650 Cash Flows from Capital and Related Financing Activities:
Payments for debt service - principal payments (878,670) - (878,670) - Payments for debt service - interest payments (106,149) - (106,149) - Capital contributions 7,630,458 - 7,630,458 - Sale of capital assets - - - 256,390 Acquisition and construction of capital assets (8,054,254) - (8,054,254) (3,094,069) Net cash provided by (used for) capital and related financing activities (1,408,615) - (1,408,615) (2,837,679) Cash Flows from Investing Activities:
Investment earnings 376,215 56,006 432,221 (24,237) Net cash provided by investing activities 376,215 56,006 432,221 (24,237) Net increase (decrease) in cash and cash equivalents (746,002) 56,006 (689,996) 4,138,630 Cash and cash equivalents - beginning of year 23,520,005 685,298 24,205,303 12,157,626 Cash and cash equivalents - end of year 22,774,003$ 741,304$ 23,515,307$ 16,296,256$ Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities:
Operating Income (Loss) 1,123,643 $ - $ 1,123,643 $ 2,804,749 $ Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities:
Depreciation 2,947,959 - 2,947,959 2,123,720 Other revenue (expenses) 117,885 - 117,885 46,583 Changes in Assets and Liabilities:
Accounts receivable 196,888 - 196,888 107,292 Prepaid expenses (3,888) - (3,888) - Due from other governments (124,571) - (124,571) (1,963) Inventories 21,419 - 21,419 (41,287) Deferred outflows - pension related (1,165,689) - (1,165,689) - Deferred outflows - OPEB related (13,596) - (13,596) - Accounts payable 702,913 - 702,913 (514,198) Retentions payable 43,611 - 43,611 - Deposits payable 12,962 - 12,962 - Accrued compensated absences (4,586) - (4,586) - Deferred inflows - pension related (1,508,403) - (1,508,403) - Deferred inflows - OPEB related 725,542 - 725,542 - Net pension liability 2,600,515 - 2,600,515 - Net OPEB liability (1,726,946) - (1,726,946) - Net cash provided by (used for) operating activities 3,945,658 $ - $ 3,945,658 $ 4,524,896 $ There were no non-cash investing, capital or financing activities for the year ended June 30, 2023.
See accompanying notes to financial statements
CITY OF FONTANA
Statement of Cash Flows
Proprietary Funds
Year Ended June 30, 2023
Business-type Activities
Enterprise Funds
33 Exhibit K
Private Purpose
Trust Fund
Custodial Successor Agency
Funds of the Former RDA
Assets:
Cash and investments 15,603,300 $ 19,569,155 $ Receivables (net):
Assessments 386,139 -
Interest - 1,219,204
Loans receivable - 2,381,374 Allowance for doubtful accounts - (1,971,279) Restricted assets:
Cash and investments 21,488,664 2,909
Total assets 37,478,103 21,201,363
Liabilities:
Interest payable - 2,056,354 Due to other governments 60,677 - Deferred revenue - 125,000 Long-term liabilities:
Due in one year - 16,793,885 Due in more than one year - 418,215,790 Total liabilities 60,677 437,191,029 Net Position:
Held for other organizations 7,487,584 - Restricted for debt service 29,929,842 (415,989,666) Total Net Position (deficit) 37,417,426 $ (415,989,666) $ See accompanying notes to financial statements
CITY OF FONTANA
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2023
34 Exhibit L
Private Purpose
Trust Fund
Custodial Successor Agency
Funds of the Former RDA
Additions:
Contributions from property owners 15,891,007 $ 34,924,052 $ Contributions from other governments - 71,313 Interest and change in fair value of investments 118,338 (335,295) Increase in deposits held 6,684,301 - Other revenue 754,424 511,649 Total additions 23,448,070 35,171,719 Deductions:
Contractual services - 368,552 Administrative expense 826,454 6,000 Interest expense 6,931,519 19,012,168 Contributions to other governments - 200,150 Principal payments 6,040,000 - Decrease in deposits held 5,891,451 - Total deductions 19,689,424 19,586,870 Changes in net position 3,758,646 15,584,849 Net Position (deficit) - Beginning of the Year 33,658,780 (431,574,515) Net Position (deficit) - End of the Year 37,417,426 $ (415,989,666)$
CITY OF FONTANA
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
Year Ended June 30, 2023
See accompanying notes to financial statements
35 CITY OF FONTANA
Notes to the Financial Statements
Note 1. Organization and Summary of Significant Accounting Policies
a. Description of the Reporting Entity
The City of Fontana was incorporated on June 25, 1952, under the laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. It is governed by an elected five-member board. As required by generally accepted accounting principles, these financial statements present the City of Fontana (the primary government) and its component units. The City operates under a Council-Manager form of government, and currently provides a wide variety of services to its citizens, including police, public services, community development, general administrative and other services.
The inclusion of an organization within the scope of the reporting entity of the City of Fontana is based on the provisions of GASB Statement No. 14 and amended with GASB Statement No. 61. The blended component units discussed below, although legally separate entities, are in substance part of the government operation and so data from these component units has been combined herein. The following criteria were used in the determination of the blended component unit:
1. The members of the City Council also act as the governing body of the Fontana Industrial Development Authority, the Fontana Public Financing Authority, the Fontana Housing Authority (Housing Authority), the Fontana Community Foundation, the Fontana Fire Protection District (Fire District) and the Fontana Public Facilities Financing Authority.
2. The Fontana Industrial Development Authority, the Fontana Public Financing Authority, the Fontana Housing Authority, the Fontana Community Foundation, the Fontana Fire Protection District and the Fontana Public Facilities Financing Authority are managed by employees of the City. A portion of the City’s general overhead costs is allocated to the Fire District and the Housing Authority.
3. The City, the Fontana Industrial Development Authority, the Fontana Public Financing Authority, the Housing Authority, the Fontana Community Foundation, the Fire District and the Fontana Public Facilities Financing Authority are financially interdependent. They provide financial benefit/burden to the City.
Blended Component Units:
The Fontana Industrial Development Authority was established February 3, 1981, pursuant to Government Code Section 91500 of the State of California for the purpose of encouraging and financing industrial development within areas of the City of Fontana. There was no activity for the year being reported therefore the Fontana Industrial Development Authority is not presented in this report.
The Fontana Public Financing Authority was established on May 2, 1989, pursuant to Government Code Section 6500 of the State of California (Joint Exercise of Powers). Its purpose is to assist in the financing of capital improvements and working capital requirements of the City, the Former Redevelopment Agency and any other eligible local agencies. Separate financial statements are not available for the Public Financing Authority.
36 CITY OF FONTANA
Notes to the Financial Statements
The Fontana Housing Authority was established May 3, 1994, pursuant to Government Code Section 34240 of the State of California for the purpose of rehabilitating and increasing the low- and moderate-income housing stock in the City of Fontana. Separate financials statements are not available for the Housing Authority.
The Fontana Community Foundation was established on April 27, 2005, pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986 for the purpose of aiding and assisting in the implementation, improvement and maintenance of public services that preserve and promote the health and welfare and education of local citizenry of the City of Fontana. Separate financials statements are not available for the Foundation.
The Fontana Fire Protection District was established on July 1, 2008, pursuant to the State of California Health and Safety Code Section 13800 for the purpose of providing fire suppression, emergency medical, fire prevention and education services within the city limits and the unincorporated area within the District’s Sphere of Influence. Separate financials statements are not available for the District.
The Fontana Public Facilities Financing Authority was established on September 9, 2014, pursuant to Government Code Section 6500 of the State of California (Joint Exercise of Powers). Its purpose is to assist in the financing of capital improvements and working capital requirements of the City, the Fontana Fire Protection District and any other eligible local agencies. Separate financial statements are not available for the Public Facilities Financing Authority.
b. Government-Wide and Fund Financial Statements
The government-wide financial statements include a statement of net position and a statement of activities. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. For the most part, the effect of interfund activities has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, 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 are 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 particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter 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.
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 fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless 37 CITY OF FONTANA
Notes to the Financial Statements
of the timing of related cash flows. 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.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period or 180 days for certain intergovernmental revenues.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.
The City’s fiduciary funds consist of custodial funds and a private purpose trust fund. Custodial funds account for assets held by the City for other governments or individuals. Fiduciary funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City.
The City reports the following major governmental funds:
The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.
The Fire Protection District Special Revenue Fund accounts for revenues received as part of property taxes, permits, and fees, that are to be used for fire suppression, emergency medical, fire prevention and education services incurred by the District within the City’s Sphere of Influence.
The Housing Authority Special Revenue Fund accounts for the assets and activities transferred from the Former Fontana Redevelopment Agency that will be monies to be used to increase and improve the community's supply of low and moderate income housing.
The Economic Stimulus Fund accounts for federal funds received due to COVID-19 to assist in the economic recovery of the City.
The Capital Reinvestment Fund accounts for discretionary infrastructure projects.
The Future Capital Projects Fund accounts for capital improvement reimbursements from the San Bernardino County Transportation Authority (SBCTA) that is used for general infrastructure improvements throughout the City.
38 CITY OF FONTANA
Notes to the Financial Statements
The Sewer Expansion Fund accounts for revenues received from development impact fees which, in turn, are reported to the Inland Empire Utilities Agency (IEUA) for capital expansion.
The Community Facilities Districts Funds account for activities related to the maintenance of City landscaped areas.
The Traffic Mitigation Capital Project Fund accounts for the revenues received from development impact fees which, in turn, are expended for traffic studies, planning and construction of traffic flow improvements.
The City reports the following major proprietary fund:
The Sewer Operations Fund is used to account for the operation of the City’s sewer utility system, a self-supporting activity which renders services on a user charge basis to residences and businesses located in the City.
Additionally, the City reports the following fund types:
Governmental Fund Types
Special Revenue Funds – to account for the proceeds of specific revenue resources (other than major capital projects) that are legally restricted to expenditures for specific purposes.
Debt Service Funds – to account for the accumulation of resources for, and the payment of, long-term debt obligation principal, interest and related costs.
Capital Project Funds – to account for financial resources to be used for the acquisition or construction of major capital facilities.
Proprietary Fund Types
Enterprise Funds – to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the City Council is that the costs (including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges.
Internal Service Fund – to account for financial transactions related to replacement of City-owned vehicles and equipment. These services are provided to other departments or agencies of the City, on a cost reimbursement basis.
Fiduciary Fund Types
Custodial Funds – to account for assets held by the City for other governments or individuals. These funds include debt service transactions on Community Facilities Districts bonds for which the City is not obligated.
39 CITY OF FONTANA
Notes to the Financial Statements
Private Purpose Trust Fund - accounts for the assets and liabilities of the former redevelopment agency and is allocated revenue to pay estimated installment payments of enforceable obligations until obligations of the former redevelopment agency are paid in full and assets have been liquidated.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s sewer function and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses 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 enterprise funds and the internal service fund are charges to customers for sales and services. Operating expenses for enterprise funds and internal service fund include the costs of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating 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 they are needed.
d. Assets, Liabilities and Net Position or Fund Balance
Deposits and Investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.
Investments for the City are reported at fair value. The City’s policy is generally to hold investments until maturity or until fair value equal or exceed cost. The State Treasurer’s Investment Pool operates in accordance with appropriate State laws and regulations. The reported value of the pool is the same as the fair value of the pool shares.
Fair Value Measurements
Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:
Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
40 CITY OF FONTANA
Notes to the Financial Statements
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and fair value is determined through the use of models or other valuation methodologies including:
Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in markets that are inactive; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (current portion of interfund loans) or “advances to/from other funds” (the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”.
Advances between funds, as reported in the fund financial statements, are offset by a non-spendable fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.
The City has elected, by ordinance, that the duties of assessing and collecting property taxes be performed by the San Bernardino County Assessor and Tax Collector, respectively. Tax levies cover the period from July 1 to June 30 of each year. All tax liens attach annually on January 1 preceding the fiscal year for which the taxes are levied. Taxes are levied on both real and personal property as of January 1. Secured property taxes are levied against real property and are due and payable in two equal installments. The first installment is due on November 1 and becomes delinquent if not paid by December 10. The second installment is due on February 1 and becomes delinquent if not paid by April 10. Unsecured personal property taxes are due on July 1 each year and become delinquent if not paid by August 31.
Functional Classifications
Expenditures of the Governmental funds are classified by function. Functional classifications are defined as follows:
General Government includes legislative activities which have a primary objective of providing legal and policy guidelines for the City. Also included in this classification are those activities which provide management or support services across more than one functional area.
Public Safety includes those activities which involve the protection of people and property.
Public Works includes those activities which involve the maintenance and improvement of City streets, roads and park department development and maintenance.
41 CITY OF FONTANA
Notes to the Financial Statements
Community Development includes those activities which enhance the general quality of life and for protective inspections except those related to fire.
Community Services includes those activities which provide all cultural and recreational programs and facilities.
Engineering includes those activities which provide specialized skills and knowledge in support of the operation of government.
Inventories, Prepaids and Land Held for Resale
All inventories are valued at cost using the first-in, first-out (FIFO) method. Inventories consist of expendable supplies held for consumption.
Inventory costs are recorded as expenditures when used.
The General Fund inventory is accounted for using the consumption method and is offset by a reservation of fund balance in the fund-level statements, which indicates that it does not constitute “available spendable resources.”
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaids in both the government-wide and fund financial statements.
Land purchased for resale is capitalized as inventory at acquisition cost or net realizable value, if lower.
Leases
At the commencement of the 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 are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date.
Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term. For additional information, refer to the disclosures in Footnote 4.
Key estimates and judgments include how the City determines the discount rate it uses to discount the expected lease receipts to present value, lease term and lease receipts.
The City used the estimated incremental borrowing rate as the discount rate for leases. The lease term includes the noncancellable period of the lease. Lease receipts included the measurement of the lease receivable is composed of fixed payments from the lessee.
The City monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.
42 CITY OF FONTANA
Notes to the Financial Statements
Restricted Assets
Restricted assets represent unexpended bond proceeds, interest earnings thereon and reserve amounts of certificates of participation, tax allocation bonds, and special assessment bonds. Under the related resolutions and indentures, the remaining proceeds are restricted for the use of future construction of improvements to the respective projects, for debt service or for reserve requirements. The majority of these assets are held by trustees and fiscal agents.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, 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 an initial, individual cost of more than $5,000 ($50,000 for intangibles and $100,000 for infrastructure) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation.
In accordance with GASB 34, the City has reported general infrastructure assets acquired in prior and current years. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business- type activities is included as part of the capitalized value of the assets constructed.
Property, plant and equipment of the primary government is depreciated using the straight-line method over the following estimated useful lives:
Asset Years
Buildings and improvements 40-55 years
Machinery and equipment 3-20 years
Vehicles 5-20 years
Infrastructure 20-30 years
Right to use asset 5 years
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, are transactions that represent a consumption of net assets that applies to a future period(s) and are not considered assets. The government has two items that qualify for reporting in this category, deferred outflows related to pensions and OPEB.
43 CITY OF FONTANA
Notes to the Financial Statements
In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and are not considered to be liabilities. The government has four items that qualify for reporting in this category:
1. Unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues for revenues that are measurable but are not collected within 60 days of the end of the current fiscal period or 180 days for certain intergovernmental revenues. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.
2. Pension related deferred inflows, is reported only on the Statement of Net Position. The government reports deferred inflows of resources related to pensions arising from certain changes in the collective net pension liability.
3. OPEB related deferred inflows, is reported only on the Statement of Net Position. The government reports deferred inflows of resources related to pensions arising from certain changes in the collective OPEB liability.
4. Lease related deferred inflows, is reported on the governmental balance sheet and the Statement of Net Position. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.
Compensated Absences
It is the City’s policy to permit employees to accumulate earned but unused personal leave which includes both vacation and sick pay benefits. All personal leave is accrued when incurred in the government-wide, proprietary, and fiduciary fund financial statements. The General Fund and the Sewer Operations Fund are typically used to liquidate these obligations. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements.
Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financial sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
The City is subject to a legal bonded indebtedness limit of 15 percent of the assessed value of all real and personal property in the City, excluding any bonded indebtedness of the Successor Agency. At June 30, 2023, the City had bonded indebtedness of $51,255,000 against its debt limit of $4,052,895,804, which is 1.26 percent of the total limit. 44 CITY OF FONTANA
Notes to the Financial Statements
Pensions
For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, pension expense, information about the fiduciary net position and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by City of Fontana. 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 at fair value.
Generally accepted accounting principles requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
Valuation Date (VD) June 30, 2021
Measurement Date (MD) June 30, 2022
Measurement Period (MP) July 1, 2021, to June 30, 2022
Other Postemployment Benefits (OPEB)
For purposes of measuring the total OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the OPEB plan (OPEB Plan), and additions to/deductions from the OPEB Plan have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.
Generally accepted accounting principles require that the reported results must pertain to liability information within certain defined timeframes.
For this report, the following timeframes are used:
Valuation Date (VD) June 30, 2021
Measurement Date (MD) June 30, 2022
Measurement Period (MP) July 1, 2021, to June 30, 2022
Net position flow assumption
Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and unrestricted – net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied.
45 CITY OF FONTANA
Notes to the Financial Statements
Fund balance flow assumptions
Sometimes the government will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance.
Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.
e. Reconciliation of Government-Wide and Fund Financial Statements
Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position
The governmental fund balance sheet includes a reconciliation between fund balance of governmental funds and net position of governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that “long-term liabilities, including net pension liability, are not due and payable in the current period and, therefore, is not recognized in the funds.” The detail of this $342,128,793 long-term liabilities difference is as follows:
51,255,000$
Loan payables 2,444,412
22,584,976
Compensated absences 11,213,108
Lease liability 86,356
Other post employment benefits liability 18,294,557
Net pension liability 199,150,942
6,113,689
funds to arrive at net position of governmental activities 311,143,040$ Net adjustment to reduce fund balances of governmental
Lease revenue bonds payable
Claims and judgments
Bond premium to be amortized
46 CITY OF FONTANA
Notes to the Financial Statements
Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities
The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation states that “the issuance of long-term debt provides current financial resources to governmental funds, but the issuing debt increases long-term liabilities in the statement of net position.” Repayment of bond principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net position.” The detail of this $2,488,567 difference are as follows:
Another element of that reconciliation states that “some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this $1,927,826 are as follows:
(1,760,000)$
Net change in premium (728,567)
(2,488,567)$
Net adjustment to increase net changes in fund balances of governmental funds to arrive at changes in net position of governmental activities
Principal repayments:
Lease revenue bonds
(1,930,976)$
Compensated absences (113,716)
Accrued interest 116,866
(1,927,826)$
of governmental funds to arrive at changes in net position of governmental activities
Claims and judgments
Net adjustment to increase net changes in fund balances 47 CITY OF FONTANA
Notes to the Financial Statements
Note 2. Stewardship, Compliance and Accountability
Budgetary Information
Annual budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles (GAAP).
The City uses the following procedures in establishing the budgetary data reflected in the financial statements. After January 1, department heads prepare estimates for required appropriations for the fiscal year commencing the following July 1. The proposed budget includes estimated expenditures and forecasted revenues for the fiscal year. The data is presented to the City Manager for review. Prior to June 1, the City Manager submits to the City Council a proposed operating budget for the upcoming fiscal year. The operating budget includes a summary of the proposed expenditures and financial resources of the City, as well as historical data for the preceding five fiscal periods. Public meetings are conducted at the civic center to obtain taxpayer comments. The City Council adopts the budget by June 30 through passage of an adopting resolution. Budgets were legally adopted for the General, special revenue, debt service and all capital project funds during the fiscal year ended June 30, 2023. This appropriated budget covers substantially all City expenditures. All appropriated amounts shown are as originally adopted or as amended by the City Council. During the year, supplementary appropriations in the Governmental Funds were approved in the amount of $284,614,530. Additionally, amounts representing projects that were not completed were unappropriated at the end of the year, and reappropriated in the following year.
Unexpended appropriations lapse at the year end.
The legal level of control is at the department level. Department heads are authorized to transfer budgeted amounts within their departments, within the same funds, with the approval of the City Manager. Transfers of appropriations between departments and between funds may be made only by authority of the City Council. Formal budgetary integration is employed as a management control device during the fiscal year for all governmental funds.
Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year end do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year. There were no excess expenditures over appropriations in certain funds at the department level.
48 CITY OF FONTANA
Notes to the Financial Statements
All funds with expenditures exceeding appropriations are reviewed by the City as part of its regular quarterly budget report to ensure that adequate revenues and/or other sources are available to cover these expenditures. In the event that revenues and other sources are not sufficient to fund the following year’s planned expenditures, the budget for the following fiscal year may be adjusted to ensure that there are no fund balance deficits in any funds. Excess of expenditures over appropriations at the fund level for the fiscal year ending June 30, 2023, are as follows:
A budgetary comparison schedule not presented for the Down Payment Assistance and TDA special revenue funds as it did not have a legally adopted annual budget. Budgetary schedules for all other governmental funds are presented in the fund financial statements or the combining and individual fund statements and schedules.
Deficit Fund Balance
As of June 30, 2023, the following funds had deficit fund balances:
These deficit fund balances will be addressed through future year revenues and transfers.
Expenditures Appropriations Excess
Special Revenue Funds
Gas Tax Fund 4,246,038 $ 3,854,398 $ 391,640 $ Traffic Safety Fund 68,247 49,020 19,227 Federal Law Enforcement Block Grant Fund 304,606 303,657 949 Capital Project Funds
Community Facilities District 8,854,828 6,893,944 1,960,884 Special Revenue Funds:
Grants 1,122,218 $
TDA 56,290
Housing and Community Development Block Grant 803,097
Federal Law Enforcement Block Grant 1,215
Community Services Reimbursements 1,166,851
ASES ELO-P 1,539,118
Permanent Local Housing Allocation 889,251
ARPA County 131,499
Debt Service Funds:
General Debt Service 2,069
Fiduciary Funds:
Successor Agency 415,989,666
49 CITY OF FONTANA
Notes to the Financial Statements
Note 3. Cash and Investments
The City follows the practice of pooling cash and investments of all funds except for restricted funds generally held by outside custodians and funds in its employees’ deferred compensation plans. Each fund’s portion of total cash and investments is summarized by fund type in the combined balance sheet as equity in pooled cash and investments. Amounts in the City’s deferred compensation plan are no longer reported on the City’s balance sheet as they are held in trust.
Interest income earned on pooled cash and investments is allocated to those funds which are required by law, local ordinance, administrative action or agreements to receive interest. Such allocation is made annually, at a minimum, based on the weighted average cash balances in each fund receiving interest. Interest income from cash and investments, which are restricted, is credited directly to the related fund.
Investments and Interest Receivable – Restricted
Restricted assets represent unexpended financing proceeds, interest earnings thereon and reserved amounts of certificates of participation, tax allocation bonds, and special assessment bonds. Under the related resolutions and indentures, the remaining proceeds are restricted for the use of future construction or improvement to the respective projects, for debt service or for reserve requirements. The majority of these assets are held by trustees and fiscal agents.
Restricted Assets
Cash and Cash with
Investments Fiscal Agent Total
Governmental activities 470,736,779 $ 80,971,629 $ 551,708,408 $ Business-type activities 23,515,307 - 23,515,307 Fiduciary funds 35,172,455 21,491,573 56,664,028 529,424,541$ 102,463,202 $ 631,887,743 $
50 CITY OF FONTANA
Notes to the Financial Statements
Authorized Investments
Under the provisions of the City’s investment policy and in accordance with Section 53601 of the California Government Code, the City may invest in the following types of investments:
State Treasurer’s Local Agency Investment Fund (LAIF) Mortgage Pass-Through Securities (FHLMC or FNMA only) Corporate Obligations (medium-term notes and bonds) Commercial Paper U.S. Government Securities Certificates of Deposit Mutual Funds Negotiable Certificates of Deposit
Bankers’ Acceptances Investment Contracts
It is the City’s policy not to invest in Small Business Administration Obligations (SBAs), Repurchase Agreements, Reverse Repurchase Agreements, or Financial Futures and Financial Option Contracts even though such investments are authorized under the California Government Code. All investments present at June 30, 2023 and during the fiscal year conform to the City’s investment policy.
Local Agency Investment Fund (LAIF)
The LAIF is a special fund of the California State Treasury, secured by the full faith and credit of the State of California, through which local governments may pool investments. Each city may invest up to $75,000,000 in LAIF for each entity. Investments in LAIF are highly liquid as deposits can be converted to cash within twenty-four (24) hours without loss of interest earned to such date.
LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. The State Treasurer’s Office audits the fund annually. The fair value of the position in the State pool is the same as the value of the pool shares.
Deposits
At June 30, 2023, the carrying amount of the City’s deposits was $163,624,768 and the bank balance was $164,328,266. The $703,498 difference represents outstanding checks and other reconciling items.
The California Government Code requires California banks and savings and loan associations to secure an Entity’s deposits by pledging government securities with a value of 110% of an Entity’s deposits. California law also allows financial institutions to secure Entity deposits by pledging first trust deed mortgage notes having a value of 150% of an Entity’s total deposits. The City Treasurer may waive the collateral requirement for deposits which are fully insured up to $250,000 by the FDIC. The collateral for deposits in federal and state-chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California, as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors. Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an “Agent of Depository” has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository are considered to be held for, and in the name of, the local government agency.
51 CITY OF FONTANA
Notes to the Financial Statements
Credit Risk
The City’s investment policy limits investments in medium term notes (MTNs) and federal securities to those in a rating category of “A” or its equivalent or better by Moody’s or Standard and Poor’s rating service. As of June 30, 2023, the City’s investment in medium term notes, federal securities and money market funds consisted of the following:
As of June 30, 2023, the City’s investment in external investment pools were unrated.
Custodial Credit Risk
The 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 deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City does not have a policy for custodial credit risk associated with deposits or investments.
Amount AAA - Aaa AA+ - AA- A - A+ Not Rated
$ 28,117,212 - $ 22,308,255 $ - $ 5,808,958 $ 9,846,242 - - - 9,846,242 29,517,305 23,421,693 - - 6,095,612 91,625,450 5,303,719 64,252,200 22,069,531 - 75,551 - 75,551 - - 127,798,957 127,798,957 - - - 78,625,020 - - - 78,625,020 92,316,009 - 92,316,009 - - 10,341,229 - - - 10,341,229 $ 468,262,975 $ 156,524,369 $ 178,952,015 $ 22,069,531 $ 110,717,061 Ratings as of Year End
Investment Type
U.S Government Securities
Mortgage Pools
Asset-Backed Security
Corporate
Municipal Bonds
U.S Treasuries
State Investment Pool (LAIF)
Money Market Funds
Section 115 Trust Investments
52 CITY OF FONTANA
Notes to the Financial Statements
Concentration of Credit Risk
The City’s investment policy imposes restrictions for certain types of investments with any one issuer.
With respect to concentration risk, as of June 30, 2023, the City is in compliance with the restrictions of the investment policy.
Investments guaranteed by the U.S. Government and investments in mutual funds and external investment pools are excluded from this requirement.
Interest Rate Risk
The City’s investment policy limits investment maturity as a means of managing its exposure to fair value losses arising from increasing interest rates. The City’s investment policy states that at least 10% of the City’s portfolio shall mature in one year or less. The only exception to this maturity limit shall be the investment of the gross proceeds of tax-exempt bonds. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk.
Investment Type
Maximum
Maturity
Maximum % of Pool
Allowed
Government Code
Section
State Treasurer’s Local Agency
Investment Fund (LAIF) 5 years $75 million/account 16429.1 U.S. Government Securities 5 years None 53601(b) 53601(f) California State, California Local
Government Agencies, and other
United States State Bonds
5 years 20% 53601(c) 53601(d)
53601(e)
Bankers Acceptances 180 days 40% 53601(g)
Commercial Paper 270 days 10% 53601(h)
Negotiable Certificates of Deposit 5 years 30% 53601(i) Medium-Term Notes 5 years 10% 53601(k)
Pass-Through Securities 5 years 20% 53601(o)
Supranational Obligations 5 years 30% 53601(q)
Certificates of Deposit 5 years None 53635
53 CITY OF FONTANA
Notes to the Financial Statements
As of June 30, 2023, the City had the following investments and maturities:
6 months 6 months 1 to 3 3 to 5 Fair
or less to 1 year years years Value
U.S Government Securities 3,798,007 $ - $ 20,820,251 $ 3,498,954 $ 28,117,212 $ Corporate Obligations - 8,524,137 76,375,683 6,725,630 91,625,450 State Investment Pool 78,625,020 - - - 78,625,020 Treasury Notes 200 - 127,798,757 - 127,798,957 Municipal Bonds - 75,551 - - 75,551 Asset-Backed Securities - - 670,460 28,846,845 29,517,305 Mortgage Pools - - - 9,846,242 9,846,242 Money Market Mutual Funds 92,316,009 - - - 92,316,009 Section 115 Trust - Pension
Exchange Traded Funds 5,554,470 - - - 5,554,470 Mutual Funds - Bonds 3,308,349 - - - 3,308,349 Mutual Funds - Equity 1,478,410 - - - 1,478,410 185,080,465$ 8,599,688 $ 225,665,151 $ 48,917,671 $ 468,262,975 $ Investment Maturities
54 CITY OF FONTANA
Notes to the Financial Statements
Fair Value Measurement
The City categorizes its fair value investments within the fair value hierarchy established by generally accepted accounting principles. The City has the following recurring fair value measurements as of June 30, 2023:
Note 4. Leases
The City is a lessor in noncancellable leases for use of City property for cell towers. The leases are for five years and are required to make fixed monthly payments per month. The leases interest rates range from .31% to 1.70%. The City is a lessor in a 55-year noncancellable lease for an apartment unit complex with fixed monthly rent payments starting at $1,667 per month with annual increase of 2%. The City recognized $713,394 in lease revenue and $11,115 in interest revenue during the current fiscal year related to these agreements. As of June 30, 2023, the lease receivable is $17,018,509 and deferred inflows of resources is $16,303,344.
Investments Measured at Fair Value
Level 1 Level 2 Level 3 Total Fair Value
U.S Government Securities $ - $ 28,117,212 $ - $ 28,117,212 Corporate Obligations - 91,625,450 - 91,625,450 Treasury Notes 127,798,957 - - 127,798,957 Municipal Bonds - 75,551 - 75,551 Asset-Backed Securities - 29,517,305 - 29,517,305 Mortgage Pools - 9,846,242 - 9,846,242 Section 115 Trust - Pension
Exchange Traded Funds - 5,554,470 - 5,554,470 Mutual Funds - Bonds - 3,308,349 - 3,308,349 Mutual Funds - Equity - 1,478,410 - 1,478,410 Total investments measured at fair value $ 127,798,957 $ 159,181,760 $ - 297,321,946 Investments Not Reported in Fair Value Hierarchy
Money Market Mutual Funds $ 92,316,009
State Investment Pool (LAIF) 78,625,020
Total investments not reported in fair value hierarchy
170,941,029
Total investments held
468,262,975$
Fair Value Hierarchy
Net Asset Value
55 CITY OF FONTANA
Notes to the Financial Statements
The City is a lessee in a noncancellable lease for the City’s use of vehicles. For further information on the City’s lease liability see Footnote 8.
Note 5. Receivables
Receivables as of June 30, 2023, for the City’s individual major funds and non-major, proprietary major and non-major, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Due to the uncollectability of the loans to the Successor Agency, an allowance for doubtful accounts has been recorded at June 30, 2023 for the loans that are pending approval by the State Department of Finance as enforceable obligations. An allowance has been recorded for these loans in the amount $3,305,829 in Sewer Operations funds. This allowance will remain in place until the State Department of Finance makes further determinations regarding the probability of collection on the loan balances. Several loans have been approved by the State Department of Finance; thus, an allowance has not been recorded for the loans in the amounts of $23,599,749 in the General Fund.
Community Nonmajor
Fire Protection Housing Capital Future Capital Sewer Facilities Traffic Governmental General District Authority Reinvestment Projects Expansion Districts Mitigation Funds 3,861,306$ 46,525 $ - $ 12,065 $ - $ 25,929 $ - $ 2,087 $ 118,366 $ - - - - - - - - 540,011 428,870 132,195 4,106,248 102,926 35,013 127,409 - 245,540 1,974,538 - - 71,852,645 125,000 - - - - 10,695,724 23,599,749 - - - - - - - - 27,889,925$ 178,720 $ 75,958,893 $ 239,991 $ 35,013 $ 153,338 $ - $ 247,627 $ 13,328,639 $ 207,573 - - - - - - - 151,265 27,682,352$ 178,720 $ 75,958,893 $ 239,991 $ 35,013 $ 153,338 $ - $ 247,627 $ 13,177,374 $ Special Revenue Capital Projects
Loans to Successor Agency
Less allowance for
doubtful accounts
Accounts
Assessments
Interest
Loans
Nonmajor Internal
Sewer Enterprise Service Fiduciary
Operations Fund Funds Funds Total
1,232,244$ - $ 2,685 $ - $ 5,301,207 $ - - - 386,139 926,150 142,413 3,739 82,204 1,219,204 8,600,299 2,777,191 1,166,192 - 2,381,374 88,998,126 3,305,829 - - - 26,905,578 7,457,677 1,169,931 84,889 3,986,717 130,731,360 3,305,829 - - 1,971,279 5,635,946 4,151,848$ 1,169,931 $ 84,889 $ 2,015,438 $ 125,095,414 $ Less allowance for
doubtful accounts
Accounts
Assessments
Interest
Loans
Loans to Successor Agency
56 CITY OF FONTANA
Notes to the Financial Statements
Note 6. Capital Assets
Capital asset activity for the year ended June 30, 2023, was as follows:
Beginning
Balance Balance
June 30, 2022 Transfers Increases Decreases June 30, 2023 Governmental activities:
Capital assets, not being depreciated
Land 161,362,284 $ (942,414) $ 14,646,146 $ - $ 175,066,016 $ Construction in progress 52,382,959 (26,169,441) 37,224,898 (1,618,989) 61,819,427 Easements 4,996,141 1,343,371 - - 6,339,512 Total capital assets, not being depreciated 218,741,384 (25,768,484) 51,871,044 (1,618,989) 243,224,955 Capital assets, being depreciated
Buildings and improvements 316,413,983 21,053,848 14,100 - 337,481,931 Machinery and equipment 26,890,315 14,178 1,598,251 - 28,502,744 Vehicles 36,751,601 806,121 2,576,902 (1,708,106) 38,426,518 Right to use assets 108,141 - - - 108,141 Infrastructure 860,897,019 3,894,337 14,039,044 - 878,830,400 Intangibles 5,384,870 - - - 5,384,870 1,246,445,929 25,768,484 18,228,297 (1,708,106) 1,288,734,604 Less accumulated depreciation for:
Buildings and improvements (154,123,446) - (11,856,162) - (165,979,608) Machinery and equipment (22,642,791) - (1,369,121) - (24,011,912) Vehicles (22,783,274) - (2,909,297) 1,708,106 (23,984,465) Right to use assets (1,825) - - - (1,825) Infrastructure (547,599,581) - (21,414,559) - (569,014,140) Intangibles (2,455,675) - (64,854) - (2,520,529) (749,606,592) - (37,613,993) 1,708,106 (785,512,479) Total capital assets, being depreciated, net 496,839,337 25,768,484 (19,385,696) - 503,222,125 Governmental activities capital assets, net 715,580,721 $ - $ 32,485,348 $ (1,618,989) $ 746,447,080 $ 57 CITY OF FONTANA
Notes to the Financial Statements
Depreciation expense was charged to functions/programs of the primary government as follows:
Beginning
Balance Balance
June 30, 2022 Transfers Increases Decreases June 30, 2023 Business-type activities:
Capital assets, not being depreciated
Construction in progress 477,105 $ - $ 1,036,561 $ - $ 1,513,666 $ Total capital assets, not being depreciated 477,105 - 1,036,561 - 1,513,666 Capital assets, being depreciated
Buildings and improvements 1,798,150 - - - 1,798,150 Machinery and equipment 603,611 - 9,938 - 613,549 Infrastructure 116,035,868 - 7,007,755 - 123,043,623 Intangibles 64,698 - - - 64,698 118,502,327 - 7,017,693 - 125,520,020 Less accumulated depreciation for:
Buildings and improvements (692,147) - (46,244) - (738,391) Machinery and equipment (596,972) - (3,630) - (600,602) Infrastructure (58,301,291) - (2,898,085) - (61,199,376) Intangibles (64,698) - - - (64,698) (59,655,108) - (2,947,959) - (62,603,067) Total capital assets, being depreciated, net 58,847,219 - 4,069,734 - 62,916,953 Business-type activities capital assets, net 59,324,324 $ - $ 5,106,295 $ - $ 64,430,619 $ Governmental activities:
General government 3,248,031 $ Business-type activities:
Public safety 2,945,863 Sewer Operations 2,947,959 $ Public works 6,812,058
Community development 1,292,118
Community services 863,036
Engineering 20,329,167
Total Depreciation charged to functions 35,490,273
Charged to Internal Service Fund 2,123,720
Total Governmental Activities 37,613,993 $
58 CITY OF FONTANA
Notes to the Financial Statements
The following material construction commitments existed at June 30, 2023:
Note 7. Interfund Receivables, Payables and Transfers
The composition of interfund balances as of June 30, 2023, is as follows:
Due to/from other funds:
Project Name Contract Amount
Expenditures
to date as of
June 30, 2023
Remaining
Commitments
City Hall Renovation Project, PH 1 18,081,961 $ $ 235,432 $ 17,719,783 Downtown Parking Structure 15,000,000 213,537 14,432,521 Fire Station No. 81 12,090,967 8,107,819 3,944,175 Arrow/Tokay TS 1,512,000 180,242 1,287,973 Arrow/Cypress TS 1,380,000 211,238 1,147,200 Foothill: Hemlock-Almeria Arterial 2,230,000 784,731 202,303 Receivable Fund Payable Fund Amount
General Fund Major Governmental Funds
Community Facilities Districts 14,216,633 $
Non-major Governmental Funds
Traffic Congestion Relief 6,049,197
Permanent Local Housing Allocation 240,803
TDA 55,767
Federal Law Enforcement Block Grant 194,632
Housing and Community Development Block Grant 691,918
Community Services Reimbursements 1,388,003
ASES ELO-P 1,104,732
ARPA County 130,999
General Debt Service 3,196
Total 24,075,880 $
59 CITY OF FONTANA
Notes to the Financial Statements
The amounts due to the General Fund are the result of negative cash balances at the end of the year.
Advances to/from other funds:
The advances from Future Capital Projects to the Capital Improvements fund are representative of a cooperative agreement entered into with the City of Ontario for the Etiwanda Avenue and Slover Avenue / Airport Drive Intersection Project. The City has agreed to pay for the City of Ontario’s DIF share of the project. The City of Ontario will reimburse the City three years after the project construction has been accepted.
The advances from Future Capital Projects to the Storm Drain fund are representative of the cost of the Duncan Storm Drain / I-15 Freeway to Citrus Avenue project. The City is expected to be reimbursed a portion of the costs from developer, Lewis Homes.
The advances from Future Capital Projects to the Traffic Mitigation fund are representative of cooperative agreements entered into with San Bernardino Associated Governments (SANBAG) for various transportation projects throughout the City. SANBAG will repay the amounts owed to the Measure I 2010-2040 fund over a thirty-year period, as Measure I funds are collected. As part of the cooperative agreement, the City was required to fund a certain percentage of each project with Development Impact Fees (DIF) collected in the Traffic Mitigation fund. In order to complete these projects now rather than over a thirty-year period, various funds advanced the SANBAG share and DIF share of each project. There is no repayment schedule for these advances as the amounts will be repaid as collections are received.
Receivable Fund Payable Fund Amount
Future Capital Projects Capital Improvements 1,717,369 $ Storm Drain 2,295,000
Traffic Mitigation 26,691,542
Total 30,703,911 $
60 CITY OF FONTANA
Notes to the Financial Statements
Interfund transfers:
Interfund transfers primarily consist of allocation of administrative costs, transfer of funding to capital project funds, and transfer of funding to general debt service fund.
Fire Nonmajor
Protection Capital Governmental Internal
General District Reinvestment Funds Service Fund Total
Transfer out:
General - $ 289,000 $ 9,456,000 $ 2,896,041 $ 739,500 $ 13,380,541 $ Fire Protection District 6,167,085 - 5,000,000 19,694,610 - 30,861,695 Housing Authority 56,600 - - - - 56,600 Economic Stimulus 306,070 - 1,473,494 - - 1,779,564 Capital Reinvestment 100,000 - - 24,342 - 124,342 Future Capital Improvements 462,470 - - - - 462,470 Traffic Mitigation 185,130 - - - - 185,130 Nonmajor Governmental Funds 7,986,784 1,006,100 - 846,113 1,085,070 10,924,067 Sewer Operations 3,008,180 - - - 651,080 3,659,260 18,272,319$ 1,295,100 $ 15,929,494 $ 23,461,106 $ 2,475,650 $ 61,433,669 $ Transfers In:
61 CITY OF FONTANA
Notes to the Financial Statements
Note 8. Long-Term Debt
Long-term debt activity for the year ended June 30, 2023, was as follows:
Beginning Ending Amounts Amounts
Balance Balance Due Within Due in More
June 30, 2022 Additions Retirements June 30, 2023 One Year Than One Year Governmental Activities:
Lease Revenue Bonds 53,015,000 $ - $ 1,760,000 $ 51,255,000 $ 1,830,000 $ 49,425,000 $ Claims and judgments 20,654,000 6,946,328 5,015,352 22,584,976 5,292,948 17,292,028 Compensated absences 11,099,392 7,859,206 7,745,490 11,213,108 7,745,490 3,467,618 Loan payable - SANBAG 2,851,815 - 407,403 2,444,412 407,402 2,037,010 Lease liability 106,709 - 20,353 86,356 22,581 63,775 Total Long-Term Debt - City 87,726,916 $ 14,805,534 $ 14,948,598 $ 87,583,852 $ 15,298,421 $ 72,285,431 $ Unamortized bond premium 6,113,689 6,113,689
93,697,541$ 78,399,120$
Business-Type Activities:
Compensated absences 241,713 $ 185,088 $ 189,674 $ 237,127 $ 237,127 $ 47,454 $ Loans payable 5,720,872 - 878,670 4,842,202 894,463 3,947,739 Total Business-Type Activity Long-Term Debt 5,962,585 $ 185,088 $ 1,068,344 $ 5,079,329 $ 1,131,590 $ 3,995,193 $ 62 CITY OF FONTANA
Notes to the Financial Statements
Lease Revenue Bonds
2014 Lease Revenue Bonds
In November 2014, the Fontana Public Facilities Financing Authority issued $37,675,000 of Lease Revenue Bonds. The proceeds of the issue were used to refinance 2007 Lease Revenue Bonds with an outstanding balance of $29,890,000. The bonds pay interest semi-annually at rates ranging from 3.875% to 5.00% and mature from September 2015 through September 2037. Principal and interest payments are made from the lease income for certain real property and the improvements thereon.
2021 Lease Revenue Bonds
In November 2021, the Fontana Public Facilities Financing Authority issued $23,125,000 of Lease Revenue Bonds. The proceeds of the issue were used to refinance 2010 Lease Revenue Bonds with an outstanding balance of $5,075,000, finance the acquisition, construction and installation of certain public capital improvements and pay the costs of issuing the Lease Revenue bonds Series 2021A Bonds. The bonds pay interest semi-annually at rates of 4.00% and mature from November 2022 through November 2048. Principal and interest payments are made from the lease income for certain real property and the improvements thereon.
Principal Interest Total
2024 485,000 $ 905,800 $ 1,390,800 $
2025 505,000 886,400 1,391,400
2026 525,000 866,200 1,391,200
2027 545,000 845,200 1,390,200
2028 565,000 823,400 1,388,400
2029-2033 3,185,000 3,758,800 6,943,800 2034-2038 3,870,000 3,069,600 6,939,600 2039-2043 4,720,000 2,230,400 6,950,400 2044-2048 4,220,000 1,324,400 5,544,400 2049-2052 4,025,000 410,200 4,435,200 Totals 22,645,000 $ 15,120,400 $ 37,765,400 $
2021 Lease Revenue Bonds
Principal Interest Total
2024 1,345,000 $ 1,267,925 $ 2,612,925 $
2025 1,410,000 1,199,050 2,609,050
2026 1,480,000 1,126,800 2,606,800
2027 1,555,000 1,050,925 2,605,925
2028 1,630,000 971,300 2,601,300
2029-2033 9,420,000 3,570,375 12,990,375 2034-2038 11,770,000 1,213,600 12,983,600 Totals 28,610,000 $ 10,399,975 $ 39,009,975 $
2014 Lease Revenue Bonds
63 CITY OF FONTANA
Notes to the Financial Statements
SANBAG Loan Payable
The City entered into an agreement with San Bernardino Associated Governments “SANBAG” for the I-15 Duncan Canyon Interchange Project.
Under the agreements, SANBAG contributed $12.0 million of State Proposition 1B Corridor Mobility Improvement funds to the project. A portion of the SANBAG funding public share to the project needs to be paid back, totaling $4,074,021. The City has seven years to pay back the amount without interest. The outstanding balance as of June 30, 2023, is $2,444,412.
Lease Liability
The City is a lessee in a noncancellable lease for the City’s use of vehicles. The lease terms are in five-year terms. The leases are required to make a fixed monthly payment ranging between $682 - $752 per month. The City recognized $22,945 in principal lease payments and $1,567 in interest paid during the current fiscal year related to these agreements. As of June 30, 2023, the lease liability is $86,356.
Future principal and interest payments on the lease liability is as follows:
Fiscal Year
Ending Principal Interest Total
2024 407,402 $ - $ 407,402 $
2025 407,402 - 407,402
2026 407,402 - 407,402
2027 407,402 - 407,402
2028 407,402 - 407,402
2029 407,402 - 407,402
Totals 2,444,412 $ - $ 2,444,412 $
SANDBAG
Principal Interest Total
2024 21,354 $ 1,226 $ 22,580 $
2025 21,701 879 22,580 2026 22,056 525 22,581 2027 21,245 165 21,410 Totals 86,356 $ 2,795 $ 89,151 $ Lease Liability
64 CITY OF FONTANA
Notes to the Financial Statements
San Bernardino Trunk Sewer Loans
In March 2007, the City received approval from the State of California Water Resources Control Board for the San Bernardino Trunk Sewer Project.
The Project was being funded by the State Revolving Fund on a reimbursement basis for construction costs incurred in relation to the project. The project was done in three phases, with each of the three phases being funded by a separate loan from the State Revolving Fund. The loans will be repaid in twenty annual installments.
Mello-Roos Community Facilities Districts
Between 1988 and 2023, twenty Community Facilities Districts have issued Special Tax Bonds. The bonds are authorized pursuant to the Mello- Roos Community Facilities Act of 1982 and are secured by and payable solely from the revenues of an annual special assessment tax levied against land within the Districts. The bonds are not backed by the full faith and credit or taxing power of the City and do not constitute indebtedness of the City. The City is not liable for the bonds, but acts as an agent for the bondholders in collecting the assessments from property owners, forwarding the collections to bondholders and initiating foreclosure proceedings if necessary.
The transactions occurring as a result of the City acting in an agent capacity are being accounted for in an agency fund. As the bonds are financing the construction and installation of certain public improvements, the transactions relating to the construction of the improvements are being accounted for in capital project funds. The bonds are not reflected as an indebtedness of the City at June 30, 2023.
65 CITY OF FONTANA
Notes to the Financial Statements
Note 9. Risk Management
The City established risk management programs for workers’ compensation in 1978-79 and for general liability in 1983-84, which are accounted for in the City’s General Fund. The programs are supported by contributions from the other principal City funds and intra-fund transfers.
Effective with an excess coverage insurance policy on July 1, 1992, the workers’ compensation program provides for self-insurance up to a maximum of $1,000,000 per incident. The claims which exceed the limit are insured up to a maximum per incident of $45,000,000.
Special Tax Bonds Date of Issue
Original Issue
Amount
Outstanding
Amount at
June 30, 2023
CFD # 7 Series B (Sierra Lakes) July 2021 1,445,000 $ 1,270,000 $ CFD # 11 (Heritage West End) July 2021 2,995,000 2,625,000 CFD # 12 Series A (Sierra Lakes) July 2021 9,950,000 9,040,000 CFD # 22 (Sierra Hills South) June 2014 31,260,000 21,815,000 CFD # 31 (Citrus Heights North) July 2018 18,485,000 15,475,000 CFD # 31 (Citrus Heights North) October 2021 8,025,000 8,025,000 CFD # 37 (Montelago) July 2021 2,135,000 2,025,000 CFD # 70 (Avellino) July 2021 1,975,000 1,925,000 CFD # 71 (Sierra Crest) July 2016 5,915,000 5,015,000 CFD #74B (Citrus/Summit) June 2019 4,045,000 3,805,000 CFD # 80 (Bella Strada) August 2017 11,125,000 10,030,000 CFD # 81 (Gabriella) March 2018 7,180,000 6,585,000 CFD #86 (Etiwanda Ridge) February 2020 5,025,000 4,710,000 CFD #85 (The Meadows) October 2020 22,640,000 21,650,000 CFD #88 (Sierra Crest II) October 2020 6,510,000 6,385,000 CFD #89 (Belrose) November 2020 5,725,000 5,430,000 CFD #90 (Summit @ Rosena I) June 2021 22,260,000 21,840,000 CFD #87 (El Paseo) July 2021 5,325,000 5,220,000 CFD #95 (Summit @ Rosena 2) May 2022 9,305,000 9,080,000 CFD #106 (Mountainview) August 2022 6,940,000 6,940,000 CFD #99 (The Retreat) May 2023 4,630,000 4,630,000 Total Special Tax Bonds 192,895,000 $ 173,520,000 $
66 CITY OF FONTANA
Notes to the Financial Statements
Under the City’s excess insurance policy for general liability, all claims incurred after October 1, 1992, are self-insured up to a maximum of $1,000,000 per incident. The claims which exceed the limit are insured up to maximum per incident of $25,000,000. The City is self-insured for general liability claims incurred prior to October 1, 1992.
There have been no significant changes in insurance coverage in the last four years. The amount of settlements has not exceeded the amount of insurance coverage for each of the past four fiscal years.
Liabilities under the City’s self-insurance programs are accrued and charged to expenses when claims are reasonably determinable and when the existence of the City’s liability is probable. The accrued liabilities for general liability include an estimate of incurred but not reported claims.
The following is a summary of the changes in the claims liability over the past two fiscal years:
There are several other legal actions pending against the City which management considers incidental to normal operations. These actions are not covered by insurance. All liabilities to be accrued are included in the claims and judgments amount stated above.
Note 10. Litigation
The City of Fontana has been named as a defendant in numerous lawsuits and claims arising in the course of operations. In the aggregate, these claims seek monetary damages in significant amounts. To the extent the outcome of such litigation has been determined to result in probable financial loss to the City, such loss has been accrued in the accompanying financial statements.
Claims payable, June 30, 2021 13,983,035 $
Claims incurred (including IBNRs) 10,590,633
Claims paid/dismissed (3,919,668)
Claims payable, June 30, 2022 20,654,000 $
Claims incurred (including IBNRs) 6,946,328
Claims paid/dismissed (5,015,352)
Claims payable, June 30, 2023 22,584,976 $
67 CITY OF FONTANA
Notes to the Financial Statements
Note 11. Jointly Governed Organization
I.R.N.E.T.
The City of Fontana is a member of Inland Regional Narcotics Enforcement Team (I.R.N.E.T.), a joint powers authority of the police departments of ten cities in San Bernardino and Riverside Counties, and participating county, federal and state law enforcement agencies. The organization was formed September 18, 1989, with the mission to promote coordinated law enforcement efforts and to address emerging criminal justice issues, mainly in the areas of drug trafficking and money laundering. The executive council consists of police chiefs of the cities and resident agents in charge of the federal and state law enforcement agencies. All financial decisions were made by the executive council. The members received monetary distributions from the asset seizures based on their respective contribution to the effort. Financial information for I.R.N.E.T. is not available.
Note 12. Other Post-Employment Benefits Liability
Plan Description
In addition to the pension benefits described in Note 13, the City provides post-retirement health care benefits (OPEB Plan) in accordance with City Council approval to all employees who retire from the City on or after reaching age 50 or over with at least five years of PERS-credited service. The post-retirement health care benefits are provided to eligible retirees by the City, as a single-employer plan. Additional requirements are set forth in the individual contracts for executive positions or in the Memorandum of Understanding (MOUs) for the five bargaining units operating within the City. The amount the City provides on the behalf of retirees is dictated in the contracts or MOUs.
Employees Covered
As of the June 30, 2022, measurement date, the following current and former employees were covered by the benefit terms under the OPEB Plan:
Contributions
The required contribution is based on projected pay-as-you-go financing requirements. For the fiscal year ending June 30, 2023, the City’s cash contributions were $2,193,387 in the form of current premiums, which is funded through the General Fund, and the estimated implied subsidy was $646,252 resulting in total payments of $3,034,840.
Active employees 577
Inactive employees or beneficiaries currently receiving benefits 239 Inactive employees entitled to, but not yet receiving benefits 0 Total 816
68 CITY OF FONTANA
Notes to the Financial Statements
OPEB Liability
The City’s OPEB liability was measured as of June 30, 2022, and was determined by an actuarial valuation dated June 30, 2021, based on the following actuarial methods and assumptions:
Discount Rate
The discount rate used to measure the total OPEB liability was 6.00 percent. Under GASB 75, the discount rated used in valuing OPEB liabilities as of the Measurement Date for an unfunded plan is a single rate that reflects a yield or index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale).
Actuarial Cost Method: Entry Age Normal
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Mortality Rate
Pre-Retirement Turnover
Healthcare Trend Rate
6.00%
2.30%
2.80% per annum, in aggregate
Derived using CalPERS’ Membership Data
for all funds
Derived using CalPERS’ Membership Data
for all funds
Based on 2021 Getzen model that reflects
actual premium increases through 2023
followed by 5.50% non-Medicare/ 5.3%
Medicare, gradually decreasing to an
ultimate rate of 4.04% in 2075.
69 CITY OF FONTANA
Notes to the Financial Statements
Changes in the OPEB Liability
The changes in the OPEB liability for the OPEB Plan are as follows:
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2022:
Net OPEB
Liability
Balance at June 30, 2022
(Measurement Date June 30, 2022) 68,859,033$
Changes recognized for the measurement period:
Service cost 795,323
Interest 1,494,505
Differences between expected and actual experience (4,893,445) Changes of assumptions (22,969,516)
Contributions - employer (26,652,051)
Net investment income 2,249,921
Administrative expense 8,992
Net Changes (49,966,271)
Balance at June 30, 2023
(Measurement Date June 30, 2022) 18,892,762$
Increase (Decrease)
1% Decrease
(5.00%)
Current
Discount Rate
(6.00%)
1% Increase
(7.00%)
OPEB Liability 23,422,421$ 18,892,762 $ 15,080,933 $ 70 CITY OF FONTANA
Notes to the Financial Statements
Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates
The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2022:
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the fiscal year ended June 30, 2023, the City recognized OPEB expense of $287,181. As of fiscal year ended June 30, 2023, the City reported deferred outflows of resources related to OPEB from the following sources:
The $3,034,840 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2022, measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2024.
1% Decrease
(4.50% decreasing
to 3.04%)
Current Healthcare
Cost Trend Rates
(5.50% decreasing to
4.04%)
1% Increase
(6.50%
decreasing to
5.04%)
Net OPEB Liability 14,596,641$ 18,892,762 $ 23,999,536 $ Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB contributions subsequent to measurement date 3,034,840 $ - $ Changes of assumptions 8,784,746 20,417,348 Net difference between projected and actual earnings on OPEB plan investments 2,362,898 - Differences between expected and actual experience - 12,818,020 Total 14,182,484 $ 33,235,368 $
71 CITY OF FONTANA
Notes to the Financial Statements
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as OPEB expense as follows:
Note 13. Pensions
Plan Description
All qualified permanent and probationary employees are eligible to participate in the Local Government’s separate Safety (police and fire) and Miscellaneous (all other) Plans, an agent multiple employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the Plan’s June 30, 2021, Annual Actuarial Valuation Report (funding valuation). Details of the benefits provided can be obtained in Appendix B of the actuarial valuation report. This report and CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website.
Measurement
period Ended
June 30:
Deferred
Outflows/(Inflows)
of Resources
2023 $ (2,459,951)
2024 (2,459,951)
2025 (2,459,951)
2026 (2,459,949)
2027 (3,050,675)
Thereafter (9,197,247)
72 CITY OF FONTANA
Notes to the Financial Statements
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:
Employees Covered
As of the June 30, 2022, measurement date, the following employees were covered by the benefit terms for each Plan:
Contribution Description
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified Tier I Tier II Tier III
Prior to On or after After Prior to On or after
Hire Date Hire Date July 1, 2011 July 1, 2011 January 1, 2013 July 1, 2011 July 1, 2011 Benefit formula Benefit Formula 3% @ 50 3% @ 55 2.7% @ 57 2.5% @ 55 2% @ 62 Final Average Compensation Period Final Average Compensation Period Highest 1-year salary Final 3-year average Final 3-year average Highest 1-year salary Final 3-year average Benefit vesting schedule Benefit Vesting Schedule 5 yrs credited service 5 yrs credited service 5 yrs credited service 5 yrs credited service 5 yrs credited service Benefit payments Benefit Payments Monthly Monthly Monthly Monthly Monthly Retirement age Retirement Age 50 and above 50 and above 50 and above 55 and above 55 and above Monthly benefit basis Monthly Benefit Basis Benefit factor, years of service and final
compensation
Benefit factor, years of
service and final
compensation
Benefit factor, years of
service and final
compensation
Benefit factor, years of
service and final
compensation
Benefit factor, years of
service and final
compensation
Safety Miscellaneous
Safety Miscellaneous
208 557
73 1,013
Active employees 189 502
Total 470 2,072
Inactive employees or beneficiaries
currently receiving benefits
Inactive employees entitled to but
not yet receiving benefits
73 CITY OF FONTANA
Notes to the Financial Statements
by the pension plan terms as plan member contribution requirements are classified as plan member contributions; payments made by the employer are paid from the General Fund of the City.
Actuarial Methods and Assumptions used to determine Total Pension Liability
The June 30, 2021, valuation was rolled forward to determine the June 30, 2022, total pension liability, based on the following actuarial methods and assumptions:
Actuarial Cost Method Entry Age Actuarial Cost Method
Actuarial Assumptions
Discount Rate 6.90%
Inflation 2.30%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table1
Post Retirement Benefit Increase
Derived using CalPERS’ Membership Data for all funds
The lesser of contract COLA or 2.30% until Purchasing
Power Protection
Allowance floor on purchasing power applies, 2.30% thereafter
1 The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 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. The Experience Study report may be accessed on the CalPERS website at www.calpers.ca.gov under Forms and Publications.
Change of Assumptions
Effective with the June 30, 2021, valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions.
74 CITY OF FONTANA
Notes to the Financial Statements
Discount Rate
The discount rate used to measure the total pension liability was 6.90 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members 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.
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 .
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:
Asset Class 1 Assumed Asset
Allocation
Real
Return 1,2
Global Equity – Cap weighted 30.0% 4.54%
Global Equity – Non-Cap weighted 12.0 3.84
Private Equity 13.0 7.28
Treasury 5.0 0.27
Mortgage-backed Securities 5.0 0.50
Investment Grade Corporates 10.0 1.56
High Yield 5.0 2.27
Emerging Market Debt 5.0 2.48
Private Debt 5.0 3.57
Real Assets 15.0 3.21
Leverage (5.0) (0.59)
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study.
75 CITY OF FONTANA
Notes to the Financial Statements
Pension Plan Fiduciary Net Position
The plan fiduciary net position (assets) disclosed in the GASB report may differ from the plan assets reported in the actuarial valuation report due to several reasons. First, CalPERS must keep Reserves for Deficiencies and Fiduciary Self Insurance. These amounts are excluded for rate setting purposes in the actuarial valuation report while required to be included for GASB reporting purposes. In addition, differences may result from early CAFR closing and final reconciled reserves.
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. These reports are publicly available reports that can be obtained at https://www.calpers.ca.gov/page/investments/about-investment-office/investment-financial- reports.
Liability, Expense and Deferred Outflows/Inflows
The components of the net pension liability at June 30, 2023, are as follows:
Pension expense
At June 30, 2023, the City recognized pension expense for CalPERS of $28,829,432.
Total Pension Liability $611,711,857
Plan's Fiduciary Net Position 407,286,024
Net Pension Liability $204,425,833
Plan Fiduciary Net Position as a
Percentage of Total Pension Liability 66.58%
76 CITY OF FONTANA
Notes to the Financial Statements
Deferred Outflows/Inflows
At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Safety Plan
Deferred Outflows of
Resources
Deferred Inflows of
Resources
Pension contributions subsequent to
measurement date $ 14,423,033 $ - Differences between Expected and Actual
Experience 5,327,253 (80,490) Changes of Assumptions 11,453,753 (47,729) Net Difference between Projected and
Actual Earnings on Pension Plan
Investments
10,939,217 -
$ 42,143,256 $ (128,219) Misc Plan
Deferred Outflows of
Resources
Deferred Inflows of
Resources
Pension contributions subsequent to
measurement date $ 8,960,523 $ - Differences between Expected and Actual
Experience 74,026 (1,041,213) Changes of Assumptions 6,741,084 - Net Difference between Projected and
Actual Earnings on Pension Plan
Investments
9,601,389 -
$ 25,377,022 $ (1,041,213)
77 CITY OF FONTANA
Notes to the Financial Statements
Changes in Net Pension Liability
The following table shows the changes in net pension liability recognized over the measurement period for the Safety plan:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at: 6/30/2021 (VD) $317,342,165 $231,646,538 $85,695,627 Changes Recognized for the Measurement Period:
Service Cost 7,533,954 7,533,954
Interest on the Total Pension Liability 22,633,582 22,633,582 Changes of Benefit Terms - - Differences between Expected and Actual Experience (99,208) (99,208) Changes of Assumptions 14,117,417 14,117,417 Net Plan to Plan Resource Movement - - Contributions from the Employer 13,170,539 (13,170,539) Contributions from Employees 2,815,197 (2,815,197) Net Investment Income (17,840,625) 17,840,625
Benefit Payments, including Refunds of Employee Contributions (14,208,832) (14,208,832) - Administrative Expense (144,302) 144,302
Other Miscellaneous Income/(Expense) -
Net Changes during 2021-22 29,976,913 (16,208,023) 46,184,936 Balance at: 6/30/2022 (MD) $347,319,078 $215,438,515 $131,880,563 Increase (Decrease)
78 CITY OF FONTANA
Notes to the Financial Statements
The following table shows the changes in net pension liability recognized over the measurement period for the Miscellaneous plan:
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 6.90 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage-point lower (5.90 percent) or one percentage-point higher (7.90 percent) than the current rate:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at: 6/30/2020 (VD) $244,097,778 $208,946,661 $35,151,117 Changes Recognized for the Measurement Period:
Service Cost 5,312,666 5,312,666
Interest on the Total Pension Liability 17,253,263 17,253,263 Differences between Expected and Actual Experience (1,093,834) (1,093,834) Changes of Assumptions 9,951,124 9,951,124 Contributions from the Employer 7,805,249 (7,805,249) Contributions from Employees 2,123,002 (2,123,002) Net Investment Income (15,769,024) 15,769,024
Benefit Payments, including Refunds of Employee Contributions (11,128,218) (11,128,218) - Administrative Expense (130,161) 130,161
Other Miscellaneous Income/(Expense) -
Net Changes during 2020-21 20,295,001 (17,099,152) 37,394,153 Balance at: 6/30/2021 (MD) $264,392,779 $191,847,509 $72,545,270 Increase (Decrease)
79 CITY OF FONTANA
Notes to the Financial Statements
Amortization of Deferred Outflows and Deferred Inflows of Resources
Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.
The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred inflows and deferred outflows to be recognized in future pension expense.
The amortization period differs depending on the source of the gain or loss:
Difference between projected and actual earnings 5 year straight-line amortization
All other amounts Straight-line amortization over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired as of the beginning of the measurement period).
The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired).
The EARSL for the Safety Plan for the measurement period ending June 30, 2022, was 5.3 years, which was obtained by dividing the total service years of 2,434 (the sum of remaining service lifetimes of the active employees) by 458 (the total number of participants). Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.
The EARSL for the Miscellaneous Plan for the measurement period ending June 30, 2022, was 3.1 years, which was obtained by dividing the total service years of 6,175 (the sum of remaining service lifetimes of the active employees) by 1,992 (the total number of participants). Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.
Discount Rate – 1%
(5.90%)
Current Discount Rate
(6.90%)
Discount Rate + 1%
(7.90%)
Plan’s Net Pension Liability
Safety $183,131,874 $131,880,563 $90,251,039
Plan’s Net Pension Liability
Misc. $111,233,426 $72,545,270 $41,042,029
80 CITY OF FONTANA
Notes to the Financial Statements
Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
For the measurement period ending June 30, 2022 (the measurement date), the City of Fontana recognized a pension expense of $18,990,371 for the Safety Plan.
As of June 30, 2023, the City of Fontana reports other amounts for the Safety Plan as deferred outflow and deferred inflow of resources related to pensions as follows:
Employer contributions of $14,423,033 were made after the measurement date of the net pension liability but before the end of the fiscal year; these contributions are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2024.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Deferred Outflows of
Resources
Deferred Inflows of
Resources
Pension contributions subsequent to
measurement date $ 14,423,033 $ - Differences between Expected and Actual
Experience 5,327,253 (80,490) Changes of Assumptions 11,453,753 (47,729) Net Difference between Projected and
Actual Earnings on Pension Plan
Investments
10,939,217 -
Total $ 42,143,256 $ (128,219) Measurement period
Ended June 30:
Deferred
Outflows/(Inflows) of
Resources
2023 $ 7,005,062
2024 6,191,279
2025 4,160,288
2026 9,441,896
2027 793,479
Thereafter -
81 CITY OF FONTANA
Notes to the Financial Statements
For the measurement period ending June 30, 2022 (the measurement date), the City of Fontana recognized a pension expense of $9,839,061 for the Miscellaneous Plan.
As of June 30, 2023, the City of Fontana reports other amounts for the Miscellaneous Plan as deferred outflow and deferred inflow of resources related to pensions as follows:
Employer contributions of $8,960,523, were made after the measurement date of the net pension liability but before the end of the fiscal year; these contributions are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2024.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Measurement period Ended
June 30:
Deferred
Outflows/(Inflows) of
Resources
2023 $ 4,198,390
2024 4,170,536
2025 982,171
2026 6,024,189
Thereafter -
Deferred Outflows of
Resources
Deferred Inflows of
Resources
Pension contributions subsequent to
measurement date $ 8,960,523 $ - Differences between Expected and Actual
Experience 74,026 (1,041,213) 6,741,084 -
Net Difference between Projected and
Actual Earnings on Pension Plan
Investments
9,601,389 -
$ 25,377,022 $ (1,041,213)
82 CITY OF FONTANA
Notes to the Financial Statements
Subsequent Events
On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.
On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modification to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.
Note 14. Public Agency Retirement Services
For some City employees (regular-part-time employees) that do not qualify for inclusion in the CalPERS pension plans administered by the City, the City offers an alternative plan, the Public Agency Retirement Services Alternate Retirement System Plan (PARS ARS). Employees are enrolled, on a voluntary basis, in this defined contribution plan; the plan requires a minimum contribution of 7.5% of the employee wages and are paid by the employees only. There is no annual expense to the City for this benefit.
Measurement period Ended
June 30:
Deferred
Outflows/(Inflows) of
Resources
2023 $ 4,198,390
2024 4,170,536
2025 982,171
2026 6,024,189
Thereafter -
83 CITY OF FONTANA
Notes to the Financial Statements
Note 15. Classification of Fund Balances
In the fund financial statements, government funds report the following fund balance classification:
Nonspendable include amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted include amounts that are constrained on the use of resources by either (a) external creditors, grantors, contributors, or laws of regulations of other governments or (b) by law through constitutional provisions or enabling legislation.
Committed include amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest authority, the City Council. The formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is resolution.
Assigned include amounts that are constrained by the government’s intent to be used for specific purposes but are neither restricted nor committed.
The Chief Finance Officer is authorized to assign amounts to a specific purpose, which was established by the governing body in Administrative Policy # 20-32.
Unassigned include the residual amounts that have not been restricted, committed, or assigned to specific purposes.
The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. In governmental funds other than the General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.
An individual governmental fund could include nonspendable resources and amounts that are restricted or unrestricted (committed, assigned, or unassigned) or any combination of those classifications. Restricted amounts are to be considered spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available and committed, assigned, then unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications can be used.
84 CITY OF FONTANA
Notes to the Financial Statements
The details of the fund balances as of June 30, 2023, are presented below:
Adequate reserve levels are a necessary component of the City’s overall financial management strategy and to provide for the orderly provision of services to the citizens of the City of Fontana. Those necessary components are as follows:
Local disasters and other hardships or downturns in the local economy Contingencies for unforeseen operating or capital needs
The balance of these components as of June 30, 2023, is $32,411,496 and is included in the committed fund balance in the General Fund.
Fire Future Community Other
Protection Housing Economic Capital Capital Sewer Facilities Traffic Governmental General District Authority Stimulus Reinvestment Projects Expansion Districts Mitigation Funds Totals Fund balances:
Nonspendable
Deposits 100,384 $ - $ - $ - $ - $ - $ - $ - $ - $ 35,266 $ 135,650 $ Inventories 407,053 - - - - - - - - 871,931 1,278,984 Land held for resale - - - - 5,650,178 4,379,694 - - - - 10,029,872 Loan receivables 23,599,749 - - - - - - - - 10,695,724 34,295,473 Total Nonspendable 24,107,186 - - - 5,650,178 4,379,694 - - - 11,602,921 45,739,979 Restricted
Community facilities districts - - - - - - - 30,257,097 - 31,778,634 62,035,731 Community services - - - - - - - - - 3,842,874 3,842,874 Government-access channel 1,703,897 - - - - - - - - - 1,703,897 Housing & community development - - 85,876,784 115,399 - - - - 15,444,197 3,400,200 104,836,580 Section 115 Pension Trust 10,694,317 - - - - - - - - - 10,694,317 Lighting and landscaping - - - - - - - - - 4,032,407 4,032,407 Municipal Services Impact - - - - - - - - - 22,362,925 22,362,925 Public safety - 26,432,199 - - - - - - - 16,772,006 43,204,205 Transportation - - - - - - - - - 23,096,657 23,096,657 Solid waste mitigation - - - - - - - - - 4,809,310 4,809,310 Total Restricted 12,398,214 26,432,199 85,876,784 115,399 - - - 30,257,097 15,444,197 110,095,013 280,618,903 Committed
Economic uncertainty 32,411,496 - - - - - - - - - 32,411,496 Assigned
Capital projects 1,101,781 - - - 20,310,139 37,658,283 345,456 - - 113,943,770 173,359,429 Retiree benefits 2,042,030 - - - - - - - - - 2,042,030 Total Assigned 3,143,811 - - - 20,310,139 37,658,283 345,456 - - 113,943,770 175,401,459 Unassigned 45,200,677 - - - - - - 2,252,135 6,357,308 (12,811,460) 40,998,660 Total fund balances 117,261,384$ 26,432,199 $ 85,876,784 $ 115,399 $ 25,960,317 $ 42,037,977 $ 345,456 $ 32,509,232 $ 21,801,505 $ 222,830,244 $ 575,170,497 $ Capital ProjectSpecial Revenue
85 CITY OF FONTANA
Notes to the Financial Statements
Note 16: Fontana Fire Protection District
The Fontana Fire Protection District (the District) was formed on July 1, 2008 pursuant to the State of California Health and Safety Code commencing with Section 13800, for the purpose of providing fire protection services. The District is a component unit of the City of Fontana; the City of Fontana has oversight responsibility of the District determined by criteria such as financial interdependency, selection of governing authority and designation of management, budget control, ability to significantly influence operations, etc.
The accounts of the District have been included within the scope of the basic financial statement of the City because the City Council has financial accountability over the operations of the District. The following information is relative only to the District as a component unit, which is an integral part of the total reporting entity.
The District reports the following governmental funds:
The Fire Protection District Special Revenue Fund accounts for the cost of fire suppression, emergency medical, fire prevention and education services incurred by the District within the City’s Sphere of Influence.
The Fire Protection District CFD Special Revenue Fund accounts for the special taxes levied on property developed after January 2, 2001, to finance fire protection and suppression services within the Community Facilities District.
The Fire Protection District Capital Project Fund accounts for the money expended on capital improvements and equipment replacement for the District.
a. Cash and investments
As of June 30, 2023, the District reported $46,859,421 as cash and investments.
The District’s funds are pooled with the City of Fontana’s cash and investments in order to generate optimum interest income. Each fund’s share of the pooled cash account is separately accounted for, and investment income is allocated to all participating funds based on the relationship of their average daily cash balances to the total of the pooled cash and investments. Information regarding the authorized types of deposits and investments, the type of risks (i.e. credit, interest rate, custodial, etc.) and other disclosures associated with the City’s pooled cash and investment is included in Note 3.
86 CITY OF FONTANA
Notes to the Financial Statements
b. Capital Assets
An analysis of capital assets as of June 30, 2023, follows:
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental Activities:
Public safety – fire protection $ 1,284,511
c. Long-Term Debt
The District does not have any outstanding debt as of June 30, 2023.
Balance Balance
June 30, 2022 Increases Decreases June 30, 2023
Capital assets, not being depreciated
1,122,000$ - $ - $ 1,122,000 $ 1,122,000 - - 1,122,000 Capital assets, being depreciated
16,413,403 14,100 - 16,427,503 2,540,209 505,015 - 3,045,224 Vehicles 12,340,122 - - 12,340,122 Infrastructure 1,012,418 - - 1,012,418 32,306,152 519,115 - 32,825,267 Less accumulated depreciation for:
(4,692,321) (469,966) - (5,162,287) (1,402,152) (243,416) - (1,645,568) (7,910,134) (537,306) - (8,447,440) (272,605) (33,823) - (306,428) (14,277,212) (1,284,511) - (15,561,723) 18,028,940 (765,396) - 17,263,544 19,150,940$ (765,396) $ - $ 18,385,544 $ Total Capital assets, net Buildings and improvements
Machinery and equipment
Vehicles
Infrastructure
Total capital assets, being depreciated, net
Land
Total capital assets, not being depreciated
Buildings and improvements
Machinery and equipment
87 CITY OF FONTANA
Notes to the Financial Statements
d. Fund Balance
The district reports fund balances in accordance with the classifications consistent with the City, see Note 15 for more information on the types and descriptions of the fund balance classifications. The details of the fund balances as of June 30, 2023, are presented below:
e. Fire Protection Services Agreement
The District entered into a fire protection services agreement with the San Bernardino County Fire Protection District (County) effective July 1, 2018 for a period of twenty (20) years. The agreement calls for the County to provide to the District fire prevention, fire investigation, fire suppression, advance life support services, ambulance transportation service, hazardous materials, and rescue services. The District paid $39,973,150 to the County for these services during the fiscal year ending June 30, 2023. The County also provides various administrative duties including billing and collecting of advanced life support and ambulance transportation fees for the District. The District leased its real property, furniture and fixtures, and fire apparatus and equipment to the County for one dollar for the life of the contract. The agreement calls for the County to maintain insurance for workers compensation, comprehensive general and automobile.
The details of the contract expenses for the fiscal year ending June 30, 2023, are as follows:
Fire Fire Fire
Protection Protection Protection
District District CFD District Totals
Fund balances:
Restricted
Public safety 26,432,199 $ 4,475,365 $ - $ 30,907,564 $ Assigned
Equipment replacement - - 38,377,217 38,377,217 Total fund balances 26,432,199$ 4,475,365 $ 38,377,217 $ 69,284,781 $ Special Revenue Capital Project
Salaries and benefits 32,984,472 $
Services and supplies 3,705,043
Station expenses 1,361,099
Fire Prevention services 369,310
County contract management fee 1,553,226
Total contract expenses 39,973,150 $
88 CITY OF FONTANA
Notes to the Financial Statements
Note 17. Successor Agency Trust for Assets of Former Redevelopment Agency
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the Bill”) that provided for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Fontana that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit. In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.
The Bill provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 10, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of City resolution number 2012- 001.
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining 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, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.
The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill. This review was completed October 2014 and identified $7,124,646 in unallowable transfers. The City has contended all unallowable transfers, however the State Controller upholds its initial finding and has instructed the City to return the assets to the Successor Agency in a timely manner. As of June 30, 2023, the assets have not yet been returned to the State Controller.
Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City’s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City.
As of June 30, 2023, there is one obligation that has been denied by the State Department of Finance that is currently being contested through the California court system. The Jurupa Hills Owner Participation Agreement (OPA) has been disallowed due to insufficient documentation to support the outstanding obligation, inability to ever repay the entire debt and the opinion that the agreement appears contrary to public policy. In July 2016, the Courts ruled in favor of the Successor Agency; the State Department of Finance has filed an appeal to the ruling.
89 CITY OF FONTANA
Notes to the Financial Statements
After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City.
a. Cash and investments
Cash and investments reported in the accompanying financial statements consisted of the following:
b. Loans Receivable
Loans receivable reported in the accompanying financial statements consist of the following:
1. A loan was issued for the Oleander Storm Drain on March 2003 in the amount of $850,429. The balance of the loan at June 30, 2023, was $850,429. The purpose of the loan was to assist the developer with infrastructure improvements. There is no set repayment schedule for this loan.
2. A loan was issued for the Chaffey College in February 2005 in the amount of $4,000,000. The balance of the loan at June 30, 2023, was $1,480,000. The purpose of the loan was to assist with the costs of expanding the campus located within the City of Fontana. This loan is scheduled to be repaid over a term of 30 years.
3. Various loans were issued for the San Gabriel Valley Water Company in 1988-1989 in the amount of $330,756. The balance at the loan at June 30, 2023, was $50,945. The loan represents the reimbursement of costs incurred by the Agency for construction of water infrastructure.
This loan is scheduled to be repaid over a forty-year period.
Cash and investments pooled with the City 19,569,155 $
Cash and investments with fiscal agent 2,909
19,572,064$
90 CITY OF FONTANA
Notes to the Financial Statements
c. Long-Term Debt
A description of long-term debt outstanding (excluding defeased debt) of the Successor Agency as of June 30, 2023, follows:
Amounts Amounts
Balance Balance Due Within Due in More
Fiduciary Activities: June 30, 2022 Additions Retirements June 30, 2023 One Year Than One Year Tax Allocation Bonds and Notes:
2017 Tax Allocation Refunding Bonds 161,240,000 $ $ - 11,240,000 $ 150,000,000 $ 11,770,000 $ 138,230,000 $ 2018 Tax Allocation Refunding Bonds 22,550,000 - 3,315,000 19,235,000 3,480,000 15,755,000 Other Redevelopment Agency:
Advances from City 28,284,047 - 1,378,469 26,905,578 1,543,885 25,361,693 Ow ner participation agreements 207,380,374 362,520 - 207,742,894 - 207,742,894 Total Redevelopment Agency 419,454,421 $ 362,520 $ 15,933,469 $ 403,883,472 $ 16,793,885 $ 387,089,587 $ Unamortized bond premium 31,126,203 31,126,203
435,009,675$ 418,215,790$
Tax Allocation Bonds
The Former Fontana Redevelopment Agency has issued the following Tax Allocation Bonds which are special obligations of the Successor Agency secured by pledged property tax revenues. The bonds are not a debt of the City and are not payable out of any funds or properties other than those of the Successor Agency.
91 CITY OF FONTANA
Notes to the Financial Statements
2017 Tax Allocation Refunding Bonds
$208,125,000 of 2017 Tax Allocation Refunding Bonds were issued in November 2017. The bonds pay interest semi-annually at rates ranging from
1.50% to 3.00% and mature from October 2018 to October 2036. The proceeds were used to refinance various tax allocation bonds previously issued by the Former Redevelopment Agency of the City of Fontana.
2018 Tax Allocation Refunding Bonds
$31,580,000 of 2018 Tax Allocation Refunding Bonds were issued in July 2018. The bonds mature October 1, 2027, with an interest yield of 5.00 percent. The proceeds from the bonds will be used to refinance various tax allocation bonds previously issued by the Former Redevelopment Agency of the City of Fontana for the Jurupa Hills Project Area.
Long-Term Payables to the City of Fontana
The advances between the City and the Former Redevelopment Agency include the following:
1. A loan between the Agency and the City which resulted from the amendment to the 1991 Junior Lien Tax Allocation Bonds.
2. Advances between the City and the Agency for administrative and other costs.
Principal Interest Total
2024 11,770,000 $ 6,979,725 $ 18,749,725 $
2025 12,275,000 6,399,006 18,674,006
2026 12,755,000 5,793,138 18,548,138
2027 13,380,000 5,158,500 18,538,500
2028 14,030,000 4,491,450 18,521,450
2029-2033 73,980,000 11,729,125 85,709,125
2034-2037 11,810,000 792,750 12,602,750 Totals 150,000,000 $ 41,343,694 $ 191,343,694 $
2017 Tax Allocation Refunding Bonds
92 CITY OF FONTANA
Notes to the Financial Statements
Payable Under Jurupa Hills Owner Participation Agreement
The Agency has entered into an owner participation agreement (OPA) with Ten-Ninety, Ltd., a private land development partnership (the Participating Owner), relating to the Jurupa Hills Project Area. The OPA requires, among other things, the reimbursement by the Agency to the Participating Owner of costs incurred for certain infrastructure and other improvements. Costs advanced, which accrue interest at 15.5%, are reimbursed from, and limited to: (i) the tax increment revenue generated in the Southridge Village portion of the Jurupa Hills Project Area and (ii) certain fees and assessments collected from benefited property owners.
In January 1992, the City, Agency and Participating Owner entered into two agreements in further implementation of the development of Southridge Village; a Facilitation Agreement and an Amendment No. 3 to OPA and Composite OPA. On March 31, 1992, a judgment was entered by the San Bernardino County Superior Court validating the provisions of these two agreements and declaring them to be legally binding upon the parties.
The Facilitation Agreement provides for specific allocations of costs and responsibilities between the City and Participating Owner with respect to certain public works items and for the discharge of the Participating Owner’s obligations and responsibilities with respect to the infrastructure items for Phase I, II and III of Southridge Village.
Amendment No. 3 to OPA includes acknowledgment that the Participating Owner has completed its infrastructure obligations relating to the development of Southridge Village and provides for certain payments by the Participating Owner to the Agency and City, in order to mitigate certain negative fiscal impacts imposed by the development and continued existence of Southridge Village. As described in the agreements, the payments to the City and Agency will be in amounts equal to 35% of the residual tax increments and 50% of the assessments and other reimbursements to be paid to the Participating Owner as reimbursement for public infrastructure improvements installed by the Participating Owner.
The balance at June 30, 2023 does not include $792,082,611 of accumulated unpaid interest that is subject to the same limitations of reimbursement from tax increment revenue, fees and assessments as is the case for costs of construction advanced. The total reimbursement costs of the project are $207,740,002. This obligation has been disallowed by the State Department of Finance due to insufficient documentation to support the outstanding obligation, inability to ever repay the entire debt and the opinion that the agreement appears contrary to public policy. This determination is currently being challenged in the California court system by the Successor Agency. A hearing was held in July 2016, in which the courts ruled in favor of the Successor Agency.
Pledged Revenue
The Successor Agency pledged, as security for bonds issued, either directly or through the Financing Authority, a portion of tax increment revenue (including Low- and Moderate-Income Housing set-aside and pass through allocations) that it receives. The bonds issued were to provide financing for various capital projects, accomplish Low- and Moderate-Income Housing projects and to defease previously issued bonds. Assembly Bill 1X 26 provided that upon dissolution of the Redevelopment Agency, property taxes allocated to redevelopment agencies no longer are deemed tax increment but rather property tax revenues and will be allocated first to successor agencies to make payments on the indebtedness incurred by the dissolved redevelopment agency. Total principal and interest remaining on the debt is $212,976,819 with annual debt service requirements as indicated above. For the current year, the total property tax revenue recognized by the Successor Agency for the payment of indebtedness incurred by the dissolved redevelopment agency was $34,924,052 and the debt service obligation on the bonds was $23,133,150.
93 CITY OF FONTANA
Notes to the Financial Statements
d. Insurance
The Successor Agency is covered under the City of Fontana’s insurance policies. Therefore, the limitation and self-insured retentions applicable to the City also apply to the Successor Agency. Additional information as to coverage and self-insured retentions can be found in Note 8.
e. Commitments and Contingencies
At June 30, 2023, the Successor Agency was involved as a defendant in several lawsuits arising out of the ordinary conduct of its affairs. It is the opinion of management that settlements of these lawsuits, including losses for claims that are incurred but not reported, if any, will not have a material effect on the financial position of the Successor Agency.
Note 18. Tax Abatement
The City occasionally enters into Operating Covenant Agreements (OCA) with local businesses as a mechanism to promote economic development in the City, retain business and create jobs. The City currently has the following OCA’s in which the City is granting a portion of sales tax revenues generated back to the retailer as an incentive to continue operating their business in the City:
An operating covenant agreement with a retailer of consumer products to retain their distribution center within the City for a period of no less than 20 years commencing December 15, 2015. The retention of the distribution center will generate substantial revenue, retain and create new jobs, revitalize the City and result in community and public improvements. The City agreed to refund, on a quarterly basis, 50% of sales tax revenues attributable to taxable sales above the first $50,000 in sales tax revenue received by the City within said quarter.
An operating covenant agreement with an automotive dealership to continue to operate their automobile sales business within the City for a period of up to 12 years or until $1,800,000 in sales tax revenue is refunded to the dealership commencing January 29, 2020. The operation of business has been determined to result in substantial benefits to the City and its citizens including the creation of new jobs, property tax revenues, sales tax revenues, etc. The City agreed to refund 50% of all sales tax revenue up to a maximum amount of $1,800,000 with an additional bonus payment of $240,000 for the dealership’s commencement of operations.
An operating covenant agreement with an automotive dealership to continue to operate their automobile sales business within the City for a period of up to 12 years or until $2,400,000 in sales tax revenue is refunded commencing September 15, 2021. The City has determined the continued operation of the business will result in significant new employment opportunities, property tax and sales tax revenues. The City agreed to refund 50% of all sales tax revenue per year up to a maximum amount of $2,400,000.
94 CITY OF FONTANA
Notes to the Financial Statements
Note 19. Prior Period Adjustments
During the year ended June 30, 2023, the City made prior period adjustments as follows:
Governmental and Government-wide restatement to correct prior year gas tax revenues.
Governmental funds - General Fund restatement to record prior year expenditures for contributions to the City’s Section 115 trust.
Other
Governmental Governmental
Activities Funds
Net position at July 1, 2022, as previously reported 1,010,558,692 $ 206,632,130 $ Prior period adjustments:
To correct prior year gas tax revenue (475,528) (475,528) To correct contributions to OPEB Trust (21,553,499) - Net position at July 1, 2022, as restated 988,529,665 $ 206,156,602 $ General Fund
Fund balance at July 1, 2022, as previously reported 124,061,436 $ Correct Section 115 Trust payment for prior year expenditures (21,553,499) Fund Balance at July 1, 2022, as restated 102,507,937 $ 95 Measurement Period 2022 2021 2020 2019 2018 2017 2016 2015 2014
TOTAL PENSION LIABILITY
Service Cost 7,533,954 $ 6,559,973 $ 6,574,765 $ 6,391,012 $ 6,252,517 $ 6,181,410 $ 5,464,647 $ 5,255,619 $ 5,261,265 $ Interest 22,633,582 21,409,558 20,347,932 18,942,663 17,568,272 16,583,112 15,674,983 14,718,880 13,833,230 Changes of Benefit Terms - - - - - - - - - Difference between Expected and Actual Experience (99,208) 1,072,506 6,367,568 6,274,697 1,250,890 (544,846) 773,988 463,048 - Changes of Assumptions 14,117,417 - - - (445,464) 15,075,525 - (3,940,129) - Benefit Payments, Including Refunds of Employee Contributions (14,208,832) (13,563,503) (12,716,297) (11,561,706) (10,323,275) (9,330,793) (8,666,808) (8,043,006) (7,265,033) Net Change in Total Pension Liability 29,976,913 15,478,534 20,573,968 20,046,666 14,302,940 27,964,408 13,246,810 8,454,412 11,829,462 Total Pension Liability – Beginning 317,342,165 301,863,631 281,289,663 261,242,997 246,940,057 218,975,649 205,728,839 197,274,427 185,444,965 Total Pension Liability – Ending (a) 347,319,078 $ 317,342,165 $ 301,863,631 $ 281,289,663 $ 261,242,997 $ 246,940,057 $ 218,975,649 $ 205,728,839 $ 197,274,427 $
PLAN FIDUCIARY NET POSITION
Contributions – Employer 13,170,539 11,820,068 10,500,692 9,196,355 8,215,736 7,706,792 6,985,270 6,756,772 6,213,039 Contributions – Employee 2,815,197 2,877,842 2,720,062 2,639,928 2,577,060 2,509,352 2,505,888 2,177,122 1,764,545 Net Investment Income (17,840,625) 43,154,767 8,990,686 11,157,517 13,214,512 15,449,532 710,225 2,956,715 19,674,310 Benefit Payments, Including Refunds of Employee Contributions (14,208,832) (13,563,503) (12,716,297) (11,561,706) (10,323,275) (9,330,793) (8,666,808) (8,043,006) (7,265,033) Other Changes in Net Fiduciary Position (144,302) (187,346) (251,361) (118,778) (696,076) (203,553) (83,139) (153,538) - Net Change in Fiduciary Net Position (16,208,023) 44,101,828 9,243,782 11,313,316 12,987,957 16,131,330 1,451,436 3,694,065 20,386,861 Plan Fiduciary Net Position – Beginning 231,646,538 187,544,710 178,300,928 166,987,612 153,999,655 137,868,325 136,416,889 132,722,824 112,335,963 Plan Fiduciary Net Position – Ending (b) 215,438,515 231,646,538 187,544,710 178,300,928 166,987,612 153,999,655 137,868,325 136,416,889 132,722,824 Plan Net Pension Liability – Ending (a) - (b) 131,880,563 $ 85,695,627 $ 114,318,921 $ 102,988,735 $ 94,255,385 $ 92,940,402 $ 81,107,324 $ 69,311,950 $ 64,551,603 $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 62.03% 73.00% 62.13% 63.39% 63.92% 62.36% 62.96% 66.31% 67.28% Covered Payroll 24,976,011 23,795,599 23,158,734 22,436,218 21,782,736 21,411,929 21,176,697 20,121,052 19,360,681 Plan Net Pension Liability as a Percentage of Covered Payroll 528.03% 360.13% 493.63% 459.03% 432.71% 434.06% 383.00% 344.47% 333.42% Notes to Schedule:
GASB 68 was implemented in FY 2014-15, therefore only nine years of information is being presented.
Benefit Changes: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.
Changes of Assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions.In 2019, 2020 and 2021, there were no changes. In 2018, demographic assumptions and inflation rate were changed in accordance with the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes to the discount rate. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense.) In 2014, amounts reported were based on the 7.5 percent discount rate.
CITY OF FONTANA
Safety Plan
Schedule of Changes in Net Pension Liability and Related Ratios During the Measurement Period 96 Measurement Period 2022 2021 2020 2019 2018 2017 2016 2015 2014
TOTAL PENSION LIABILITY
Service Cost 5,312,666 $ 4,943,305 $ 5,099,318 $ 5,057,352 $ 4,814,030 $ 4,788,249 $ 4,194,877 $ 4,254,965 $ 4,004,767 $ Interest 17,253,263 16,462,337 15,725,500 14,869,142 13,725,324 13,067,481 12,382,291 11,767,900 11,147,316 Changes of Benefit Terms - - - - - - - - - Difference between Expected and Actual Experience (1,093,834) (800,611) 629,230 5,210,993 (556,946) (1,186,594) (1,811,514) (1,027,499) - Changes of Assumptions 9,951,124 - - - (972,809) 11,708,939 - (3,097,256) - Benefit Payments, Including Refunds of Employee Contributions (11,128,218) (10,157,377) (9,124,186) (8,075,186) (7,673,900) (6,602,614) (6,385,882) (5,914,227) (5,994,855) Net Change in Total Pension Liability 20,295,001 10,447,654 12,329,862 17,062,301 9,335,699 21,775,461 8,379,772 5,983,883 9,157,228 Total Pension Liability – Beginning 244,097,778 233,650,124 221,320,262 204,257,961 194,922,262 173,146,801 164,767,029 158,783,146 149,625,918 Total Pension Liability – Ending (a) 264,392,779 $ 244,097,778 $ 233,650,124 $ 221,320,262 $ 204,257,961 $ 194,922,262 $ 173,146,801 $ 164,767,029 $ 158,783,146 $
PLAN FIDUCIARY NET POSITION
Net Plan to Plan Resource Movement - - - - (354) 13,206 - - - Contributions – Employer 7,805,249 7,329,666 6,606,745 5,841,667 5,081,435 4,478,806 4,452,429 3,868,104 3,657,678 Contributions – Employee 2,123,002 2,383,713 2,313,683 2,369,932 2,238,093 2,148,688 2,157,198 2,068,784 2,016,250 Net Investment Income (15,769,024) 38,806,647 8,280,112 10,133,426 12,059,314 14,325,541 622,155 2,781,662 18,466,862 Benefit Payments, Including Refunds of Employee Contributions (11,128,218) (10,157,377) (9,124,186) (8,075,186) (7,673,900) (6,602,614) (6,385,882) (5,914,227) (5,994,855) Other Changes in Net Fiduciary Position (130,161) (170,573) (229,660) (108,649) (640,045) (188,255) (77,240) (142,590) - Net Change in Fiduciary Net Position (17,099,152) 38,192,076 7,846,694 10,161,190 11,064,543 14,175,372 768,660 2,661,733 18,145,935 Plan Fiduciary Net Position – Beginning 208,946,661 170,754,585 162,907,891 152,746,701 141,682,158 127,506,786 126,738,126 124,076,393 105,930,458 Plan Fiduciary Net Position – Ending (b) 191,847,509 208,946,661 170,754,585 162,907,891 152,746,701 141,682,158 127,506,786 126,738,126 124,076,393 Plan Net Pension Liability – Ending (a) - (b) 72,545,270 $ 35,151,117 $ 62,895,539 $ 58,412,371 $ 51,511,260 $ 53,240,104 $ 45,640,015 $ 38,028,903 $ 34,706,753 $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 72.56% 85.60% 73.08% 73.61% 74.78% 72.69% 73.64% 76.92% 78.14% Covered Payroll 31,672,556 32,584,261 31,712,176 30,080,386 29,204,258 28,947,762 28,347,600 28,221,562 25,050,147 Plan Net Pension Liability as a Percentage of Covered Payroll 229.05% 107.88% 198.33% 194.19% 176.38% 183.92% 161.00% 134.75% 138.55% Notes to Schedule:
GASB 68 was implemented in FY 2014-15, therefore only nine years of information is being presented.
Changes of Assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions.In 2019, 2020 and 2021, there were no changes. In 2018, demographic assumptions and inflation rate were changed in accordance with the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes to the discount rate. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense.) In 2014, amounts reported were based on the 7.5 percent discount rate.
CITY OF FONTANA
Miscellaneous Plan
Schedule of Changes in Net Pension Liability and Related Ratios During the Measurement Period Benefit Changes: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary. 97 Fiscal Year 2022-23 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 Actuarially Determined Contribution $ 14,423,033 $ 13,332,172 $ 11,820,068 $ 10,500,692 $ 9,196,355 $ 8,215,736 $ 7,706,792 $ 6,985,270 $ 6,756,772 $ 6,213,039 Contributions in Relation to the
Actuarially Determined Contribution (14,423,033) (13,332,172) (11,820,068) (10,500,692) (9,132,884) (8,215,736) (7,706,792) (6,985,270) (6,756,772) (6,213,039) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Covered Payroll $ 25,478,199 $ 24,976,011 $ 23,795,599 $ 23,158,734 $ 22,436,218 $ 21,782,736 $ 21,411,929 $ 21,176,697 $ 20,121,052 $ 19,360,681 Contributions as a Percentage of
Covered Payroll 56.61% 53.38% 49.67% 45.34% 40.99% 37.72% 35.99% 32.99% 33.58% 32.09% Notes to Schedule:
Actuarial Cost Method Entry Age Actuarial Cost Method
Amortization Method/Period For details, see June 30, 2020 Funding Valuation Report Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2020 Funding Valuation Report.
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Payroll Growth 2.75%
Investment Rate of Return 7.00% Net of Pension Plan Investment Expenses, including Inflation.
Retirement Age
Mortality
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2022-23 were from the June 30, 2020 public agency valuations.
The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.
The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality using 90% of Scale MP-2016 published by the Society of Actuaries.
CITY OF FONTANA
Schedule of Plan Contributions
Safety Plan
98 Fiscal Year 2022-23 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 Actuarially Determined Contribution $ 8,960,523 $ 7,920,425 $ 7,329,666 $ 6,606,745 $ 5,841,667 $ 5,081,435 $ 4,478,806 $ 4,452,429 $ 3,868,104 $ 3,657,678 Contributions in Relation to the
Actuarially Determined Contribution (8,960,523) (7,920,425) (7,329,666) (6,606,745) (5,841,667) (5,081,435) (4,478,806) (4,452,429) (3,868,104) (3,657,678) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Covered Payroll $ 34,201,914 $ 31,672,556 $ 32,584,261 $ 31,712,176 $ 30,080,386 $ 29,204,258 $ 28,947,762 $ 28,347,600 $ 28,221,562 $ 25,050,147 Contributions as a Percentage of
Covered Payroll 26.20% 25.01% 22.49% 20.83% 19.42% 17.40% 15.47% 15.71% 13.71% 14.60% Notes to Schedule:
Actuarial Cost Method Entry Age Actuarial Cost Method
Amortization Method/Period For details, see June 30, 2020 Funding Valuation Report Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2020 Funding Valuation Report.
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Payroll Growth 2.75%
Investment Rate of Return 7.00% Net of Pension Plan Investment Expenses, including Inflation.
Retirement Age
Mortality The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality using 90% of Scale MP-2016 published by the Society of Actuaries.
CITY OF FONTANA
Miscellaneous Plan
Schedule of Plan Contributions
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2022-23 were from the June 30, 2020 public agency valuations.
The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. 99 Measurement Period 2022 2021 2020 2019 2018 2017
TOTAL OPEB LIABILITY
Service cost 795,323 $ 1,973,739 $ 1,406,780 $ 1,114,136 $ 1,109,799 $ 1,073,307 $ Interest on the total OPEB liability 1,494,505 1,909,977 2,328,825 2,442,178 2,377,354 2,345,864 Actual and expected experience difference (4,893,445) (7,638,248) (3,610,614) (1,274,244) - - Changes in assumptions (22,969,516) 4,351,220 7,714,949 (3,295,758) (1,014,856) - Changes in benefit terms - - - - - - Benefit payments (2,839,639) (3,114,653) (2,784,909) (2,653,423) (2,591,180) (2,467,790) Net change in Total OPEB liability (28,412,772) (2,517,965) 5,055,031 (3,667,111) (118,883) 951,381 Total OPEB liability - beginning 68,859,033 71,376,998 66,321,967 69,989,078 70,107,961 69,156,580 Total OPEB liability - ending (a) 40,446,261$ 68,859,033 $ 71,376,998 $ 66,321,967 $ 69,989,078 $ 70,107,961 $
PLAN FIDUCIARY NET POSITION
Contribution - employer 26,652,051 $ 3,114,653 $ 2,784,909 $ 2,653,426 $ 2,591,180 $ 2,467,790 $ Net investment income (2,249,921) - - - - - Benefit payments (2,839,639) (3,114,653) (2,784,909) (2,653,426) (2,591,180) (2,467,790) Administrative expense (8,992) - - - - - Net change in plan fiduciary net position 21,553,499 - - - - - Net OPEB liability - ending (a)-(b) 18,892,762$ 68,859,033$ 71,376,998$ 66,321,967$ 69,989,078$ 70,107,961$ Covered-employee payroll 50,801,314$ 49,452,985 $ 54,870,910 $ 52,516,604 $ 50,986,994 $ 50,359,691 $ Net OPEB liability as a percentage of covered-employee payroll 37.19% 139.24% 130.08% 126.29% 137.27% 139.21% Notes to Schedule:
Historical information is required only for measurement periods for which GASB 75 is applicable.
Future years' information will be displayed up to 10 years as information becomes available.
CITY OF FONTANA
Schedule of Changes in Net OPEB Liability and Related Ratios for the Measurement Periods Ended June 30,
100
Non-Major Governmental Funds
Special Revenue Funds
Special Revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes.
Gas Tax - To account for receipts and expenditures of money apportioned by the State and Highway Code §'s 2103, 2105, 2106, 2107 and 2107.5. Gas Tax moneys can only be used to construct and maintain streets and highways.
Traffic Congestion Relief – To account for the receipt of voter-approved (Measure I) tax revenue relating to the relief of traffic congestion through maintenance and upkeep of streets and highways.
Traffic Safety - To account for fines collected on vehicle code infractions and the use of expenditures for traffic safety purposes.
Prop 1B – To account for the receipts and expenditures of money allocated by the Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006, Local Street and Roads Improvement Allocation. Prop 1B moneys can only be used on street improvement projects.
Municipal Services Fiscal Impact - To account for moneys paid by developers of new development projects to mitigate their negative impact on the City's services and General Fund.
Solid Waste Mitigation - To account for moneys paid by the County of San Bernardino to mitigate the use of city infrastructure for refuse disposed at the landfill just outside of city limits.
Road Maintenance and Rehabilitation – the account for receipts and expenditures of money apportioned by the State under the Road Repair and Accountability Act of 2017 for road maintenance and rehabilitation projects for cities and counties.
Home Program - To account for the activity of improving the supply of high-quality multifamily properties which are also available to low income households at affordable rent levels.
Crime Prevention Seizure - To account for the receipt of 1% of Federal seizures from illegal narcotic activities, and the expenditure of such assets to fund crime prevention programs such as DARE.
State Seizure - To account for the receipt of seized assets from illegal narcotic activities obtained through cooperation with State agencies and the expenditure of such assets for local law enforcement purposes .
Federal Seizure - To account for the receipt of seized assets from illegal narcotic activities obtained through cooperation with Federal agencies and the expenditure of such assets for local law enforcement purposes. 101
Non-Major Governmental Funds
Special Revenue Funds (continued)
Grants - To account for miscellaneous Federal, State and County grants requiring segregated fund accounting.
TDA/ Article 3 – To account for bicycle and pedestrian projects. SBCTA oversees the disbursement of 2% of the Local Transportation Funds (LTF) made available to counties and cities for facilities geared towards the exclusive used of pedestrians and bicyclists.
Housing and Community Development Block Grant - To account for the receipts and expenditures of the City's entitlements under Federal Community Development Block Grant (CDBG) programs of the US Department of Housing and Urban Development (HUD).
Federal Law Enforcement Block Grant - To account for Federal block grant funds used to enhance policing services.
AB 3229 State COPS Program - To account for State grant funds used to enhance policing services.
Office of Traffic Safety - To account for a State grant, matched with local funding, to augment abandoned vehicle towing.
Air Quality Management District - To account for receipts from the South Coast Air Quality Management District used for the purpose of reducing air pollution from motor vehicles.
Down Payment Assistance – To track receipts and expenditures for the HUD first time homebuyer assistance program.
Community Services Reimbursements - To account for after school programs funded through Proposition 49.
ASES ELO-P – To account for funding pertaining to afterschool and summer school enrichment programs for kindergarten (which may include transitional kindergarten) through sixth grade as described in California Education Code (EC) Section 46120.
Fontana Community Foundation- To account for costs associated with the Fontana Community Foundation, a separate legal entity governed by Section 501(c)(3) of the Internal Revenue Code of 1986 for the purpose of aiding and assisting in the implementation, improvement and maintenance of public services that preserve and promote the health and welfare and education of local citizenry of the City of Fontana.
Housing Authority AB 1486 – To account for receipts and expenditures of surplus land disposition proceeds as required for affordable housing under AB-1486.
Permanent Local Housing Allocation – To account for receipts and expenditures of the State Permanent Local Housing Allocation fund that must be used for housing-related projects and programs that assist unmet housing needs in the City.
Fire Protection District CFD- To account for special taxes levied on property developed after January 2, 2001 to finance fire protection and suppression services within the Community Facilities District.
Landscape Maintenance Districts - To account for special benefit assessments levied on property owners for landscape maintenance in various zones throughout the City.
102
Non-Major Governmental Funds
Special Revenue Funds (continued)
Lighting District #3 - Hunter's Ridge - To account for special assessments imposed on property owners in the Hunter's Ridge area to pay for street lighting.
AB 2928 – To account for receipt of seized assets that were proceeds from or used in illegal activities.
Opioid Settlement – To account for receipts and expenditures of money from Opioid Settlements.
ARPA - To account for receipts from San Bernardino County for expenditures for enhancements to Veterans Park, Jack Bulik Park, Center Stage Theater and Cypress-Knoph Community.
Community Facilities Districts - To account for special taxes levied on property owners in the development for landscape maintenance, parks and street lighting in the City’s numerous special assessments districts.
Debt Service Funds
General Debt Service – To account for debt service payments on general City obligations.
Capital Project Funds
The Capital Project funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds.
Storm Drain - To account for receipts from drainage fees imposed on developers, for the construction of storm drainage facilities within the City limits.
San Sevaine Flood Control - To account for flood control fees collected for the construction of flood control improvements in the San Sevaine Area.
Upper Etiwanda Flood Control- To account for flood control fees collected for the construction of flood control improvements.
Park Development- To account for receipts and expenditures from park development fees for new parks and renovation of existing parks.
Landscape Improvements - To account for landscaping improvement fees used to improve landscaping Citywide.
Library Capital Improvement - To account for developer impact fees used for the construction of library facilities.
Police Facility- To account for development impact fees to fund capital improvements of police facilities and equipment. 103
Non-Major Governmental Funds
Capital Project Funds (continued)
Capital Improvements- To account for monies expended on miscellaneous capital improvements.
General Government Improvement - To account for developer impact fees used for the capital construction of City facilities.
Underground Utilities - To account for developer fees used for offsetting the cost of relocating electrical and cable lines underground to enhance the appearance and the safety of the community.
Fire Assessment - To account for revenues from special tax assessments and for expenditures relating to fire prevention and protection.
Affordable Housing Trust - to account inclusionary housing and affordable housing developer impact fees to be used to construct, rehabilitate or subsidize affordable housing that complies with the Affordable Housing Trust Fund regulations.
Fire Protection District - To account for monies expended on capital improvements and equipment replacement for the Fontana Fire Protection District.
Fontana Housing Authority- To account for costs associated with the Housing Authority, a separate legal entity governed by California State Housing Authority law. The Housing Authority uses funds from the Fontana Redevelopment Agency's Low and Moderate Income Housing Fund and Federal Department of Housing and Urban Development Program Grants to actively improve and develop quality neighborhoods and housing opportunities throughout the City of Fontana.
104
CITY OF FONTANA
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2023
Schedule 1