Fountain Valley City Council
April 16, 2024

Governmental Business-type
Activities Activities Total
(2,837,484) (2,837,484) -
(37,343,261) (37,343,261) -
(3,165,958) (3,165,958) -
(1,515,611) (1,515,611) -
(1,303,722) (1,303,722) -
(425,387) - (425,387)
(46,591,423) (46,591,423) -
8,470,933 - 8,470,933
1,500,945 - 1,500,945
- 110,156 110,156
10,082,034 - 10,082,034
(46,591,423) 10,082,034 (36,509,389)
23,365,555 23,365,555 -
16,504,276 16,504,276 -
17,363,447 17,363,447 -
2,595,444 2,595,444 -
1,522,875 1,522,875 -
1,648,971 356,396 2,005,367
992,907 - 992,907
2,887,046 (2,887,046) -
66,880,521 (2,530,650) 64,349,871
20,289,098 7,551,384 27,840,482
108,900,682 44,610,855 153,511,537
$ 129,189,780 52,162,239 181,352,019
Net (Expense) Revenue and
Changes in Net Position
See accompanying notes to the basic financial statements. 18

CITY OF FOUNTAIN VALLEY
Balance Sheet - Governmental Funds
June 30, 2023
Special Revenue
Fund Other
Housing Governmental
General Authority Funds Total
Cash and investments $ 67,225,767 6,621,024 7,433,765 81,280,556 Restricted cash and investments 17 - 2 19
Restricted cash and investments - pension 15,791,754 - - 15,791,754 Receivables:

Accounts 7,370,116 - 823,355 8,193,471
Accrued interest 630,195 205,208 - 835,403
Loans - 12,045,448 191,655 12,237,103
Leases 8,436,913 - - 8,436,913
Due from other funds 14,465 - - 14,465
Advances to other funds 935,810 - - 935,810
Inventories 12,590 - - 12,590
Prepaid items 267,824 - - 267,824
TOTAL ASSETS $ 100,685,451 18,871,680 8,448,777 128,005,908 LIABILITIES:

Accounts payable $ 2,738,866 4,485 1,517,740 4,261,091
Accrued wages payable 547,551 - - 547,551
Deposits payable 115,975 - 490,370 606,345
Advances from other funds - 935,810 - 935,810
Unearned revenue - - 37,031 37,031
Due to other funds - - 14,465 14,465
TOTAL LIABILITIES 3,402,392 940,295 2,059,606 6,402,293 DEFERRED INFLOWS OF RESOURCES:

Deferred amounts from leases 8,139,392 - - 8,139,392
Unavailable revenues 481,087 - - 481,087

TOTAL DEFERRED INFLOWS
OF RESOURCES 8,620,479 - - 8,620,479
FUND BALANCES:

Nonspendable:

Inventories 12,590 - - 12,590
Prepaid items 267,824 - - 267,824
Advances to other funds 935,810 - - 935,810
Restricted:

Public safety - - 1,346,453 1,346,453
Transportation 2,238,242 - 4,471,483 6,709,725
Housing - 17,931,385 338,356 18,269,741
Community development 3,603 - 177,306 180,909
Capital projects 184,350 - - 184,350
Other purposes 286,845 - - 286,845
Debt service - - 2 2
Pension 15,799,650 - - 15,799,650
Committed:

Emergencies 18,426,000 - - 18,426,000
Assigned:

Fleet replacement 3,105,016 - - 3,105,016
Information technology replacement 1,402,920 - - 1,402,920 Major facility replacement 4,189,419 - - 4,189,419
Employee benefits 2,422,710 - - 2,422,710
Self insurance 4,642,941 - - 4,642,941
Capital equipment 1,214,004 - - 1,214,004
Capital projects 9,950,427 - 55,571 10,005,998
Measure HH 20,904,064 - - 20,904,064
Economic development 1,956,806 - - 1,956,806
Contingency reserves 500,000 - - 500,000
Unassigned 219,359 - - 219,359
TOTAL FUND BALANCES 88,662,580 17,931,385 6,389,171 112,983,136

TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES $ 100,685,451 18,871,680 8,448,777 128,005,908

LIABILITIES AND FUND BALANCES
ASSETS
See accompanying notes to the basic financial statements. 19

CITY OF FOUNTAIN VALLEY
Reconciliation of the Governmental Funds
Balance Sheet to the Statement of Net Position
June 30, 2023
Fund balances - total governmental funds $ 112,983,136
Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets, net of depreciation, have not been included as financial resources in government fund activities:

Capital assets 176,760,954
Accumulated depreciation (44,605,259)
Long-term liabilities are not due and payable in the current period and therefore are not reported in the governmental funds. Long-term liabilities consist of the following:
2015A Taxable Pension Obligation Bonds (12,830,000)
Bond discount 211,533
2016A Lease Revenue Bonds (9,635,000)
Bond premium (598,637)
2017 Clean Renewable Energy Bond (2,273,681)
Subscription-based Information Technology Payable (835,764) Compensated absences (2,420,123)
Liability for claims and judgments (4,925,954)
OPEB and pension related debt applicable to the City governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities.

Deferred outflows of resources and deferred inflows of resources related to OPEB and pensions are only reported in the Statement of Net Position as the changes in these amounts effects only the government-wide statements for governmental activities.

Deferred outflows of resources - OPEB plan 8,104,003
Deferred inflows of resources - OPEB plan (11,777,326)
Net OPEB liability (23,468,478)
Deferred outflows of resources - pension plans 47,741,370 Deferred inflows of resources - pension plans (12,531,834) Net pension liability (90,926,330)
Receivables that are measurable but not available are recorded as a deferred inflow of resources under the modified accrual basis of accounting. 481,087 Accrued interest payable for the current portion of interest due on bonds payable has not been reported in the governmental funds. (263,917) Net position of governmental activities $ 129,189,780
See accompanying notes to the basic financial statements. 20

CITY OF FOUNTAIN VALLEY
Statement of Revenues, Expenditures and
Changes in Fund Balances - Governmental Funds
Year ended June 30, 2023
Special
Revenue Fund Other
Housing Governmental
General Authority Funds Total
REVENUES:

Taxes $ 61,889,534 - 61,889,534 -
Licenses and permits 2,331,633 - 2,331,633 -
Fines and penalties 503,600 - - 503,600
Investment income 1,648,969 270,729 120,358 2,040,056
Rental income 1,150,302 - 1,150,302 -
Intergovernmental 1,246,519 6,701,742 - 7,948,261
Charges for services 5,127,786 - 43,532 5,171,318
Miscellaneous 1,235,361 - 1,235,361 -
TOTAL REVENUES 75,133,704 270,729 6,865,632 82,270,065
EXPENDITURES:

Current:

General government 4,863,471 - 4,863,471 -
Public safety 41,977,975 - 216,118 42,194,093
Transportation 6,821,591 7,826,450 - 14,648,041
Community development 4,782,328 1,102,828 434,392 6,319,548 Community services 3,569,971 - 590 3,570,561
Capital outlay 11,906,940 - 160,439 12,067,379
Debt service:

Principal 1,146,484 - 635,193 1,781,677
Interest 3,445 - 462,635 466,080
TOTAL EXPENDITURES 75,072,205 1,102,828 9,735,817 85,910,850

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 61,499 (832,099) (2,870,185) (3,640,785) OTHER FINANCING SOURCES (USES):

Transfers in 3,359,083 5,145,593 - 8,504,676
Transfers out (1,947,498) (3,670,132) - (5,617,630)
Issuance of IT subscriptions 405,381 - - 405,381

TOTAL OTHER FINANCING
SOURCES (USES) 1,816,966 1,475,461 - 3,292,427
NET CHANGE IN FUND BALANCES 1,878,465 (832,099) (1,394,724) (348,358) FUND BALANCES - BEGINNING OF YEAR 86,784,115 18,763,484 7,783,895 113,331,494 FUND BALANCES - END OF YEAR $ 88,662,580 17,931,385 6,389,171 112,983,136 See accompanying notes to the basic financial statements. 21

CITY OF FOUNTAIN VALLEY
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
Net change in fund balances - total governmental funds $ (348,358) Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense.

Capital outlay 13,548,174
Depreciation expense (3,279,697)
Disposal of capital assets (2,425)
The issuance of long-term debt provides current financial resources to governmental Repayment of principal 1,781,677
Issuance of debt (405,381)
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 the governmental funds.

Change in compensated absences (54,453)
Change in the liability for claims and judgments (95,822) Change in accrued interest on long-term debt 13,181
Amortization of bond premium 44,898
Amortization of bond discount (17,386)
OPEB expense reported in the governmental funds includes the insurance premiums paid. In the Statement of Activities, OPEB expense includes the change in the net OPEB liability, and related change in OPEB amounts for deferred outflows of resources and deferred inflows of resources. 779,163 Pension expense reported in the governmental funds includes the annual required contributions. In the Statement of Activities, pension expense includes the change in the net pension liability, and related change in pension amounts for deferred outflows of resources and deferred inflows of resources 8,433,210 Revenues that are measurable but not available are not recorded as revenue under the modified accrual basis of accounting. (107,683)
Change in net position of governmental activities $ 20,289,098 funds, while repayment of the principal of long-term debt consumes the current financial resources of the governmental funds. Issuance of bond principal is an other financing source and repayment of bond principal is an expenditure in the governmental funds, but the issuance increases long-term liabilities and the repayment reduces long-term liabilities in the Statement of Net Position. The amounts are the net effect of these differences in the treatment of long-term debt:

See accompanying notes to the basic financial statements. 22

CITY OF FOUNTAIN VALLEY
Statement of Net Position
Proprietary Funds
June 30, 2023
Water Solid
Utility Sewer Waste Total
ASSETS:

CURRENT ASSETS:

UNRESTRICTED ASSETS:

Cash and investments $ 24,910,866 8,938,193 948,287 34,797,346 Accounts receivable 3,228,865 387,677 742,405 4,358,947 Inventory 346,834 - - 346,834
Prepaid items 25,673 - - 25,673
TOTAL UNRESTRICTED ASSETS 28,512,238 9,325,870 1,690,692 39,528,800 RESTRICTED ASSETS:

Cash and investments 791,966 - - 791,966
TOTAL CURRENT ASSETS 29,304,204 9,325,870 1,690,692 40,320,766 NONCURRENT ASSETS:

Capital assets:

Not being depreciated 161,911 8,417 - 170,328
Being depreciated, net 25,862,222 7,763,927 - 33,626,149 TOTAL NONCURRENT ASSETS 26,024,133 7,772,344 - 33,796,477 TOTAL ASSETS 55,328,337 17,098,214 1,690,692 74,117,243 DEFERRED OUTFLOWS OF RESOURCES:

Deferred amounts from OPEB plan 513,148 141,854 - 655,002 Deferred amounts from pension plans 2,712,455 664,787 - 3,377,242

TOTAL DEFERRED OUTFLOWS
OF RESOURCES 3,225,603 806,641 - 4,032,244
LIABILITIES:

CURRENT LIABILITIES:

Accounts payable 3,056,264 20,678 405,182 3,482,124
Unearned revenue - - 53,954 53,954
Deposits payable 81,972 - - 81,972
Interest payable 196,966 - - 196,966
Compensated absences, current portion 140,847 30,586 - 171,433 Bonds payable, current portion 595,000 - - 595,000
TOTAL CURRENT LIABILITIES 4,071,049 51,264 459,136 4,581,449 NONCURRENT LIABILITIES:

Compensated absences, net 38,063 8,266 - 46,329
Bonds payable, net 9,588,735 - - 9,588,735
Net OPEB liability 1,486,032 410,798 - 1,896,830
Net pension liability 6,018,743 1,475,115 - 7,493,858
TOTAL NONCURRENT LIABILITIES 17,131,573 1,894,179 - 19,025,752 TOTAL LIABILITIES 21,202,622 1,945,443 459,136 23,607,201 DEFERRED INFLOWS OF RESOURCES:

Deferred amounts from OPEB plan 745,744 206,154 - 951,898 Deferred amounts from pension plans 1,147,028 281,121 - 1,428,149

TOTAL DEFERRED INFLOWS
OF RESOURCES 1,892,772 487,275 - 2,380,047
NET POSITION:

Net investment in capital assets 16,632,364 7,772,344 - 24,404,708 Unrestricted 18,826,182 7,699,793 1,231,556 27,757,531
TOTAL NET POSITION $ 35,458,546 15,472,137 1,231,556 52,162,239 Business-Type Activities
See accompanying notes to the basic financial statements. 23

CITY OF FOUNTAIN VALLEY
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
Year ended June 30, 2023
Water Solid
Utility Sewer Waste Total
OPERATING REVENUES:

Charges for services $ 18,710,079 2,526,629 4,499,999 25,736,707 Miscellaneous 212,119 - - 212,119
TOTAL OPERATING REVENUES 18,922,198 2,526,629 4,499,999 25,948,826 OPERATING EXPENSES:

Distribution maintenance 778,802 19,381 - 798,183
Utility administration 292,526 444,036 - 736,562
Contract services - 220,286 4,428,766 4,649,052
Pumping and maintenance 216,169 - - 216,169
Water treatment 7,660,566 - - 7,660,566
Depreciation 1,207,341 341,981 - 1,549,322
TOTAL OPERATING EXPENSES 10,155,404 1,025,684 4,428,766 15,609,854 OPERATING INCOME 8,766,794 1,500,945 71,233 10,338,972
NONOPERATING REVENUES (EXPENSES):

Investment income 242,944 98,701 14,751 356,396
Intergovernmental 23,398 - 38,923 62,321
Interest expense (319,259) - - (319,259)

TOTAL NONOPERATING
REVENUES (EXPENSES) (52,917) 98,701 53,674 99,458
INCOME BEFORE TRANSFERS 8,713,877 1,599,646 124,907 10,438,430 TRANSFERS:

Transfers out (2,630,315) (256,731) - (2,887,046)
TOTAL TRANSFERS (2,630,315) (256,731) - (2,887,046)
CHANGES IN NET POSITION 6,083,562 1,342,915 124,907 7,551,384 NET POSITION - BEGINNING OF YEAR 29,374,984 14,129,222 1,106,649 44,610,855 NET POSITION - END OF YEAR $ 35,458,546 15,472,137 1,231,556 52,162,239 Business-Type Activities
See accompanying notes to the basic financial statements. 24

CITY OF FOUNTAIN VALLEY
Statement of Cash Flows
Proprietary Funds
Year ended June 30, 2023
Water Solid
Utility Sewer Waste Total
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers $ 19,227,761 2,531,571 4,422,284 26,181,616 Cash payments to suppliers of goods and services (5,592,150) (13,292) (4,334,565) (9,940,007) Cash payments to employees for services (6,066,035) (955,224) (7,021,259) -

NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 7,569,576 1,563,055 87,719 9,220,350

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Cash paid to other funds (2,714,609) (256,731) (2,971,340) - Cash received from grants 23,398 - 14,402 37,800

NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES (2,691,211) (256,731) 14,402 (2,933,540)

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Cash paid for acquisition and construction
of capital assets (187,191) (198,770) - (385,961)
Principal paid on debt (630,000) - - (630,000)
Interest paid on debt (409,682) - - (409,682)

NET CASH PROVIDED (USED) BY CAPITAL
AND RELATED FINANCING ACTIVITIES (1,226,873) (198,770) (1,425,643) - CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income 242,944 98,701 14,751 356,396

NET CASH PROVIDED BY
INVESTING ACTIVITIES 242,944 98,701 14,751 356,396

NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 3,894,436 1,206,255 116,872 5,217,563

CASH AND CASH EQUIVALENTS -
BEGINNING OF YEAR 21,808,396 7,731,938 831,415 30,371,749 CASH AND CASH EQUIVALENTS - END OF YEAR $ 25,702,832 8,938,193 948,287 35,589,312 Business-Type Activities
See accompanying notes to the basic financial statements. 25

CITY OF FOUNTAIN VALLEY
Statement of Cash Flows
Proprietary Funds
(Continued)
Year ended June 30, 2023
Water Solid
Utility Sewer Waste Total

RECONCILIATION OF OPERATING INCOME

TO NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES:

Operating income $ 8,766,794 1,500,945 71,233 10,338,972 Adjustments to reconcile operating income to
net cash provided by operating activities:

Depreciation 1,207,341 341,981 1,549,322 -
Changes in operating assets, deferred outflows
of resources, liabilities, and deferred inflows
of resources:
(Increase) decrease in accounts receivable 288,066 4,942 (77,715) 215,293 (Increase) decrease in prepaid items 34,224 - - 34,224
(Increase) decrease in deferred outflows of
resources from OPEB plan 220,164 (14,571) - 205,593
(Increase) decrease in deferred outflows of
resources from pension plans (1,691,320) (425,488) (2,116,808) - Increase (decrease) in accounts payable (331,820) 17,906 94,201 (219,713) Increase (decrease) in retentions payable - - - -
Increase (decrease) in deposits payable 17,497 - - 17,497 Increase (decrease) in compensated absences 2,546 (9,405) - (6,859) Increase (decrease) in net OPEB liability (361,408) 90,132 - (271,276) Increase (decrease) in net pension liability 2,363,186 618,450 2,981,636 - Increase (decrease) in deferred inflows of
resources from OPEB plan (649,001) (35,936) - (684,937) Increase (decrease) in deferred inflows of
resources from pension plans (2,296,693) (525,901) (2,822,594) -

NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES $ 7,569,576 1,563,055 87,719 9,220,350

CASH AND CASH EQUIVLENTS -
FINANCIAL STATEMENT CLASSIFICATION:

Cash and investments $ 24,910,866 8,938,193 948,287 34,797,346 Restricted cash and investments 791,966 - - 791,966
TOTAL CASH AND CASH EQUIVALENTS $ 25,702,832 8,938,193 948,287 35,589,312

NONCASH INVESTING, CAPITAL, AND
FINANCING ACTIVITIES:

Amortization of bond premium $ 74,673 - - 74,673
Total noncash investing, capital and
financing activities $ 74,673 - - 74,673
Business-Type Activities
See accompanying notes to the basic financial statements. 26

CITY OF FOUNTAIN VALLEY
Statement of Fiduciary Net Position
June 30, 2023
Private-Purpose
Trust Funds
Successor Custodial
Agency Fund
ASSETS:

Cash and investments $ 537,721 362,030
TOTAL ASSETS 537,721 362,030
LIABILITIES:

Accounts payable - 46,894
TOTAL LIABILITIES - 46,894
NET POSITION:

Restricted for:

Successor Agency 537,721 -
Individuals, organizations, and other governments - 315,136 TOTAL NET POSITION $ 537,721 315,136
See accompanying notes to the basic financial statements. 27

CITY OF FOUNTAIN VALLEY
Statement of Changes in Fiduciary Net Position
Year ended June 30, 2023
Private-Purpose
Trust Funds
Successor Custodial
Agency Fund
ADDITIONS:

Taxes $ 100,000 $ -
Net investment income 7,430 105
Fees assessed by other governments - 913,951
TOTAL ADDITIONS 107,430 914,056
DEDUCTIONS:

Community development 100,000 -
Payments to other governments - 751,041
TOTAL DEDUCTIONS 100,000 751,041
CHANGE IN NET POSITION 7,430 163,015
NET POSITION - BEGINNING OF YEAR 530,291 152,121
NET POSITION - END OF YEAR $ 537,721 315,136
See accompanying notes to the basic financial statements. 28

CITY OF FOUNTAIN VALLEY

NOTES TO THE BASIC FINANCIAL STATEMENTS

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Fountain Valley, California (City) have been prepared in accordance with accounting principles generally accepted in the United States of America, as applied to government units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.

The following is a summary of the City’s significant accounting policies. a. Reporting Entity
The City of Fountain Valley is a general law city governed by an elected five-member city council.

As required by generally accepted accounting principles, these financial statements present the City of Fountain Valley (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from the City. However, the City’s elected officials have a continuing full or partial accountability for fiscal matters of the other entities.

An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit’s balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit’s governing body is substantially the same as the City’s or the component unit provides services almost entirely to the City and the City either has a financial benefit or burden relationship or has operational responsibility for the component unit. The component units discussed below have governing bodies substantially the same as the City and the City has operational responsibility for them. Therefore, these component units of the City are blended within the financial statements of the City.

The Fountain Valley Housing Authority (Housing Authority) was established in 2011 to preserve the ability to provide affordable housing activities. The City provides management assistance to the Housing Authority and the members of the City Council also act as the Housing Authority’s governing body. The activities of the Housing Authority are reported in the Housing Authority Special Revenue Fund. Separate financial statements are not prepared for this blended component unit.

The Fountain Valley Public Financing Authority (Authority) was established on August 19, 2014, for the purpose of issuing tax exempt obligations for the water utility proprietary fund (2014 Revenue Bond) and for the City’s governmental activities (Lease Revenue Bond, Series 2016A and Clean Renewable Energy Bonds). The activities of the Authority are reported in the Water Utility Proprietary Fund and the Fountain Valley Public Financing Authority Debt Service Fund.

Separate financial statements are not prepared for this blended component unit. b. Basis of Accounting, Measurement Focus and Financial Statement Presentation The basic financial statements of the City are composed of the following:
 Government-wide financial statements
 Fund financial statements
 Notes to basic financial statements
29

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements.

Government-Wide Financial Statements
While separate government-wide and fund financial statements are presented, they are interrelated. In the government-wide financial statements, the governmental activities column incorporates data from governmental funds and internal service funds, while business-type activities incorporate data from the government’s enterprise funds.

Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Accrual basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Revenue from property taxes is recognized in the fiscal year which the taxes are levied. Grants and similar items are recognized as revenues as soon as the eligibility requirements imposed by the provider have been satisfied. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided.

The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. The types of transactions reported as program revenues for the City are reported in three categories:

1. Charges for services,

2. Operating grants and contributions

3. Capital grants and contributions.

Charges for services include revenues from customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function. Grants and contributions include revenues restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as expenses. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than as another financing source.

Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. 30

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the government’s Water Utility, Sewer, and Solid Waste functions and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Fund Financial Statements
The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity (net position), revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

The fund financial statements provide information about the government’s funds, including its fiduciary funds and blended component units. Separate statements for each fund category - governmental, proprietary, and fiduciary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.

During the course of operations, the City has activity between funds for various purposes. Any residual balances outstanding at year-end are reported as due to/from other funds and advances to/from other funds. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in business-type activities are eliminated so that only the net amount is included as internal balances in the business-type activities column.

Further, certain activity occurs during the year involving transfers of resources between funds.

In fund financial statements, these are reported at gross amounts as transfers in/out. While this is the reporting method for the fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in businesstype activities are eliminated so that only the net amount is included as transfers in the business-type activities column.
31

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Funds
In the fund financial statements, governmental funds are presented using the modified-accrual basis of accounting. Under the modified-accrual basis of accounting, revenues are recognized when they become both measurable and available. Revenues are considered to be available when they are collected 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 year (within 60 days of year-end for all revenue except for grant revenue for which the availability period is 90 days). 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. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources.

Sales taxes, property taxes, franchise taxes, intergovernmental, rental income, transient occupancy taxes and special assessments are all considered to be susceptible to accrual and have been recognized as revenues in the current fiscal period to the extent normally collected within the availability period. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year-end for all revenue except for grant revenue for which the availability period is 90 days). Other revenue items are considered to be measurable and available when cash is received by the government.

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

Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Proprietary Funds
Proprietary fund types are accounted for using the economic resources measurement focus and accrual basis of accounting. This means that all assets, deferred outflows of resources, liabilities, and deferred inflows of resources (whether current or noncurrent) associated with the activity are included on the statement of net position. Their reported fund equity presents total net position. The operating statement of the proprietary fund presents increases (revenues) and decreases (expenses) in total net position. Revenues are recognized when they are earned, and expenses are recognized when the liability is incurred. 32

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Proprietary funds distinguish operating revenues and expenses from nonoperating 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 City's water utility, sewer, and solid waste funds are charges to customers for sales and services. Operating expenses for proprietary funds include all cost 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.

Fiduciary Funds
Fiduciary Fund Financial Statements include a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. The City's Fiduciary private-purpose trust funds are accounted for using the economic resources measurement focus and accrual basis of accounting. The private-purpose trust funds account for the assets held by the City for the Successor Agency to the Fountain Valley Agency for Community Development. The City's Fiduciary custodial funds use the economic resources measurement focus and utilize the accrual basis for reporting its assets and liabilities. The City uses custodial funds to account for the collection and disbursement of funds for fees assessed by other governments collected by the City on behalf of others. Because these funds are not available for use by the City, fiduciary funds are not included in the governmental-wide statements. c. Fund Classifications
The City reports the following major governmental funds:

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

Housing Authority Special Revenue Fund - This special revenue fund is used to account for the housing activities of the former Fountain Valley Agency for Community Development.

Funding sources consists primarily of loan repayments and corresponding interest that are used to increase, improve, and preserve the community’s supply of low- and moderate-income housing.

The City of Fountain Valley reports the following major enterprise funds:

Water Utility Fund - This enterprise fund is used to account for the provision of water to the residents of the City. All activities necessary to provide such services are accounted for in this fund including, but not limited to, administration, operation, maintenance, construction, financing, and related debt service.

Sewer Utility Fund - This enterprise fund is used to account for fees and services for sewer activities.

Solid Waste Fund - This enterprise fund accounts for fees and services for trash disposal. 33

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Additionally, the government reports the following fund types:

The Special Revenue Funds are used to account for proceeds of specific revenue sources that are legally restricted or otherwise assigned for specific purposes.

The Debt Service Funds are used to account for resources restricted or assigned for expenditure of principal and interest.

The Capital Projects Funds are used to account for resources restricted or assigned for capital improvements.

The Private-Purpose Trust Fiduciary Funds are used to account for the activities of the Successor Agency of the former Fountain Valley Agency for Community Development.

The Custodial Fund are used to account for the collection and disbursement of funds for fees assessed by other governments collected by the City on behalf of others in the special deposit and receipt fund.
d. Accounting Changes
New Governmental Accounting Standards Implemented for the Year Ended June 30, 2023:
 GASB Statement No. 96 – “Subscription-Based Information Technology Arrangements.” The implementation of this statement resulted in a recognition of a payable and a right to use asset in the financial statements.

Upcoming Governmental Accounting Standards Implementation:

The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB statements:
• GASB Statement No. 99 – “Omnibus 2022.” The requirements of this Statement will take effect for fiscal years beginning after June 15, 2023.
 GASB Statement No. 100 – “Accounting Changes and Error Corrections.” The requirements of this Statement will take effect for fiscal years beginning after June 15, 2023.  GASB Statement No. 101 – “Compensated Absences.” The requirements of this Statement will take effect for fiscal years beginning after December 15, 2023. 34

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) e. Cash and Investments
Investments are reported in the accompanying basic financial statements at fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments in external pools are valued based on the stated fair value represented by the external pool.

Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments.
f. Cash Equivalents
For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates and have an original maturity date of three months or less. Cash equivalents represent the proprietary funds’ share in the cash and investment pool of the City of Fountain Valley. g. Inventories
Inventories are stated at average cost. Physical counts of inventory are taken on a cyclical basis during each fiscal year with perpetual records adjusted to actual at that time. The City uses the consumption method of accounting for inventories.
h. Prepaid Items
Payments to vendors that reflect costs applicable to future accounting periods are recorded as prepaid expenses in both government-wide and fund financial statements utilizing the consumption method.
i. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements.

Capital assets are valued at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are valued at acquisition value on the date of donation.

Capital assets subject to lease obligations or subscription-based information technology arrangements (SBITA) are valued at the present value of future lease/SBITA payments at the inception of the lease/SBITA.

Depreciation of all exhaustible capital assets used by the governmental and business-type activities is charged as an expense against their operations. Accumulated depreciation is reported on the statement of net position.
35

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Depreciation has been calculated using the straight-line method over the following estimated useful lives:

Buildings 25 - 40 years
Improvements other than buildings 10 - 50 years
Vehicles 3 - 25 years
Machinery and equipment 10 years
Furniture and fixtures 10 years
Infrastructure 20 - 50 years
Reservoirs 60 years
Wells, pumps, and mains 25 - 75 years
Water meters and hydrants 30 years
Other water equipment 6 - 25 years
Subscription-based IT assets 1 - 10 years
The following schedule shows the minimum threshold at which the various types of asset purchases are capitalized when the estimated useful life is in excess of one year:

Land/land improvements Capitalize All
Buildings $ 50,000
Building improvements $ 25,000
Structures and improvements other than buildings $ 25,000 Equipment and vehicles $ 5,000
Infrastructure $ 100,000
The City has reported all capital assets including infrastructure in the government-wide statement of net position. The City has elected to use the straight-line depreciation method for some of the infrastructure assets and the modified approach for others, in which the City agrees to maintain those assets at a specified level of maintenance. Those assets reported using the straight-line depreciation method are traffic signals, sewers, and storm drains. Those assets reported using the modified approach are arterial pavement, local pavement, curbs and gutters and sidewalks.
j. 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, represent a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The City the following items that qualify for reporting in this category: deferred outflows – pension related and deferred outflows – Other Post Employment Benefits (OPEB) related.

In addition to liabilities, the statement of net position and governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represent an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The City has the following items that qualify for reporting in this category:

Unavailable revenue deferred and recognized as inflow of resources in the period that the amounts become available, deferred inflows – pension related, deferred inflows – OPEB related, and deferred inflows – lease related.
36

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) k. Property Taxes
Under California law, property taxes are assessed and collected by the counties up to 1 % of assessed value, plus other increases approved by the voters. The property taxes go into a pool and are then allocated to the cities based on complex formulas. Accordingly, the City of Fountain Valley accrues only those taxes which are received within 60 days after year-end.

The property tax calendar is as follows:

Lien Date: January 1
Levy Date: July 1
Due Date: First Installment - November 1
Second Installment - February 1
Delinquent Date: First Installment - December 10
Second Installment - April 10
l. Claims and Judgments
The City records a liability for litigation, judgments, and claims when it is probable that an asset has been impaired or a liability (including incurred but not reported) has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. This liability is recorded in the government-wide financial statements and has typically been paid from the City’s general fund.
m. Employee Leave Benefits
A liability is recorded for unused vacation and similar compensatory leave balances since the employees’ entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.

A liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receive termination payment, as well as those who are expected to become eligible to receive termination benefits as a result of continuing their employment with the City. Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely upon the occurrence of a future event (illness) which is outside the control of the City and the employee.

If material, a proprietary fund liability is accrued for all leave benefits relating to the operations of the proprietary funds. A current liability is accrued in the governmental funds for material leave benefits due on demand to governmental fund employees that have terminated prior to year-end. All other amounts are recorded in the government-wide financial statements. These non-current amounts will be recorded as fund expenditures in the year in which they are paid or become due on demand to terminated employees.
37

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) n. Subscription-based Information Technology Arrangements The City is a participant in subscription-based IT arrangements as detailed in Note 5. The City recognizes a subscription-based IT payable and right to use IT assets in the financial statements.

At the commencement of the arrangement, the City initially measures the payable at the present value of payments expected to be paid during the arrangement term. Subsequently, the payable is reduced by the principal portion of payments made. The right to use assets are initially measured at the initial amount of the subscription-based IT payable. Subsequently, the right to use assets are amortized over the life of the arrangement term. o. Net Position
The government-wide financial statements, proprietary fund statements and fiduciary fund statements utilize a net position presentation. Net position is classified in the following categories:

Net investment in capital assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets.

Restricted net position - This amount is restricted by enabling legislation (such as external creditors, grantors, contributors, or laws or regulations of other governments) and includes unspent proceeds of bonds issued to acquire or construct capital assets.

Unrestricted net position - This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position”. p. Net Position Flow Assumption
Sometimes the City 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, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s practice to consider restricted net position to have been depleted before unrestricted net position is applied, unless otherwise directed by Council. q. Fund Balances
Fund balances are reported in the fund statements in the following classifications:

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

Restricted Fund Balance - this includes amounts that can be spent only for specific purposes stipulated by legal requirements imposed by other governments, external resource providers, or creditors. City Council imposed restrictions do not create restricted fund balance unless the legal document that initially authorized the revenue (associated with that portion of fund balance) also included language that specified the limited use for which the authorized revenues were to be expended.
38

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) q. Fund Balances (Continued)
Committed Fund Balance - this includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City Council. Those committed amounts cannot be used for any other purpose unless City Council removes or changes the specified use by taking the same type of action (for example, resolution, ordinance, minutes action, etc.) that it employed to previously commit those amounts. If the Council action that limits the use of the funds was separate from the action that initially created the revenues that form the basis for the fund balance, then the resultant fund balance is considered to be committed, not restricted.

The City considers a resolution to constitute the highest formal action of City Council for the purposes of establishing committed fund balance.

Assigned Fund Balance - this includes amounts that are intended to be used for specific purposes as indicated either by City Council or by persons to whom City Council has delegated the authority to assign amounts for specific purposes. City Council has not delegated this authority.

Unassigned Fund Balance - this includes the remaining spendable amounts which are not included in one of the other classifications. In other funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. Only the General Fund shows a positive unassigned fund balance.

It is the City’s policy that restricted resources will be applied first, followed by (in order of application) committed, assigned, and unassigned resources, in the absence of a formal policy adopted by the Council.

The emergencies stabilization arrangement amount of $18,426,000 is presented as committed fund balance in the General Fund and has been formally approved by the City Council. This balance is to be utilized when the City Council declares an emergency for natural disasters or financial emergencies. A financial emergency is considered when annual general fund operating revenues decrease, or expenditures increase by 5% or more. City Council authorization through the declaration of an emergency is required for use of this amount. r. OPEB
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB and OPEB expense, information about the fiduciary net position of the City’s OPEB Plan and additions to/deductions from the OPEB Plans’ fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the City’s OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value.
39

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) s. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
t. Use of Estimates
The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources, at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 - CASH AND INVESTMENTS
Cash and Investments
Cash and investments as of June 30, 2023, are classified in the accompanying financial statements as follows:

Cash and investments held by the City at June 30, 2023 consisted of the following:
$ 116,077,902
791,985
15,791,754
899,751
Total cash and investments $ 133,561,392
Cash and investments
Statement of Net Position:

Cash and investments
Restricted cash and investments
Restricted cash and investments - pension
Statement of Fiduciary Net Position:
$ 43,175
20,154,127
113,364,090
$133,561,392
Cash on hand
Deposits with financial institutions
Investments
Total cash and investments
40

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by the California Government Code and the City’s Investment Policy
The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk.

This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City or the investment of the funds within the pooled trusts with PARS and CERBT that are governed by the agreements between the City and the trustee, rather than the general provisions of the California Government Code or the City’s investment policy.

Investment Types
Authorized by State Law
Authorized by
Investment
Policy
Maximum
Maturity*
Maximum
Percentage of
Portfolio*
Maximum
Investment
in One
Issuer*
Local Agency Bonds Yes 5 years None None
U.S. Treasury Obligations Yes 5 years None None
U.S. Government Sponsored
Agency Securities Yes 5 years None 25%
Banker’s Acceptances Yes 180 days 40% 5%
Commercial Paper Yes 270 days 25% 5%
Negotiable Certificates of
Deposit Yes
5 years 30% 5%
Repurchase Agreements Yes 1 year None None
Medium-Term Notes Yes 5 years 30% 5%
Mutual Funds Yes N/A 20% 10%
Money Market Mutual Funds Yes N/A 20% 10%
Mortgage Pass-Through
Securities Yes
5 years 20% 5%
Local Agency Investment
Funds Yes
N/A $75 million None
JPA Pools (other investment
pools) Yes
N/A None None
Supranational Investments Yes 5 years 30% 10%
*Based on state law requirements or the City’s investment policy requirements, whichever is more restrictive.

N/A - Not Applicable
41

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of short-term and long-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flows and liquidity needed for operations.

Disclosures Relating to Interest Rate Risk
Information about the sensitivity of the fair values of the City’s investments (including those held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity. For purposes of the schedule shown below, any callable securities are assumed to be held to maturity.

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

Investment Type
12 Months or
Less
13 to 36
Months
37 to 60
Months Total
Local Agency Investment Fund $ 55,080,302 - - 55,080,302 U.S. Government Sponsored
Agency Securities 809,827 7,218,338 - 8,028,165
U.S. Treasury Notes - 5,233,914 9,321,592 14,555,506
Money Market Mutual Funds 134,990 - - 134,990
Medium-Term Notes 925,422 5,199,991 4,155,396 10,280,809 Mortgage Pass-Through Securities - 2,068,174 2,182,910 4,251,084 Supranational Investments - 3,296,372 - 3,296,372
Collateralized Mortgage Obligations - 339,750 813,394 1,153,144 Held by Fiscal Agent:

Money Market Mutual Funds 791,964 - - 791,964
Held by Trust:

PARS Pooled Trust - Pension:

Money Market Mutual Funds 738,113 - - 738,113
Mutual Funds - Equity 6,015,585 - - 6,015,585
Mutual Funds - Fixed Income 9,038,056 - - 9,038,056
Total $ 73,534,259 23,356,539 16,473,292 113,364,090
42

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
The ratings for the “Other” category above are as follows:

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

The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2023, the City deposits (bank balances) were insured by the Federal Depository Insurance Corporation or collateralized as required under California Law.

For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the City.

Investment Type
Minimum
Legal
Rating
Total as of
June 30, 2023 AAA Other Not Rated
Local Agency Investment Fund N/A $ 55,080,302 - - 55,080,302 U.S. Government Sponsored
Agency Securities N/A 8,028,165 8,028,165 - -
U.S. Treasury Notes N/A 14,555,506 14,555,506 - -
Money Market Mutual Funds A 134,990 134,990 - -
Medium-Term Notes A 10,280,809 1,075,045 9,698,134 582,675 Mortgage Pass-Through Securities AA 4,251,084 4,251,084 - - Supranational Investments AA 3,296,372 3,296,372 - -
Collateralized Mortgage Obligations AA 1,153,144 1,153,144 - - Held by Fiscal Agent:

Money Market Mutual Funds A 791,964 791,964 - -
Held by Trust:

PARS Pooled Trust - Pension:

Money Market Mutual Funds N/A 738,113 738,113 - -
Mutual Funds - Equity N/A 6,015,585 - - 6,015,585
Mutual Funds - Fixed Income N/A 9,038,056 - - 9,038,056 Total $113,364,090 34,024,383 9, 698,134 70,716,618
Investment Type
Total as of
June 30, 2023 AA A+ A AMedium-Term Notes $ 9,698,134 1,003,171 1,488,944 4,856,066 2,349,953 43

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio. The balance available for withdrawal is based on the accounting records maintained by LAIF. LAIF is not rated.

Cash and Investments - OPEB and Pension Trusts
The City pre-funds the City’s pension plans and OPEB health plan through tax qualified irrevocable trusts organized under Internal Revenue Code Section 115. OPEB and Pension trust fund assets are held on behalf of the City by the Public Agency Retirement Services (PARS). The City provides investment direction and determines the amount and timing of disbursements for PARS trust fund assets.

Those guidelines are as follows:

Risk Tolerance Moderate
Risk Management The portfolio is constructed to control risk through four layers of diversification - asset
classes (cash, fixed income, equity),
investment styles (large cap, small cap,
international, value, growth), managers and
securities. Disciplined mutual fund selection
and monitoring process helps to drive return
potential while reducing portfolio risk.

Investment Objective To provide growth of principal and income. It is expected that dividend and interest income will
comprise a significant portion of total return,
although growth through capital appreciation is
equally important.

Strategic Ranges OPEB
0% - 10% Cash
40% - 60% Fixed Income
40% - 60% Equity
Pension
0% - 10% Cash
45% - 65% Fixed Income
30% - 50% Equity
44

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are quoted prices for similar assets in active markets, and Level 3 inputs are significant unobservable inputs.

The City has the following recurring fair value measurements as of June 30, 2023:

NOTE 3 - INTERFUND ACTIVITY
The following represents the interfund activity of the City for the fiscal year ended June 30, 2023.

Due to/From Other Funds
Current interfund balances arise in the normal course of business and to assist funds with negative cash balance at fiscal year-end. They are expected to be repaid shortly after the end of the fiscal year.

Investment Type
Quoted
Prices
Level 1
Observable
Inputs
Level 2
Unobservable
Inputs
Level 3 Total
U.S. Government Sponsored
Agency Securities* $ - 8,028,165 - 8,028,165
U.S. Treasury Notes - 14,555,506 - 14,555,506
Medium-Term Notes - 10,280,809 - 10,280,809
Mortgage Pass-Through Securities - 4,251,084 - 4,251,084 Supranational Investments - 3,296,372 - 3,296,372
Collateralized Mortgage Obligations - 1,153,144 - 1,153,144 Held by Trust:

PARS Pooled Trust - Pension:

Mutual Funds - Equity 6,015,585 - - 6,015,585
Mutual Funds - Fixed Income 9,038,056 - - 9,038,056
Total Leveled Investments $ 15,053,641 41,565,080 - 56,618,721 Local Agency Investment Fund * 55,080,302
Money Market Mutual Funds * 134,990
Held by Fiscal Agent:

Money Market Mutual Funds * 791,964
Held by Trust:

PARS Pooled Trust - Pension:

Money Market Mutual Funds * 738,113
Total Investment Portfolio $ 113,364,090
* Not subject to fair value measurement hierarchy
Receivable Fund Payable Fund Amount
General Fund Other Governmental Funds 14,465$
45

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 3 - INTERFUND ACTIVITY (CONTINUED)
Advances to/From Other Funds
In November 2022, the City Council authorized a loan from the General Fund to the Housing Authority Fund to support the purchase of a Central Cities Navigation Center to address homelessness. The 0% loan will be repaid with future low- and moderate-income housing revenues.

Transfers In/Out
The following schedule summarizes the City’s transfer activity:
(a) Transfers into the General Fund include $453,507 from Other Government Funds to fund HUT 2107 Pass-Thru to General Fund, $139,199 from the AQMD Special Revenue Fund for the purchase of three EV vehicles, and $48,326 from the Measure M2 Special Revenue Fund for funding assistance for the Senior Mobility Program.
(b) Transfers into the General Fund include $2,521,320 that was transferred from the Water Utility Fund and $196,731 from the Sewer Fund to the General Fund to pay for the use of land and buildings, and administrative services.
(c) Transfers out of the General Fund include $1,097,824 to the Fountain Valley Public Financing Authority Debt Service Fund for debt service payments on the Lease Revenue Bonds, Series 2016A and the 2017 Clean Revenue Renewal Energy Bonds, $672,840 to the Gas Tax fund for residential road rehabilitation, $155,056 to the Drainage Fund to support operations, and $21,778 to the Traffic Improvement Fund for the Traffic Signal Mod Improvements project.

Receivable Fund Payable Fund Amount
General Fund Housing Authority $ 935,810
Transfers In Transfers Out Amount
General Fund Other Governmental Funds (a) $ 641,032
Water Utility Fund (b) 2,521,320
Sewer Fund (b) 196,731
Other Governmental Funds General Fund (c) 1,947,498
Other Governmental Funds (d) 3,029,100
Water Utility Fund (e) 108,995
Sewer Fund (f) 60,000
$ 8,504,676
46

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 3 - INTERFUND ACTIVITY (CONTINUED)
(d) Transfers out of the Measure M2 Special Revenue Fund into the Traffic Improvement Fund for $1,768,258 for funding assistance for various capital projects. Transfers out Road Maintenance and Rehabilitation (SB1) Fund for $630,421 into the Gas Tax Fund per the budget for road maintenance and to the Traffic Improvement Fund for $630,421 per the budget. (e) Transfers out of the Water Utility Proprietary Fund into the Traffic Improvement Fund for $68,995 to fund water related expenses incurred for project 242221006 Euclid Arterial Rehabilitation and for project 2422125002(8) Traffic Signal Modification Improvements. In addition, a transfer into the Gas Tax Fund for $40,000 to fund water related expenses incurred by project 2402120001 Residential Roadway Rehabilitation. (f) Transfers out of the Sewer Proprietary Fund for $30,000 each into Traffic Improvement Fund to fund water related expenses incurred by project 242221006 Euclid Arterial Rehabilitation, and into the Gas Tax Fund to fund water related expenses incurred by project 2402120001 Residential Roadway Rehabilitation.
47

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 4 - CAPITAL ASSETS
Governmental Activities
Changes in capital assets for governmental activities for the year ended June 30, 2023, were as follows:

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

Infrastructure
(Modified approach) $ 63,548,697 - - 63,548,697
Land 6,851,368 8,151,780 - 15,003,148
Right of way 17,948,464 - - 17,948,464
Construction in progress 547,996 2,994,932 (2,644,960) 897, 968 Total capital assets,
not depreciated 88,896,525 11,146,712 (2,644,960) 97,398,277 Capital assets, being depreciated:

Buildings 20,648,428 - - 20,648,428
Improvements 10,140,798 55,596 - 10,196,394
Vehicles and equipment 14,487,222 2,000,786 (24,244) 16,463,764 Furniture and fixtures 201,642 29,894 - 231,536
Infrastructure
(Depreciation approach) 28,978,950 2,554,764 (928,408) 30,605,306 Subscription-based IT assets* 811,867 405,382 - 1,217,249 Total capital assets,
being depreciated 75,268,907 5,046,422 (952,652) 79,362,677 Less accumulated depreciation:

Buildings (11,871,668) (449,673) - (12,321,341)
Improvements (3,849,062) (548,175) - (4,397,237)
Vehicles and equipment (8,648,814) (1,272,040) 21,819 (9,899,035) Furniture and fixtures (74,020) (20,780) - (94,800)
Infrastructure
(Depreciation approach) (17,832,225) (709,258) 928,408 (17,613,075) Subscription-based IT assets - (279,771) - (279,771)
Total accumulated
depreciation (42,275,789) (3,279,697) 950,227 (44,605,259) Total capital assets,
being depreciated, net 32,993,118 1,766,725 (2,425) 34,757,418 Governmental activities
capital assets, net $ 121,889,643 12,913,437 (2,647,385) 132,155, 695 *Beginning balance restated due to the implementation of GASB 96. 48

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 4 - CAPITAL ASSETS (CONTINUED)
Depreciation expense was charged in the following functions in the Statement of Activities:

Business-type Activities
Changes in capital assets for business-type activities for the fiscal year ended June 30, 2023, were as follows:

Depreciation expense in the amount of $1,207,341 and $341,981 was charged to the Water Utility and Sewer Funds, respectively.

General government $ 680,178
Transportation 5,813
Public safety 862,641
Community development 1,155,050
Community services 576,015
Total $ 3,279,697
Balance at
July 1, 2022 Additions Deletions
Balance at
June 30, 2023
Capital assets, not depreciated:

Land $ 123,076 - - 123,076
Construction in progress 54,796 385,961 (393,505) 47,252 Total capital assets,
not depreciated 177,872 385,961 (393,505) 170,328
Capital assets, being depreciated:

Buildings 30,276,823 183,427 (100,000) 30,360,250
Improvements 30,652,308 210,078 (3,553) 30,858,833
Machinery and equipment 252,088 - - 252,088
Total capital assets,
being depreciated 61,181,219 393,505 (103,553) 61,471,171 Less accumulated depreciation:

Buildings (10,643,995) (642,774) 100,000 (11,186,769)
Improvements (15,536,571) (886,117) 3,553 (16,419,135)
Machinery and equipment (218,687) (20,431) - (239,118)
Total accumulated
depreciation (26,399,253) (1,549,322) 103,553 (27,845,022) Total capital assets,
being depreciated, net 34,781,966 (1,155,817) - 33,626,149 Business-type activities
capital assets, net $ 34,959,838 (769,856) (393,505) 33,796,477 49

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 5 - LONG-TERM LIABILITIES
Changes in long-term liabilities for the governmental activities for the year ended June 30, 2023 (including unamortized discounts and refunding costs) are as follows:
2017 Clean Renewable Energy Bonds
On January 7, 2017, the Fountain Valley Public Financing Authority issued $2,843,166 in Clean Renewable Energy bonds for the financing of the City’s energy efficiency project including the acquisition, construction, and installation of solar photovoltaic systems. The bonds are payable from Lease Payments to be made by the City to the Fountain Valley Public Financing Authority. The bonds bear interest of 4.44%, payable semiannually on March 1 and September 1, commencing September 1, 2017. The amount of bonds outstanding at June 30, 2023 is $2,273,681.

Future debt service principal and interest payments on the 2017 Clean Renewable Energy Bonds are as follows:

Balance at
July 1, 2022 Additions Deletions
Balance at
June 30, 2023
Due within
One Year
Governmental Activities:

Taxable Pension Obligation Bonds
Series 2015A $ 13,595,000 (765,000) - 12,830,000 840,000 Less: Unamortized Bond Discount (228,919) - 17,386 (211,533) - Lease Revenue Bonds, Series 2016A 10,150,000 (515,000) - 9,635,000 535,000 Add: Unamortized Bond Premium 643,535 (44,898) - 598,637 - 2017 Clean Renewable Energy Bonds 2,393,874 (120,193) - 2,273,681 125,968 Compensated Absences 2,365,670 2,914,868 (2,860,415) 2,420,123 1,905,242 Claims and Judgements (Note 6) 4,830,132 1,566,504 (1,470,682) 4,925,954 1,151,275 Subscription-based IT Payable* 811,867 405,381 (381,484) 835,764 399,251 Total $ 34,561,159 4,886,753 (6,140,286) 33,307,626 4,956,736 *Beginning balance restated due to the implementation of GASB 96.

Year
Ending
June 30, Principal Interest Total
2024 $ 125,968 99,586 225,554
2025 131,939 93,928 225,867
2026 138,111 88,002 226,113
2027 144,490 81,800 226,290
2028 151,082 75,313 226,395
2029-2033 862,216 268,577 1,130,793
2034-2037 719,875 65,237 785,112
Total $ 2,273,681 772,443 3,046,124
50

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 5 - LONG-TERM LIABILITIES (CONTINUED)
Taxable Pension Obligation Bonds Series 2015A
On August 19, 2015, the City issued $15,995,000 in Taxable Pension Obligation bonds for the financing of the City’s outstanding side fund obligation to CalPERS with respect to its Tier I Safety Plan (3% @ 50) and Tier I Miscellaneous Plan (2.5% @ 55). The bonds are obligations imposed by law payable from any source of funds to be appropriated by the City pursuant to Retirement Law.

The City will deposit with the Trustee on or before August 1 of each Fiscal Year the amount which, together with excess moneys remaining in the bond fund after the last interest payment date of each fiscal year, is sufficient to pay the City’s debt service obligations on the bonds payable during such fiscal year. The bonds bear interest ranging from 3.33% to 6.39%, payable semiannually on March 1 and September 1, commencing March 1, 2016.

The bonds maturing on September 1, 2035 are subject to mandatory sinking fund redemption on September 1 in each year, commencing September 1, 2030, at a redemption price equal to the principal amount thereof to be redeemed, without premium, plus accrued interest to the date of redemption, in the aggregate principal amounts ranging from $650,000 to $1,440,000.

The amount of bonds outstanding at June 30, 2023 is $12,830,000.

Future debt service principal and interest payments on the Taxable Pension Obligation Bonds Series 2015A are as follows:

Lease Revenue Bonds, Series 2016A
On January 27, 2016, the Fountain Valley Public Financing Authority issued $12,895,000 in Lease Revenue Bonds for the purpose of refunding the 2003 Certificates of Participation and financing the improvement of two storm water pump stations of the City. The issuance of the Lease Revenue Bonds, Series 2016A resulted in the full repayment of the 2003 Certificates of Participation in the fiscal year ended June 30, 2016. The bonds are payable from Lease Payments to be made by the City to the Fountain Valley Public Financing Authority. The bonds bear interest ranging from 3.000% to 3.125%, payable semiannually on May 1 and November 1, commencing May 1, 2016.

The amount of bonds outstanding at June 30, 2023 is $9,635,000.

Year
Ending
June 30, Principal Interest Total
2024 $ 840,000 503,476 1,343,476
2025 925,000 473,638 1,398,638
2026 1,010,000 439,144 1,449,144
2027 1,110,000 398,638 1,508,638
2028 1,215,000 352,138 1,567,138
2029-2033 4,910,000 1,064,801 5,974,801
2034-2036 2,820,000 192,064 3,012,064
Total $ 12,830,000 3,423,899 16,253,899
51

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 5 - LONG-TERM LIABILITIES (CONTINUED)
Future debt service principal and interest payments on the Lease Revenue Bonds, Series 2016A are as follows:

Compensated Absences
Governmental compensated absences are generally liquidated by the General Fund.

Subscription-based Information Technology Arrangements (SBITAs) The City has entered into subscription-based information technology (IT) arrangements with various vendors. These arrangements are governed by Governmental Accounting Standards Board Statement No. 96, Subscription-Based IT Arrangements.

As of June 30, 2023, the City has recognized a liability of $835,764 related to these subscriptionbased IT arrangements. This liability represents the total estimated cost of the remaining subscription period, as determined by the contract terms and usage data.

The City has also recognized an intangible asset of $1,217,249, representing the right to use the subscription-based IT arrangements for the remaining subscription period, as determined by the contract terms and usage data.

The annual debt service requirements for the SBITAs outstanding at June 30, 2023 are as follows:

Year
Ending
June 30, Principal Interest Total
2024 $ 535,000 336,650 871,650
2025 550,000 314,950 864,950
2026 570,000 292,550 862,550
2027 595,000 269,250 864,250
2028 620,000 244,950 864,950
2029-2033 3,505,000 827,025 4,332,025
2034-2037 3,260,000 205,669 3,465,669
Total $ 9,635,000 2,491,044 12,126,044
Year
Ending
June 30, Principal Interest Total
2024 $ 399,251 17,628 416,879
2025 260,334 9,302 269,636
2026 42,696 3,664 46,360
2027 43,582 2,777 46,359
2028 44,954 1,872 46,826
2029 44,947 945 45,892
Total $ 835,764 36,188 871,952
52

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 5 - LONG-TERM LIABILITIES (CONTINUED)
Business-type Activities
Changes in long-term liabilities for business-type activities for the year ended June 30, 2023, are as follows:
2014A Revenue Bonds
On December 17, 2014, the Fountain Valley Public Financing Authority (the Authority) issued approximately $13,695,000 in Revenue bonds for the financing of the acquisition and construction of certain improvements, betterments, renovations and expansions of facilities within its water system (the 2014 Project) and to refinance the Orange County Water District Note Payable. The Bonds are special limited obligation of the Authority payable solely from Authority revenues, which consist of installment payments to be made by the City to the Authority pursuant to an installment purchase agreement, dated as of December 1, 2014 by and between the City and the Authority.

The Bonds are secured by installment payments to be made pursuant to an Installment Purchase Agreement, by and between the City and the Authority.

The 2014A Revenue Bonds were issued to provide for the refinancing of the OCWD Well Loan and the financing of the 2014 Project which installment payments will be payable from net revenues of the City’s water system. The Installment Purchase Agreement also requires the water fund to fix, prescribe and collect rates and charges for the water service which will be at least sufficient to yield during each fiscal year net revenues equal to 120% of the debt service for such fiscal year. For the fiscal year 2022-2023, the net revenues equal 534% of the debt service. Total interest expense for the 2014A bonds was $425,431 for the year ended June 30, 2023.

Future requirements to amortize outstanding 2014A Revenue Bonds as of June 30, 2023, are as follows:

Balance at
July 1, 2022 Additions Deletions
Balance at
June 30, 2023
Due within
One Year
Business-Type Activities:
2014A Revenue Bond $ 9,955,000 - (630,000) 9,325,000 595,000 Add: Unamortized Bond Premium 933,405 - (74,673) 858,732 - Compensated Absences 224,624 225,504 (232,363) 217,765 171,433 Total $ 11,113,029 225,504 (937,036) 10,401,497 766,433 Year
Ending
June 30, Principal Interest Total
2024 $ 595,000 393,931 988,931
2025 625,000 364,181 989,181
2026 655,000 332,931 987,931
2027 690,000 300,181 990,181
2028 725,000 265,681 990,681
2029-2033 4,155,000 797,156 4,952,156
2034-2035 1,880,000 94,527 1,974,527
Total $ 9,325,000 2,548,588 11,873,588
53

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 5 - LONG-TERM LIABILITIES (CONTINUED)
Compensated Absences
Business-type compensated absences are generally liquidated by the Water Utility and Sewer Funds.

NOTE 6 - CLAIMS AND JUDGMENTS
Self-Insurance
At June 30, 2023, the City was self-insured for workers’ compensation, employee long-term disability, and earthquake and flood insurance. Additionally, the City has purchased coverage for individual workers’ compensation claims in excess of $750,000 for general employees and $1,000,000 for public safety. The City has also purchased coverage for individual earthquake and flood claims in excess of $50,000 up to a limit of $10,000,000 per occurrence.

Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City’s general and auto liability self-insurance retention is $350,000, and the balance extending to $25,000,000 is covered by the use of pooling maintained through the California State Association of Counties Excess Insurance Authority (Insurance Authority). The City also purchased commercial insurance for other risks of loss, including pollution, property loss, fidelity, and vehicle physical damage.

The City is a member of the Insurance Authority (Insurance Authority). The Insurance Authority is composed of 283 California public entities, including 55 of 58 California Counties, and is organized under a joint power’s agreement pursuant to California Government Code Section 6500 et. seq. The purpose of the Insurance Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The Insurance Authority began covering claims of its members in 1979. The Insurance Authority has 55 County Board Members, appointed by the Board of Supervisors of each participating County. Additionally, the Insurance Authority has 10 Public Entity Board Members, including 3 alternates, appointed by the public entity membership. The Board operates through an eleven-member Executive Committee, and a ninemember Finance Committee.

Self-Insurance Programs of the Insurance Authority
The City pays an annual basic premium for excess coverage and is assessed an annual risk premium based on an actuarial review that estimates each of the program participant’s ultimate liabilities.

Should actual losses among participants be greater than anticipated, the City will be assessed its pro rata share of that deficiency. Conversely, if the actual losses are less than anticipated, the City will be refunded its pro rata share of the excess.
54

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 6 - CLAIMS AND JUDGMENTS (CONTINUED)
Property Insurance
The City participates in the all-risk property protection program of the Insurance Authority. This insurance protection is underwritten by several insurance companies. The City property is currently insured according to a schedule of covered property submitted by the City to the Insurance Authority. The City property currently has all-risk property insurance protection in the amount of $79 million. There is a $10,000 deductible per occurrence.

Crime Insurance
The City of Fountain Valley purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Insurance Authority.

Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2022-23.

Changes in Claims and Judgments Payable
Changes in claims and judgments payable amounts for the past two fiscal years are as follows:

Fiscal Year
Beginning
Balance
Claims
Incurred and
Changes in
Estimates
Claim
Payments
Ending
Balance
2021-2022 4,794,524 $ 641,277 (605,669) 4,830,132
2022-2023 4,830,132 $ 1,566,504 (1,470,682) 4,925,954
55

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 7 - OTHER POST-EMPLOYMENT BENEFITS
a. Plan Description
The City administers a single-employer other post-employment benefit (OPEB) plan that provides eligible retirees and qualified family members with a subsidy towards medical and dental insurance premiums. Benefits vary by hire date, employment status and employment classification. Benefits continue to the surviving spouses.

In 2010, the City established a trust with Public Agency Retirement Services (PARS) to hold assets that are legally restricted for the City’s OPEB plan under Section 115 of the Internal Revenue Code. Contributions to the OPEB Trust and earnings on those contributions are irrevocable.

The PARS OPEB Trust issues a publicly available financial report for the fiduciary net position that is available upon request. Copies of PARS’s annual financial report may be obtained from its executive office at 4350 Von Karman Ave. Suite 100, Newport Beach, California 92660.

The City’s OPEB Plan does not issue a separate financial report.

Benefits Provided
For all covered employees with effective dates of retirement after October 1, 1980, and a minimum of 10-20 years of continuous service, the City contributes the actual cost of insurance up to the amount contributed for active employees. For general, professional, and technical employees hired prior to February 16, 1986, insurance with the City will be supplemental to Medicare upon reaching the age of 65.

For employees hired after February 16, 1986, benefits with the City will terminate upon reaching age 65. For fire employees hired prior to August 10, 1985, insurance with the City will be supplemental to Medicare upon reaching the age of 65. For fire employees hired after August 10, 1985, benefits with the City will terminate upon reaching age 65. For police employees, insurance with the City will be supplemental to Medicare upon reaching the age of 65.

Department Directors receive paid supplemental coverage after the age of 65.

Employees are eligible for retiree health benefits if they retire from the City on or after age 50 with at least five years of service and are eligible for a CalPERS pension. 56

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 7 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
Employees Covered
As of measurement date June 30, 2022, the following current and former employees were covered by the benefit terms under the plan:

Contributions
The benefit provisions and contribution requirements of plan members and the City are established and may be amended through agreements and memorandums of understanding between the City, it its employees, and unions representing the City’s employees. Administrative costs of the OPEB plan are financed through investment earnings. The contribution required to be made under City Council and labor agreements is based on a pay-as-you-go basis (i.e., as medical insurance premiums become due). For the fiscal year ending June 30, 2023, the City contributed $1,945,706 for current premiums. No contributions were made to the PARS OPEB Trust for the fiscal year ended June 30, 2023. The contributions to the OPEB plan are generally made from the General Fund. The water utility and sewer proprietary funds are responsible for the pay-as-you-go amounts for their respective employees.

Method Used to Value Investments
Investments are reported at fair value, which is determined by the means of the most recent bid and asked prices as obtained from dealers that make markets in such securities. Securities for which market quotations are not readily available are valued at their fair value as determined by the custodian with the assistance of a valuation service. b. Total OPEB liability
The City’s total OPEB liability was measured as of June 30, 2022, and was determined by an actuarial valuation as of June 30, 2021. A summary of the principal assumptions and methods used to determine the total OPEB liability is shown on the next page.

Inactive employees or beneficiaries currently
receiving benefits 181
Inactive employees or beneficiaries entitled to but
not yet receiving benefits -
Active employees 210
391
57

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 7 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
Actuarial Assumptions
The total OPEB liability in the June 30, 2022, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

The long-term expected rate of return estimates are presented as geometric means developed by the actuary over a 24-year period. The long-term expected real rates of return for each major asset class included in the OPEB plan’s target asset allocation for the PARS OPEB Trust as of June 30, 2023, are summarized in the following table:

Discount Rate
The discount rate used to measure the total OPEB liability was 5.85%. The projection of cash flows used to determine the discount rate assumed that the City would make benefit payments outside of the trust. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on the PARS OPEB was applied to all periods of the projected benefit payments to determine the total OPEB liability.

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry age normal, level percentage of payroll Actuarial Assumptions:

Discount Rate 5.85%
Long-Term Expected Rate
of Return on Investments 5.85%
Inflation 2.50%
Healthcare Trend Rates 4.00%
Mortality, Retirement, Disability,
Termination
2017 CalPERS Mortality for Safety and Miscellaneous
Employees
Salary Increases 2.75%
Asset Class
Percentage
of Portfolio
Assumed
Gross Return
All Equities 60% 7.5450%
Long-Term Corporate Bonds 5% 5.0450%
Intermediate-Term Government Bonds 30% 4.2500%
Short-Term Gov't Fixed 5% 3.0000%
100%
58

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 7 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
c. Changes in the Net OPEB Liability
The changes in the net OPEB liability are as follows:

Change of Assumptions
There are no significant changes to the actuarial methods or assumptions for the actuarial valuation.

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (4.85%) or 1-percentage point higher (6.85%) than the current discount rate:

Sensitivity of the Total OPEB Liability to Changes in Medical Trend Rates The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using medical trend rates that are 1-percentage point lower and 1-percentage point higher than the current medical trend rate:

Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
Balance at June 30, 2021
(Measurement Date) $ 37,004,264 14,276,205 22,728,059
Changes in the Year:

Service Cost 781,521 - 781,521
Interest on Total OPEB Liability 2,124,178 - 2,124,178
Expected Investment Income - 833,476 (833,476)
Administrative Expenses - (57,489) 57,489
Employer Contributions as Benefit Payments - 1,804,338 (1,804,338) Actual Benefit Payments from Employer (1,804,338) (1,804,338) - Expected Minus Actual Benefit Payments (364,241) - (364,241) Investment Gains/Losses - (2,676,116) 2,676,116
Net Changes 737,120 (1,900,129) 2,637,249
Balance at June 30, 2022
(Measurement Date) $ 37,741,384 12,376,076 25,365,308
1% Decrease Discount Rate 1% Increase

4.85% 5.85% 6.85%
Net OPEB Liability $ 29,345,296 25,365,308 21,982,277
1% Decrease
Current Healthcare
Cost Trend Rate 1% Increase
Net OPEB Liability $ 21,070,092 25,365,308 30,534,045
59

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 7 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2023, the City recognized OPEB expense of $415,923. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

The differences between projected and actual earnings on plan investments is amortized over five years, while differences between expected and actual experiences, and changes in assumptions are amortized over 7.1 years.
$1,945,706 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the fiscal year ending June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

Fiscal Year Ending
June 30, Amount
2024 $ (1,712,763)
2025 (1,700,874)
2026 (1,753,498)
2027 30,522
2028 (622,521)
Thereafter (156,790)
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
Differences between Expected and Actual
Experiences $ 772,001 (6,413,905)
Changes of Assumptions 4,965,611 (6,315,318)
Differences Between Projected and Actual
Earnings on Plan Investments 1,075,687 -
Contributions Subsequent to the
Measurement Date 1,945,706 -
Total $ 8,759,005 (12,729,223)
60

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS)
a. General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Employee Pension Plans, cost-sharing multiple-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least five years of services. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least five years of service. All members are eligible for non-duty disability benefits after five years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit.

Safety members can receive a special death benefit if the member dies while actively employed and the death is job-related. Fire members may receive the alternate death benefit in lieu of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law. 61

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS) (CONTINUED) The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:

Miscellaneous
Tier I Tier II Tier III - PEPRA
Prior to On or After On or After
Hire date December 25, 2010 December 25, 2010 January 1, 2013 Benefit formula 2.5%@55 2%@60 2%@62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 55 50 - 62 52 - 67
Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 1.092% to 2.418% 1.0% to 2.5% Required employee contribution rates 8.0% 7% 6.25%
Required employer contribution rates:

Normal cost rate 13.020% 8.630% 7.470%
Payment of unfunded liability $ 2,934,272 $ 13,898 $ 11,122 Safety - Police
Hire date
Tier I
Prior to
October 30, 2010
Tier II
On or After October
30, 2010
Tier III - PEPRA
On or After
January 1, 2013
3%@50 3%@55 2.7%@57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 50 - 55 50 - 57
Monthly benefits, as a % of eligible compensation 3.0% 2.4% to 3.0% 2% to 2.7% Required employee contribution rates 12% 9% 11.5%
Required employer contribution rates:

Normal cost rate 25.640% (1) 20.640% 12.780%
Payment of unfunded liability $ 4,569,928 $ 21,981 $ 8,164 (1) Members of this plan cover 3% of the City's actuarially determined rate.

Safety - Fire
Tier I Tier II Tier III - PEPRA
Prior to On or After On or After
Hire date March 31, 2012 March 31, 2012 January 1, 2013 Benefit formula 3%@50 2%@50 2.7%@57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 50 - 55 50 - 57
Monthly benefits, as a % of eligible compensation 3.0% 2.0% to 2.7% 2% to 2.7% Required employee contribution rates 9% 9% 11.5%
Required employer contribution rates:

Normal cost rate 25.640% 18.170% 12.780%
Payment of unfunded liability $ 4,569,928 $ 5,638 $ 7,532 (1) Members of this plan cover 3% of the City's actuarially determined rate. 62

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS) (CONTINUED) Contributions
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 by the pension plan terms as plan member contribution requirements are classified as plan member contributions.

Actuarial Assumptions
For the measurement period ended June 30, 2022 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2021, total pension liability determined in the June 30, 2021, actuarial accounting valuation.

The June 30, 2022, total pension liability was based on the following actuarial methods and assumptions:

Miscellaneous Safety
Valuation Date June 30, 2021 June 30, 2021
Measurement Date June 30, 2022 June 30, 2022
Actuarial Cost Method Entry Age Actuarial
Cost Method
Entry Age Actuarial
Cost Method
Actuarial Assumptions:

Discount Rate 6.90% 6.90%
Inflation 2.30% 2.30%
Salary Increases (1) (1)
Mortality Rate Table (2) (2)
Post Retirement Benefit Increase (3) (3)
(1) - Varies by entry age and service.
(2) - The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Preretirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.
(3) - The lesser of contract COLA up to 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter. 63

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS) (CONTINUED) 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.

Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at 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.

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 shortterm and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:

Asset Class (a)
Assumed Asset
Allocation
Real
Return
(a),(b)
Global Equity - Cap-weighted 30.00% 4.54%
Global Equity - Non-Cap-weighted 12.00% 3.84%
Private equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
(a) An expected inflation of 2.30% used for this period. (b) Figures are based on the 2021 Asset Liability Management study. 64

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS) (CONTINUED) Pension Plans Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
The payments for the defined benefit pension plans are generally paid by the General Fund, Water Utility proprietary fund, and Sewer proprietary fund.

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

The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2022, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021, using standard update procedures.

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

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

Proportionate
Share of Net
Pension Liability
Miscellaneous $ 36,172,503
Safety 62,247,686
$ 98,420,189
Miscellaneous Safety
Proportion - June 30, 2021 1.19355% 0.78918%
Proportion - June 30, 2022 0.77304% 0.90587%
Change - Increase (Decrease) -0.42051% 0.11669%
65

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS) (CONTINUED) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the City’s proportionate share of the net pension liability for each Plan, calculated using the discount rate for each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1- percentage point lower or 1-percentage point higher than the current rate:

For the year ended June 30, 2023, the City recognized pension income of $4,260,325 for the miscellaneous plan and pension expense of $7,621,669 for the safety plan. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Miscellaneous Safety
1% Decrease 5.90% 5.90%
Net Pension Liability $ 52,806,014 $ 95,765,068
Current Discount Rate 6.90% 6.90%
Net Pension Liability $ 36,172,503 $ 62,247,686
1% Increase 7.90% 7.90%
Net Pension Liability $ 22,487,250 $ 34,854,799
Miscellaneous
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions $ 3,706,629 -
Differences between Expected and Actual Experience 726,415 (486,521) Differences between Projected and Actual
Investment Earnings 6,625,842 -
Differences between Employer's Contributions and
Proportionate Share of Contributions 1,488,824 (396,527) Change in Employer's Proportion 96,504 (6,010,562)
Pension Contributions Made Subsequent to
Measurement Date 6,657,578 -
Total $ 19,301,792 (6,893,610)
66

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS) (CONTINUED) $6,657,578 and $7,094,740 reported as deferred outflows of resources related to contributions subsequent to the measurement date for the miscellaneous and safety plan, respectively, will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2024. Other amounts reported as deferred outflows/inflows of resources related to pensions will be recognized as pension expense as follows:

NOTE 9 - DEFINED CONTRIBUTION PENSION PLAN (PARS)
As of January 1, 1992, the City implemented a defined contribution pension Plan through PARS for all of its non-regular employees. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. All non-regular employees are eligible to participate from the date of employment. Federal legislation requires contributions of at least 7.5% to a retirement plan, and City Council has resolved to match the employees’ contributions of 3.75% for employees hired prior to August 29, 2014. Employees hired after August 29, 2014, are required to pay the full 7.5%. The City’s contributions for each employee (and interest earned by the accounts) are fully vested immediately. For the year ended June 30, 2023, the City’s payroll covered by the plan was $740,447 and the City made employer contributions of $1,225 (3.75% of current covered payroll for employees hired before August 29, 2014).

Safety
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions $ 6,276,451 -
Differences between Expected and Actual Experience 2,576,206 (675,961) Differences between Projected and Actual
Investment Earnings 9,829,780 -
Differences between Employer's Contributions and
Proportionate Share of Contributions - (5,952,260)
Change in Employer's Proportion 6,039,643 (438,152)
Pension Contributions Made Subsequent to
Measurement Date 7,094,740 -
Total $ 31,816,820 (7,066,373)
Fiscal Year Ending
June 30, Miscellaneous Safety Total
2024 $ 793,583 4,541,706 5,335,289
2025 618,222 4,519,926 5,138,148
2026 286,207 2,597,783 2,883,990
2027 4,052,592 5,996,292 10,048,884
2028 - - -
Thereafter - - -
67

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - LOANS RECEIVABLE
The City has outstanding rehabilitation and first-time home buyer loans receivable totaling $863,263 from qualified applicants. Loans receivable of $12,045,448 is recorded in the Housing Authority Fund; $177,307 in the Community Development Block Grant (CDBG) Special Revenue Fund; and $14,348 in the HOME Grant Special Revenue Fund. All housing rehabilitation loans are repaid when title to the property changes or according to payment schedules.

On October 1, 2002, the City entered into an Affordable Housing Agreement with Fountain Valley Partners, L.P. for the development of an apartment complex for seniors. Under the agreement, the City agreed to loan Fountain Valley Housing Partners, L.P. $5,606,071 at an interest rate of 2%.

Principal and interest are due at various maturity dates but no later than 55 years from the date of the note. The amount outstanding at June 30, 2023 is $3,173,840.

On January 22, 2019, the Fountain Valley Housing Authority approved a loan agreement with The Related Companies of California LLC (“Developer”) to assist with the development of a new 50-unit multifamily affordable housing project intended for tenancy by qualified extremely low, very low and low-income persons and families.

Under the loan agreement, the Housing Authority will advance and loan Developer up to $6,443,882 for the sole purposes of acquisition of the property and termination of the billboard lease of the proposed project. The loan will be funded from the Housing Authority Special Revenue Fund utilizing low and moderate housing asset funds of the former Fountain Valley Agency for Community Development. The outstanding principal balance of the loan shall bear simple interest at the rate of zero percent (0%) per annum. The loan will have a 60-year term to be repaid from residual receipts from operation of the proposed project. The amount outstanding at June 30, 2023 is $8,200,000.

NOTE 11 – LEASE RECEIVABLE
On July 18, 2002, the City entered into a lease with Mike Thompson’s Recreational Vehicle for the use of approximately 8.25 acres of City owned property. The lease was subsequently amended to include six 5-year extensions through June 2042. Annual payments of $424,900 are fixed for the first twelve years and then escalate by the lesser of 7.5% or CPI each 5 years. As of June 30, 2023, the lease receivable is $6,588,272, calculated at an estimated interest rate of 3%. At June 30, 2023, deferred inflow of resources related to the lease was $6,376,863. The City recognized $334,792 of lease revenue and $201,298 of interest revenue during the fiscal year.

On August 18, 2009 and December 15, 2009, the City entered into a lease with Mobilitie for cell sites on two city properties, Well No. 7 and Harper Park, respectively. The lease includes five extension options, each option for a 30-year period. Payments of $2,000 and 2,500 per year for year one, increasing by 3.5% thereafter. As of June 30, 2023, the lease receivable is $635,513 and $802,038, calculated at an estimated interest rate of 3%. At June 30, 2023, deferred inflow of resources related to the lease was $597,084 and $753,515. The City recognized $37,016 and $45,791 of lease revenue and $19,361 and $24,421 of interest revenue during the fiscal year.

On February 6, 1996, the City entered into a lease with City of Newport Beach for the use of a parcel of land. The lease includes three extension options, each option for a 25-year period.

Payments of $25,000 per year paid annually for years 1-25. As of June 30, 2023, the lease receivable is $411,090, calculated at an estimated interest rate of 3%. At June 30, 2023, deferred inflow of resources related to the lease was $411,930 The City recognized $18,229 of lease revenue and $12,702 of interest revenue during the fiscal year. 68

CITY OF FOUNTAIN VALLEY
Notes to Basic Financial Statements
June 30, 2023
NOTE 12 - TAX ABATEMENT
Hotel Incentive Program
In January 2017, the City Council adopted guidelines that established a Hotel Incentive Program (HIP) which provides economic incentives to develop 3-to-5-star quality hotels in the City of Fountain Valley. The City will reimburse up to 50 percent of the total new transient occupancy tax (TOT) each year over a period of 15 years or less for new hotels with 100 or more rooms maintained at 3 to 5 star quality. Reimbursement applies for TOT above a $200,000 revenue requirement. No amounts have been abated under the HIP.
69

CITY OF FOUNTAIN VALLEY

REQUIRED SUPPLEMENTARY INFORMATION

Fiscal year ended June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 Measurement period June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 Plan's proportion of the net pension liability 0.77304% 1.19355% 0.80281% 0.84022% 0.74471% $ 36,172,503 $ 22,663,092 33,863,123 31,665,411 29,356,769 Plan's covered payroll $ 9,687,647 $ 9,141,003 9,466,034 8,846,622 8,117,618 373.39% 247.93% 357.73% 357.94% 361.64%

80.67% 80.67% 70.17% 71.08% 72.18%
$ 9,687,647 $ 6,657,578 3,172,753 2,888,943 2,482,065
Notes to Schedule:

Benefit changes:

Changes in Assumptions:

Fiscal year June 30, 2016:

Fiscal year June 30, 2018:

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

Fiscal year June 30, 2019:

Fiscal year June 30, 2020, June 30, 2021, and June 30, 2022:

No changes to assumptions
Fiscal year June 30, 2023:
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

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.

Miscellaneous Plan
Schedule of Proportionate Share of the Net Pension Liability

CITY OF FOUNTAIN VALLEY
Last Ten Fiscal Years*
Plan's proportionate share of the fiduciary net
position as a percentage of the Plan's total
pension liability
Plan's proportionate share of aggregate employer
contributions
GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense.

Demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate.

Plan's proportionate share of the net pension
liability
Plan's proportionate share of the net pension
liability as percentage of covered payroll
There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshakes). Employers that have done so may need to report this information as a separate liability in their financial statement as CalPERS considers such amounts to be separately financed employer-specific liabilities. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2019 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool. 70

Fiscal year ended June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Measurement period June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Plan's proportion of the net pension liability 0.75405% 0.76029% 1.00465% 0.88131% 29,725,101 26,411,625 27,562,365 21,781,373
Plan's covered payroll 8,613,145 8,337,303 7,985,207 7,904,107 345.11% 316.79% 345.17% 275.57%

71.55% 72.57% 78.40% 76.48%
2,828,483 2,602,305 2,279,664 1,915,598
Notes to Schedule:

Benefit changes:

Changes in Assumptions:

Fiscal year June 30, 2016:

Fiscal year June 30, 2018:

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

Fiscal year June 30, 2019:

Fiscal year June 30, 2020, June 30, 2021, and June 30, 2022:

No changes to assumptions
Fiscal year June 30, 2023:
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

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.

CITY OF FOUNTAIN VALLEY
Schedule of Proportionate Share of the Net Pension Liability Last Ten Fiscal Years*
GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense.

Miscellaneous Plan
There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshakes). Employers that have done so may need to report this information as a separate liability in their financial statement as CalPERS considers such amounts to be separately financed employer-specific liabilities. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2019 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

Demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate.

Plan's proportionate share of the net pension
liability
Plan's proportionate share of the net pension
liability as percentage of covered payroll
Plan's proportionate share of the fiduciary net
position as a percentage of the Plan's total
pension liability
Plan's proportionate share of aggregate employer
contributions
71

Fiscal year ended June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 Contractually required contribution
(actuarially determined) $ 3,657,578 3,493,212 3,172,753 2,888,943 2,482,065 Contributions in relation to the actuarially
determined contributions (6,657,578) (6,493,212) (3,172,753) (2,888,943) (2,482,065) Contribution deficiency (excess) $ (3,000,000) - - -
Covered payroll $ 10,504,602 9,687,647 9,141,003 9,466,034 8,846,622 Contributions as a percentage of
covered payroll 63.38% 67.03% 34.71% 30.52% 28.06%
Notes to Schedule:

Valuation Date June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 Methods and Assumptions Used to Determine Contribution Rates:

Valuation Date June 30, 2020
Agent employers Entry age
Amortization method Level percentage of payroll, closed Asset valuation method Fair Value
Inflation 2.50%
Salary increases Depending on age, service, and type of employment Investment rate of return 7.00%, net of pension plan investment expense, including inflation Retirement age
Mortality
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown. (1)
50 for all plans with the exception of 52 for Miscellaneous PEPRA 2% @ 62 Miscellaneous Plan
Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.

Fiscal year 2016 - Contributions in relationship to the actuarially determined contributions includes the City's pay off of its CalPERS Side Fund liability.

CITY OF FOUNTAIN VALLEY
Schedule of Contributions
Last Ten Fiscal Years*
(3,000,000)
72

(1)
Fiscal year ended June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution
(actuarially determined) 2,086,374 1,935,810 2,350,238 1,605,582 Contributions in relation to the actuarially
determined contributions (2,086,374) (1,935,810) (8,436,539) (1,605,582) Contribution deficiency (excess) - - (6,086,301) -
Covered payroll 8,117,618 8,613,145 8,337,303 7,985,207 Contributions as a percentage of
covered payroll 25.70% 22.48% 101.19% 20.11%
Notes to Schedule:

Valuation Date June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 Methods and Assumptions Used to Determine Contribution Rates:

Valuation Date June 30, 2020
Agent employers Entry age
Amortization method Level percentage of payroll, closed Asset valuation method Fair Value
Inflation 2.50%
Salary increases Depending on age, service, and type of employment Investment rate of return 7.00%, net of pension plan investment expense, including inflation Retirement age
Mortality
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown. (1)
Last Ten Fiscal Years*
Schedule of Contributions

CITY OF FOUNTAIN VALLEY
Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.

Fiscal year 2016 - Contributions in relationship to the actuarially determined contributions includes the City's pay off of its CalPERS Side Fund liability.
50 for all plans with the exception of 52 for Miscellaneous PEPRA 2% @ 62 Miscellaneous Plan
73

Fiscal year ended June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 Measurement period June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 Plan's proportion of the net pension liability 0.90587% 0.78918% 0.81705% 0.85261% 0.86844% $ 62,247,686 27,696,088 54,435,083 53,224,533 50,956,240 Plan's covered payroll $ 11,123,636 11,920,540 12,089,065 11,659,261 10,615,883 559.60% 232.34% 450.28% 456.50% 480.00%

87.82% 87.82% 74.97% 74.43% 74.40%
$ 7,094,740 6,497,942 7,861,650 5,503,036 4,870,231
Notes to Schedule:

Benefit changes:

Changes in Assumptions:

Fiscal year June 30, 2016:

Fiscal year June 30, 2018:

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

Fiscal year June 30, 2019:

Fiscal year June 30, 2020, June 30, 2021, and June 30, 2022:

No changes to assumptions
Fiscal year June 30, 2023:
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

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.

CITY OF FOUNTAIN VALLEY
Schedule of Proportionate Share of the Net Pension Liability Last Ten Fiscal Years*
GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense.

Demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate.

Plan's proportionate share of the net pension
liability as percentage of covered payroll
Plan's proportionate share of the fiduciary net
position as a percentage of the Plan's total
pension liability
Plan's proportionate share of aggregate employer
contributions
Plan's proportionate share of the net pension
liability
There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshakes). Employers that have done so may need to report this information as a separate liability in their financial statement as CalPERS considers such amounts to be separately financed employer-specific liabilities. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2019 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

Safety Plan
74

CITY OF FOUNTAIN VALLEY
Schedule of Proportionate Share of the Net Pension Liability Last Ten Fiscal Years*
Fiscal year ended June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Measurement period June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Plan's proportion of the net pension liability 0.87905% 0.89557% 1.11371% 1.07112% 52,524,831 46,383,732 45,889,913 40,177,430
Plan's covered payroll 11,128,552 10,947,647 10,362,480 9,883,584 471.98% 423.69% 442.85% 406.51%

72.68% 73.89% 78.40% 76.12%
4,823,404 4,535,038 4,005,245 3,624,917
Notes to Schedule:

Benefit changes:

Changes in Assumptions:

Fiscal year June 30, 2016:

Fiscal year June 30, 2018:

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

Fiscal year June 30, 2019:

Fiscal year June 30, 2020, June 30, 2021, and June 30, 2022:

No changes to assumptions
Fiscal year June 30, 2023:
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

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.

Safety Plan
Demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate.

Plan's proportionate share of the net pension
liability
Plan's proportionate share of the net pension
liability as percentage of covered payroll
Plan's proportionate share of the fiduciary net
position as a percentage of the Plan's total
pension liability
Plan's proportionate share of aggregate employer
contributions
GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense.

There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshakes). Employers that have done so may need to report this information as a separate liability in their financial statement as CalPERS considers such amounts to be separately financed employer-specific liabilities. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2020 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool. 75

Fiscal year ended June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 Contractually required contribution
(actuarially determined) $ 7,094,740 6,497,942 7,861,650 5,503,036 4,870,231 Contributions in relation to the actuarially
determined contributions (7,094,740) (6,497,942) (7,861,650) (5,503,036) (4,870,231) Contribution deficiency (excess) $ - - - - -
Covered payroll $ 11,266,173 11,123,636 11,920,540 12,089,065 11,659,261 Contributions as a percentage of
covered payroll 62.97% 58.42% 65.95% 45.52% 41.77%
Notes to Schedule:

Valuation Date June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 Methods and Assumptions Used to Determine Contribution Rates:

Valuation Date June 30, 2020
Agent employers Entry age
Amortization method Level percentage of payroll, closed Asset valuation method Fair value
Inflation 2.500%
Salary increases Depending on age, service, and type of employment Investment rate of return 7.00%, net of pension plan investment expense, including inflation Retirement age
Mortality
* - Fiscal year 2015 was the 1st year of implementation, therefore only eight years are shown. (1) Fiscal year 2016 - Contributions in relationship to the actuarially determined contributions includes the City's pay off of its CalPERS Side Fund liability.
50 for all plans with the exception of 52 for Miscellaneous PEPRA 2% @ 62

CITY OF FOUNTAIN VALLEY
Schedule of Contributions
Last Ten Fiscal Years*
Safety Plan
Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
76

CITY OF FOUNTAIN VALLEY
Schedule of Contributions
Last Ten Fiscal Years*
(1)
Fiscal year ended June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution
(actuarially determined) 4,097,350 3,781,998 4,097,511 3,339,873 Contributions in relation to the actuarially
determined contributions (4,097,350) (3,781,998) (13,823,511) (3,339,873) Contribution deficiency (excess) - - (9,726,000) -
Covered payroll 10,615,883 11,128,552 10,947,647 10,362,480 Contributions as a percentage of
covered payroll 38.60% 33.98% 126.27% 32.23%
Notes to Schedule:

Valuation Date June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 Methods and Assumptions Used to Determine Contribution Rates:

Valuation Date June 30, 2020
Agent employers Entry age
Amortization method Level percentage of payroll, closed Asset valuation method Fair value
Inflation 2.500%
Salary increases Depending on age, service, and type of employment Investment rate of return 7.00%, net of pension plan investment expense, including inflation Retirement age
Mortality
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown. (1)
50 for all plans with the exception of 52 for Miscellaneous PEPRA 2% @ 62 Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.

Fiscal year 2016 - Contributions in relationship to the actuarially determined contributions includes the City's pay off of its CalPERS Side Fund liability.

Safety Plan
77

CITY OF FOUNTAIN VALLEY
Schedule of Changes in the Net OPEB Liability and Related Ratios Last Ten Fiscal Years*
Fiscal year end 6/30/2023 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Measurement date 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 Total OPEB Liability:

Service cost $ 781,521 918,710 894,122 110,595 853,490 783,000 Interest on total OPEB liability 2,124,178 2,608,735 2,554,439 2,042,543 2,792,205 2,737,000 Benefit payments, including refunds
and the implied subsidy benefit payments (1,804,338) (2,692,398) (2,620,294) (1,647,702) (2,256,000) (2,209,000) Expected minus actual benefit payments (364,241) 96,952 74,233 - - - Actuarial - Experience Gains (Losses) (8,423,561) - - (226,446) 1,808,185 - Actuarial - Changes in Assumptions - 891,311 8,170,158 - (16,183,013) - Net Change in Total OPEB Liability 737,120 (6,600,251) 902,500 8,449,148 (12,985,133) 1,311,000 Total OPEB Liability - Beginning of Year 37,004,264 43,604,515 42,702,015 34,252,867 47,238,000 45,927,000 Total OPEB Liability - End of Year (a) 37,741,384 37,004,264 43,604,515 42,702,015 34,252,867 47,238,000 Plan Fiduciary Net Position:

Contributions - employer - 2,692,398 2,620,294 1,647,702 3,956,000 2,209,000 Net investment income 833,476 711,322 (263,144) 59,466 555,665 807,000 Administrative expenses (57,487) (54,189) (50,751) (43,248) (45,829) (20,000) Employer contributions as benefit payments 1,804,338 - - - - - Benefit payments, including refunds
and the implied subsidy benefit payments (1,804,338) (2,692,398) (2,620,294) (1,647,702) (2,256,000) (2,209,000) Actuarial - Investment Gains (Losses) (2,676,116) 1,930,956 688,572 648,267 5,118 - Net Change in Plan Fiduciary Net Position (1,900,127) 2,588,089 374,677 664,485 2,214,954 787,000 Plan Fiduciary Net Position - Beginning of Year 14,276,205 11,688,116 11,313,439 10,648,954 8,434,000 7,647,000 Plan Fiduciary Net Position - End of Year (b) 12,376,078 14,276,205 11,688,116 11,313,439 10,648,954 8,434,000 Net OPEB Liability - Ending (a)-(b) $ 25,365,306 22,728,059 31,916,399 31,388,576 23,603,913 38,804,000 Plan fiduciary net position as a percentage of the
total OPEB liability 32.79% 38.58% 26.80% 26.49% 31.09% 17.85% Covered - employee payroll (1) $ 21,770,775 20,811,283 21,061,543 21,555,000 18,734,000 19,742,000 Net OPEB liability as percentage of
covered - employee payroll 116.51% 109.21% 151.54% 145.62% 126.00% 174.15% Notes to Schedule:

Changes in Assumptions:

Year ended June 30, 2020
(1) - OPEB Benefits are not based on a measurement of employee payroll * Fiscal year 2018 was the first year of implementation; therefore, only six years are shown.

The studies that served as the basis for Mortality rates changed from the 2014 CalPERS Mortality Study in the prior year, to the 2017 CalPERS Mortality Study in the current year.

The studies that served as the basis for the Retirement rates changed from the 2009 CalPERS Retirement and Turnover Tables in the prior year, to the 2017 CalPERS Retirement and Turnover Tables in the current year.
78

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund
Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Taxes $ 58,179,080 60,294,080 61,889,534 1,595,454
Licenses and permits 1,814,000 1,994,000 2,331,633 337,633 Fines and penalties 569,500 569,500 503,600 (65,900)
Investment income (loss) 1,075,778 1,310,778 1,648,969 338,191 Rental income 1,128,036 1,201,600 1,150,302 (51,298)
Intergovernmental 1,388,870 1,385,349 1,246,519 (138,830) Charges of services 6,595,029 7,054,529 5,127,786 (1,926,743) Miscellaneous 2,437,097 2,552,097 1,235,361 (1,316,736) TOTAL REVENUES 73,187,390 76,361,933 75,133,704 (1,228,229) EXPENDITURES:

Current:

General government 6,109,501 6,162,828 4,863,471 1,299,357 Public safety 42,695,001 48,134,669 41,977,975 6,156,694 Transportation 7,744,402 7,818,479 6,821,591 996,888
Community development 5,262,486 6,163,443 4,782,328 1,381,115 Community services 3,646,275 3,926,041 3,569,971 356,070 Capital outlay 6,156,873 25,266,618 11,906,940 13,359,678 Debt service:

Principal 1,165,000 1,547,450 1,146,484 400,966
Interest - 4,000 3,445 555
TOTAL EXPENDITURES 72,779,538 99,023,528 75,072,205 23,951,323

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 407,852 (22,661,595) 61,499 22,723,094 OTHER FINANCING SOURCES (USES):

Transfers in 11,994,562 12,094,562 3,359,083 (8,735,479) Transfers out (12,601,997) (12,601,997) (1,947,498) 10,654,499 Issuance of IT subscriptions - - 405,381 405,381

TOTAL OTHER FINANCING
SOURCES (USES) (607,435) (507,435) 1,816,966 2,324,401
NET CHANGE IN FUND BALANCE (199,583) (23,169,030) 1,878,465 25,047,495 FUND BALANCE - BEGINNING OF YEAR 86,784,115 86,784,115 86,784,115 - FUND BALANCE - END OF YEAR $ 86,584,532 63,615,085 88,662,580 25,047,495 Budgeted Amounts
See accompanying notes to the required supplementary information. 79

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Housing Authority Special Revenue Fund Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income (loss) $ 216,500 216,500 270,729 54,229 TOTAL REVENUES 216,500 216,500 270,729 54,229
EXPENDITURES:

Current:

Community development 409,110 1,349,110 1,102,828 246,282 Capital outlay - - - -
TOTAL EXPENDITURES 409,110 1,349,110 1,102,828 246,282

NET CHANGE IN
FUND BALANCE (192,610) (1,132,610) (832,099) 300,511
FUND BALANCE - BEGINNING OF YEAR 18,763,484 18,763,484 18,763,484 - FUND BALANCE - END OF YEAR $ 18,570,874 17,630,874 17,931,385 300,511 Budgeted Amounts
See accompanying notes to the required supplementary information. 80

CITY OF FOUNTAIN VALLEY
Notes to Required Supplementary Information
June 30, 2023
NOTE 1 - BUDGETS AND BUDGETARY DATA
The adopted budget of the City consists of the presentation of a Council action request in the form of a staff report specifying the total appropriation for each departmental activity, (e.g., Police Administration, Street Maintenance, etc.).

Total appropriations for each fund may only be increased by the City Council by the approval of a staff report requesting to amend the budget with the exception of budget adjustments which involve offsetting revenues and expenditures. In cases involving offsetting revenues and expenditures, the Finance Director is authorized to increase or decrease an appropriation for a specific purpose where said appropriation is offset by unbudgeted revenue which is designated for said specific purpose.

The City Manager has the authority to adjust the amounts appropriated between the departments and activities of a fund, objects within each departmental activity and between accounts within the objects, provided, however, that the total appropriations for each fund does not exceed the amounts provided in the original Council action formally adopting the budget.

The level at which expenditures may not legally exceed appropriations is the fund level.

All appropriations lapse at fiscal year-end unless City Council takes formal action in the form of an adopted staff report that allows the appropriation to continue into the following fiscal year.

Budgets for the various funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are legally adopted for the general, special revenue, debt service, capital projects, and proprietary fund types.

NOTE 2 - DISCLOSURES FOR STREETS, SIDEWALKS, CURBS AND GUTTERS The City elected to use the modified approach in reporting its street pavement infrastructure network. Under the modified approach, infrastructure assets that are part of a network or subsystem of a network are not required to be depreciated as long as two requirements are met.

First, the government must manage the eligible infrastructure assets using an asset management system that has the following characteristics:
• An up-to-date inventory of eligible infrastructure assets, • Annual condition assessments of the eligible infrastructure assets and summaries of the results using a measurement scale, and
• Estimates of the annual cost to maintain and preserve the eligible infrastructure assets at the condition level established and disclosed by the government. 81

CITY OF FOUNTAIN VALLEY
Notes to Required Supplementary Information
June 30, 2023
NOTE 2 - DISCLOSURES FOR STREETS, SIDEWALKS, CURBS AND GUTTERS (CONTINUED):

Second, the government must document that the eligible infrastructure assets are being preserved approximately at (or above) a condition level established and disclosed by the government. If eligible infrastructure assets meet all requirements and are not depreciated, all expenditures made for those assets (except for additions and improvements) are expensed in the period incurred.

Additions and improvements to eligible infrastructure assets are capitalized. Additions or improvements increase the capacity or efficiency of infrastructure assets rather than preserve the useful life of the assets.

Streets:

The condition of the City’s roadway pavements is measured using the CarteGraph Pavement Management System. The system uses a measurement scale that is based on a Pavement Condition Index (PCI) ranging from zero for a very poor pavement to 100 for a pavement in very good condition. The City’s road system is divided into roadway segments according to the classifications of Primary, Major, and Secondary routes which are combined for reporting purposes as Master Plan of Arterial Highways (MPAH) and Locals. Field condition surveys of the pavement surface are conducted using 19 pavement distress types and a five-level measurement scale to develop the PCI for each roadway segment and an overall pavement network rating. The five levels are: Very Good (86-100), Good (75-85), Fair (60-74), Poor (41-59), and Very Poor (0-40). Field condition surveys are undertaken, and PCI ratings are compiled bi-annually for MPAH’s and Locals. It is the City’s policy to maintain a weighted average of all roadway segments at a PCI of 65 or better. The following table shows the results of the field condition surveys:

Condition PCI Range MPAH Locals Total Mi. % of Network
Very Good (86-100) 28.0 57.7 85.8 52.3%
Good (75-85) 15.2 41.9 57.1 34.8%
Fair (60-74) 9.0 9.4 18.5 11.3%
Poor (41-59) 1.9 0.7 2.7 1.6%
Very Poor (0-40) 0.0 0.1 0.1 0%
Totals 54.1 109.8 164.2 100%
The overall condition of the City’s pavement network based on the most recent complete assessment performed in fiscal year 2023 was “Very Good” with a weighted average PCI of

85.7 based on the surface area of each segment. The City’s four assessments performed previously in fiscal years 2020, 2018, 2016, and 2014 were “Very Good” to “Good” with a weighted average Overall Condition Index (OCI) of 86.4, 86.1, 85.1, and 81.4, respectively. 82

CITY OF FOUNTAIN VALLEY
Notes to Required Supplementary Information
June 30, 2023
NOTE 2 - DISCLOSURES FOR STREETS, SIDEWALKS, CURBS AND GUTTERS (CONTINUED) Sidewalks
The City’s maintenance standards for sidewalks are based upon the various vertical offset criteria listed below:

Sidewalk Maintenance
• 0” to ½” - will be flagged for identification purposes, however, will be excluded from the budgetary section of the report. These distress locations are potential hazards and should be considered for future maintenance.
• ½” to 1” - will be flagged for grinding maintenance.
• 1” to 2”- will be flagged for ramping maintenance.
• >2” caused by a tree - will be flagged as ramp maintenance until the tree is removed. Then the City will remove the deficient sidewalk and/or curbs and gutter.

It is the City’s policy to perform maintenance on sidewalks consistent with the above criteria.

Curbs and Gutters
The City’s maintenance standards for curbs and gutters requires that sections of curbs and gutters that experience a vertical offset of 1-1/2 inches or greater, which create “standing” water shall be placed on a schedule for removal and replacement consistent with existing City Council policy. To the greatest extent possible, removal and replacement of curbs and gutters meeting the above criteria shall be performed in conjunction with street resurfacing projects within which the deficient curbs and gutters sections are located.

Comparison of Needed-to-Actual Maintenance/Preservation 2022-2023 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018 - 575,000 575,000 296,000 - 296,000
- 348,134 152,184 9,310 12,540 -
2,377,015 1,920,000 1,819,743 3,800,494 3,259,479 1,426,127 2,087,181 1,353,847 1,267,756 2,106,312 1,287,645 43,755 3,050,000 2,000,000 2,921,000 2,300,000 1,800,000 1,800,000 2,864,058 1,798,038 2,615,071 2,287,898 1,485,305 1,535,470 Fiscal Year
Actual
Residential Roadway:

Budgeted
Actual
Sidewalks, Curbs and
Budgeted
Actual
Roadway Classification:

Arterial and Collectors:

Budgeted
83

CITY OF FOUNTAIN VALLEY

SUPPLEMENTARY SCHEDULES

CITY OF FOUNTAIN VALLEY
Other Governmental Funds
June 30, 2023

SPECIAL REVENUE FUNDS
Special revenue funds are used to account for specific revenue sources that are legally restricted to or otherwise assigned for specific purposes.

Criminal Activities - This fund is used to account for receipts and disbursements of seized and forfeited assets used for sale of controlled substances and to account for state monies to be used for policing activities. This fund includes the opioid settlement allocation from the State of California (Abatement Funds) and related opioid remediation activities.

Road Maintenance and Rehabilitation Program SB 1 - This fund is used to account for revenues received from the State SB1 taxes. Expenditures are restricted to basic road maintenance, rehabilitation, and critical safety projects.

Gas Tax - This fund is used to account for state gasoline taxes received by the City. These funds may be used for street maintenance, right-of-way acquisition and street construction.

Abandoned Vehicle Abatement - This fund is used to account for abatement of abandoned or disabled vehicles illegally parked in the City.

Traffic Improvement - This fund is used to account for Measure M revenues received by the City.

These funds may be used for street projects to improve traffic.

Pollution Reduction - This fund is used to account for South Coast Air Quality Management District revenues received by the City. These funds may be used for various programs to reduce air pollution.

HOME Grant - This fund is used to account for federal HOME Grant funds.

Measure M2 - This fund is used to account for Measure M2 revenue and interest earnings. These funds are transferred out for traffic improvement related projects.

Community Development Block Grant - This fund is used to account for federal Housing and Community Development Block Grant funds.

DEBT SERVICE FUNDS
Debt service funds are used to account for resources restricted or assigned for expenditure of principal and interest.

Fountain Valley Public Financing Authority - This fund is used to account for the repayment of principal and interest on the Lease Revenue Bonds, Series 2016A. 84

CITY OF FOUNTAIN VALLEY
Other Governmental Funds
(Continued)
June 30, 2023

CAPITAL PROJECTS FUNDS
Capital projects funds are used to account for resources restricted or assigned for capital improvements.

Drainage - This fund is used to account for the implementation of goals and objectives of the master drainage plan and to mitigate water runoff impacts of new development in the drainage area.
85

CITY OF FOUNTAIN VALLEY
Combining Balance Sheet
Other Governmental Funds
June 30, 2023
Road Maint
and Rehab Abandoned
Criminal Program Gas Vehicle Traffic
Activities SB1 Tax Abatement Improvement
Cash and investments $ 932,092 17,284 757,500 5,310 2,144,391 Restricted cash and investments - - - - -
Receivables:

Accounts 6,017 223,559 264,640 - -
Loans - - - - -
TOTAL ASSETS $ 938,109 240,843 1,022,140 5,310 2,144,391 LIABILITIES:

Accounts payable $ 54,770 - 5,455 - 1,402,425
Deposits payable - - 226,575 - 263,795
Unearned revenue 37,031 - - - -
Due to other funds - - - - -
TOTAL LIABILITIES 91,801 - 232,030 - 1,666,220
FUND BALANCES:

Restricted for:

Public safety 846,308 - - - -
Transportation - 240,843 790,110 5,310 478,171
Housing - - - - -
Community development - - - - -
Debt service - - - - -
Assigned:

Capital projects - - - - -
TOTAL FUND BALANCES 846,308 240,843 790,110 5,310 478,171

TOTAL LIABILITIES AND
FUND BALANCES $ 938,109 240,843 1,022,140 5,310 2,144,391 ASSETS

LIABILITIES AND FUND BALANCES
Special Revenue Funds
86

Debt Service Capital
Fund Projects Funds
Fountain
Valley
Community Public
Pollution HOME Measure Development Financing
Reduction Grant M2 Block Grant Authority Drainage Total 500,145 324,008 2,665,843 - - 87,192 7,433,765
- - - - 2 - 2
- - 291,206 37,933 - - 823,355
- 14,348 - 177,307 - - 191,655
500,145 338,356 2,957,049 215,240 2 87,192 8,448,777
- - - 23,469 - 31,621 1,517,740
- - - - - - 490,370
- - - - - - 37,031
- - - 14,465 - - 14,465
- - - 37,934 - 31,621 2,059,606
500,145 - - - - - 1,346,453
- - 2,957,049 - - - 4,471,483
- 338,356 - - - - 338,356
- - - 177,306 - - 177,306
- - - - 2 - 2
- - - - - 55,571 55,571
500,145 338,356 2,957,049 177,306 2 55,571 6,389,171
500,145 338,356 2,957,049 215,240 2 87,192 8,448,777
Special Revenue Funds (Continued)
87

CITY OF FOUNTAIN VALLEY
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds
Year ended June 30, 2023
Road Maint
and Rehab Abandoned
Criminal Program Gas Vehicle Traffic
Activities SB1 Tax Abatement Improvement
REVENUES:

Investment income $ 10,718 11,521 9,279 84 14,404
Intergovernmental 323,141 1,275,803 1,456,010 - 1,535,595 Charges for services - - - - 43,532
TOTAL REVENUES 333,859 1,287,324 1,465,289 84 1,593,531 EXPENDITURES:

Current:

Public safety 214,945 - - - -
Transportation - - 2,916,896 - 4,909,554
Community development - - - - -
Community services - - - 590 -
Capital outlay - - - - -
Debt service:

Principal - - - - -
Interest - - - - -
TOTAL EXPENDITURES 214,945 - 2,916,896 590 4,909,554

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 118,914 1,287,324 (1,451,607) (506) (3,316,023) OTHER FINANCING SOURCES (USES):

Transfers in - - 1,373,261 - 2,519,452
Transfers out - (1,260,842) (453,507) - -

TOTAL OTHER FINANCING
SOURCES (USES) - (1,260,842) 919,754 - 2,519,452
NET CHANGE IN FUND BALANCES 118,914 26,482 (531,853) (506) (796,571) FUND BALANCES - BEGINNING OF YEAR 727,394 214,361 1,321,963 5,816 1,274,742 FUND BALANCES - END OF YEAR $ 846,308 240,843 790,110 5,310 478,171 Special Revenue Funds
88

Debt Service Capital
Fountain
Valley
Community Public
Pollution HOME Measure Development Financing
Reduction Grant M2 Block Grant Authority Drainage Total 8,033 4,900 56,478 4,938 3 - 120,358
55,802 - 1,601,182 454,209 - - 6,701,742
- - - - - - 43,532
63,835 4,900 1,657,660 459,147 3 - 6,865,632
1,173 - - - - - 216,118
- - - - - - 7,826,450
- - - 434,392 - - 434,392
- - - - - - 590
- - - - - 160,439 160,439
- - - - 635,193 - 635,193
- - - - 462,635 - 462,635
1,173 - - 434,392 1,097,828 160,439 9,735,817
62,662 4,900 1,657,660 24,755 (1,097,825) (160,439) (2,870,185) - - - - 1,097,824 155,056 5,145,593
(139,199) - (1,816,584) - - - (3,670,132)
(139,199) - (1,816,584) - 1,097,824 155,056 1,475,461
(76,537) 4,900 (158,924) 24,755 (1) (5,383) (1,394,724) 576,682 333,456 3,115,973 152,551 3 60,954 7,783,895
500,145 338,356 2,957,049 177,306 2 55,571 6,389,171
Special Revenue Funds (Continued) Fund Projects Funds
89

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Criminal Activities Special Revenue Fund Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ 5,100 5,100 10,718 5,618
Intergovernmental 150,000 220,000 323,141 103,141
Miscellaneous 5,000 5,000 - (5,000)
TOTAL REVENUES 160,100 230,100 333,859 103,759
EXPENDITURES:

Current:

Public safety 137,375 317,739 214,945 102,794
TOTAL EXPENDITURES 137,375 317,739 214,945 102,794

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 22,725 (87,639) 118,914 206,553
FUND BALANCE - BEGINNING OF YEAR 727,394 727,394 727,394 - FUND BALANCE - END OF YEAR $ 750,119 639,755 846,308 206,553 Budgeted Amounts
90

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Road Maintenance and Rehabilitation Program (SB1) Special Revenue Fund Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ 1,000 1,000 11,521 10,521
Intergovernmental 1,260,841 1,260,841 1,275,803 14,962
TOTAL REVENUES 1,261,841 1,261,841 1,287,324 25,483

OTHER FINANCING
SOURCES (USES):

Transfers out (1,260,842) (1,260,842) (1,260,842) -

TOTAL OTHER FINANCING
SOURCES (USES) (1,260,842) (1,260,842) (1,260,842) -
NET CHANGE IN FUND BALANCE 999 999 26,482 25,483
FUND BALANCE - BEGINNING OF YEAR 214,361 214,361 214,361 - FUND BALANCE - END OF YEAR $ 215,360 215,360 240,843 25,483 Budgeted Amounts
91

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Gas Tax Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ 15,000 15,000 9,279 (5,721)
Intergovernmental 1,617,243 1,617,243 1,456,010 (161,233) TOTAL REVENUES 1,632,243 1,632,243 1,465,289 (166,954)
EXPENDITURES:

Current:

Transportation 56,000 3,011,000 2,916,896 94,104
TOTAL EXPENDITURES 56,000 3,011,000 2,916,896 94,104

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 1,576,243 (1,378,757) (1,451,607) (72,850)

OTHER FINANCING
SOURCES (USES):

Transfers in 1,373,261 1,373,261 1,373,261 -
Transfers out (495,043) (495,043) (453,507) 41,536

TOTAL OTHER FINANCING
SOURCES (USES) 878,218 878,218 919,754 41,536
NET CHANGE IN FUND BALANCE 2,454,461 (500,539) (531,853) (31,314) FUND BALANCE - BEGINNING OF YEAR 1,321,963 1,321,963 1,321,963 - FUND BALANCE - END OF YEAR $ 3,776,424 821,424 790,110 (31,314) Budgeted Amounts
92

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Abandoned Vehicle Abatement Special Revenue Fund Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ - - 84 84
TOTAL REVENUES - - 84 84
EXPENDITURES:

Current:

Community services 2,270 2,270 590 1,680
TOTAL EXPENDITURES 2,270 2,270 590 1,680

EXCESS OF REVENUES
UNDER EXPENDITURES (2,270) (2,270) (506) 1,764
FUND BALANCE - BEGINNING OF YEAR 5,816 5,816 5,816 -
FUND BALANCE - END OF YEAR $ 3,546 3,546 5,310 1,764
Budgeted Amounts
93

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Traffic Improvement Special Revenue Fund Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ 11,000 11,000 14,404 3,404
Intergovernmental - 1,535,595 - 1,535,595
Charges for services 10,000 10,000 43,532 33,532
TOTAL REVENUES 21,000 21,000 1,593,531 1,572,531
EXPENDITURES:

Current:

Transportation 6,449,012 - 4,909,554 1,539,458
TOTAL EXPENDITURES 6,449,012 - 4,909,554 1,539,458

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 21,000 (6,428,012) (3,316,023) 3,111,989 OTHER FINANCING SOURCES:

Transfers in 3,713,001 4,210,051 2,519,452 (1,690,599)

TOTAL OTHER FINANCING
SOURCES 3,713,001 4,210,051 2,519,452 (1,690,599)

NET CHANGE IN
FUND BALANCE 3,734,001 (2,217,961) (796,571) 1,421,390
FUND BALANCE - BEGINNING OF YEAR 1,274,742 1,274,742 1,274,742 - FUND BALANCE - END OF YEAR $ 5,008,743 (943,219) 478,171 1,421,390 Budgeted Amounts
94

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Pollution Reduction Special Revenue Fund Year ended June 30, 2023
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ 6,000 6,000 8,033 2,033
Intergovernmental 58,000 58,000 55,802 (2,198)
TOTAL REVENUES 64,000 64,000 63,835 (165)
EXPENDITURES:

Current:

Public safety 13,560 13,560 1,173 12,387
TOTAL EXPENDITURES 13,560 13,560 1,173 12,387

EXCESS OF REVENUES
OVER EXPENDITURES 50,440 50,440 62,662 12,222
OTHER FINANCING USES:

Transfers out (65,000) (165,000) (139,199) 25,801

TOTAL OTHER
FINANCING USES (65,000) (165,000) (139,199) 25,801

NET CHANGE IN
FUND BALANCE (14,560) (114,560) (76,537) 38,023
FUND BALANCE - BEGINNING OF YEAR 576,682 576,682 576,682 - FUND BALANCE - END OF YEAR $ 562,122 462,122 500,145 38,023 95

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - HOME Grant Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ - - 4,900 4,900
TOTAL REVENUES - - 4,900 4,900

EXCESS OF REVENUES
OVER EXPENDITURES - - 4,900 4,900
FUND BALANCE - BEGINNING OF YEAR 333,456 333,456 333,456 - FUND BALANCE - END OF YEAR $ 333,456 333,456 338,356 4,900 96

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Measure M2 Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ 24,000 24,000 56,478 32,478
Intergovernmental 1,150,319 1,150,319 1,601,182 450,863 TOTAL REVENUES 1,174,319 1,174,319 1,657,660 483,341
OTHER FINANCING USES:

Transfers out (3,113,113) (3,566,168) (1,816,584) 1,749,584

TOTAL OTHER
FINANCING USES (3,113,113) (3,566,168) (1,816,584) 1,749,584 NET CHANGE IN FUND BALANCE (1,938,794) (2,391,849) (158,924) 2,232,925 FUND BALANCE - BEGINNING OF YEAR 3,115,973 3,115,973 3,115,973 - FUND BALANCE - END OF YEAR $ 1,177,179 724,124 2,957,049 2,232,925 Budgeted Amounts
97

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Community Development Block Grant Special Revenue Fund Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ - - 4,938 4,938
Intergovernmental 500,000 500,000 454,209 (45,791)
TOTAL REVENUES 500,000 500,000 459,147 (40,853)
EXPENDITURES:

Current:

Community development 950,000 950,001 434,392 515,609
TOTAL EXPENDITURES 950,000 950,001 434,392 515,609

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (450,000) (450,001) 24,755 474,756 FUND BALANCE - BEGINNING OF YEAR 152,551 152,551 152,551 - FUND BALANCE - END OF YEAR $ (297,449) (297,450) 177,306 474,756 Budgeted Amounts
98

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Fountain Valley Public Financing Authority Debt Service Fund Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Investment income $ - - 3 3
TOTAL REVENUES - - 3 3
EXPENDITURES:

Debt service:

Principal 604,607 629,856 635,193 (5,337)
Interest 487,885 462,636 462,635 1
TOTAL EXPENDITURES 1,092,492 1,092,492 1,097,828 (5,336)

EXCESS OF REVENUES
UNDER EXPENDITURES (1,092,492) (1,092,492) (1,097,825) (5,333)

OTHER FINANCING
SOURCES:

Transfers in 1,097,828 1,097,828 1,097,824 (4)

TOTAL OTHER FINANCING
SOURCES 1,097,828 1,097,828 1,097,824 (4)
NET CHANGE IN FUND BALANCE 5,336 5,336 (1) (5,337)
FUND BALANCE - BEGINNING OF YEAR 3 3 3 -
FUND BALANCE - END OF YEAR $ 5,339 5,339 2 (5,337)
Budgeted Amounts
99

CITY OF FOUNTAIN VALLEY
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Drainage Capital Projects Fund
Year ended June 30, 2023
Variance with
Final Budget
Positive
Original Final Actual (Negative)
REVENUES:

Charges for services $ 1,000 1,000 - (1,000)
TOTAL REVENUES 1,000 1,000 - (1,000)
EXPENDITURES:

Capital outlay - 500,000 160,439 339,561
TOTAL EXPENDITURES - 500,000 160,439 339,561

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 1,000 (499,000) (160,439) 338,561
OTHER FINANCING SOURCES:

Transfers in 405,000 405,000 155,056 (249,944)

TOTAL OTHER
FINANCING SOURCES 405,000 405,000 155,056 (249,944)

NET CHANGE IN
FUND BALANCE 406,000 (94,000) (5,383) 88,617
FUND BALANCE - BEGINNING OF YEAR 60,954 60,954 60,954 - FUND BALANCE - END OF YEAR $ 466,954 (33,046) 55,571 88,617 Budgeted Amounts
100

CITY OF FOUNTAIN VALLEY

STATISTICAL SECTION (UNAUDITED)

CITY OF FOUNTAIN VALLEY
Description of Statistical Section Contents
June 30, 2023
This part of the City of Fountain Valley’s annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the government’s overall financial health.

Contents: Pages
Financial Trends - Theses schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. 103
Revenue Capacity - These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax. 113
Debt Capacity - These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. 118 Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 125 Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. 127
101

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Governmental activities:

Net Investment in Capital Assets $ 101,557,748 $ 97,768,732 $ 95,231,907 $ 93,401,436 $ 97,951,856 $ 101,064,072 $ 103,764,607 $ 107,617,521 $ 107,890,367 $ 118,812,613 Restricted 15,452,824 19,856,331 24,307,690 26,763,094 35,436,520 33,994,978 29,866,794 28,451,630 29,865,667 27,459,109 Unrestricted 39,381,257 (33,410,687) (39,176,211) (39,063,347) (73,293,802) (67,204,319) (63,160,488) (49,292,105) (28,855,352) (17,081,942) Total governmental activities net assets $ 156,391,829 $ 84,214,376 $ 80,363,386 $ 81,101,183 $ 60,094,574 $ 67,854,731 $ 70,470,913 $ 86,777,046 $ 108,900,682 $ 129,189,780 Business-type activities
Net Investment in Capital Assets $ 11,878,770 $ 22,427,033 $ 22,772,437 $ 22,721,048 $ 22,877,809 $ 22,720,616 $ 23,153,001 $ 25,735,726 $ 24,914,150 $ 24,404,708 Restricted - 9,720,189 - - - - - - - -
Unrestricted 6,467,394 (3,417,051) 7,465,990 8,378,389 6,367,172 9,938,356 13,563,383 15,478,713 19,696,705 27,757,531 Total business-type activity net assets $ 18,346,164 $ 28,730,171 $ 30,238,427 $ 31,099,437 $ 29,244,981 $ 32,658,972 $ 36,716,384 $ 41,214,439 $ 44,610,855 $ 52,162,239 Primary government:

Net Investment in Capital Assets $ 113,436,518 $ 120,195,765 $ 118,004,344 $ 116,122,484 $ 120,829,665 $ 123,784,688 $ 126,917,608 $ 133,353,247 $ 132,804,517 $ 143,217,321 Restricted 15,452,824 29,576,520 24,307,690 26,763,094 35,436,520 33,994,978 29,866,794 28,451,630 29,865,667 27,459,109 Unrestricted 45,848,651 (36,827,738) (31,710,221) (30,684,958) (66,926,630) (57,265,963) (49,597,105) (33,813,392) (9,158,647) 10,675,589 Total primary government net assets $ 174,737,993 $ 112,944,547 $ 110,601,813 $ 112,200,620 $ 89,339,555 $ 100,513,703 $ 107,187,297 $ 127,991,485 $ 153,511,537 $ 181,352,019

CITY OF FOUNTAIN VALLEY

NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year Ended June 30,
102

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Expenses:

Governmental activities:

General government $ 3,398,739 $ 3,394,812 $ 4,060,614 $ 3,490,836 $ 5,355,236 $ 6,367,611 $ 5,465,753 $ 5,496,861 $ 7,138,620 $ 4,113,134 Public safety 25,531,715 27,397,338 30,519,703 30,725,287 35,670,029 36,295,298 38,015,694 35,711,555 30,384,895 42,181,933 Transportation 8,602,763 8,270,272 7,228,722 9,956,544 8,613,423 11,109,470 12,176,938 11,972,499 12,598,733 9,633,255 Community development 5,256,405 5,068,347 4,962,051 4,986,214 5,306,588 5,159,303 5,237,500 6,637,024 6,638,725 5,480,927 Community services 2,649,541 2,602,832 2,770,264 3,090,014 3,424,384 3,728,605 3,164,169 2,807,876 3,735,705 2,925,694 Interest and other charges 349,089 334,168 600,774 332,056 640,767 549,006 499,535 477,206 452,983 425,387 Total governmental activities expenses $ 45,788,252 $ 47,067,769 $ 50,142,128 $ 52,580,951 $ 59,010,427 $ 63,209,293 $ 64,559,589 $ 63,103,021 $ 60,949,661 $ 64,760,330 Business-type activity:

Water 12,344,634 12,173,386 12,198,363 13,474,865 15,563,270 12,060,429 13,319,761 15,403,363 16,095,806 10,474,663 Sewer * 1,050,288 1,187,547 1,586,054 1,621,912 1,265,982 990,369 1,184,187 1,369,997 1,025,684 Solid Waste 2,936,437 2,976,404 2,979,627 2,995,313 3,240,886 3,307,447 3,484,877 3,730,439 3,853,705 4,428,766 Total business-type activity expenses $ 15,281,071 $ 16,200,078 $ 16,365,537 $ 18,056,232 $ 20,426,068 $ 16,633,858 $ 17,795,007 $ 20,317,989 $ 21,319,508 $ 15,929,113 Total primary government expenses $ 61,069,323 $ 63,267,847 $ 66,507,665 $ 70,637,183 $ 79,436,495 $ 79,843,151 $ 82,354,596 $ 83,421,010 $ 82,269,169 $ 80,689,443 Program revenues:

Governmental activities:

Charges for services:

General government 1,589,201 1,541,214 1,485,945 1,322,154 1,263,170 1,709,408 1,584,928 4,444,160 3,027,505 1,275,650 Public safety 2,437,171 2,407,751 2,580,643 2,628,927 2,779,810 2,590,953 2,476,200 3,538,314 4,314,296 3,957,206 Transportation - - - - - - 44,865 - - -
Community development 3,571,688 1,798,307 1,857,165 1,990,806 1,992,671 1,922,787 1,961,130 2,908,827 3,073,777 3,310,491 Community services 1,696,636 2,031,969 1,335,765 1,406,686 1,316,668 1,991,614 782,464 297,772 855,376 1,044,724 Operating grants and contributions 4,417,860 3,844,012 3,342,815 4,632,452 4,403,294 6,664,738 5,406,933 6,564,949 13,553,937 6,645,582 Capital grants and contributions - - - - - 46,100 1,131,106 - 704,835 1,935,254 Total governmental activities
program revenues $ 13,712,556 $ 11,623,253 $ 10,602,333 $ 11,981,025 $ 11,755,613 $ 14,925,600 $ 12,256,520 $ 18,885,128 $ 25,529,726 $ 18,168,907 Business-type activities:

Charges for services:

Water 12,939,652 13,104,591 12,723,158 13,818,022 15,820,684 16,240,470 17,483,253 19,418,208 19,988,530 18,922,198 Sewer * 1,891,019 1,917,391 1,974,735 2,046,393 2,164,911 2,176,199 2,383,617 2,417,275 2,526,629 Solid Waste 3,096,014 3,226,183 3,275,267 3,236,804 3,253,768 3,389,777 3,541,474 3,752,561 3,913,741 4,499,999 Operating grants and contributions 62,321
Capital grants and contributions - - - - 189,259 - 47,311 98,539 71,183 - Total business-type activities
program revenues $ 16,035,666 $ 18,221,793 $ 17,915,816 $ 19,029,561 $ 21,120,845 $ 21,984,417 $ 23,248,237 $ 25,652,925 $ 26,390,729 $ 26,011,147 Total primary government
program revenues $ 29,748,222 $ 29,845,046 $ 28,518,149 $ 31,010,586 $ 32,876,458 $ 36,910,017 $ 35,504,757 $ 44,538,053 $ 51,920,455 $ 44,180,054 Net revenues (expenses):

Governmental activities (32,075,696) (35,444,516) (39,539,795) (40,599,926) (47,254,814) (48,283,693) (52,303,069) (44,217,893) (35,419,935) (46,591,423) Business-type activities 754,595 2,021,715 1,550,279 973,329 694,777 5,350,559 5,453,230 5,334,936 5,071,221 10,082,034 Total net revenues (expenses) $ (31,321,101) $ (33,422,801) $ (37,989,516) $ (39,626,597) $ (46,560,037) $ (42,933,134) $ (46,849,839) $ (38,882,957) $ (30,348,714) $ (36,509,389) * Sewer Fund previously reported in governmental activities

CITY OF FOUNTAIN VALLEY

CHANGES IN NET POSITION

EXPENSES AND PROGRAM REVENUES
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year Ended June 30,
103

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
General revenues and other changes
in net position:

Governmental activities:

Taxes:

Property taxes $ 10,423,211 $ 16,247,191 $ 16,782,178 $ 17,704,506 $ 18,807,430 $ 19,651,638 $ 20,450,086 $ 21,340,781 $ 22,019,180 $ 23,365,555 Sales taxes 11,442,672 11,556,673 12,963,883 12,284,030 12,369,585 13,559,781 12,254,561 14,006,993 16,091,255 16,504,276 Sales taxes - Measure HH - - 2,547,720 - 11,742,254 13,287,116 12,364,200 14,062,109 17,162,175 17,363,447 Franchise taxes 1,628,690 1,790,685 1,766,769 1,635,261 1,920,165 1,975,656 2,072,908 1,971,665 2,088,568 2,595,444 Other taxes 2,739,433 3,032,589 3,158,311 3,221,064 3,227,918 1,442,220 1,185,655 2,748,711 1,305,350 1,522,875 Revenue from other governmental agencies 4,569,352 - - - - 221,349 233,956 240,373 - - Investment income (loss) 707,717 547,066 729,762 118,500 516,705 1,830,759 2,034,377 1,873,429 (3,390,470) 1,648,971 Transfers 79,800 197,855 195,240 336,812 194,760 2,661,845 2,219,108 914,050 1,006,157 2,887,046 Gain on sale of property 32,419 465,509 26,696 3,427,663 1,284,231 - 1,871,361 5,318 156,276 - Miscellaneous 33,128 87,486 9,320 62,167 20,172 129,255 233,039 371,820 1,105,080 992,907 Extraordinary gain 4,918,798 - 56,646 - - - - - - -
Total governmental activities $ 31,656,422 $ 38,843,852 $ 35,688,805 $ 41,337,723 $ 48,798,989 $ 56,043,850 $ 54,919,251 $ 57,535,249 $ 57,543,571 $ 66,880,521 Business-type activities:

Investment income (loss) 33,905 126,889 153,217 184,868 (3,240) 725,277 823,290 8,169 (668,648) 356,396 Transfers (79,800) (197,855) (195,240) (336,812) (194,760) (2,661,845) (2,219,108) (914,050) (1,006,157) (2,887,046) Miscellaneous 9,415 - - 39,625 58,767 - - 69,000 - -
Extraordinary Gain (Loss) 4,000,000 - - - - - - - - -
Total business-type activities $ (36,480) $ 3,929,034 $ (42,023) $ (112,319) $ (139,233) $ (1,936,568) $ (1,395,818) $ (836,881) $ (1,674,805) $ (2,530,650) Total primary government $ 31,619,942 $ 42,772,886 $ 35,646,782 $ 41,225,404 $ 48,659,756 $ 54,107,282 $ 53,523,433 $ 56,698,368 $ 55,868,766 $ 64,349,871 Changes in net position:

Governmental activities (419,274) 3,399,336 (3,850,990) 737,797 1,544,175 7,760,157 2,616,182 13,317,356 22,123,636 20,289,098 Business-type activities 718,115 5,950,749 1,508,256 861,010 555,544 3,413,991 4,057,412 4,498,055 3,396,416 7,551,384 Total primary government $ 298,841 $ 9,350,085 $ (2,342,734) $ 1,598,807 $ 2,099,719 $ 11,174,148 $ 6,673,594 $ 17,815,411 $ 25,520,052 $ 27,840,482

CITY OF FOUNTAIN VALLEY

CHANGES IN NET POSITION

GENERAL REVENUES
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year Ended June 30,
104

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
General fund:

Nonspendable $ 1,966,451 $ 1,599,806 $ 1,698,026 $ 807,126 $ 405,583 $ 136,233 $ 1,648,597 $ 1,664,859 $ 982,832 $ 1,216,224 Restricted - 4,714,142 4,555,926 4,430,934 8,364,256 13,360,125 15,222,812 15,924,621 13,911,169 18,512,690 Committed - - - - 13,000,000 14,200,000 13,700,000 15,578,000 18,426,000 18,426,000 Assigned 12,100,000 21,971,647 22,547,158 16,961,310 26,613,049 30,791,835 31,631,113 41,450,633 54,143,595 50,288,307 Unassigned 28,497,308 19,191,130 17,975,150 27,155,079 327,080 2,412 3,760 52,504 (679,481) 219,359 Total general fund $ 42,563,759 $ 47,476,725 $ 46,776,260 $ 49,354,449 $ 48,709,968 $ 58,490,605 $ 62,206,282 $ 74,670,617 $ 86,784,115 $ 88,662,580 All other governmental funds:

Nonspendable $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Restricted 15,452,824 15,142,189 19,751,764 22,332,160 27,072,264 28,312,259 25,488,079 25,289,799 26,486,425 24,264,985 Assigned 3,831,549 161,316 127,402 (464,523) 149,668 - 38,522 22,951 60,954 55,571 Unassigned - - - - - (165,595) - - - -
Total all other governmental funds $ 19,284,373 $ 15,303,505 $ 19,879,166 $ 21,867,637 $ 27,221,932 $ 28,146,664 $ 25,526,601 $ 25,312,750 $ 26,547,379 $ 24,320,556

CITY OF FOUNTAIN VALLEY

FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year Ended June 30,
105

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Revenues:

Taxes $ 24,609,300 $ 30,655,218 $ 32,689,435 $ 36,060,441 $ 46,463,473 $ 49,916,411 $ 48,327,410 $ 52,295,198 $ 58,666,528 $ 61,889,534 Licenses and permits 1,834,212 1,915,471 2,006,480 1,869,865 1,906,153 1,988,757 1,850,421 2,140,736 2,200,559 2,331,633 Fines and forfeitures (penalties) 751,302 705,372 643,936 564,786 619,096 651,129 616,823 645,037 678,489 503,600 Investment income (loss) 744,447 572,377 757,868 156,162 578,312 2,404,272 2,330,442 2,156,247 (3,027,937) 2,040,056 Revenue from use of money and property 1,163,515 1,203,964 1,094,844 1,255,618 1,167,468 1,145,604 1,042,561 688,239 959,121 1,150,302 Intergovernmental 8,489,979 3,758,497 2,920,345 4,130,922 3,990,316 5,789,190 5,376,671 7,622,971 13,471,387 7,948,261 Charges for services 6,124,998 4,285,172 4,335,669 4,866,961 4,553,747 2,805,579 2,502,673 5,452,583 6,934,339 5,171,318 Miscellaneous 1,679,542 2,021,825 1,371,496 8,316,814 1,351,792 2,322,432 1,038,301 4,499,999 1,439,608 1,235,361 Total revenues $ 45,397,295 $ 45,117,896 $ 45,820,073 $ 57,221,569 $ 60,630,357 $ 67,023,374 $ 63,085,302 $ 75,501,010 $ 81,322,094 $ 82,270,065 Expenditures
Current:

General government 2,870,199 2,883,285 3,085,759 3,212,619 4,916,069 3,679,299 3,540,459 4,907,222 4,721,463 4,863,471 Public safety 24,616,202 25,333,018 27,618,810 28,550,818 31,934,793 32,536,436 35,862,528 35,894,663 40,889,387 42,194,093 Transportation 8,446,708 7,903,404 7,082,567 9,914,437 7,564,408 8,817,469 11,046,220 10,533,417 10,493,946 14,648,041 Community development 3,989,139 4,041,504 4,026,081 4,170,849 3,994,652 4,185,304 4,321,408 5,482,190 5,501,221 5,383,738 Community services 2,321,707 2,328,863 2,407,019 2,618,815 2,653,045 3,206,775 2,670,156 2,306,922 3,193,303 3,570,561 Capital outlay 3,640,756 2,085,519 839,613 6,382,540 10,324,969 6,266,831 6,966,245 3,316,790 2,550,120 13,003,189 Debt service:

Principal retirement 747,414 644,547 659,275 430,000 470,398 1,046,105 1,138,981 1,214,205 1,294,603 1,781,677 Interest and fiscal charges 363,661 344,400 440,725 444,629 575,222 552,048 534,160 514,484 492,357 466,080 Costs of debt issuance - - 395,488 110,180 - - - - - -
Payment to refunded bond escrow agent - - 889,617 - - - - - - - Total expenditures $ 46,995,786 $ 45,564,540 $ 47,444,954 $ 55,834,887 $ 62,433,556 $ 60,290,267 $ 66,080,157 $ 64,169,893 $ 69,136,400 $ 85,910,850 Excess (deficiency) of revenues
over (under) expenditures $ (1,598,491) $ (446,644) $ (1,624,881) $ 1,386,682 $ (1,803,199) $ 6,733,107 $ (2,994,855) $ 11,331,117 $ 12,185,694 $ (3,640,785) Other financing sources (uses):

Transfers in 3,061,091 3,225,390 17,012,787 7,011,672 5,985,246 7,933,565 12,680,545 5,363,530 4,607,793 8,504,676 Transfers out (2,981,291) (3,027,535) (16,817,547) (6,674,860) (5,790,486) (5,271,720) (10,461,437) (4,449,481) (3,601,636) (5,617,630) Issuance of IT subscriptions* 405,381
Proceeds from sale of capital assets - - - - 1,310,417 - 1,871,361 5,318 156,276 - Proceeds from issuance of bonds - 28,890,000 - 2,843,166 - - - - - - Bond premium (discount) - - 580,162 - - - - - - -
Payment to refunded bond escrow agent - - (6,785,383) - - - - - - - Total other financing sources (uses) $ 79,800 $ 197,855 $ 22,880,019 $ 3,179,978 $ 194,760 $ 3,972,262 $ 4,090,469 $ 919,367 $ 1,162,433 $ 3,292,427 Net change in fund balances, before
extraordinary/special item (1,518,691) (248,789) 21,255,138 4,566,660 (1,608,439) 10,705,369 1,095,614 12,250,484 13,348,127 (348,358) Special Item
Payment of defined benefit pension plan
side fund - - (17,436,588) - - - - - - -
Extraordinary gain (loss) 4,918,798 - 56,646 - - - - - - - Net change in fund balances $ (1,518,691) $ 4,670,009 $ 3,875,196 $ 4,566,660 $ (1,608,439) $ 10,705,369 $ 1,095,614 $ 12,250,484 $ 13,348,127 $ (348,358) Debt service as a percentage of
noncapital expenditures 2.55% 2.26% 2.35% 1.64% 1.97% 2.93% 2.83% 2.82% 2.68% 3.11% *Note: Issuance of IT subscriptions is a new line-item as of June 2023, due to the implementation of GASB 96.

CITY OF FOUNTAIN VALLEY

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year Ended June 30,
106

Fiscal Year Taxable Total
Ended Assessed Direct Tax
June 30, Secured Unsecured Value Rate (1)
2014 7,131,028,229 303,412,549 7,434,440,778 0.13171
2015 7,694,438,312 334,834,388 8,029,272,700 0.13177
2016 8,142,567,704 240,473,501 8,383,041,205 0.17172
2017 8,444,874,157 238,403,442 8,683,277,599 0.13173
2018 8,843,461,588 269,238,862 9,112,700,450 0.13173
2019 9,282,526,512 293,682,416 9,576,208,928 0.13550
2020 9,796,913,673 316,787,979 10,113,701,652 0.13505
2021 10,182,790,098 332,988,158 10,515,778,256 0.13491
2022 10,395,996,372 332,366,455 10,728,362,827 0.13488
2023 11,142,057,244 376,665,339 11,518,722,583 0.13468
Notes:

Exempt values are not included in Total
In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1%, based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. (1) Total Direct Tax Rate is the weighted average City general fund share of the 1% Prop 13 rate for all TRA's Source: HdL, Coren & Cone, prepared on 8/21/2023

CITY OF FOUNTAIN VALLEY

ASSESSED VALUE AND ESTIMATED ACTUAL VALUE

OF TAXABLE PROPERTY
Last Ten Fiscal Years
City
107

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
City Direct Rate (1) 0.12870 0.12870 0.12870 0.12870 0.12870 0.12870 0.12870 0.12870 0.12870 0.12870 Fountain Valley Elementary General Fund 0.29490 0.29490 0.29490 0.29490 0.29490 0.29490 0.29490 0.29490 0.29490 0.29490 Huntington Beach Union High General Fund 0.19230 0.19230 0.19230 0.19230 0.19230 0.19230 0.19230 0.19230 0.19230 0.19230 Educational Revenue Augmentation Fund 0.15300 0.15300 0.15300 0.15300 0.15300 0.15300 0.15300 0.15300 0.15300 0.15300 Coast Community College General Fund 0.08120 0.08120 0.08120 0.08120 0.08120 0.08120 0.08120 0.08120 0.08120 0.08120 Orange County General Fund 0.05200 0.05200 0.05200 0.05200 0.05200 0.05200 0.05200 0.05200 0.05200 0.05200 O.C. Sanitation #3 Operating 0.03160 0.03160 0.03160 0.03160 0.03160 0.03160 0.03160 0.03160 0.03160 0.03160 Orange County Flood Control District 0.01667 0.01667 0.01667 0.01667 0.01667 0.01667 0.01667 0.01667 0.01667 0.01667 Orange County Public Library 0.01405 0.01405 0.01405 0.01405 0.01405 0.01405 0.01405 0.01405 0.01405 0.01405 O.C. Harbors Beaches & Park Csa 26 0.01288 0.01288 0.01288 0.01288 0.01288 0.01288 0.01288 0.01288 0.01288 0.01288 O.C. Dept. of Education - General Fund 0.01199 0.01199 0.01199 0.01199 0.01199 0.01199 0.01199 0.01199 0.01199 0.01199 Orange County Water District 0.00739 0.00739 0.00739 0.00739 0.00739 0.00739 0.00739 0.00739 0.00739 0.00739 Orange County Transit Authority 0.00237 0.00237 0.00237 0.00237 0.00237 0.00237 0.00237 0.00237 0.00237 0.00237 Orange County Vector Control District 0.00084 0.00084 0.00084 0.00084 0.00084 0.00084 0.00084 0.00084 0.00084 0.00094 Orange County Water District Water Reserve 0.00011 0.00011 0.00011 0.00011 0.00011 0.00011 0.00011 0.00011 0.00011 0.00011 Total Basic Levy 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 Overlapping Rates:

Huntington Beach High School 2004 - Bond 2004A 0.02271 0.02400 0.02440 0.02451 0.02440 0.02440 0.02273 0.02187 0.02165 - Coast Community College 0.02899 0.03015 0.03092 0.03116 0.03092 0.03092 0.03181 0.03119 0.03102 0.03102 Fountain Valley School District - - - - - - - - - 0.02396 Garden Grove USD - - - - - - - - - 0.06329
Huntington Beach High School District - - - - - - - - - 0.02234 Metro Water District of Orange County 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 Ocean View School District - - - - - - - - - 0.02722
Rancho Santiago Community College - - - - - - - - - 0.04691 Huntington Beach High School 2004 - Bond 2005 0.00001 0.00214 0.00001 0.00001 0.00001 0.00001 0.00001 0.00001 0.00001 - Huntington Beach High School 2004 - Bond 2007 0.00132 0.00123 0.00119 0.00091 0.00119 0.00119 0.00077 0.00072 0.00068 - Total Overlapping Rates 0.05653 0.06102 0.06002 0.06009 0.06002 0.06002 0.05882 0.05729 0.05686 0.21824 Total Direct & Overlapping Tax Rates 1.05653 1.06102 1.06002 1.06009 1.06002 1.06002 1.05882 1.05729 1.05686 1.21824 Notes:

In 1978 the voters of the State of California passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount.

This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of the School District bonds. (1) Total Direct Tax Rate is the weighted average City general fund share of the 1% Prop 13 rate for all TRA's Source: Orange County Assessor's Office

CITY OF FOUNTAIN VALLEY

DIRECT AND OVERLAPPING PROPERTY TAX RATES
(Rate per $100 of taxable value)
Last Ten Fiscal Years
Fiscal Year Ended June 30,
108

Taxable Percent of Total City Taxable Percent of Total City Taxpayer (Parcels) Assessed Value Taxable Assessed Value Assessed Value Taxable Assessed Value Orange Coast Memorial Medical Center (9) $ 221,680,557 1.92% $ 192,287,124 2.59% Hyundai Motor America (1) 201,509,794 1.75% 40,799,530 0.55% Fountain Valley Regional Hospital (12) 172,795,223 1.50% 146,543,177 1.97% BEXAEW the Havens LP (2) 122,093,358 1.06% 0.00%
Corte Bella Fee Ower (2) 88,476,382 0.77% 0.00%
JKS-CMFV LLC (17) 90,525,835 0.79% 72,793,066 0.98%
Yakult USA Inc (1) 23,660,622 0.21% 0.00%
David Craig Hunsaker Trust (8) 67,274,000 0.58% 0.00%
Euclid and Heil FV Owner LLC (1) 65,000,000 0.56% 0.00% Raintree Fountain Valley LLC (1) 56,981,616 0.49% 0.00% $ 1,109,997,387 9.64% $ 452,422,897 6.09%
The amounts shown above include assessed value data for the City .

Source: HdL, Coren & Cone, prepared on 8/21/2023
2023 2014

CITY OF FOUNTAIN VALLEY

PRINCIPAL PROPERTY TAX PAYERS
Current Year and Nine Years Ago
109

Fiscal Taxes Levied Collections in
Year Ended for the Percent Subsequent Percent
June 30, Fiscal Year Amount* of Levy Years** Amount of Levy 2014 9,227,976 9,114,156 98.77% 40,888 9,155,044 99.21% 2015 9,757,887 9,652,108 98.92% 30,039 9,682,147 99.22% 2016 10,286,311 10,155,604 98.73% 41,013 10,196,617 99.13% 2017 10,652,346 10,543,581 98.98% 33,732 10,577,313 99.30% 2018 11,193,927 11,101,526 99.17% 35,678 11,137,204 99.49% 2019 11,678,495 11,586,299 99.21% 41,659 11,627,958 99.57% 2020 12,264,593 12,121,446 98.83% 54,334 12,175,780 99.28% 2021 12,756,006 12,612,713 98.88% 51,500 12,664,213 99.28% 2022 13,110,041 12,930,762 98.63% 52,005 12,982,767 99.03% 2023 14,256,951 14,043,987 98.51% 64,638 14,108,625 98.96% Note:
*The amounts presented include City property taxes only.

Source: Orange County Assessor's Office
**These amounts consist of "prior year" taxes (excluding penalties and interest) remitted in the subsequent fiscal year; the Orange County Auditor Controller's Office aggregates these payments and does not provide detail on allocations to particular years.

CITY OF FOUNTAIN VALLEY

PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Collected within the
Fiscal Year of Levy Total Collections to Date
110

Fiscal Year Certificates Taxable Pension Lease Total Total Total Percentage Debt Ended Leases of Obligation Revenue Governmental Loans Revenue Business-type Primary of Personal per June 30, Payable Participation (1) Bonds (3) Bonds (4) (5) Activities Payable Bonds (2) Activities Government Income Capita (6) 2014 218,822 8,760,000 - - 8,978,822 535,285 - $ 535,285 9,514,107 0.50% 168 2015 109,275 8,225,000 - - 8,334,275 - 15,188,452 $ 15,188,452 23,522,727 1.21% 415 2016 - - 15,661,765 13,807,919 29,469,684 - 14,611,443 $ 14,611,443 44,081,127 2.26% 777 2017 - - 15,679,151 16,176,187 31,855,338 - 14,041,771 $ 14,041,771 45,897,109 2.27% 806 2018 - - 15,696,538 15,660,893 31,357,431 - 13,457,099 $ 13,457,099 44,814,530 2.15% 791 2019 - - 15,203,923 15,079,889 30,283,812 - 12,847,425 $ 12,847,425 43,131,237 2.01% 772 2020 - - 14,651,309 14,466,011 29,117,320 - 12,217,751 $ 12,217,751 41,335,071 1.82% 752 2021 - - 14,038,695 13,836,909 27,875,604 - 11,563,077 $ 11,563,077 39,438,681 1.79% 697 2022 - - 13,366,081 13,187,409 26,553,490 - 10,888,405 $ 10,888,405 37,441,895 1.58% 657 2023 - - 12,618,467 12,507,318 25,125,785 - 10,183,732 $ 10,183,732 35,309,517 1.49% 620 (1) On July 9, 2003, the City issued 2003 Certificates of Participation in the amount of $13,270,000. (2) On December 17, 2014, the City issued 2014A Revenue Bonds in the amount of $13,695,000 (3) On September 2, 2015, the City issued 2015A Taxable Pension Obligation Bonds in the amount of $15,995,000 (4) On February 10, 2016, the City issued 2016A Lease Revenue Bonds in the amount of $12,895,000 (5) On January 7, 2017 the City issued 2017 Clean Renewable Energy Bonds in the amount of $2,843,166 (6) These ratios are calculated using personal income and population for the prior calendar year Details regarding the City's outstanding debt can be found in the notes to basic financial statements.

CITY OF FOUNTAIN VALLEY

RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Governmental Activities Business-type Activities
111

Fiscal Year Certificates Taxable Pension Lease Percent of Ended of Obligation Revenue Assessed Per
June 30, Participation Bonds Bonds Total Value (1) Capita 2014 8,760,000 - - 8,760,000 0.12% 155
2015 8,225,000 - - 8,225,000 0.10% 145
2016 - 15,661,766 13,807,919 29,469,685 0.35% 520
2017 - 15,679,151 16,176,187 31,855,338 0.37% 560
2018 - 15,696,538 15,660,893 31,357,431 0.34% 554
2019 - 15,203,923 15,079,889 30,283,812 0.32% 542
2020 - 14,651,309 14,466,011 29,117,320 0.29% 530
2021 - 14,038,695 13,836,909 27,875,604 0.27% 493
2022 - 13,366,081 13,187,409 26,553,490 0.25% 466
2023 - 12,618,467 12,507,318 25,125,785 0.22% 441
General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds.
(1) Assessed value has been used because the actual value of taxable property is not readily available in the State of California.

CITY OF FOUNTAIN VALLEY

RATIO OF GENERAL BONDED DEBT OUTSTANDING
Last Ten Fiscal Years
112

2022-2023 City Assessed Valuation
Total Assessed Valuation $ 11,516,761,029
Percentage Total Debt City's Share of Debt
Applicable (1) June 30, 2023 June 30, 2023
OVERLAPPING TAX AND ASSESSMENT DEBT:

Metropolitan Water District 0.316% $ 19,215,000 $ 60,719 Coast Community College District 6.461% 920,781,084 59,491,666 Rancho Santiago Community College District 0.332% 176,539,286 586,110 Rancho Santiago Community College District SFID No. 1 0.627% 149,820,000 939,371 Garden Grove Unified School District 11.023% 524,835,000 57,852,562 Huntington Beach Union High School District 11.882% 151,029,998 17,945,384 Fountain Valley School District 72.803% 57,420,000 41,803,483 Ocean View School District Certificates of Participation 0.913% 126,975,000 1,159,282 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 179,838,577 OVERLAPPING GENERAL FUND DEBT:

Orange County General Fund Obligations 1.589% $ 451,165,000 $ 7,169,012 Orange County Board of Education Certificates of Participation 1.589% 10,860,000 172,565 Coast Community College District Certificates of Participation 6.461% 1,480,000 95,623 Coast Community College District Pension Obligation Bonds 6.461% 1,380,000 89,162 Huntington Beach Union High School District Certificates of Participation 11.882% 55,086,090 6,545,329 Ocean View School District Certificates of Participation 0.913% 14,555,000 132,887 TOTAL OVERLAPPING GENERAL FUND DEBT $ 14,204,578
TOTAL OVERLAPPING DEBT $ 194,043,155

DIRECT GENERAL FUND DEBT
City of Fountain Valley General Fund Obligations 100.000% 11,908,678 11,908,678 City of Fountain Valley Pension Obligation Bonds 100.000% 12,830,000 12,830,000 TOTAL DIRECT DEBT $ 24,738,678
COMBINED TOTAL DIRECT AND OVERLAPPING DEBT (2) $ 218,781,833 (2) Ratios to 2022-23 Assessed Valuation:

Total Overlapping Tax and Assessment Debt……….…………………….. 1.56% Total Direct Debt ($24,738,678)…….…..…......………...………………. 0.21% Combined Total Debt…….…..……………………………………………1.90%
Source: California Municipal Statistics, Inc. (August 11, 2023)

CITY OF FOUNTAIN VALLEY

DIRECT AND OVERLAPPING DEBT
June 30, 2023
(1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. 113

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Assessed valuation $ 7,426,581,220 $ 7,994,583,167 $ 8,391,505,862 $ 8,682,569,021 $ 9,112,408,153 $ 9,591,156,528 $ 10,150,637,700 $ 10,514,690,981 $ 10,727,588,631 $ 11,516,761,029 Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% Adjusted assessed valuation 1,856,645,305 1,998,645,792 2,097,876,466 2,170,642,255 2,278,102,038 2,397,789,132 2,537,659,425 2,628,672,745 2,681,897,158 2,879,190,257 Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Debt limit 278,496,796 299,796,869 314,681,470 325,596,338 341,715,306 359,668,370 380,648,914 394,300,912 402,284,574 431,878,539 Total net debt applicable to limitation:

General obligation bonds - - - - - - - - - -
Legal debt margin $ 278,496,796 $ 299,796,869 $ 314,681,470 $ 325,596,338 $ 341,715,306 $ 359,668,370 $ 380,648,914 $ 394,300,912 $ 402,284,574 $ 431,878,539 Total debt applicable to the limit
as a percentage of debt limit 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation.

However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state.

Sources: Orange County Assessor's Office
City Finance Department

CITY OF FOUNTAIN VALLEY

LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Fiscal Year Ended June 30,
114

Fiscal Net Revenue
Year Ended Operating Operating Available for
June 30, Revenues (1) Expenses (2) Debt Service Principal Interest Total Coverage 2019 $ 16,786,253 $12,247,390 $ 4,538,863 $535,000 $ 516,231 $ 1,051,231 431.8% 2020 $ 18,058,993 $13,268,179 $ 4,790,814 $555,000 $ 494,831 $ 1,049,831 456.3% 2021 $ 19,432,555 $13,335,179 $ 6,097,376 $580,000 $ 472,631 $ 1,052,631 579.3% 2022 $ 19,507,971 $14,537,706 $ 4,970,265 $600,000 $ 449,431 $ 1,049,431 473.6% 2023 $ 19,165,142 $ 8,948,063 $ 10,217,079 $630,000 $ 425,431 $ 1,055,431 968.0% Notes:
(1) Total operating revenues (including investment income). (2) Total operating expenses exclusive of depreciation and amortization.

Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.

Debt Service Requirements

CITY OF FOUNTAIN VALLEY

PLEDGED-REVENUE COVERAGE
Last Five Fiscal Years
Series 2014A Revenue Bonds
On December 17, 2014, the City issued 2014A Revenue Bonds in the amount of $13,695,000. 115

Calendar Personal Income Per Capita Unemployment
Year Population (in thousands) Personal Income Rate
2013 56,702 1,888,687 33,309 4.2%
2014 56,690 1,903,877 33,584 5.4%
2015 56,714 1,940,507 34,215 4.4%
2016 56,709 1,947,214 34,336 3.9%
2017 56,920 2,023,830 35,555 3.4%
2018 56,652 2,087,077 36,840 3.0%
2019 55,878 2,150,520 38,485 2.8%
2020 54,953 2,276,596 41,428 9.3%
2021 56,564 2,206,548 39,009 6.1%
2022 56,987 2,363,225 41,469 3.3%
Source: HdL, Coren & Cone, prepared on 8/21/2023

CITY OF FOUNTAIN VALLEY

DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
116

Number of Percent of Number of Percent of
Employer Employees Total Employment Employees Total Employment Orange Coast Memorial Medical 1,563 6.51% 967 4.52%
Fountain Valley Regional Hospital 1,518 6.32% 1,667 7.79% Memorial Health Services 913 3.80% 554 2.59%
Hyundai Motor America, Inc. 749 3.12% 421 1.97%
Kingston Technology Company 609 2.53% 651 3.04%
Memorial Care Medical Foundation 493 2.05%
Costco Wholesale #411 400 1.66% 322 1.50%
Surefire, LLC 326 1.36% 422 1.97%
Spec Services, Inc. 238 0.99%
Sam's Club 219 0.91% 264 1.23%
Mobis Parts America, LLC 211 0.88%
Interconnect Solutions Company 206 0.86%
Hyundai Autoever America 179 0.75%
Yakult U.S.A Inc. 151 0.63%
VCA West Coast Specialty & Emergency Animal Hosp 143 0.60% Metalcrafters Transaparencies and Composites Inc. 143 0.60% United Sports Brands 130 0.54%
8,191 34.09% 5,268 24.61%
Total Employment 24,026
Source: HdL, Coren & Cone, prepared on 8/21/2023
2023 2014

CITY OF FOUNTAIN VALLEY

PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
117

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Administration 3.00 3.00 2.00 1.00 3.00 3.00 3.50 3.00 3.00 4.00 City clerk 2.00 2.00 2.00 2.00 1.00 1.00 1.00 * * *
Finance 10.60 10.75 10.75 9.80 9.75 9.75 9.75 9.75 7.75 10.75 Information services 3.00 4.00 4.00 4.00 4.00 4.00 4.00 3.00 3.00 3.00 Human resources 3.50 4.00 4.00 3.00 4.00 4.00 4.75 3.75 3.00 6.00 Community development 8.00 7.00 7.00 6.00 6.00 7.00 8.00 8.00 13.00 14.50 Public works 9.00 9.00 9.00 8.00 9.00 8.00 13.00 9.00 8.00 8.00 Field services 28.00 28.00 23.00 22.00 24.75 26.75 24.00 20.75 21.75 22.75 Fire 43.00 42.00 42.00 39.00 45.00 45.00 46.00 43.00 43.00 42.00 Police 85.00 83.00 82.00 72.50 79.00 79.00 87.00 78.00 80.00 78.00 Community services 6.00 6.00 6.00 6.00 6.00 6.00 6.00 4.00 6.00 7.00 Utilities (W&S) 22.00 22.00 20.00 19.00 18.00 19.00 22.00 19.00 18.00 18.00 Total 223.10 220.75 211.75 192.30 209.50 212.50 229.00 201.25 206.50 214.00 Source: City of Fountain Valley, Human Resources: Authorized List for Full-Time Employees, June 2023 *Note: City Clerk position reclassified into Administration count, as of June 2021.

CITY OF FOUNTAIN VALLEY

FULL-TIME EQUIVALENT CITY EMPLOYEES
Last Ten Fiscal Years

BY DEPARTMENT
Department
118

Function 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Police:

Arrests 1,636 1,423 1,616 1,475 1,460 1,800 1,783 1,524 1,241 1,321 Parking citations issued 7,373 6,789 6,604 8,246 6,649 7,569 5,627 9,880 8,209 5,194 Fire:

Number of emergency calls 4,638 4,638 5,359 5,488 5,660 5,401 5,401 5,360 5,912 6,137 Inspections 2,542 5,973 7,627 8,156 10,260 4,147 2,115 813 504 747 Public works:

Street resurfacing (miles) 9 9 8 7 4 6 7 5 5 5
Parks and recreation:

Number of recreation classes 1,103 1,103 3,923 1,357 1,501 1,449 1,032 375* 357* 1,148 Number of facility rentals 3,768 3,768 1,565 2,673 2,235 2,343 1,825 448* 770 1,597 Water:

New connections 340 1,253 1,310 1,298 402 430 411 423 410 430 Average daily consumption
(thousands of gallons) 7,876 7,395 6,630 6,937 7,367 8,387 7,228 7,794 8,705 7,627 Notes:

New connections are all new customers connected
*Number of rentals & recreation classes low due to the Corona Virus Pandemic of 20-21 Source: City of Fountain Valley

CITY OF FOUNTAIN VALLEY

OPERATING INDICATORS

BY FUNCTION
Last Ten Fiscal Years
Fiscal Year Ended June 30,
119

Function 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Police:

Stations 1 1 1 1 1 1 1 1 1 1
Fire:

Fire stations 2 2 2 2 2 2 2 2 2 2
Public works:

Street (miles) 165 165 165 165 165 165 165 165 165 165
Streetlights** N/A N/A N/A N/A 3,200 3,200 3,614 3,614 3,614 Traffic signals 54 54 54 54 54 54 55 55 55 55
Parks and recreation:

Parks 19 19 19 19 19 19 19 19 19 20
Community centers 2 2 2 2 2 2 2 2 2 2
Water:

Water mains (miles) 202 202 202 209 209 209 209 209 209 217 Maximum daily capacity
(thousands of gallons) 13,500,000 16,700,000 11,500,000 12,000,000 12,060,000 11,404,785 10,427,232 13,131,795 11,958,732 12,102,106 **Streetlights were acquired from So. Cal Edison on 11/30/18 Source: City of Fountain Valley

CITY OF FOUNTAIN VALLEY

CAPITAL ASSET STATISTICS

BY FUNCTION
Last Ten Fiscal Years
Fiscal Year Ended June 30,
120

10200 Slater Avenue
Fountain Valley, CA 92708
www.fountainvalley.org

1 REQUIRED AUDIT COMMUNICATIONS
City Council
City of Fountain Valley
Fountain Valley, California
We have audited the financial statements of the government activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information City of Fountain Valley (the City) as of and for the year ended June 30, 2023 and have issued our report thereon dated January 26, 2024. Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated May 23, 2023, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you in our engagement letter.

Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, and our firm have complied with all relevant ethical requirements regarding independence under the American Institute of Certified Public Accountants (“AICPA”) independence standards, contained in the Code of Professional Conduct.

2 Significant Risks Identified
We identified the following significant risks:
 Implementation of the Governmental Accounting Standards Board (GASB) Statement No. 96: Subscription-Based Information Technology Arrangements (SBITA): As a result, we received the City’s inventory of SBITAs, reviewed a sample of subscription agreements, tested the calculations of the subscription transactions, and ensured the City’s subscription disclosure footnotes are accurate and complete in accordance with the new standard.
 Single Audit: We tested the City’s federal expenditures for compliance with federal guidelines.

Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in Note 1 to the financial statements. As described in Note 5 to the financial statements, the City changed accounting policies related to subscription based information technology arrangements by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 96, Subscription-Based Information Technology Arrangements, in the fiscal year 2023. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.

Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments.

The most sensitive accounting estimates affecting the financial statements include:
 Judgments as to which City capital projects should be capitalized and depreciated in the government-wide financial statements and proprietary funds. We evaluated management’s judgements for reasonableness.
 Judgments involving the calculation of the pension liability. We evaluated the actuarial valuation report supporting the calculations.
 Judgments involving the calculation of the other post-employment benefit (OPEB) liability. We evaluated the actuarial valuation report supporting the calculations.  Judgments involving estimates of the claims payable liabilities related to general liability and workers’ compensation claims. We evaluated the actuarial valuation report supporting the calculations.

3 We evaluated the key factors and assumptions used to develop the estimates and determined that it is reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units.

Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:
 The disclosure of pensions in note 8 to the financial statements.  The disclosure of OPEB in note 7 to the financial statements.

The financial statement disclosures are neutral, consistent, and clear.

Significant Unusual Transactions
For purposes of this communication, professional standards require us to communicate to you significant unusual transactions identified during our audit. There were no unusual transactions noted as a result of our audit procedures.

Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.

Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit. We noted no uncorrected misstatements.

In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. We identified material misstatements related to recording cash, construction in progress, claims payable, and pension and OPEB. These issues were brought to the attention of, and corrected by, management.

Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit.

4 Representations Requested from Management
We have requested certain written representations from management in a letter dated January 26, 2024.

Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City’s auditors.

Other Information Included in the Annual Comprehensive Financial Report Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in the City’s annual report, does not extend beyond the information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. However, in accordance with such standards, we have read the information and considered whether such information, or the manner of its presentation, was materially inconsistent with its presentation in the financial statements.

Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements.

This report is intended solely for the information and use of the City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties.

Irvine, California
January 26, 2024

CITY OF FOUNTAIN VALLEY
Single Audit Report on
Federal Awards
Year Ended June 30, 2023

CITY OF FOUNTAIN VALLEY
Single Audit Report on Federal Awards
Year Ended June 30, 2023

TABLE OF CONTENTS
Page
Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 1 Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 3
Schedule of Expenditures of Federal Awards 6
Notes to the Schedule of Expenditures of Federal Awards 7 Schedule of Findings and Questioned Costs 8
Summary Schedule of Prior Audit Findings 11

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards
City Council
City of Fountain Valley
Fountain Valley, California
Independent Auditor’s Report
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Fountain Valley (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, and have issued our report thereon dated January 26, 2024.

Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify one internal control, described in the accompanying schedule of findings and questioned costs as items 2023-001 that we consider to be a significant deficiency.
1

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

City’s Response to Finding
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the finding identified in our audit and described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Irvine, California
January 26, 2024
2

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
City Council
City of Fountain Valley
Fountain Valley, California
Independent Auditor’s Report
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Fountain Valley’s (City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2023. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2023.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City’s federal programs. 3

Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. 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, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.
 Identify and assess the risks of material noncompliance, 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 City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
4

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by Uniform Guidance
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of 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. We issued our report thereon, dated January 26, 2024, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements 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 schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. 5 Irvine, California
March 27, 2024 except for our report on the Schedule of Expenditures of Federal Awards, for which the date is January 26, 2024

Catalog of
Federal
Domestic Program
Assistance Identification Federal Subrecipient
Federal Grantor Program Title Number Number Expenditures Expenditures United States Department of Housing and
Urban Development
Direct assistance:

Community Development Block Grant Cluster:

Community Development Block Grant / Entitlement Grant 14.218 B-20-MC-06-0550 $ 434,392 81,332 Total U.S. Department of Housing and
Urban Development 434,392 81,332
United States Department of Transportation
Passed through State of California:

Minimum Penalties for Repeat Offenders of Driving While 20.608 PT21172 28,005 - Intoxicated
Minimum Penalties for Repeat Offenders of Driving While 20.608 PT23030 32,127 - Intoxicated
Passed-through California Department of Transportation:

Highway Planning and Construction Cluster:

Highway Planning and Construction Cluster 20.205 HSIPL-5341(033) 2,387,969 - Total U.S. Department of Transportation 2,448,101 -
United States Department of Homeland Security
Passed through California Governor's Office of Emergency:

FEMA-4482-DR-CA
Disasters) 97.036 CAL OES ID: 059-25380 119,799 -
Passed through County of Orange
FEMA-4482-DR-CA
Disasters) 97.036 CAL OES ID: 0529-00000 29,314 -
Total U.S. Department of Homeland Security 149,113 -
United States Department of Treasury
Passed through County of Orange:

21.027 CA3010069 9,125 -
Total U.S. Department of Treasury 9,125 -
Total Federal Expenditures $ 3,040,731 81,332

CITY OF FOUNTAIN VALLEY
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
COVID-19 Coronavirus State and Local Fiscal Recovery
Funds
Disaster Grants - Public Assistance (Presidentially Declared Disaster Grants - Public Assistance (Presidentially Declared See accompanying notes to the schedule of expenditures of federal awards. 6

CITY OF FOUNTAIN VALLEY
Notes to the Schedule of Expenditures of Federal Awards Year Ended June 30, 2023
(1) Summary of Significant Accounting Policies Applicable to the Schedule of Expenditures of Federal Awards
(a) Scope of Presentation
The accompanying schedule presents only the expenditures incurred by the City of Fountain Valley (the City) that are reimbursable by agencies providing federal assistance. For the purposes of this schedule, federal financial assistance includes both federal financial assistance received directly from a federal agency, as well as federal funds received indirectly from a non-federal agency or other organization. Only the portion of program expenditures reimbursable with such federal funds are reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with state, local or other non-federal funds are excluded from the accompanying schedule. The City did not use the 10% de minimis indirect cost rate covered in section 200.414 of the Uniform Guidance.
(b) Basis of Accounting
The expenditures included in the accompanying schedule were reported on the accrual basis of accounting. Under the accrual basis of accounting, expenditures are recognized when incurred. Expenditures reported include any property or equipment acquisitions incurred under the federal program. (c) Subrecipients
For the fiscal year ended June 30, 2023, payments to subrecipients consisted of the following:

Community Development Block Grant
B-20-MC-06-0550 $ 81,332
Total $ 81,332
7

CITY OF FOUNTAIN VALLEY
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section I - Summary of Auditor’s Results
Financial Statements

1. Type of auditor’s report issued on whether the
financial statements audited were prepared in
accordance with GAAP: Unmodified

2. Internal control over financial reporting:
a. Material weakness(es) identified? No
b. Significant deficiency(ies) identified? 2023-001

3. Noncompliance material to the financial
statements noted? No
Federal Awards

1. Internal control over major programs:
a. Material weakness(es) identified? No
b. Significant deficiency(ies) identified? None noted

2. Type of auditor’s report issued on
compliance for major programs: Unmodified

3. Any audit findings disclosed that are
required to be reported in accordance
with 2 CFR 200.516 (a)? No

4. Identification of major programs:

CFDA Number Name of Federal Program or Cluster

20.205 Highway Planning and Construction

5. Dollar threshold used to distinguish
between Type A and Type B programs: $750,000

6. Auditee qualified as a low-risk auditee? Yes

8

CITY OF FOUNTAIN VALLEY
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section II - Financial Statement Findings
2023-001: Journal Entries Detected During the Audit
As a result of audit procedures performed for the fiscal year ended June 30, 2023, we identified three projects placed in service that were reported as construction in progress. All three projects should have been moved to a depreciable asset category. This resulted in a material adjustment to correct construction in progress and accumulated depreciation.

We also detected material misstatements in OPEB beginning balance resulting in a journal entry to agree the balance to the actuarial report resulting in a journal entry to correct OPEB expense and deferred outflow of resources.

Recommendation
We recommend the City Finance Department and Public Works department communicate about the status of projects throughout the year and review all open projects at the end of the year to determine when projects are complete or otherwise should be moved out of construction in progress. The City should also revise OPEB beginning balances against their actuarial report.

Management’s Comments Regarding Corrective Actions Planned Management concurs and has taken steps to improve communications between Finance and Public Works regarding the status of ongoing projects to ensure that projects are moved out of construction in progress when placed into service.

Management has also incorporated more in-depth communications about the CIP program into mid-year and annual budget discussions, facilitating clarification about project status and addressing budgetary needs. The City will also revise the beginning OPEB balances to agree with the actuarial report. 9

CITY OF FOUNTAIN VALLEY
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section III - Federal Award Findings and Questioned Costs There were no matters reported.
10

CITY OF FOUNTAIN VALLEY
Summary Schedule of Prior Audit Findings
Year Ended June 30, 2023
Status of Prior Year Audit Findings
2022-001: Journal Entries Detected During the Audit
This finding has been repeated as item 2023-001.
11

INDEPENDENT ACCOUNTANT’S REPORT
The Honorable Mayor and City Council
City of Fountain Valley, California
We have performed the procedures enumerated below on the City of Fountain Valley, California (City) appropriations limit worksheets for compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution for the year ended June 30, 2023.

The City is responsible for compliance with Section 1.5 of Article XIIIB of the California Constitution.

The City has agreed to and acknowledged that these procedures are appropriate to meet the intended purpose of evaluating compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution and the League of California Cities publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines for the year ended June 30, 2023. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and the associated findings are as follows:

1. We obtained the worksheets referred to above and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote.

Results: No exceptions were noted as a result of our procedures.

2. We recalculated the mathematical computations reflected in the City’s worksheets.

Results: No exceptions were noted as a result of our procedures.

3. We compared the current year information used to determine the current year limit and agreed it to worksheets prepared by the City and to information provided by the State Department of Finance.

Results: No exceptions were noted as a result of our procedures.

4. We compared the amount of the prior year appropriations limit presented in the worksheets to the amount adopted by the City Council for the prior year.

Results: No exceptions were noted as a result of our procedures.

The Honorable Mayor and City Council
City of Fountain Valley, California
Page Two
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively on the worksheets referred to above. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of the Management of the City of Fountain Valley, California and is not intended to be, and should not be, used by anyone other than the specified party.

Irvine, California
January 26, 2024