CITY OF
HUNTINGTON BEACH
For The Fiscal
Year Ended
June 30, 2021
California
Annual Comprehensive
Financial Report
CITY OF HUNTINGTON BEACH, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
Prepared by the Finance Department
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INTRODUCTORY SECTION
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City of Huntington Beach
Annual Comprehensive Financial Report
For the Year Ended June 30, 2021
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents ........................................................................................................................................... i-ii Letter of Transmittal ....................................................................................................................................... iii-xi City Officials ................................................................................................................................................... xii Organizational Chart ...................................................................................................................................... xiii Certificate of Achievement in Excellence in Financial Reporting .................................................................. xiv
FINANCIAL SECTION
Independent Auditor’s Report ........................................................................................................................ 1-3 Management’s Discussion and Analysis (Required Supplementary Information) ........................................ 4-21 Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position ..................................................................................................................... 25 Statement of Activities .......................................................................................................................... 26 Fund Financial Statements:
Balance Sheet – Governmental Funds ................................................................................................ 27 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ......... 28 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ...... 29 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ......................................................................... 30 Statement of Net Position – Proprietary Funds .................................................................................... 31 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds............. 32 Statement of Cash Flows – Proprietary Funds..................................................................................... 33 Statement of Fiduciary Fund Net Position – Fiduciary Funds .............................................................. 34 Statement of Changes in Fiduciary Fund Net Position – Fiduciary Funds .......................................... 34 Notes to Financial Statements ................................................................................................................. 36-123 Required Supplemental Information:
Notes to Required Supplementary Information .................................................................................... 126 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget And Actual – General Fund ............................................................................................................... 127 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget And Actual – Grants Special Revenue Fund ..................................................................................... 128 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget And Actual – LMIHAF Capital Projects Fund .................................................................................... 129 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget And Actual – Pension Liability Debt Service Fund ............................................................................ 129 Schedule of Changes in the Net Pension Liability and Related Ratios ............................................... 130-132 Schedule of Changes in the Net OPEB Liability and Related Ratios .................................................. 133 Schedule of Contributions..................................................................................................................... 134-136 Schedule of Money Market Weighted Rate of Return .......................................................................... 136 Schedule of Contributions for the OPEB Plan ...................................................................................... 137
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FINANCIAL SECTION (Continued)
Supplementary Information:
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet – Other Governmental Funds .................................................................... 141-144 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Governmental Funds ............................................................................................................... 145-148 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Other Governmental Funds ............................................................................. 149-155 Statement of Net Position – Internal Service Funds ............................................................................ 160 Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds ..................................................................................................................... 161 Statement of Cash Flows – Internal Service Funds ............................................................................. 162 Combining Statement of Fiduciary Fund Assets and Liabilities ........................................................... 166 Combining Statement of Changes in Fiduciary Net Position ............................................................... 166
STATISTICAL SECTION
Net Position by Component – Last Ten Fiscal Years .................................................................................... 169-170 Changes in Net Position – Last Ten Fiscal Years ......................................................................................... 171-172 Fund Balances – Governmental Funds – Last Ten Fiscal Years .................................................................. 173 Changes in Fund Balances – Governmental Funds – Last Ten Fiscal Years .............................................. 175-176 Assessed and Actual Valuation of All Taxable Property (Excluding Redevelopment Agency) - Last Ten Fiscal Years ................................................................................................................................. 177 Property Tax Rates – All Direct and Overlapping Government Tax Rate 04-001 Largest Area in City – Last Ten Fiscal Years ............................................................................................. 177 Property Tax Levies and Collections – Last Ten Fiscal Years ...................................................................... 178 Top Ten Property Tax Payers – Current Year and Nine Years Ago ............................................................. 179 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ....................................................................... 181-182 Legal Debt Margin – Last Ten Fiscal Years................................................................................................... 183 Statement of Direct and Overlapping Bonded Debt ...................................................................................... 184 Principal Private Employers – Current Year and Nine Years Ago ................................................................ 185 Full-Time Actual and Budgeted City Employees by Function/Program– Last Ten Fiscal Years .................. 186 Operating Indicators by Function/Activity – Last Ten Fiscal Years ............................................................... 187-188 Capital Assets Statistics by Function/Activity ................................................................................................ 189
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CITY OF HUNTINGTON BEACH
December 16, 2021
Honorable Mayor, City Council and Citizens of the City of Huntington Beach:
In accordance with the requirements of the City Charter, and th e City of Huntington Beach’s ongoing commitment to transparent f inancial reporting, I am ple ased to present the Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2021.
As required by the City Charter, and to ensure the reliability of the information contained herein, the City of Huntington Beach (the City) contracted with the ind ependent auditing firm of Davis Farr LLP. The goal of the audit was to provide reasonable assu rance that the City’s financial statements are free fr om material misstatement. In addition, Da vis Farr LLP audits the City’s major program expenditures of f ederal grants for compliance wit h Title 2 of the United States Code of Federal Regulations Part 200 (Uniform Guidance). The re port of the Single Audit is published separately from this ACFR and may be obtained upon request from the City’s Finance Department.
This report consists of management’s representations concerning the City’s finances. As such, management assumes full responsibility for the completeness and accuracy of the information presented in this document and t hat it is reported in a manner that fairly presents the financial position and operations of the va rious funds of the City. To pr ovide a reasonable basis for making these representations, and assurance that the financial statements will be free from material misstatement, management has established a comprehensi ve internal control framework that is designed to both protect the government’s assets from theft, loss, or misuse and to compile sufficient reliabl e information for financial st atement conformity with GAAP. As the cost of internal controls should not outweigh their benefit s, the City’s comprehensive framework of internal controls has been designed to provide reasonable assurance rather than absolute assurance that the financial statements will be free from material misstatement.
We are pleased to report that Davis Farr LLP granted the City an unmodified (clean) opinion for the financial statements of the City for the year ended June 30, 2021. The auditor’s opinion can be found in the Financial Section of this report. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the financial statements in the form of a Management Discussion and Anal ysis (MD&A). This transmitta l letter is designed to complement and should be read in conjunction with it. The MD&A can be found immediately following the independent auditor’s report.
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Profile of the City of Huntington Beach
The City of Huntington Beach is home to a thriving beach commun ity, located on the Orange County coast, 35 miles south of Los Angeles and 90 miles north of San Diego. With a population of 198,039 residents, it is known as Surf City due to its abundance of beaches; the year-round sunny and warm Mediterranean climate; and its casual lifestyle. With over 10 miles of coastline and iconic pier spanning 1,856 foot in length- the longest pier on the West Coast- Huntington Beach plays host to over 16 million visitors annually.
As the fourth largest city in Orange County, and the 23rd large st in California by population, Huntington Beach is recognized as a prime location to live, wor k and play, ranking #1 in the nation for “Quality of City Services” and #18 for “Best-Run Cit y in America Poll” by WalletHub (June 2020) and one of the top three “Best Cities to Live In” by the Orange County Register for the past five consecutive years. Huntington Beach was also rank ed the 33rd Happiest City in America by WalletHub (March 2021). The City boasts an annual me dian household income of $91,318, 51 percent higher than the median household income for the United States, 28 percent higher than the State of California and 6 percent higher than Orange County. In addition, more than half of its residents, or 53 percent, have a college educa tion. There are over 105,600 people employed by public and private entities in Huntington Beach.
Founded in the late 1880s, Hunti ngton Beach was incorporated as a Charter City in 1909.
Huntington Beach has a Council /Manager form of government where in seven City Council members are elected to four-year terms, and the Mayor is filled on a rotating basis from the incumbent Council Members. The City Attorney, City Clerk and Ci ty Treasurer positions are also elected and serve four-year terms. The City of Huntington Beach is a full-service city including police, fire, public works, and other key functional departments with a dedicated and talented team of over 900 full-time equivalent employees.
In 2011, the unincorporated oceanfront community of Sunset Beach was officially annexed by the City of Huntington Beach. Suns et Beach is a small beachfron t community with approximately 1,000 residents and 1.5 square miles of land. Bea chfront properties with high property values make this community a valuable addition to the City. Sunset Beach features one of the widest and most pristine beaches in Southern California and is home to the historic Sunset Beach Arts Festival.
A thriving beach community, Huntington Beach is home to numerous events, including the Great Pacific Airshow – the only beachfront airshow on the West Coast featuring the U.S. Navy Blue Angels, U.S. Marine Corps MV-22 Osprey Demo Team, U.S. Army Golden Knights, and many others. This unique airshow, whic h first premiered in October 2 016, has gained tremendous popularity and attracts visitors from all over the world to view the two-day event.
The City’s century-old traditional Fourth of July Fireworks Show and Parade, known nationally as “the largest Fourth of July P arade west of the Mississippi,” which was adapted in 2020 to comply with State and County Shelter-in-Place orders, returned in 2021. In addition to the traditional parade, 5K run, and Pier Plaza festival, the three-day event also included an all-new Amusements Area, featuring a 75- foot tall ferris wheel, 90-foot Monster Slide, traditional carnival games, and other family-friendly activities.
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The City also hosts a variety of other exciting events for families and visitors such as the annual Concours d’Elegance, Cherry Blossom Festival, Civil War Days, and other events. In November 2021, the City unveiled a new ice rink in Pier Plaza, kicking off its inaugural Winter Wonderland event. Surf City Winter Wonderland will transform downtown Huntington Beach into a holiday destination by providing various winter activities, such as ice-skating, live entertainment, festive programming, and more.
Economic Condition and Outlook
As the economy continues to recover from the impacts of the COVID-19 pandemic and public health guidelines become less restrictive, revenue sources such as Sales Tax and Transient Occupancy Tax are anticipated to increase considerably in coming fiscal years. In addition, low interest rates, recovering unemployment rates, rising consumer confidence, and recovery in the hospitality and travel industries are expected to improve Huntington Beach’s economy; however, continuing volatility in the financial and equity markets, along with the rapidly changing economic picture and the length and continuing scope of the COVID-19 pandemic, adds a layer of uncertainty to the City’s financial projections.
The City of Huntington Beach continues to thrive together through the motto “OneHB,” which reflects the City’s commitment to facing the unprecedented challenges created by the COVID- 19 pandemic guided by the following principles:
To stay committed to being One Team: working together to serve the people of Huntington Beach exceptionally to inspire pride in the community. Work to have One Focus: to stay fanatical about achieving municipal excellence by being active caretakers of our unique, people‐centric HB culture. Continue to pursue One Goal: to ensure that HB continually improves its standing as a premier coastal community as measured through the health of our people, our organization, our infrastructure, and our community.
Property Tax
The City of Huntington Beach’s assessed valuations are very strong, reflecting both new development and increased property values. The City’s Fiscal Year 2021/22 assessed property value grew 2.6 percent to $47.3 billion. This solid performance, coupled with steady year-over- year growth, reflects a stable property tax base that can weather steep declines in real estate markets. Over 60 percent of parcels have an assessed valuation (AV) base year prior to 2004, representing a significant amount of untapped AV. For Fiscal Year 2020/21, secured property tax revenue collections totaled $61.1 million. For Fiscal Year 2021/22, secured property taxes are estimated at $62.6 million, reflecting a 2.5 percent increase.
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Sales Tax
Huntington Beach’s business community is well-diversified with no single industry or business dominating the local economy. Local businesses include aerospace and high technology, petroleum, manufacturing, computer hardware and software, financial and business services, hotel and tourism, automobile services, large-scale retailers, and surf apparel. The City’s diverse sales tax base makes it a stable source of revenue and mitigates the impact of industry- specific downturns as shown below.
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*Fiscal Year 2017/18 reflects nine months of data only due to the change in the City’s fiscal year
Transient Occupancy Tax (TOT)
Transient Occupancy Tax (TOT), a 10 percent tax applied to hotel stays within the City remains strong as Huntington Beach remains a prime tourist destination and the hotel industry continues to thrive. The City collected $10.4M in TOT revenues during Fiscal Year 2020/21, with the $0.8M increase due to the lifting of Shelter-in-Place orders that was used to combat the COVID-19 virus on business and leisure travel.
*Fiscal Year 2017/18 reflects nine months of data only due to the change in the City’s fiscal year
Budget Development and Monitoring
The budget is prepared under the supervision of the City Manager and transmitted to the City Council for deliberation at least 30 days prior to the end of the fiscal year. Pursuant to the City’s Charter, the City Council must adopt the annual budget by June 30th and may amend or revise
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it any time at a properly noticed meeting. Budgetary control is at the Department level within each fund and a Department Head, with the Chief Financial Officer’s approval, may transfer funds within like categories (operating and capital expenditures) of the same Department. The transfer of funds for salaries and benefits requires additional approval by the City Manager or his designee.
Cash Management Policies and Practices
Surplus cash is invested by the elected City Treasurer, in investments allowed by the City’s Investment Policy. The Investment Policy is adopted annually by the City Council after approval by the Investment Advisory Board. It outlines guidelines to meet the daily cash flow needs of the City, maximize the efficiency of the City’s cash management system, and identifies prudent investment vehicles for cash balances. The rate of return earned for the year ended June 30, 2021 was 1.41 percent. The City Treasurer, as required by California Government Code 53601, has prepared an annual Statement of Investment Policy which allows the City to meet current obligations while earning a market rate of return. Further information regarding the City’s cash and investments can be found in Note 2 of the financial statements.
Long-Term Financial Planning and Major Initiatives
The Strategic Goals provides the framework for the goals and objectives of the City. The City Council has six Strategic Goals:
Community Engagement
Homelessness Response
Economic Development & Housing
Infrastructure and Parks
COVID-19 Response
Overall Organizational Fiscal Stability
The goals drive both short and long-term budgetary decisions and the daily operations of the City by ensuring everyone is consistently working to achieve the goals outlined in the Plan.
Pension Obligation Bonds
To meet the goal of strengthening overall financial sustainability, the City issued Pension Obligation Bonds (POBs) in April 2021 in the amount of $363.6 million to refinance 85 percent of its Unfunded Pension Liability (UAL) with CalPERS. In conjunction with the issuance of the POBs, the City also implemented a robust plan to manage future pension liabilities which includes the following provisions:
A minimum $1 million annual contribution to the City’s Section 115 Pension Trust 100% of the first year refinance savings will be contributed to the Section 115 Trust in Fiscal Year 2021/22, then 50 percent annually thereafter (increased for CPI) At the end of each fiscal year, 50 percent of any unassigned General Fund surplus would be dedicated to the Section 115 Trust
Accelerated repayment of any new UAL to be paid from the Section 115 Trust or General Fund Pension Rate Stabilization Reserve
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Paying down these liabilities, controlling the City’s pension costs through various mechanisms including the issuance of Pension Obligation Bonds, funding a Section 115 trust, and creating an Unfunded Pension Liability Policy helps build capacity to manage future pension cost increases. While the impact of higher CalPERS costs will not be entirely mitigated, this proactive strategy has placed Huntington Beach in a stronger financial position than many other cities.
American Rescue Plan Act (ARPA)
On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which allocated $1.9 trillion in economic recovery funding for families, businesses, schools, and governments impacted by the COVID-19 public health crisis. Pursuant to that legislation, the City was allocated $29.6 million in funding, 50 percent of which was received in May 2021. City Council established a three-person City Council Ad-hoc Subcommittee in June 2021 to develop a proposed ARPA spending plan that either addressed immediate, current needs of the City, or constituted a transformative, “Plan for the Future” project with long-term positive community impacts. On September 7, 2021, City Council approved an ARPA spending plan which includes the following projects:
Oak View Rising Program: to fund implementation efforts associated with livability/landscape improvements, parking impact mitigation, community center facility planning, and youth programming efforts in the Oakview area. Community Loan Program: to provide loan funding for start-ups and smaller, less established businesses where borrowers are making 80 percent of the Area Median Income (AMI) or less and to support existing mid-sized qualified businesses as they look to expand within the City.
Economic Development Fund: to establish a fund to help support local business expansion efforts, with a particular focus on environmental mitigation. Major City Facility Upgrade Project: to fund the preliminary planning work associated with the City’s proposed Design-Build-Finance-Operate-Maintain (DBFOM) major City facility upgrade project. Through this initial effort, the City will be able to fund site assessment work, facility master planning, and conceptual design efforts. Police Technology Infrastructure Improvements: to upgrade HBPD's Computer Aided Dispatch (CAD) & Records Management Systems (RMS) technology infrastructure for police department response.
World Skate Skatepark Development: to ascertain the feasibility of developing local Olympic-quality recreational facilities to bring LA 2028 Olympics action sports to HB (for skateboarding, surfing, and BMX).
Joint Youth Training Center for Police & Fire: to build a new Joint Youth Training Center on the CNET training ground with new Fire and Police equipment to develop a two-track program that provides vocational and educational pathways for local students and underserved youth.
Healing Center Project
During the past fiscal year, the City has made tremendous strides in its efforts to end homelessness in Huntington Beach through a multifaceted project which includes the development of a premier homeless prevention program that will incorporate transitional housing program options, shelter options for families and children, and additional permanent supportive housing units in the community. As a part of this effort, the City constructed a 174-
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bed temporary Navigation Center at 17642 Beach Boulevard in partnership with the County of Orange, which opened in December 2020. The Navigation Center, operated by Mercy House, will provide homeless adults with access to healthcare, dental, and behavioral services. Staff will also assist in finding employment and permanent housing for this vulnerable population to help them on their path to housing security.
In April 2021, City Council also approved the creation of Orange County’s first mobile mental health response program in partnership with Be Well OC. This mobile response team, launched in September 2021, is composed of two crisis counselors and assists with many non-emergency and non-medical situations, including public assistance with lack of basic needs (e.g., food, shelter, water) and homelessness, in collaboration with the Huntington Beach Homeless Task Force. Currently, the program is available seven days a week, 12 hours per day, and is planned to expand to 24-hour coverage by Winter 2021-22.
City Council also approved the use of $2.5 million in ARPA funds to assist in the creation of a healing center campus facility that embeds medical, behavioral health, recuperative care, and respite housing options that integrate into a broader continuum of mental health/substance abuse care. An additional $2.5 million was approved to facilitate the production of additional Permanent Support Housing units in the City to assist in homeless mitigation efforts.
Downtown and Beach Enhancements
In May 2021, the City rolled out its first Mobi-Mat to improve beach accessibility for visitors with disabilities, parents with strollers, and others with limited mobility. The mat, located near 6th Street and PCH, provides a stable walkway across the sand and to the water’s edge. Due to immense popularity, a second Mobi-Mat was made available in October 2021.
The City also launched a five-month pilot micro-mobility program in July 2021. This free transit service, in partnership with Circuit, provides five low-speed, six-seat electric shuttles to transport residents, workers, and visitors over short distances within the downtown area using the Circuit app and is available seven days a week. This option will reduce greenhouse gas emissions and also encourage visitors to “park once” and explore all that Huntington Beach has to offer.
As part of the City’s commitment to improving the downtown area, City Council approved the use of $1.75 million in ARPA funds towards Downtown Revitalization Improvements to develop final plans for reconfiguring the broader downtown resort district, including enhancements to Main Street, while investing in improvements to enhance connectivity and revitalize businesses and activities.
Awards and Acknowledgements
The City of Huntington Beach has once again received the “Certificate of Achievement for Excellence in Financial Reporting” award bestowed by the Government Finance Officers’ Association (GFOA) of the United States and Canada for the 35th consecutive year. Receipt of the award requires government entities to publish transparent, easily readable and efficiently organized Annual Comprehensive Financial Reports, conforming to program, accounting, and legal standards.
The Certificate of Achievement earned for the fiscal year ended June 30, 2020, is valid for one year only. The City believes that this Annual Comprehensive Financial Report continues to
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conform to the Certificate of Achievement Program requirements and will be submitted to the GFOA for its consideration for another award.
I wish to thank the City Council, City Manager, and City Departments for their continued diligence in their role as fiscal stewards for the City of Huntington Beach. Without their leadership and support, the favorable financial results contained in this report would not have been possible. I would also like to thank the Finance Commission, a seven member body appointed by the City Council, which has been instrumental in helping the City maintain its long term goal of financial sustainability.
The preparation of this report would also not have been possible without the professional dedicated staff of the Finance Department. Specifically, I would like to thank Sunny Rief, Zack Zithisakthanakul, Ian Wuh, John Willard, Ming Zhai, Leslie Zimmer, Michael Dolan, and Thuy Vi for their hard work and dedication.
Respectfully,
Dahle Bulosan
Chief Financial Officer
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City of Huntington Beach
City Council
Barbara Delgleize, Mayor
Mike Posey, Mayor Pro Tem
Rhonda Bolton, Councilmember
Kim Carr, Councilmember
Dan Kalmick, Councilmember
Natalie Moser, Councilmember
Erik Peterson, Councilmember
Executive Team
Oliver Chi, City Manager
Travis Hopkins, Assistant City Manager
Elected Department Heads
Alisa Backstrom, City Treasurer
Robin Estanislau, City Clerk
Michael Gates, City Attorney
Department Directors
Dahle Bulosan, Finance
Sean Crumby, Public Works
Chief Scott Haberle, Fire
Interim Chief Julian Harvey, Police
Ursula Luna-Reynosa, Community Development
Brittany Mello, Interim Administrative Services
Chris Slama, Community & Library Services
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FINANCIAL SECTION
Independent
Auditor’s Report
City Council
City o
f Huntington Beach
Huntington Beach, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Huntington Beach, California, as of June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.
An audit
also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
1 Opinions
In
our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Huntington Beach, California, as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
During the year ended June 30, 2021, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 84: Fiduciary Activities. Our opinion is not modified with respect to this matter.
The financial statements for the year ended June 30, 2021 reflect certain prior period adjustments as described further in note 19 to the financial statements. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information for the General Fund and each major special revenue fund, schedule of changes in net pension liability and related ratios, schedule of pension contributions, schedule of money market weighted rate of return, schedule of changes in net OPEB liability and related ratios, and schedule of OPEB contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Huntington Beach’s basic financial statements. The combining and individual fund financial statements and schedules, the introductory section and the statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, 2 including co
mparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and the statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our report dated December 16, 2021 on our consideration of the City of Huntington Beach's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Huntington Beach’s internal control over financial reporting and compliance.
Irvine, California
December 16, 2021
3 MANAGEMENT DISCUSSION
AND
ANALYSIS
4 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
As management of the City of Huntington Beach, we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City of Huntington Beach for the year ended June 30, 2021. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our Letter of Transmittal, which can be found on pages iii-xi of this report.
Financial Highlights
Below is a summary of the City’s government-wide financial information (in thousands):
The City of Huntington Beach’s total assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $691,730,000. Total net position increased modestly by $3,567,000 or 0.5 percent in spite of the growth in assets primarily as a result of the ramp up in liabilities and increase in deferred outflows of resources related to pension and other postemployment benefits.
Long-term obligations increased by $377,840,000 or 70.2 percent. This increase is primarily due to issuance of Pension Obligation Bonds in the amount of $363,645,000 to refinance 85 percent of the City’s unfunded pension liability with CalPERS. In addition, a new lease in the amount of $12,753,000 was approved in Fiscal Year 2020/21 to finance the purchase of three helicopters, one rescue boat, and one fire engine.
Deferred outflows of resources increased by $361,306,000 or 625.5 percent primarily due to pension contributions made subsequent to the measurement date including the unfunded liability payment to CalPERS totaling $362,430,000 made from proceeds of the Pension Obligation Bond. Deferred inflows of resources increased by $5,028,000 or 35.2 percent primarily due to changes in assumptions and the differences between the expected and actual experience used to determine the City’s net pension liability.
June 30, 2021
June 30, 2020
(Restated)
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Assets 1,254,251$ 1,214,369$ 39,882$ 3.3% Deferred Outflows of Resources 419,067 57,761 361,306 625.5% Liabilities 962,271 569,678 392,593 68.9% Deferred Inflows of Resources 19,317 14,289 5,028 35.2% Total Net Position 691,730 688,163 3,567 0.5% Unrestricted Net Position (236,030) (236,041) 11 0.0% Long-Term Obligations 915,921 538,081 377,840 70.2% Program Revenues 136,519 146,713 (10,194) -6.9% Taxes 186,787 175,663 11,124 6.3% Other General Revenues 26,660 9,271 17,389 187.6% Expenses 346,399 332,175 14,224 4.3% Total Governmental and Business-Type Activities
5 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Program revenues decreased by $10,194,000 or 6.9 percent. The decrease is primarily due to one-time revenues received in Fiscal Year 2019/20 for the payoff of Hermosa Vista and Huntington Pointe loan repayments totaling almost $7,400,000, as well as affordable housing in-lieu fees of $2,200,000 paid by the developer to fulfill the affordable housing requirement for the Sea Dance Housing Development. Additionally, the City experienced reductions in City-owned beach concessionaire and recreation class revenues as a result of a temporary rent abatement program beginning in March 2020 to help offset the loss in revenues small businesses are experiencing due to COVID-19, and the cancellation of in- person recreation programs in accordance with State and County health orders in place in prevent the spread of COVID-19.
Expenses increased by $14,224,000 or 4.3 percent largely due to additional costs incurred related to the COVID-19 pandemic. The City awarded $5,423,000 in grants to 785 local small business and non-profits impacted by COVID-19 utilizing CARES and other funds passed through the County of Orange. Additionally, the City incurred other COVID-19 related expenses, primarily within the Police and Fire departments, for increased labor costs related to paramedic transport, vaccine pod staffing, and overtime to maintain essential levels of service which are anticipated to be reimbursed with FEMA Public Assistance funds. Expenses also increased due to rising pension and workers compensation costs allocated to all City functions.
Overview of the Financial Statements
This discussion and analysis serves as an introduction to the City of Huntington Beach’s basic financial statements. The City of Huntington Beach’s basic financial statements are comprised of three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains certain other supplementary information in addition to the basic financial statements.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City’s financial condition and are prepared similarly to those in the private sector.
The Statement of Net Position presents information on all of the City’s assets, liabilities, deferred outflows and inflows with the difference between them reported as net position.
Over time, continued increases or decreases in net position may indicate whether the City’s financial condition is improving or deteriorating.
The Statement of Activities presents information on how the City’s net position changed during the most recent fiscal year. These changes are reported on the full accrual basis when the economic event occurs (not when the cash is received or paid). 6 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
The government-wide financial st atements separate functions tha t are primarily supported by taxes and intergov ernmental revenues (governmental activities) from functions that are supported by user fees (business-type activi ties). Governmental activities include the City Council, City Manager, City Treasurer, City Attorney, City Clerk, Finance, Community Development, Fi re, Information Services, Police, Community Services, Library Services, and Public Works departments. Business-type activities include Water, Sewer, Refuse, and Hazmat Services.
The government-wide financial statements include the City and all of its component units that are legally separate but whose activities entirely support the City of Huntington Beach.
The government-wide financial statements can be found on pages 25-26 of this report.
Fund Financial Statements
The City separates financial acti vities into funds to maintain control over resources that have been legally separated. All of the funds of the City can b e divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds
Governmental funds are used to account for the same functions reported in governmental activities in the government-wi de financial statements. However, the focus in the governmental fund section of these financial statements is on near-term resource inflows and outflows available for spending, as well as balances of res ources available for spending at the end of the fiscal year.
It is useful to compare information presented for the governmen tal funds to information presented for governmental activ ities in the government-wide fi nancial statements. The reconciliations indicate to the reader the differences in finan cial reporting between the governmental activities section and the governmental funds section.
The City maintains 26 individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and in the governmental funds Statement of Revenue, Expenditures, and Changes in Fund Balances for the Gen eral Fund, Grants Special Revenue Fund, Low and Moder ate Income Housing Asset Fund (LMIHAF) and Pension Liability Debt Service Fund, all of which are considered to be major funds. Data from the other 22 smaller funds are combined into a single, agg regated presentation.
Individual fund data for each of these other governmental funds is provided in combining statements elsewhere in this report.
The City provides an annual appr opriated budget for its governm ental funds. Budgetary comparison schedules for the General Fund and other major governmental funds (Grants Special Revenue Fund, LMIHAF Capi tal Projects Fund, and Pension Liability Debt 7 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Service Fund) are required to be presented and are included on pages 127-129 of this report and demonstrate compliance with the budget.
The basic governmental fund financial statements can be found o n pages 27 and 30 of this report.
Proprietary Funds
The City maintains two different types of proprietary funds, which are used to account for the same activities as the business-type activities in the government-wide financial statements. Enterprise funds are used to report the same functi ons presented as business-type activities in the government-wide financial state ments. The City uses enterprise funds to account for i ts Water, Sewer Service, Refus e, and Hazmat Service activities. Internal Service funds are used in accounting as a device to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its self-in surance worker’s compensation a ctivities, self-insurance general liability activities, and equipment replacement needs. Because these services predominantly benefit governmental rather than business-type functions, they have been included with governmental activities in the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provides information for Water, Sewer Service, Refuse, Hazmat Service, Self-Insurance Workers’ Compensation, Self-Insurance General Liability, and Equipment Replacement Funds.
The basic proprietary fund financial statements can be found on pages 31-33 of this report.
Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the govern ment-wide financial statements because the resources of those funds are not available to support the City of Huntington Beach’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statements can be found on page 34 of this report.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government- wide and fund financial stateme nts. The notes to the financial statements can be found on pages 36-123 of this report.
8 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Other information
In addition to the basic financ ial statements and accompanying notes, this report also presents certain required supplem entary information concerning the City’s progress in funding its obligation to provide pension and OPEB benefits to its employees and General Fund and major special revenue f unds budget-to-actual compariso ns. Required supplementary information can be found on pages 126-137 of this report.
The combining statements and sc hedules referred to earlier in connection with other governmental funds is presented i mmediately following the requi red supplementary information on pensions. Combini ng and individual fund statemen ts and schedules can be found on pages 141-148 of this report.
Government-wide Financial Analysis
As noted earlier, net position may serve, over time, as a useful indicator of a government’s financial position. At the end of the current fiscal year, the City reported positive net position balances for both governmental and business-type activities, with total assets plus deferred outflows exceeding liabilities plus deferred inflows by $691,730,000.
Below is a summary schedule of the City’s net position at June 30, 2021 (in thousands):
Governmental Activities June 30, 2021
June 30, 2020
(Restated)
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Current and Other Assets 276,665$ 257,987 $ 18,678 $ 7.2% Capital Assets 737,256 714,759 22,497 3.1% Total Assets 1,013,921 972,746 41,175 4.2% Deferred Outflows of Resources 393,130 54,499 338,631 621.4% Current and Other Liabilities 34,751 20,645 14,106 68.3% Long-Term Obligations 864,784 508,578 356,206 70.0% Total Liabilities 899,535 529,223 370,312 70.0% Deferred Inflows of Resources 17,716 13,374 4,342 32.5% Net Position:
Net Investment in Capital Assets 699,204 673,498 25,706 3.8% Restricted 65,755 85,673 (19,918) -23.2% Unrestricted (275,159) (274,523) (636) -0.2% Total Net Position 489,800$ 484,648$ 5 ,152$ 1.1% Business-Type Activities June 30, 2021
June 30, 2020
(Restated)
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Current and Other Assets 97,861$ 98,838 $ (977) $ -1.0% Capital Assets 142,469 142,785 (316) -0.2% Total Assets 240,330 241,623 (1,293) -0.5% Deferred Outflows of Resources 25,937 3,262 22,675 695.1% Current and Other Liabilities 11,599 10,952 647 5.9% Long-Term Obligations 51,137 29,503 21,634 73.3% Total Liabilities 62,736 40,455 22,281 55.1% Deferred Inflows of Resources 1,601 915 686 75.0% Net Position:
Net Investment in Capital Assets 142,469 142,785 (316) -0.2% Restricted 20,332 22,248 (1,916) -8.6% Unrestricted 39,129 38,482 647 1.7% Total Net Position 201,930$ 203,515$ (1,585)$ -0.8% 9 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Analysis of the City’s Net Position
Current and Other Assets: The increase in current and other assets of $18,678,000 for governmental activities is mainly due to the increase in cash and receivables balances related to increased property and sales tax revenues, as well as the receipt of the first tranche of American Rescue Plan Act funds in May 2021 totaling $14,803,000.
The decrease in current and other assets of $977,000 for business-type activities is primarily due to a reduced cash balance in the Water Master Plan fund due to ongoing large capital project costs in Fiscal Year 2020/21 that were delayed from prior year, including water main replacements and the City’s share of slip lining the OC-44 imported water transmission line.
Current and Other Liabilities: Current and other liabilities for governmental activities increased by $14,106,000 and increased by $647,000 for business-type activities due to normal fluctuations in the accounts payable and payroll cycles. For governmental activities, the majority of the increase is related to American Rescue Plan Act Funds received in May 2021 that was recorded as unearned revenue.
Deferred Outflows and Inflows of Resources: The increase in deferred outflows of resources of $338,631,000 and $22,675,000 for governmental activities and business- type activities, respectively, is mainly due to deferral of pension contributions made subsequent to the measurement date, including the unfunded liability payment to CalPERS totaling $362,430,000 made from proceeds of the Pension Obligation Bond.
The increase in deferred inflows of resources of $4,342,000 for governmental activities and $686,000 for business-type activities is related to the actuarially determined amortization of changes in assumptions, differences between projected and actual earnings on pension plan investments, and differences between expected and actual experience used to determine the net pension and other postemployment benefits liabilities. See Notes 6, 7, and 8 for additional information.
Long-Term Obligations: Long-term obligations increased by $356,206,000 for governmental activities and $21,634,000 for business-type activities primarily due to the City issuing a $363,645,000 Pension Obligation Bond to refinance 85 percent of its unfunded pension liability with CalPERS.
Net Investment in Capital Assets: The largest portion of the City’s net position reflects investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets that is still outstanding.
The City uses capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets are reported net of related debt, the resources needed to repay this debt must be provided from other sources, since capital assets themselves cannot be used to liquidate these liabilities. Net position invested in capital assets net of related debt from governmental 10 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
activities increased $25,706,000 or 3.8 percent, primarily due the acquisition of property and related construction of the City’s 174-bed Navigation Center and residential street improvements. Net position invested in capital assets net of related debt from business- type activities decreased $316,000 or 0.2 percent primarily due to normal year to year depreciation.
Restricted Net Position: An additional portion of the City’s net position is subject to external (legally imposed or statutory) restrictions ($65,755,000 for governmental activities, and $20,332,000 for business-type activities). These amounts represent 13.4 percent and 10.1 percent of net position for governmental activities and business-type activities, respectively. Restricted net position from governmental activities decreased $19,918,000 or 23.2 percent, largely due to the change in restricted net position in the LMIHAF Capital Project fund as funds were spent for the purchase of property to construct a 174-bed Navigation Center, and in the Gas Tax Special Revenue fund for the construction of various street improvements, including arterial rehabilitation and residential street overlay projects. Restricted net position from business-type activities decreased by $1,916,000 or 8.6 percent primarily due to an increase in restricted Water Master Plan funds available for capital projects as funds are spent.
Unrestricted Net Position: The unrestricted net position (negative $275,159,000 for governmental activities and $39,129,000 for business-type activities) represent negative
56.2 percent and 19.4 percent, respectively, of net position for governmental activities and business-type activities. Unrestricted net position for governmental activities decreased $636,000 or 0.2 percent. Unrestricted net position for business-type activities increased by $647,000 or 1.7 percent during the year due to the increase in Investment in Capital Assets from the Sewer fund in fiscal year 2020/21.
11 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
A condensed summary of governmental activities (in thousands) follows:
Revenues: June 30, 2021 June 30, 2020
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Program Revenues:
Charges for Current Services 53,683$ 59,819$ (6,136)$ -10.3% Operating Grants and Contributions 6,013 8,141 (2,128) -26.1% Capital Grants and Contributions 10,192 14,483 (4,291) -29.6% Total Program Revenues 69,888 82,443 (12,555) -15.2% General Revenues:
Property Taxes 99,958 94,263 5,695 6.0%
Sales Taxes 51,162 44,616 6,546 14.7%
Utility Taxes 18,374 18,149 225 1.2%
Franchise Taxes 8,040 7,872 168 2.1%
Transient Occupancy Tax 9,253 10,763 (1,510) -14.0% Use of Money and Property 4,399 3,208 1,191 37.1% From Other Agencies - Unrestricted 22,000 3,317 18,683 563.2% Total General Revenues 213,186 182,188 30,998 17.0% Total Revenues 283,074 264,631 18,443 7.0%
Expenses:
City Council 423 405 18 4.4%
City Manager 11,163 3,328 7,835 235.4%
City Treasurer 340 317 23 7.3%
City Attorney 3,140 3,136 4 0.1%
City Clerk 1,147 949 198 20.9%
Finance 6,828 6,661 167 2.5%
Community Development 19,716 15,722 3,994 25.4% Fire 65,960 62,840 3,120 5.0%
Information Services 6,230 8,643 (2,413) -27.9%
Police 102,415 97,204 5,211 5.4%
Community Ser
vices 11,365 12,539 (1,174) -9.4%
Library Services 6,181 5,776 405 7.0%
Public Works 40,270 45,834 (5,564) -12.1%
Interest on Long-Term Debt 2,706 1,686 1,020 60.5% Total Expenses 277,884 265,040 12,844 4.8%
Change in Net Position Before Transfers 5,190 (409)
Transfers (38) (38)
Change in Net Position 5,152 (447)
Net Position - Beginning of Year 478,901 479,348
Cumulative Effect of Changes in
Accounting Principles 5,747 -
Net Position - Beginning of Year as Restated 484,648 479,348 Net Position - End of Year 489,800$ 478,901$
Governmental Activities
12 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
The cost of all governmental activities this year was $277,884,000. However, as shown in the Statement of Activities, the amount that taxpayers ultimately financed for these activities was $207,996,000, because costs of $53,683,000 were paid by those who directly benefited from the programs, or by other governments and organizations that subsidized certain programs with operating grants and contributions of $6,013,000, and capital grants and contributions of $10,192,000. Overall, the City’s governmental program revenues were $69,888,000. The City paid for the remaining “public benefit” portion of governmental activities with $213,186,000 in taxes and general revenue (some of which may only be used for certain programs) and with other revenues, such as interest and general entitlements.
Charges for current services decreased $6,136,000 or 10.3 percent. As noted in the financial highlights section, the absence of one-time revenue sources from large development projects and City’s responses to help mitigate the risks posed by COVID-19 negatively impacted the City’s recreational fee revenue which caused the Charges for Current Services to drop.
Operating Grants and Contributions decreased by $2,128,000 or 26.1 percent and Capital Grants and Contributions have decreased by $4,291,000 or 29.6 percent, primarily due to the one-time Hermosa Vista and Huntington Pointe loan repayments of almost $7,400,000 received in the prior fiscal year.
Program expenses increased by $12,844,000 or 4.8 percent due to the rise in pension and workers compensation costs coupled with the increase in spending to mitigate the effects of COVID-19. As mentioned previously, the City awarded $5,423,000 in grants to 785 local small business and non-profits impacted by COVID-19 using grant funds provided by the County of Orange. Police and Fire also incurred additional COVID-19 related personnel costs by providing services such as paramedic transport of COVID-19 patients, vaccine pod staffing, and overtime to maintain essential levels of service, which is anticipated to be reimbursed through FEMA Public Assistance funds. To help fund some of these increased costs by other departments, Public Works decreased their overall spending by $5,564,000.
Total resources available during the year to finance governmental operations were $767,722,000 consisting of restated net position at July 1, 2020 of $484,648,000, program revenues of $69,888,000, and general revenues of $213,186,000. Total expenses for governmental activities during the year were $277,884,000 plus transfers of $38,000.
Thus, net position increased by $5,152,000 or 1.1 percent, to $489,800,000.
13 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
A condensed summary of business-type activities (in thousands) follows:
The City’s net position from business-type activities decreased by $1,623,000 before transfers. This is mainly due to increases in Water expenses for capital projects including the City’s share of slip lining the OC-44 imported water transmission line and water main replacements.
The cost of all business-type activities this year was $68,515,000. As shown in the Statement of Activities, the amount paid by users of the systems was $66,631,000, other revenue was $261,000, and transfers were $38,000. Beginning net position was $203,515,000 and ending net position was $201,930,000, a decrease of $1,585,000 which is less than a tenth of a percentage. Of the ending net position amount, $142,469,000, or 70.6 percent, was invested in capital assets, $20,332,000 or 10.1 percent was restricted for expenses for the Water Master Plan, and $39,129,000, or 19.4 percent was unrestricted.
Transfers in for business-type activities were $38,000 for the current year, which is the same as prior year.
June 30, 2021 June 30, 2020
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Program Revenues:
Charges for Current Services 66,631$ 64,270$ 2,361$ 3.7% Total Program Revenues 66,631 64,270 2,361 3.7% Use of Money and Property 261 2,746 (2,485) -90.5% Total Revenues 66,892 67,016 (124) -0.2% Expenses:
Water Utility 46,054 44,463 1,591 3.6% Sewer Service 9,284 9,828 (544) -5.5% Refuse Collection 12,936 12,609 327 2.6% Hazmat Service 241 235 6 2.6% Total Expenses 68,515 67,135 1,380 2.1% Increase (Decrease) in Net Position
Before Transfers (1,623) (119)
Transfers 38 38
Total Change In Net Position (1,585) (81) Net Position - Beginning of Year 203,515 203,596 Net Position - End of Year 201,930$ 203,515$
Business-Type Activities
14 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Financial Analysis of the City’s Major Governmental Funds
Below is an analysis of the City’s major governmental fund activities for the year (in thousands):
The General Fund Balance increased by $12,486,000 due to increased property and sales tax revenues. The City also received one-time revenues from AES Southland Development, Inc. totaling $4,900,000 related to improvements in the Southeast area, as well as Strike Team revenues totaling $1,458,000 for Fire department wildfire response through the California Fire Service and Rescue Emergency Mutual Aid System managed by CalOES. The Section 115 trust fund balance also increased by $2,875,000 due to budgeted contributions to the trust and strong investment returns.
The Grants Special Revenue Fund Balance decreased by $2,207,000 primarily due to the increase in COVID-19 related expenditures that is anticipated to be reimbursed with FEMA Public Assistance Disaster Relief funds, and other capital projects that have not been reimbursed by the granting agencies. The bulk of the expenditure increase is related to the Small Business Grant Program and construction of a temporary Navigation Center Program totaling $5,423,000 and $5,610,000, respectively.
The LMIHAF Capital Projects Fund Balance decreased by $5,863,000 primarily as a result of the acquisition of property for the construction of a 174-bed Navigation Center.
The Pension Liability Fund increased by $9,083,000, largely due to revenues set aside from the voter-approved property tax override dedicated to the payment of Public Safety pension costs. The Fiscal Year 2020/21 revenues includes a one-time true up payment of $908,000 from the County for override tax generated from the former Redevelopment area.
June 30, 2021
June 30, 2020
(Restated)
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Total Fund Equity:
General Fund 94,609$ 82,123$ 12,486$ 15.2% Grants Special Revenue Fund 2,354 4,561 (2,207) -48.4% LMIHAF Capital Projects Fund 3,622 9,485 (5,863) -61.8% Pension Liability Fund 16,943 7,860 9,083 0.0% Total Fund Equity 117,528$ 104,029$ 13,499$ 13.0% Governmental Funds
15 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Financial Analysis of the City’s Major Proprietary Funds Below is an analysis of the fund equity of the City’s proprietary funds (in thousands):
The Water Fund total net position decreased by $3,408,000 due to planned capital expenditures exceeding revenues in Fiscal Year 2020/21, which caused the unrestricted net position to decline by $879,000. The Sewer Fund net position increased by $1,678,000 and unrestricted net position increased by $1,359,000 due to planned sewer projects being deferred to the following year. In addition, all enterprise funds with the exception of the Water Fund generated revenues that exceeded the expenses incurred for the current fiscal year.
Long-Term Obligations
Below is a schedule of the changes to the City’s long-term obligations (in thousands):
Governmental Activities: June 30, 2020 Additions Retirements June 30, 2021 Revenue Bonds 35,665$ 19,275$ (25,395)$ 29,545$ Compensated Absences 12,633 5,971 (5,199) 13,405 Claims Payable 37,155 23,258 (13,634) 46,779 Pollution Remediation 2,000 - - 2,000 LED Lighting Phase I 546 - (114) 432 I-Bank CLEEN Loan 2,171 - (289) 1,882 CEC Loan 2,588 - (131) 2,457 Pension Obligation Bonds - 341,501 - 341,501 Leases Payable 5,241 12,753 (5,241) 12,753 Total Long-Term Obligations
Governmental Activities 97,999 402,758 (50,003) 450,754 Business-Type Activities:
Compensated Absences 1,615 542 (731) 1,426 Pension Obligation Bonds - 22,144 - 22,144 Business-Type Activities: 1,615 22,686 (731) 23,570 Total Long-Term Obligations 99,614$ 425,444$ (50,734)$ 474,324$ June 30, 2021 June 30, 2020
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Net Position:
Water Fund 121,825$ 125,233$ (3,408)$ -2.7% Sewer Fund 79,953 78,275 1,678 2.1% Refuse Fund 48 (83) 131 157.8% Hazmat Service Fund 104 90 14 15.6% Total Net Position 201,930$ 203,515$ (1,585)$ -0.8% Unrestricted Net Position:
Water Fund 10,246$ 11,125$ (879)$ -7.9% Sewer Fund 28,865 27,506 1,359 4.9% Refuse Fund (86) (239) 153 64.0% Hazmat Service Fund 104 90 14 15.6% Total Unrestricted Net Position 39,129$ 38,482$ 647$ 1.7% Enterprise Funds
16 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Additional information on the City’s long-term debt is shown in Note 11 to the financial statements. The City of Huntington Beach is legally restricted to issuing general obligation bonds to 12 percent of its assessed valuation. Since the City has no general obligation bonds outstanding, the limit does not apply. The City’s total long-term obligations increased by $374,710,000 or 376.2 percent from the prior fiscal year as the City issued a $363,645,000 Pension Obligation Bond and $12,753,000 lease for public safety equipment in Fiscal Year 2020/21.
The City continues to maintain strong credit ratings on all of its debt issues. Most notably, on August 27, 2014 Fitch Ratings issued an AAA Implied General Obligation Bond rating to the City of Huntington Beach and that same rating was most recently reaffirmed in July 2020.
The following are the ratings as determined by Standard and Poors and Fitch Ratings as of June 30, 2021.
Capital Assets
The capital assets of the City are those assets which are used in the performance of the City’s functions including infrastructure assets. The City has elected to use the “Basic Approach” as defined by GASB Statement No. 34 for infrastructure reporting. The following infrastructure networks are recorded as capital assets in the government-wide financial statements:
Storm drain system including pump stations, drainage system and manholes. Streets (including land underneath streets), traffic signals, curbs, gutters, and sidewalks.
Debt Instrument S & P Fitch
1999 Tax Allocation Refunding Bonds AA- AA
2002 Tax Allocation Refunding Bonds AA- N/A
2020(a) Lease Revenue Bonds AA AA+
2020(b) Lease Revenue Bonds AA AA+
2021 Pension Obligation Bonds AA+ AA+
17 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Below is a schedule of the City’s capital assets, net of accumulated depreciation (in thousands):
Capital assets from governmental activities increased $22,497,000 or 3.1 percent. This increase is largely due to street replacement infrastructure costs and the acquisition of property and construction of a 174-bed Navigation Center. Capital assets from business- type activities decreased $316,000 or 0.2 percent largely due to regular depreciation for the year. Further information on the City’s capital assets can be found in Note 12 of the financial statements.
General Fund Budgetary Highlights
Changes to Original Budget
Comparing the Fiscal Year 2020/21 General Fund Original (i.e. Adopted) Budget expenditures amount of $206,060,000 to the final budgeted amount of $220,756,000 shows a net increase of $14,696,000, or 7.1 percent. This overall increase is due to budget carryovers from the previous year and increased transfers to the Infrastructure and Equipment Replacement funds of $4,400,000 and $1,319,000, respectively.
Final budgeted revenues for the General Fund increased $19,928,000 or 9.2 percent from the original (adopted) budget for the fiscal year ended June 30, 2021. The change from original to final budget occurred primarily as a result of adjustments made to budgeted property tax, sales tax, utility tax, other taxes, and transfers to other funds.
Governmental Activities: June 30, 2021 June 30, 2020
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Land 368,795$ 362,069$ 6,726$ 1.9% Buildings 126,122 126,779 (657) -0.5% Machinery and Equipment 19,583 13,962 5,621 40.3% Construction in Progress 8,584 7,515 1,069 14.2% Infrastructure 214,172 204,434 9,738 4.8% Total Governmental Activities 737,256 714,759 22,497 3.1% Business-Type Activities:
Land 3,907 3,907 - 0.0% Buildings 65,847 68,359 (2,512) -3.7% Machinery and Equipment 6,786 7,025 (239) -3.4% Construction in Progress 1,782 442 1,340 303.2% Infrastructure 64,147 63,052 1,095 1.7% Total Business-Type Activities 142,469 142,785 (316) -0.2% Total Capital Assets 879,725$ 857,544$ 22,181$ 2.6% 18 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Variance with Final Budget
General Fund actual revenues were greater than the final budget by $1,543,000 for the fiscal year ended June 30, 2021. This favorable budget variance is due in large part to actual investment returns exceeding budgeted amounts in the City’s Section 115 Trust.
General Fund expenditures were $4,910,000 less than the final budget. The favorable budget variance is due in large part to the following:
The Community Services and Library Services Departments realized $2,758,000 in savings primarily due to a reduction in city-provided services impacted by the COVID-19 pandemic.
The Public Works and Community Development Departments realized $1,050,000 in savings primarily due to differences in the projected versus actual timing of design, construction, and maintenance contracts for projects, as well as the deferral of various building and planning contracts.
Analysis of City’s Other Major Governmental Funds
Grants Special Revenue Fund
The fund balance in the Grant Special Revenue Fund decreased by $2,207,000, largely due to COVID-19 related expenditures that are expected to be reimbursed through FEMA Public Assistance funds.
LMIHAF Capital Projects Fund
The fund balance in the LMIHAF Capital Projects Fund decreased by $5,863,000 due to the purchase of property to construct a temporary 174-bed Navigation Center in partnership with the County of Orange.
Pension Liability Debt Service Fund
The fund balance in the Pension Liability Debt Service Fund increased by $9,083,000 due to revenues set-aside from the voter-approved property tax override dedicated to the payment of Public Safety pension costs. The Fiscal Year 2020/21 revenues includes a one-time true up payment of $908,000 from the County for override tax generated from the former Redevelopment area.
19 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
Economic Factors and Next Year’s Budget
The Adopted Fiscal Year 2021/22 Budget is structurally balanced, totaling $424.4 million in All Funds. This reflects a $65.4 million, or 18.2 percent, increase from the Fiscal Year 2020/21 Adopted All Funds Budget of $359.0 million. A significant portion of the increase is due to added investment in essential infrastructure and equipment and the restoration of COVID-19 temporary cost saving measures. The larger increases were due to the following funds: Infrastructure Fund ($13.3 million), Equipment Fund ($3.4 million), Pension Liability Fund ($22.6 million), Retirement Supplement Fund ($5.3 million), and General Liability Fund ($2.6 million).
The General Fund budget, which provides the majority of public services to the community, totals $228.0 million, reflecting a $11.1 million, or 5.1 percent increase from the Fiscal Year 2020/21 budget of $216.9 million. This increase is a result of the added Section 115 Trust pension liability set-aside, increased investment in infrastructure and equipment, and restoration of temporary expenditure reductions made in response to the COVID-19 pandemic. The Adopted General Fund Budget for next year has no reliance on one-time revenues to fund ongoing operations, which is critical to maintaining the City’s financial viability and success. Major highlights are as follows:
Public Safety: Funding for Public Safety represents 55 cents for every dollar spent in the General fund. With over half of the General Fund Budget committed to the Police and Fire Departments, the City has dedicated the greatest share of its resources, or $125.3 million to these core services.
In the Police Department, the budget adds $2.3 million in equipment funds, largely to finance the purchase of three new helicopters and the replacement of 39 police vehicles.
The CIP includes $1,624,000 for relocation and expansion of the Police Department Communications Center and Traffic Office, Helipad Lot Replacement, and the installation of street cameras to assist with traffic monitoring and investigations.
In the Fire Department, the Adopted Budget includes $1.1 million in Equipment Replacement Fund comprising the replacement of a Fire Engine, Rescue Boat, Command Vehicle, and Cardiac Monitors/Defibrillators. The General Fund CIP includes $590,000 for Lifeguard and Jr. Lifeguard upgrades and signals at Murdy and Heil Fire Stations.
The Fiscal Year 2021/22 Adopted Budget is a balanced budget. As the economy continues to bounce back and public health guidelines become less restrictive, revenue sources such as Sales Tax and Transient Occupancy Tax are anticipated to increase considerably in the coming year. The Fiscal Year 2021/22 Adopted Budget includes the continuation of Citywide restructuring measures implemented during Fiscal Year 2020/21, restores a number of operating cuts made in response to the COVID-19 pandemic, 20 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2021
includes mandated savings along with the debt service payment for the City’s recently instituted Pension Obligation Bonds, and prioritizes improvements to the City’s facilities, roads and parks. The Fiscal Year 2021/22 budget remains committed to improving the quality of life for our residents, businesses, and visitors by increasing funding for core services such as public safety, community & library service programs, and improving the City’s infrastructure.
General Fund Revenue
General Fund revenue is projected to be $228.0 million, a $11.1 million or 5.1 percent decrease from the Fiscal Year 2020/21 Adopted Budget resulting from projected positive economic impacts resulting from widespread COVID-19 vaccinations, loosening public health orders, and the re-opening of businesses for indoor dining and shopping.
Property Taxes are estimated at $93.2 million, reflecting an increase of 1.2 percent due to the low interest rates leading to accelerated growth in assessed valuations and Employee Retirement Override revenues being transferred to the Pension Liability Fund and no longer being budgeted in the General Fund.
Sales Tax revenues are projected to be $44.6 million, an increase of 13.8 percent from Fiscal Year 2020/21. Transient Occupancy Taxes are anticipated to increase $3.8 million, or 55.1 percent. The increases in these two revenue sources is attributable to the projected positive economic impacts resulting from widespread COVID-19 vaccinations, loosening public health orders, and the re-opening of businesses for indoor dining and shopping.
Licenses and Permits, estimated at $7.8 million, reflect a 5.7 percent increase, as economic and development activity are anticipated to increase in the coming year.
Franchise Taxes are anticipated at $7.1 million, a 29.0 percent increase. Use of Money & Property, which includes parking revenues and lease concessions, is projected to increase $1.7 million, or 11.5 percent, due to business re-openings and expected increases in visitors to our beach and downtown areas, especially as international travel continues to become less restrictive.
Contacting the City’s Financial Management Team
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report, separate reports of the City’s component units or need any additional financial information, contact the Finance Department at 2000 Main Street, Huntington Beach, California, 92648-2702, phone (714) 536-5630 or email [email protected]. 21 THIS PAGE INTENTIONALLY LEFT BLANK
22 THIS PAGE INTENTIONALLY LEFT BLANK
23 BASIC FINANCIAL STATEMENTS
24 ASSETS
Governmental
Activities
Business-Type
Activities Total
Cash and Investments 227,029 $ 88,351 $ 315,380 $ Cash and Investments with Fiscal Agent 9,902 - 9,902 Receivables, Net 36,889 6,496 43,385 Advances to Successor Agency 1,363 - 1,363 Inventories - 1,442 1,442 Prepaids 1,297 - 1,297 Joint Venture 185 1,572 1,757 Subtotal 276,665 97,861 374,526 Capital Assets:
Non-Depreciable 377,379 5,689 383,068 Depreciable, Net 359,877 136,780 496,657 Total Capital Assets 737,256 142,469 879,725 Total Assets 1,013,921 240,330 1,254,251
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 390,427 25,616 416,043 Deferred Outflows Related to Other Postemployment Benefits 2,703 321 3,024 Total Deferred Outflows of Resources 393,130 25,937 419,067
LIABILITIES
Accounts Payable 9,927 9,346 19,273 Accrued Payroll 5,877 631 6,508 Unearned Revenue 15,846 - 15,846 Accrued Interest Payable 2,341 131 2,472 Deposits 760 1,491 2,251 Subtotal 34,751 11,599 46,350 Long-Term Obligations:
Long-Term Obligations Due Within One Year 30,295 1,165 31,460 Long-Term Obligations Due in More than One Year 420,459 22,405 442,864 Net Pension Liability 411,153 27,224 438,377 Net Other Postemployment Benefits Liability 2,877 343 3,220 Total Long-Term Obligations 864,784 51,137 915,921 Total Liabilities 899,535 62,736 962,271
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 15,306 1,314 16,620 Deferred Inflows Related to Other Postemployment Benefits 2,410 287 2,697 Total Deferred Inflow of Resources 17,716 1,601 19,317
NET POSITION
Net Investment in Capital Assets 699,204
142,469 841,673
Restricted for:
Debt Service 4,435 - 4,435 Capital Projects 13,927 20,332 34,259 Public Works and Community Services Projects 47,393 - 47,393 Total Restricted Net Position 65,755 20,332 86,087 Unrestricted (275,159) 39,129 (236,030) Total Net Position 489,800$ 201,930$ 691,730$
CITY OF HUNTINGTON BEACH
STATEMENT OF NET POSITION
JUNE 30, 2021
(In Thousands)
See Notes to the Financial Statements
25 Program Revenues
Functions/Programs Expenses
Charges for
Current
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Governmental
Activities
Business-
Type
Activities Total
Governmental Activities:
City Council 423 $ 162 $ - $ - $ (261)$ - $ (261)$ City Manager 11,163 4,208 33 14 (6,908) - (6,908) City Treasurer 340 149 - - (191) - (191) City Attorney 3,140 6 - - (3,134) - (3,134) City Clerk 1,147 30 - - (1,117) - (1,117) Finance 6,828 3,055 - - (3,773) - (3,773) Community Development 19,716 8,353 2,142 964 (8,257) - (8,257) Fire 65,960 8,877 25 - (57,058) - (57,058) Information Services 6,230 610 - - (5,620) - (5,620) Police 102,415 6,477 1,519 - (94,419) - (94,419) Community Services 11,365 15,558 427 28 4,648 - 4,648 Library Services 6,181 153 401 - (5,627) - (5,627) Public Works 40,270 6,045 1,466 9,186 (23,573) - (23,573) Interest on Long-Term Debt 2,706 - - - (2,706) - (2,706) Total Governmental Activities 277,884 53,683 6,013 10,192 (207,996) - (207,996) Business-type Activities:
Water Utility 46,054 42,523 - - - (3,531) (3,531) Sewer Service 9,284 10,828 - - - 1,544 1,544 Refuse Collection 12,936 13,014 - - - 78 78 Hazmat Service 241 266 - - - 2 5 2 5 Total Business-Type Activities 68,515 66,631 - - - (1,884) (1,884) Total Governmental and Business
Type Activities 346,399 $ 120,314$ 6,013$ 10,192$ (207,996)$ (1,884)$ (209,880)$ General Revenues:
Taxes:
Property Taxes 99,958 $ - $ 99,958$ Sales Taxes 51,162 - 51,162 Utility Taxes 18,374 - 18,374 Franchise Taxes 8,040 - 8,040 Transient Occupancy Tax 9,253 - 9,253 Total Taxes 186,787 - 186,787 Other:
Use of Money and Property 4,399 261 4,660 From Other Agencies - Unrestricted 22,000 - 22,000 Total General Revenues 213,186 261 213,447 Transfers (38) 3 8 -
Total General Revenues and Transfers 213,148 299 213,447 Change in Net Position 5,152 (1,585) 3,567 Net Position - Beginning of Year 478,901 203,515 682,416 Cumulative Effect of Changes in Accounting Principles 5,747 - 5,747 Net Position - Beginning of Year as Restated 484,648 203,515 688,163 Net Position - End of Year 489,800 $ 201,930$ 691,730$ Net (Expense) Revenue and Changes in
Net Position
CITY OF HUNTINGTON BEACH
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
See Notes to the Financial Statements
26 CITY OF HUNTINGTON BEACH
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2021
(In Thousands)
ASSETS General Fund
Grants Special
Revenue
LMIHAF Capital
Projects
Pension
Liability
Other
Governmental
Funds Total
Cash and Investments 86,267$ 17,434$ 2,263$ 16,762$ 70,447$ 193,173$ Cash and Investments with Fiscal Agent - 30 - 36 9,836 9,902 Taxes Receivable 13,258 - - 98 1,494 14,850 Other Receivables, Net 8,163 5,094 8,092 47 547 21,943 Advances to Successor Agency - - 1,363 - - 1,363 Prepaids 115 - - - 105 220 TOTAL ASSETS 107,803$ 22,558$ 11,718$ 16,943$ 82,429$ 241,451$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities:
Accounts Payable 3,803$ 862$ 3$ -$ 4,544$ 9,212$ Accrued Payroll 5,567 95 7 - 192 5,861 Unearned Revenue 1,020 14,826 - - - 15,846 Deposits Payable 760 - - - - 760 Total Liabilities 11,150 15,783 1 0 - 4,736 31,679 Deferred Inflows of Resources:
Unavailable Revenue 2,044 4,421 8,086 - 209 14,760 Total Deferred Inflows of Resources 2,044 4,421 8,086 - 209 14,760 Fund Balances:
Nonspendable
Prepaids 115 - - - 105 220 Restricted
Underground Utilities 364 - - - - 364 Restitution 282 - - - - 282 Donations 767 - - - - 767 Section 115 Trust 11,378 - - - - 11,378 Pollution Remediation - - - - 355 355 Debt Service - - - 16,943 4,435 21,378 Highways, Streets and Transportation - - - - 10,443 10,443 Low Income Housing - - 3,622 - 2,698 6,320 Air Quality - - - - 1,518 1,518 Other Capital Projects - - - - 25,775 25,775 Other Purposes 770 2,354 - - 2,018 5,142 Committed
Economic Uncertainties 25,381 - - - - 25,381 Parks - - - - 1,389 1,389 Other Capital Projects 184 - - - 21,852 22,036 Other Purposes - - - - 3,616 3,616 Assigned
Litigati
on Reserves 3,650 - - - - 3,650 AES Reserve 4,900 - - - - 4,900 Capital Improvement Reserve 8,230 - - - 3,280 11,510 Equipment Replacement 8,295 - - - - 8,295 General Plan Maintenance 791 - - - - 791 General Liability Plan Migration 2,801 - - - - 2,801 Pension Rate Stabilization 741 - - - - 741 Cityview Replacement 1,028 - - - - 1,028 Section 115 Trust 1,500 - - - - 1,500 Triple Flip 749 - - - - 749 Strategic Initiatives 16,536 - - - - 16,536 Housing Agreement 174 - - - - 174 Year-End Fair Value 1,983 - - - - 1,983 Other Purposes 3,990 - - - - 3,990 TOTAL FUND BALANCES 94,609 2,354 3,622 16,943 77,484 195,012
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES 107,803$
22,558$ 11,718$ 16,943$ 82,429$ 241,451$ See Notes to the Financial Statements
27 Amounts reported for governmental activities in the statement of net position are different because:
Total Fund Balances Governmental Funds 195,012$
Net capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds. Amounts exclude net Capital Assets of the Internal Service Funds.
Capital Assets 1,113,591
Accumulated Depreciation (381,639)
Total Capital Assets 731,952 731,952
Joint Venture 185
Internal Services funds are used by management to charge the cost of various city activities to individual governmental and business-like funds. The assets and liabilities of the Internal Service fund must be added to the Statement of Net Position. (8,441) Revenues that are measurable but not available are not recognized as revenue in governmental funds. Such amounts are recorded as unavailable revenue under the modified accrual basis of accounting. 14,760
Deferred outflows related to pensions 389,193
Deferred outflows related to Other Postemployment Benefits (OPEB) 2,688 Governmental funds report all pension contributions as expenditures; however, in the statement of net position, the excess of the total pension liability over the plan fiduciary net position is reported as a net pension liability. (409,844) Deferred inflows related to pensions (15,245)
Deferred inflows related to Other Postemployment Benefits (OPEB) (2,397) Governmental funds report all OPEB contributions as expenditures; however, in the statement of net position, the excess of the total OPEB liability over the plan fiduciary net position is reported as a net pension liability. (2,861) Other long-term liabilities are not due in the current period and, therefore, are not recorded in the governmental funds.
Accrued Interest Payable (2,337)
Long-term Liabilities, including bonds and certificates of participation payable, are not due and payable in the current period and therefore are not reported in the governmental funds.
Amounts exclude Long-Term Obligation of the Internal Service Fund.
Long-Term Obligations Due in One Year (20,138)
Long-Term Obligations Due in More than One Year (382,727) Net Position of Governmental Activities 489,800$
(In Thousands)
CITY OF HUNTINGTON BEACH
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
See Notes to the Financial Statements
28 REVENUES
General
Fund
Grants Special
Revenue
LMIHAF
Capital
Projects
Pension
Liability
Other
Governmental
Funds Total
Property Taxes 91,708 $ - $ - $ 8,250$ - $ 99,958$ Sales Taxes 47,676 - - - 3,486 51,162 Utility Taxes 18,374 - - - - 18,374 Other Taxes 18,428 - - - 7,317 25,745 Licenses and Permits 7,805 - - - 408 8,213 Fines and Forfeitures 4,619 - - - - 4,619 From Use of Money and Property 16,196 222 964 300 1,481 19,163 Intergovernmental 9,967 18,075 - - 1,794 29,836 Charges for Current Services 21,878 - - 1,493 2,018 25,389 Other 2,001 - - - 3 8 2,039 Total Revenues 238,652 18,297 964 10,043 16,542 284,498
EXPENDITURES
Current:
City Council 397 - - 646 - 1,043 City Manager 3,867 5,453 - 6,284 372 15,976 City Treasurer 319 - - 518 - 837 City Attorney 2,938 - - 4,776 - 7,714 City Clerk 1,068 8 - 1,734 - 2,810 Finance 6,025 18 - 9,788 342 16,173 Community Development 8,920 8,450 6,421 14,492 929 39,212 Fire 57,002 1,880 - 89,773 1,071 149,726 Information Services 6,991 64 - 11,358 682 19,095 Police 89,440 2,141 - 140,857 - 232,438 Community Services 7,708 553 - 12,523 4,280 25,064 Library Services 5,150 233 - 8,367 349 14,099 Public Works 24,116 1,569 - 39,177 23,145 88,007 Debt Service:
Principal 1,723 - - - 2,260 3,983 Interest 182 - - - 755 937 Total Expenditures 215,846 20,369 6,421 340,293 34,185 617,114 Excess (Deficiency) of Revenues Over
(Under) Expenditures 22,806 (2,072) (5,457) (330,250) (17,643) (332,616)
OTHER FINANCING SOURCES (USES)
Transfers In 548 1,271 - - 11,239 13,058 Issuance of Long-Term Debt - - - ( 453) - (453) Issuance Premium - - - - 1,743 1,743 Issuance Discount - - - ( 649) - (649) Proceeds of Long Term Debt - - - 340,435 32,028 372,463 Payments to Escrow - - - - (28,256) (28,256) Transfers Out (10,868) (1,406) (406) - (416) (13,096) Total Other Financing Sources (Uses) (10,320) (135) (406) 339,333 16,338 344,810 Net Change In Fund Balances 12,486 (2 ,207) (5 ,863) 9,083 (1,305) 12,194 Fund Balances - Beginning of Year 80,088 4,561 9,485 7,860 75,077 177,071 Cumulative Effect of Changes in
Accounting Principles 2,035 - - - 3,712 5,747 Fund Balances - Beginning of Year as Restated 82,123 4,561 9,485 7,860 78,789 182,818 Fund Balances - End of Year 94,609 $ 2,354$ 3,622$ 16,943$ 77,484$ 195,012$ (In Thousands)
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
See Notes to the Financial Statements
29 Amounts reported for governmental activities in the
Statement of Activities are different because:
Net Changes in Fund Balances - Total Governmental funds 12,194$
Depreciable Assets Purchased 29,506
Non-Depreciable Assets Purchased 11,575 Non-Depreciable Assets Disposition (3,780) Capital Asset Depreciation (16,050)
Joint Venture (72)
Current Year Grant and Other Revenue Accrual 3,010 Prior Year Grant and Other Revenue Accrual (2,922) (1,064)
Pension expenses reported in the statement of activities includes the change in the net pension liability and related changes in pension amounts for deferred outflows and deferred inflows of resources. (9,994) Governmental funds report expenditures for retirement contributions whereas these amounts are reported as deferred outflows of resources on the Statement of Net Position. 339,296
454
Internal service funds are used by management to charge the costs of certain activities, such as self insurance workers' compensation charges. The net revenue of this internal service fund is reported as governmental activities. (13,168) Current Year Interest Accrual (2,337) Prior Year Interest Accrual 568
31,170
(372,463)
(771)
Change in Net Position of Governmental Activities 5,152$ FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
CITY OF HUNTINGTON BEACH
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF ACTIVITIES
Accrual of Revenues - Certain revenues in the Statement of Activities do not meet the "availability" criteria for revenue recognition in the governmental funds and are not reported in the governmental funds as revenue.
Capital Expenditures - Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of these assets are allocated over their estimated useful lives and reported as depreciation expense.
Liabilities not liquidated with current resources - Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
The issuance of long-term debt provides current financial resources to governmental funds.
Repayment of long-term debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.
Other Postemployment Benefits Payments - Expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds (expenses).
Repayments on long-term receivables provide current financial resources to governmental funds, while loans provided consume the current financial resources of governmental funds. These transactions, however, have no effect on net position.
The repayment of some expenses such as compensated absences, claims, and pension expenses, reported in the Statement of Activities, do not require the use of current resources, and therefore are not reported as expenditures in the governmental funds.See Notes to the Financial Statements
30 Governmental
Activities
Water
Fund
Sewer
Service Fund
Refuse
Fund
Hazmat
Service Fund Total
Internal Service
Funds
ASSETS
Current Assets:
Cash and Investments 31,348 $ 35,763 $ 420 $ 488 $ 68,019$ 33,856 $ Restricted Cash and Investments 20,332 - - - 20,332 - Other Receivables, Net 2,575 579 606 9 3,769 96 Prepaids - - - - - 1,077 Joint Ventures 1,572 - - - 1,572 - Inventories 1,442 - - - 1,442 - Unbilled Receivables 1,727 441 559 - 2,727 - Total Current Assets 58,996 36,783 1,585 497 97,861 35,029 Capital Assets:
Land 3,907 - - - 3,907 - Buildings and Improvements 57,298 42,784 - - 100,082 - Machinery and Equipment 16,797 4,584 215 - 21,596 6,831 Infrastructure 104,496 44,808 - - 149,304 - Construction in Progress 294 1,488 - - 1,782 - Less Accumulated Depreciation (91,545) (42,576) (81) - (134,202) (1,527) Total Capital Assets 91,247 51,088 134 - 142,469 5,304 Total Assets 150,243 87,871 1,719 497 240,330 40,333
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 17,925 6,705 600 386 25,616 1,234 Deferred Outflows Related to Other Postemployment Benefits 231 7 9 8 3 321 1 5 Total Deferred Outflows of Resources 18,156 6,784 608 389 25,937 1,249 Total Assets and Deferred Outflows of Resources 168,399$ 94,655$ 2,327$ 886$ 266,267$ 41,582$
LIABILITIES
Current Liabilities:
Accounts Payable 7,630 $ 693 $ 1,023 $ - $ 9,346$ 715 $ Accrued Payroll 433 174 14 10 631 16 Deposits Payable 1,491 - - - 1,491 - Interest Payable 91 35 3 2 131 4 Current Portion of Claims Payable - - - - - 10,108 Current Portion of Compensated Absences 274 103 1 0 2 389 1 2 Total Current Liabilities 9,919 1,005 1,050 1 4 11,988 10,855 Non-Current Liabilities:
Compensated Absences 731 275 24 7 1,037 32 Long-Term Obligations Due Within One Year 543 203 18 12 776 37 Long-Term Obligations Due in More than One Year 14,953 5,593 501 321 21,368 1,029 Net Pension Liability 19,053 7,126 639 406 27,224 1,309 Net Other Postemployment Benefits Liability 246 84 9 4 343 16 Claims Payable - - - - - 36,671 Total Non-Current Liabilities 35,526 13,281 1,191 750 50,748 39,094 Total Liabilities 45,445 14,286 2,241 764 62,736 49,949
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 923 345 31 15 1,314 61 Deferred Inflows Related to Other Postemployment Benefits 206 7 1 7 3 287 1 3 Total Deferred Inflows of Resources 1,129 416 3 8 1 8 1,601 7 4
NET POSITION
Investment in Capital Assets 91,247 51,088 134 - 142,469 5,304 Restricted for:
Capital Projects 20,332 - - - 20,332 - Unrestricted 10,246 28,865 (86) 104 39,129 (13,745) Total Net Position 121,825 79,953 4 8 104 201,930 (8,441) Total Liabilities, Deferred Inflows
of Resources, and Net Position 168,399 $ 94,655$ 2,327$ 886$ 266,267$ 41,582$
PROPRIETARY FUNDS
STATEMENT OF NET POSITION
CITY OF HUNTINGTON BEACH
Business-Type Activities - Enterprise Funds
(In Thousands)
June 30, 2021
See Notes to the Financial Statements
31 Governmental
Activities
Water
Fund
Sewer
Service Fund
Refuse
Fund
Hazmat
Service Fund Total
Internal Service
Funds
OPERATING REVENUES
Sales 38,995 $ - $ - $ - $ 38,995$ - $ Fees and Charges for Service - 10,814 12,968 266 24,048 14,130 Other 3,528 1 4 4 6 - 3,588 7 3 Total Operating Revenues 42,523 10,828 13,014 266 66,631 14,203
OPERATING EXPENSES
Water Purchases 17,144 - - - 17,144 - Supplies and Operations 9,664 7,096 12,911 239 29,910 4,486 Engineering 3,013 - - - 3,013 - Production and Distribution 8,339 - - - 8,339 - Maintenance 561 - - - 561 - Water Meters 2,178 - - - 2,178 - Water Quality 834 - - - 834 - Water Use Efficiency 244 - - - 244 - Claims and Judgments - - - - - 22,073 Depreciation 3,986 2,153 2 2 - 6,161 714 Total Operating Expenses 45,963 9,249 12,933 239 68,384 27,273 Operating Income (Loss) (3,440) 1,579 8 1 2 7 (1,753) (13,070)
NON-OPERATING REVENUES (EXPENSES)
Investment Income (Loss) 123 134 2 2 261 (90) Interest Expense (91) (35) (3) (2) (131) (4) Debt Service - - - - - ( 4) Total Non-Operating Revenues (Expenses) 32 9 9 ( 1) - 130 (98) Income (Loss) Before Transfers (3,408) 1,678 8 0 2 7 (1,623) (13,168)
TRANSFERS
Transfers In - - 51 - 51 - Transfers Out - - - (13) (13) - Total Transfers - - 5 1 (13) 3 8 - Change in Net Position (3,408) 1,678 131 14 (1,585) (13,168) Net Position - Beginning of Year 125,233 78,275 (83) 9 0 203,515 4,727 Net Position - End of Year 121,825 $ 79,953$ 4 8$ 104$ 201,930$ (8,441)$ Business-Type Activities - Enterprise Funds
(In Thousands)
FOR THE YEAR ENDED JUNE 30, 2021
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
CITY OF HUNTINGTON BEACH
See Notes to the Financial Statements
32 Governmental
Activities
Water
Fund
Sewer
Service Fund
Refuse
Fund
Hazmat
Service Fund Total
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers and Users 41,916 $ 10,797 $ 12,802 $ 265 $ 65,780$ 14,241 $ Cash Paid to Employees for Services (24,920) (9,342) (844) (573) (35,679) (1,561) Cash Paid to Suppliers of Goods and Services (32,327) (3,565) (12,593) ( 3) (48,488) (16,762) Net Cash and Investment Provided by
Operating Activities (15,331) (2,110) (635) (311) (18,387) (4,082)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers In - - 51 - 51 - Transfers Out - - - (13) (13) - Debt Service - - - - - (4) Proceeds from Issuance of Long-Term Debt 15,496 5,796 519 333 22,144 1,066 Net Cash and Investments Provided (Used) by
Noncapital Financing Activities 15,496 5,796 570 320 22,182 1,062
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of Capital Assets (3,373)
(2,472) - - (5,845) (1,960) Net Cash and Investments Used by
Capital and Related Financing Activities (3,373) (2,472) - - (5,845) (1,960)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income (Loss) 123 134 2 2 261 (90) Net Cash and Investments Provided by
Investing Activities 123 134 2 2 261 (90) Net Increase (Decrease) in Cash and Investments (3,085) 1,348 (63) 11 (1,789) (5,070) Cash and Investments - Beginning of Year 54,765 34,415 483 477 90,140 38,926 Cash and Investments - End of Year 51,680 $ 35,763$ 420$ 488$ 88,351$ 33,856$
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET CASH AND INVESTMENTS
PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income (Loss) (3,440) $ 1,579 $ 81 $ 27 $ (1,753)$ (13,070)$ Adjustments to Reconcile Operating
Income (Loss) to Net Cash and Investments
Provided (Used) by Operating Activities
Depreciation 3,986 2,153 22 - 6,161 714 (Increase) Decrease in Other Receivables, Net (446) (66) (223) (1) (736) 38 Decrease in Unbilled Receivables 141 35 11 - 187 - Decrease (Increase) in Prepaids - - - - - (477) (Increase) in Joint Ventures (254) - - - (254) - (Increase) in Inventory (9) - - - (9) - Increase (Decrease) in Accounts Payable 692 29 14 - 735 177 Increase (Decrease) in Accrued Payroll 63 17 3 - 83 (7) Increase (Decrease) in Deposits Payable (302) - - - (302) - Increase (Decrease) in Claims Payable - - - - - 9,624 Increase (Decrease) in Compensated Absences (150) (18) (26) 5 (189) - (Increase) Decrease in Deferred Pension Outflow (15,878) (5,939) (532) (342) (22,691) (1,093) Increase (Decrease) in Deferred Pension Inflow 501 187 17 6 711 32 Increase (Dec
rease) in Net Pension Liability (196) (73) - (6) (275) (19) Decrease in Deferred Other Postemployment Benefits Outflow 12 4 - - 16 1 (Decrease) in Deferred Other Postemployment Benefits Inflow (18) (6) (1) - (25) (1) (Decrease) in Net Other Postemployment Benefits Liability (33) (12) ( 1) - (46) ( 1) Net Cash and Investments Provided
by Operating Activities (15,331) $
(2,110)$ (635)$ (311)$ (18,387)$ (4,082)$
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
There were no noncash investing, capital, or financing activities during the year ended June 30, 2021.
Business-Type Activities - Enterprise Funds
CITY OF HUNTINGTON BEACH
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
See Notes to the Financial Statements
33 ASSETS Custodial Funds
Pension Trust Fund -
Retirement
Supplemental Fund
Huntington Beach
Redevelopment
Successor Agency
Private Purpose Trust
Cash and Investments 4,490$ 3$ 6,647$
Cash and Investments with Fiscal Agent 3,265 - 2,582
Mutual Funds - 69,928 -
Money Market Funds - 433 -
Accounts Receivable, Net 699 - 2 0
Total Assets 8,454 70,364 9,249
LIABILITIES
Accounts Payable 1,928 - 427
Accrued Payroll - - 6
Advances from City of Huntington Beach - - 1,363
Long-Term Obligations:
Long-Term Obligations Due Within One Year - - 4,171
Long-Term Obligations Due in More than One Year - - 25,550 Total Long-Term Obligations - - 29,721
Total Liabilities 1,928 - 31,517
NET POSITION
Restricted for Pension Benefits - 70,364 -
Held in Trust For Other Purposes - - (22,268)
Restricted for Individuals and Organizations 6,526 - -
Total Net Position 6,526$ 70,364$ (22,268)$ ADDITIONS Custodial Funds
Pension Trust Fund -
Retirement
Supplemental Fund
Huntington Beach
Redevelopment
Successor Agency
Private Purpose Trust
Employer Contributions -$ 933$ -$
Special Assessments or Special Taxes
Collected from Property Owners 1,512 - 5,201
Business Improvement District Taxes 4,093 - -
Parking Assessments 2,442 - -
Total Additions Before Investment Income 8,047 933 5,201 Investment Income:
Investment Income 13 15,846 10
Less Investment Expense - (129) -
Net Investment Income 13 15,717 1 0
Total Additions 8,060 16,650 5,211
DEDUCTIONS
Benefits - 5,494 -
Administrative Costs 51 314 -
Payments to other Organizations 4,748 - -
Economic Development - - 223
Interest and Fiscal Agency Expenses 1,511 - 1,822
Principal 1,810 - -
Total Deductions 8,120 5,808 2,045
Change in Net Position (60) 10,842 3,166
Net Position - Beginning of Year - 59,522 (25,434)
Cumulative Effect of Changes in
Accounting Principles 6,586 - -
Net Position - Beginning of Year as Restated 6,586 59,522 (25,434) Net Position - End of Year 6,526 $ 70,364$ (22,268)$
STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
CITY OF HUNTINGTON BEACH
STATEMENT OF FIDUCIARY FUND NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2021
(In Thousands)
CITY OF HUNTINGTON BEACH
See Notes to the Financial Statements
34 THIS PAGE INTENTIONALLY LEFT BLANK
35 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
Footnote
Number Description Page
1. Summary of Significant Accounting Policies ............................ 37-53
2. Cash and Investments ................................................................... 54-61
3. Other Receivables .......................................................................... 61-62
4. Unearned Revenue ........................................................................ 63
5. Unavailable Revenue .................................................................... 63
6. Retirement Plan – Normal ............................................................ 64-74
7. Retirement Plan – Supplemental ................................................ 74-81
8. Other Post Employment Benefits ............................................... 82-88
9. Risk Management ................................................................ 89-90
10. Interfund Transactions .......................................................................... 91-92
11. Long-Term Obligations .................................................................. 93-105
12. Capital Assets ................................................................................. 106-108
13. Investment in Joint Ventures ....................................................... 108
14. Related Party Transaction ............................................................ 108
15. Successor Agency Trust for Assets of the Former
Redevelopment Agency of the City of Huntington Beach ..... 109-116
16. Commitments and Contingencies ............................................... 116-120
17. Other Information .......................................................................... 120
18. Subsequent Events ....................................................................... 120-122
19. Prior Period Adjustments ............................................................. 122-123 36 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFI CANT ACCOUNTING POLICIES
a. Reporting Entity
The City of Huntington Beach is the primary government. It was incorporated in 1909 as a charter, full-service city. The form of government is Council-Manager.
Component units are legally separ ate organizations for which th e City Council is financially accountable, or organiza tions that if excluded from the accompanying financial statements, would make them misleading. The component units described below are blended (presented as if they are part of the primary government) or presented as a fiduciary trust f und with the primary government f o r f i n a n c i a l reporting purposes. The criteria used in determining the scope of the reporting entity are based on the provisions of GASB Statement 14, The Financial Reporting Entity, as amended by GASB Statement 39, Determining Whether Certain Organizations Are Component Units, and GASB Statement 61, The Financial Reporting Entity:
Omnibus an amendment of GASB Statements No. 14 and No. 34. A legally separate, tax exempt organization should be reported as a blended component unit of the City if all of the following criteria are met:
1. The governing board is substantiv ely the same as the primary government and there is a financial benefit or burden relationship between the primary government and the component unit;
2. The component unit provides ser vices entirely, or almost entirely, to the primary government or otherwise exclusively, or almost exclusively, benefits the primary government even though it does not provide services directly to it; and
3. The component unit’s total debt outstanding, including leases, is expected to be repaid entirely or almost entirely with the resources of the primary government.
Based on the application of the criteria listed above, the following component units have been included.
Huntington Beach Housing Authority
The Housing Authority (the Author ity) was established in March 2011 pursuant to Housing Authority Laws of California to provide rental assistance programs to low- income families and senior citizens, and to operate a Housing R ehabilitation Loan Program and other approved programs. The Authority is governed by a commission of seven members comprised of the City Council, which appoints management and has full accountability for the Authority's fiscal affairs. The Authority's financial data and transactions are included within the capital projects Low and Moderate Income Housing Asset Fund (LMIHAF). On January 9, 2012, the City adopt ed a resolution designating the Housing Authority of the City of Huntington Bea ch to serve as the Housing Successor Agency. The Housing Successor Agency's financial data and transactions are included within t he LMIHAF Capital Projects Fu nd. There is no separate Component Unit Financial Report (CUFR) prepared for the Authority.
37 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
Huntington Beach Public Financing Authority (Public Financing Authority) – This Corporation was formed in March 1988 to issue debt to finance public improvements and other capital pur chases for the City and the former Redevelopment Agency. The Public F inancing Authority’s governin g body is the City Council, which also adopts its annual budget. The Public Financing Authority is financially dependent on the City. There are no separately i ssued financial statements available for the Public Financing Authority.
The City of Huntington Beach Supplemental Retirement Plan and T rust (Supplemental Retirement Plan and Trust) – The Trust was formed to provide a supplemental retirement plan for all employees hired prior to 1 997 (exact dates differed for various associations ). The governing board of the Supplemental Retirement Plan consists of the City Treasurer, Chief Financial Officer, and the City Manager (or designee). The Retire ment Board is responsible for supervising all investments, resolving benefit disputes, and ensuring that cont ributions are made in order to pay the required benefits. There are no separate financial statements for this plan and trust.
b. Government-wide Financial Statements
The government-wide financial statements include a Statement of Net Position and a Statement of Activities. Thes e statements present summaries o f Governmental and Business-Type Activities for the City accompanied by a total column. Fiduciary activities of the City are not i ncluded in these statements. Th ese statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets, deferred inflows/outflows of resources, and liabilities, including capital assets, as well a s infrastructure assets, and long-term liabilities, are included in the accompanying Sta tement of Net Position. The Statement of Activities presents changes in Net P osition. Under the accrual basis of accounting, revenues are recognized in the per iod in which they are earned while expenses are recognized in the period in which the liability is incurred.
38 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expenses are allocated to the various functions based on a proportionate use of services. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for current services; 2) operating grants and contributions; and, 3) capital grants and contributions. Taxes and other items not properly included among program revenues are reported as general revenues.
As a general rule, the effects of interfund activity have been eliminated from the government-wide financial statements.
When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed.
Financial Statement Classification
In the government-wide financial statements, net position is classified in the following categories:
Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce this category.
Restricted Net Position – This category presents restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. The government-wide Statement of Net Position reports $65,755,000 of governmental activities restricted net position, of which $36,839,000 is restricted by enabling legislation. The government-wide Statement of Net Position reports $20,332,000 of business-type activities restricted net position, of which all is restricted by enabling legislation. This category presents restrictions placed on the categories of Capital Projects, Debt Service, and Specific Projects and Programs.
39 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Unrestricted Net Position – This category represents the net position of the City, not restricted for any project or other purpose. The government-wide Statement of Net Position reports a deficit unrestricted net position of $275,159,000 of governmental activities unrestricted net position, which is largely a result of the recent implementation of GASB Statement Nos. 68 and 75 that requires the City to report Net Pension Liabilities and Net Other Post-Employment Benefits (OPEB) Liability. The City’s Net Pension Liability at June 30, 2021 is $438,377,000 and Net OPEB Liability is $3,220,000, respectively, of which $411,153,000 and $2,877,000, respectively, is payable from Governmental Activities. The government-wide Statement of Net Position reports $39,129,000 of business-type activities unrestricted net position.
c. Fund Financial Statements
Separate fund financial statements are prepared for governmental funds, proprietary funds, and fiduciary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Only current assets, current liabilities, and deferred inflows are included on the Balance Sheets. The Statement of Revenues, Expenditures, and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.
Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, use of money and property, intergovernmental revenues, charges for current services, and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred. However, debt service expenditures as well as expenditures related to compensated absences and claims are recorded only when payment is due.
40 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
Governmental Funds Financial Statements
Governmental Funds Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balances for all major governmental funds and non-majo r funds aggregated. Accompanying schedules are presented to reconcile and exp lain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position presented in the government-wide financ ial statements.
The City presents all major funds that meet those qualifications.
The City’s Governmental Fund Balances are comprised of the foll owing components:
Nonspendable fund balance includes amounts that are not in spe ndable form and typically includes inventorie s, prepaid items, and other items that by definition cannot be appropriated.
The restricted fund balance cat egory includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation.
The committed fund balance clas sification includes amounts that can be used only for the specific purposes determined by a formal action of the City Council.
The City Council has authority to establish, modify, or rescind a fund balance commitment by formal action as specified by the City’s Fund Bal ance Policy.
Commitments to fund balance are made through adoption of a resolution by City Council.
Amounts in the assigned fund balanc e classification are intended to be used by the City for specific purposes but do not meet the criteria to be classified as restricted or committed. The City Manager or designee has the a uthority to establish, modify, or rescind a fund balance assignment as spec ified by the City’s Fund Balance Policy.
Unassigned fund balance is the residual classification for the City’s General Fund and includes all spendable amounts not contained in the ot her classifications. Unassigned fund balance in other governmental funds is limited to any negative residual fund balance after fund balance has been classified as restricted, committed, or assigned.
41 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In the government-wide statements, the City considers restricted funds to be spent first then unrestricted amounts when expenditures are incurred for purposes for which both restricted and unrestricted fund balance is available. In the governmental fund statements, when expenditures are incurred, the City uses the most restrictive funds first. The City would use the appropriate funds in the following order: committed, assigned, and lastly unassigned amounts.
The City establishes encumbrances to record the amount of purchase orders, contracts, and other obligations, which have not yet been fulfilled, cancelled, or discharged. Encumbrances outstanding at year-end are recorded as part of restricted or assigned fund balance.
Encumbrances outstanding as of June 30, 2021, by major fund (in thousands):
Economic Uncertainties Reserve
The City Council established an Economic Uncertainties Reserve in the General Fund through a resolution with a goal to commit the value of two months of the General Fund expenditure adopted budget amount. Appropriations from the Economic Uncertainties Reserve commitments can only be made by formal City Council action. Generally, appropriations and access to these funds will be reserved for emergency situations. Examples of such emergencies include, but are not limited to:
An unplanned, major event such as catastrophic disaster requiring expenditures over 5% of the General Fund adopted budget;
Budgeted revenue in excess of $1 million taken by another government entity; Drop in projected/actual revenue of more than 5% of the General Fund adopted revenue budget; and,
Should the Economic Uncertainties Reserve be used, and its level falls below the minimum amount of two months of General Fund expenditures adopted budget, the goal is to replenish the fund within three fiscal years.
General Fund 3,940$
Grants Special Revenue 1,782
LMIHAF Capital Projects 12
Other Governmental Funds 19,067
Total Encumbrance All Funds 24,801$
42 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
Proprietary Fund Financial Statements
The City’s enterprise and internal service funds are proprietar y funds. Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Fund Net Position, and a Statement of Cash Flows for each major proprietary fund.
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all ass ets, deferred inflows/outflows, and liabilities (whether current or non-current) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position present inc reases (revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.
Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non- operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.
The internal service funds, which provide services to the other funds of the City, are presented in a single column in the proprietary funds financial statements. Because the principal users of the inte rnal services funds are the City ’s governmental activities, the assets and liabilities of the internal service funds are consolidated into the governmental activities colu mn of the government-wide State ment of Net Position. The costs of the internal service fund services are s pread to the appropriate function or program on the government-wide Statement of Activities and the revenues and expenses within the internal service funds are eliminated from the government-wide financial statements to avoid any doubling effe ct of these revenues and expenses.
43 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
Fiduciary Funds Financial Statements
Fiduciary Funds Financial Statements include a Statement of Net Position and a Statement of Changes in Net Posit ion for Custodial and Trust Fu nds. The City's fiduciary funds include Custodial and Trust Funds. Custodial Funds report fiduciary activities that are not held in a trust or equivalent arrangeme nt that meets specific criteria. The Custodial funds present results of operations and include net position.
Custodial funds are accounted for on the accrual basis of accou nting. Trust Funds present results of operations and include net position. The Retirement Supplemental Trust Fund accounts for the activities of the Supplemental Retirement Plan for all employees hired prior to 1997, which accumulates resources for pension benefits to qualified employees. Contributions are made to the Supplemental Plan based on the City’s policy to fun d the required contributions a s determined by the Plan’s actuary and are recognized when they are made. The Retir ee Medical Insurance Trust Fund accounts for the activities of the City’s Other Post- Employment Benefits plans, which provide postemployment medical insurance to retirees.
The Huntington Beach Redevelopment Successor Agency Private Pur pose Trust Fund accounts for the Successor Agency for the former Redevelop ment Agency pursuant to Assembly Bill X1 26. Fiduciary funds are not presen ted in the government-wide financial statem ents because these funds do not represent net position available to the City.
The City reports the following major funds:
Governmental Funds
General Fund – accounts for activity not required to be accounted for in an other fund.
Grants Special Revenue – accounts for grant revenues received from federal, state, and local agencies restricted for related project expenditures.
LMIHAF Capital Projects – accounts for the activity related to the development of affordable housing.
Pension Liability Debt Service – accounts for the City’s contribution to its pension plan obligations, as provided by the voter-approved property tax override and other sources of revenue, including the allocable share from Enterprise Funds and Other Governmental Funds.
Proprietary Funds
Water Fund – used to account for water sales to customers.
Sewer Service Fund – accounts for user fees charged to residents and businesses for sewer service.
44 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Refuse Fund – used to account for activities related to refuse collection and disposal.
Hazmat Service Fund – accounts for user fees charged for the City’s hazardous waste material program.
The City’s fund structure also includes the following fund types:
Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.
Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.
Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Internal Service Funds
Self Insurance Workers’ Comp Fund – accounts for the City’s self insurance workers’ compensation program in an internal service fund.
Self Insurance General Liability Fund – accounts for the City’s self insurance general liability program in an internal service fund.
Equipment Replacement Fund – accounts for the City’s equipment replacement needs in an internal service fund.
Fiduciary Funds
Custodial Funds – are used to account for debt service activities related to the Parking Structure – Bella Terra and Community Facilities District conduit debt issues, in which the City acts as an agent, not as a principal. The Business Improvement District fund is used to account for taxes received and held until disbursement.
Pension Trust Fund – Retirement Supplemental Fund - accounts for the City’s supplemental retirement plan.
Huntington Beach Redevelopment Successor Agency Private Purpose Trust Fund – accounts for the Successor Agency of the former Redevelopment Agency in accordance with the State’s Dissolution Act.
45 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
d. Cash and Investments
The City pools cash resources of its various funds to facilitat e cash management.
Cash in excess of daily needs is invested and reported as inves tments. It is the City’s intent to hold investments until maturity. However, the City may, in response to market conditions, sell investments prior to maturity in ord er to improve the quality, liquidity, or yield of the portfolio. Interest earning s are apportioned among funds based on month-end cash and investment balances. The City ’s cash and cash equivalents are considered to be cash on hand, demand deposits, and highly liquid investments, such as money market funds, and any investment with a maturity of 90 days or less at the time of purchase.
For financial reporting purposes, investments are adjusted to t heir fair value whenever the difference between fair value and the carrying amount is material.
Changes in fair value that occur during the fiscal year are rec ognized as investments income reported for t hat fiscal year. Investment in come includes interest earnings, changes in fair value and any gains or losse s realized upon the liquidation or sale of investments.
The City participates in the Loc al Agency Investment Fund (LAIF ), an investment pool managed by the State Treasurer of the State of California. LAIF has invested a portion of the pool funds in structured notes and asset-backed securities. LAIF’s investments are subject to credit risk. In addition, these structured notes and asset- backed securities are subject to interest rate risk as a result of changes in interest rates. In June 2020, the City Coun cil adopted a resolution auth orizing the deposit and investment of excess funds in the Orange County Investment Pool (OCIP). The investments in OCIP are managed by the County Treasurer. The City’s investment policy is further discussed in Note 2 on page 54.
The City pools all non-restricted c ash for investment purchases a n d a l l o c a t e s interest income to the funds based on month-end cash balances. Funds that have restricted cash record interest income in the respective fund.
46 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
e. Capital Assets
Capital assets, which inclu de property, plant, equipment, and i nfrastructure, are reported in the applicable governmental or business-type activi ties columns in the government-wide financial statem ents and in the proprietary fun ds financial statements. Capital assets have an acquisition cost of $50,000 or greater ($100,000 for infrastructure) and a useful life of one year or more.
The City records all purchased capital assets at historical cos t (where historical records are available) and at est imated historical cost where no historical records exist. Capital assets acquired from gifts or contributions are recorded at acquisition value at the time received, or in the case of infrastructure as sets, at City Council acceptance date. Capital assets a cquired through annexation are recorded at net book value.
In the government-wide and proprietary funds financial statements, depreciation is recorded on the straight-line method over the estimated useful life of the assets as shown below and charged to the respective activity or fund. No depreciation is recorded in the governmental funds of the fund financial statements.
Buildings 20 to 50 years
Machinery and Equipment 5 to 30 years
Infrastructure 50 Years
f. Unearned Revenue
In the government-wide and the fund-level financial statements, unearned revenues are those where the asset recognition (availability criteria) h as been met, but the revenue recognition criteria have not been met.
47 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
g. Deferred Outflows/I nflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outfl ows of resources, represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditu re) until then. The City reports deferred outflows related to pensions and OPEB which are the result of the implementation of GASB Statement Nos. 68 and 75.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City reported the following in this category:
1. Unavailable revenues (which include revenues, notes, and lon g-term receivables) measured under the modified accrual basis of accounting reported in governmental funds. These amounts are deferred and will be r ecognized as an inflow of resources in the period that the amounts become available.
2. Changes in the net pension li ability not included in pension expense.
3. Changes in the net other pos temployment benefits liability not included in OPEB expense.
h. Inventories
Proprietary fund inventories are valued at weighted-average cos t and consist of expendable supplies and repair par ts. The cost of such inventor ies is recorded as expenditures/expenses when consumed rather than when purchased.
48 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
i. Interfund Transactions
As a general rule, interfund tr ansactions have been eliminated from the government-wide financial statements. Exceptions to this rule are payments in-lieu or charges for current service between the City’s enterprise activities and the City’s governmental activities. Elimination of these transactions woul d distort the direct costs and program revenues for the various functions. Certain e liminations have been made regarding interfund activities, payables, and receiva bles. All internal balances in the Statement of Net Position have been eliminated except those representing balances between t he governmental activities and t he business-type activities, which are presented as internal balances and elimin ated in the total primary government column.
Numerous transactions occur between funds of the City resulting in transfers and amounts due to or from other fu nds. Amounts due to or from are the current (due within one year) portion of monies that are to be paid or to be received from other funds.
j. Long-Term Obligations
In the government-wide and proprietary funds financial statemen ts, long-term obligations are recorded as liabilities in the applicable gover nmental activities, business-type activities, or proprietary fund-type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the debt. In the governmental fund financial stat ements, bond discounts and prem iums are recognized as another financing source or use. Issuance costs a re recorded as a current year debt service expenditure.
k. Employee Compensated Absences
The City records the cost of all accumulated and unused leave time (vacation, sick, and comp) as a liability when earned in the government-wide and proprietary funds financial statements. In the governmental funds financial statements these amounts are recorded as expenditures when due and payable.
49 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
l. Property Tax Revenue
Property tax in California is levied according to Article 13-A of the California Constitution. The basic levy is a countywide-levy of one percent of total assessed valuation and is allocated to county governments, school districts, cities and special districts. Additional levies r equire two-thirds approval by vot ers and are allocated directly to the specific government.
In the government-wide financial statements, property tax is recorded when earned, regardless of when levied, due, or received. City property tax revenues are recognized when levied in the governmental funds to the extent that they result in current receivables collectible within 60 days after year-end.
The County acts as a collecti on agent for property tax for all of the local governmental units. Property taxes are normally collected twice per year. The property tax calendar is as follows:
Lien Date, January 1 - Prior Fiscal Year
Levy Date, July 1 - Levy Fiscal Year
Due Date, First Installment - November 1
Due Date, Second Installment - February 1
Delinquent Date, First Installment - December 10
Delinquent Date, Second Installment - April 10
50 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (Continued)
m. Redevelopment Property Tax Trust Funds
Under ABX1 26, revenues that were previously distributed to red evelopment agencies (prior to their dissolution) in the form of property t ax increment will no longer be received. Instead, revenues are deposited by County Auditors into Redevelopment Property Tax Trust Funds (RPTTF) created in the County Treasury for each Successor Agency. The County Auditor administers the R PTTF and disburses twice annually from this fund pass-through payments to affected taxing entities, an amount equal to the total of obligation payments that are required to be paid from tax increment as denot ed on the Recognized Obligation Payment Schedules (ROPS) to Recognized Ob ligation Retirement Funds (ROR F) established in the treasury of the Successor Agencies, and vari ous allowed administrative fees and allowances. Any remaining balance is th en distributed by the County Auditor back to affected taxing entities under a prescribed method that accounts for pass-through payments.
The calendar for distribution of RPTTF funds is as follows:
Annual ROPS submission due to D epartment of Finance, February 1 Distribution of RPTTF to Successor Agencies for the July-December ROPS period, June 1
Distribution of RPTTF to Successor Agencies for the January-Ju ne ROPS period, January 2
n. Cash Flow Statements
For purposes of the Statement of Cash Flows, the Proprietary Fu nds consider all cash and investments to be cash equivalents, as these funds par ticipate in the citywide cash and investment pool.
o. Estimates
The accompanying financial statements require management to mak e estimates and assumptions that effect cer tain reported amounts and disclo sures. Actual results could differ from those estimates.
51 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
p. Pensions and OPEB
For purposes of measuring the net pension liability, net OPEB liability, related deferred outflows of resources and deferred inflows of resources, pension/OPEB expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the CalPERS’ Financial Office and the City’s Defined Benefit Pension Plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
GASB Statement Nos. 68 and 75 require reported results to pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.
Supplemental
Employee
Retirement Plan
CalPERS
Pension Plans
Other
Post-Employment
Benefit Plan
Valuation Date (VD) June 30, 2019 June 30, 2019 June 30, 2019 Measurement Date (MD) June 30, 2021 June 30, 2020 June 30, 2020 Measurement Period (MP) July 1, 2020 to
June 30, 2021
July 1, 2019 to
June 30, 2020
July 1, 2019 to
June 30, 2020
52 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) q. Fair Value Measurements
Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy t hat prioritizes the inputs to valuation techniques used to measure fair value. The hi erarchy gives the highest pri ority to unadjusted quoted prices in active markets for identical assets or liabili ties (Level 1 measurements) and the lowest pri ority to unobservable inputs (L evel 3 measurements). The three levels of fair value hierarchy are described as follows:
Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and fair value is determined through the use of models or other valuation methodologies including:
Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities i n markets that are inactive;
Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or
liability (including assumptions about risk). These unobservabl e inputs are developed based on
the best information available in the circum stances and may include the City’s own
data.
53 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
2. CASH AND INVESTMENTS
Investments Authorized by the California Government Code and the City’s Investment Policy
The table below identifies the investment types that are author ized for the City by the California Government Code (or the City’s investment policy, wh ere more restrictive).
The table also identifies certain provisions of the California Government Code Section 53601 (or the City’s investment policy, where more restrictive) that address interest rate risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the pr ovisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.
INVESTMENT TYPE MAXIMUM MATURITY MAXIMUM SPECIFIED % OF PORTFOLIO / MAXIMUM PER ISSUER
MINIMUM RATING
REQUIREMENTS
Bankers' Acceptances 180 days 25% (up to 40% with Council approval) / 10% A1/P1, "A" Rating
Negotiable Certificates of Deposit 3 years (Up to 5 years with Council approval 30% / 10% A1/P1, "A" Rating
Commercial Paper 270 days 25% / 10% A1, "A" Rating
State Obligations ‐ CA And Others 5 years None / 10% "A" Rating City/Local Agency of CA Obligations 5 years None / 10% "A" Rating U.S. Treasury Obligations 5 years None None
U.S. Government Agency Obligations 5 years None None
IBRD, IFC, IADB 5 years 10% "AA" Rating
Repurchase Agreements 3 Months None None
Reverse Repurchase Agreements 92 days 20% of the base value of the portfolio.
Requires City Council Approval. None
Medium‐Term Corporate Notes 5 years 30% / 10% "A" Rating Non‐negotiable Certificates of Deposit 3 years None / 10% A1/P1, "A" Rating Money Market Mutual Funds 60 days 15% / 10% "AAA" Rating Local Agency Investment Fund (LAIF) N/A Up to $75,000,000 None Orange County Investment Pool (OCIP) N/A Up to $75,000,000 None Joint Powers Authority N/A None / $20,000,000 See 10.0N of IPS 54 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
2. CASH AND INVESTMENTS (Continued)
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by a bond trustee, but bond indentures do allow for other forms of investments if approved in writing by the bond i nsurer that are not identified below. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk.
Authorized Investment Type Maximum Maturity
Maximum
Percentage
of Portfolio
Maximum
Investment
in One Issuer
U.S. Treasury Securities 5 Years No Limit No Limit
Federal Agency Securities 5 Years No Limit No Limit
Bankers' Acceptances 180 Days No Limit No Limit
Time CDs 360 Days No Limit No Limit
Negotiable CDs 360 Days No Limit No Limit
LAIF N/A No Limit No Limit
Commercial Paper 270 Days No Limit No Limit
Municipal Bonds from Any State Life of Bond No Limit No Limit Money Market Funds N/A No Limit No Limit
Investment Agreements Life of Bond No Limit No Limit
Corporate Bonds 5 Years No Limit No Limit
California Asset Mgmt. Program N/A No Limit No Limit
Forward Purchase/Delivery Agreements Life of Bond No Limit No Limit 55 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
2. CASH AND INVESTME NTS (Continued)
Investment of the Pension Trust Fund – Retirement Supplemental Fund
The Investment Policy Statement (IPS) of the Huntington Beach Supplemental Pension Trust is established in accordance with the assignment of fiduciary duties by the State of California Constitution and State and Local Government Codes. The purpose of the Investment Policy is to set guidelines for a prudent investment -making process. The policy was established with the assumption that the longer-term nature of the portfolio provides for higher risk tolerance and short-term volatility, but more potential for capital growth. The Investment Manager will be responsible for carrying out the activities related to the portfolio in accordance with the IPS to meet the goals of an agreed upon risk/return profile, and in accordance with the mix of parameters outlined below:
Authorized Investment Type Minimum
Allocation
Target Asset
Allocation
Maximum
Allocation
Cash or Equivalents 0% 0% 10%
Money Market 0% 0% 10%
Fixed Income 30% 40% 50%
Intermediate Bond 30% 40% 50%
Short‐Term Bond 0% 0% 10%
Long‐Term Bond 0% 0% 10%
High Yield Bond 0% 0% 10%
Inflation Protected Bond 0% 0% 10%
World Bond 0% 0% 10%
Domestic Equity 17% 27% 37%
Large Cap Equity (Value, Blend, Growth) 8% 18% 28%
Mid Cap Equity (Value, Blend, Growth) 0% 6% 16%
Small Cap Equity (Value, Blend, Growth) 0% 3% 13%
Foreign Equity 11% 21% 31%
Foreign Large Equity (Value, Blend, Growth) 7% 17% 27%
Foreign Sm / Mid Equity (Value, Growth) 0% 0% 10%
Emerging Markets 0% 4% 14%
Real Estate 0% 10% 20%
Real Estate 0% 10% 20%
Commodities 0% 2% 12%
Natural Resources 0% 2% 12%
56 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
2. CASH AND INVESTMENTS (Continued)
At year-end, the City had the following deposits and investments (amounts in thousands):
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value is to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City’s investments, including investments 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 (in thousands).
Primary Government:
Cash and Investments 315,380$
Cash and Investments with Fiscal Agent 9,902
Total Primary Government 325,282
Fiduciary Funds:
Cash and Investments 11,140
Cash and Investments with Fiscal Agent 76,208
Total Fiduciary Funds 87,348
Total Deposits and Investments 412,630$
INVESTMENTS: Fair Value Less than 1 1 to 3 3 to 5 More than 5 Total US Treasuries 13,129$ -$ 3,065$ 10,064$ -$ 13,129$ US Agency Securities* 113,063 10,018 32,424 70,621 - 113,063 Mutual Funds 69,928 69,928 - - - 69,928 Money Market Funds 1,578 1,578 - - - 1,578 Medium Term Notes - IADB 30,616 - 15,596 15,020 - 30,616 Corporate Bonds 45,968 18,155 23,806 4,007 - 45,968 Local Agency Investment Fund 44,677 44,677 - - - 44,677 Orange County Investment Pool 65,337 65,337 - - - 65,337 California Asset Mgmt Program 2,773 2,773 - - - 2,773 PARS Pension Rate Stabilization Program 11,378 11,378 - - - 11,378 Total Investments 398,447$ 223,844$ 74,891$ 99,712$ -$ 398,447 Total Deposits 14,183
Total Deposits and Investments 412,630$
* Security is callable, but classified above according to original maturity date Investment Maturities (In Years)
57 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
2. CASH AND INVESTME NTS (Continued)
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 assign ment of a rating by a nationally recognized statistical rating organization. Presented below are the minimum ratings required by, where applicable, the California Governmen t Code or the City’s investment policy, or debt agreements, and the actual rating as of the year-end for each investment type (in thousands):
Concentration of Credit Risk
The City’s investment policy lim its investments in any one issu er, except for U.S.
Treasury Securities, U.S. Gover nment Agencies and the Local Age ncy Investment Fund, to no more than 10% of the portfolio. In addition, no mor e than 50% can be invested in a single security type or with a single financial institution and every security type has a specific limit. This is in addition to the limits placed on investments by State law. Investments in any one iss uer (other than U.S. Treasury Se curities, external investment pools, or Money Market Funds) that represent 5% or more of the City’s total investments are as follows (in thousands):
Fair Value
Issuer Investment Type Amount
Federal Home Loan Bank U.S. Agency Securities 73,200 $
Federal Home Loan Mortgage Corporation U.S. Agency Securities 16,313 $ Inter-American Development Bank Medium Term Notes 15,596 $ Remaining as of Year End
INVESTMENTS: Minimum
Legal Rating Total AAA AA A BBB+ Not Rated
US Treasuries N/A 13,129 $ 13,129$ - $ -$ -$ -$ US Agency Securities* N/A 113,063 113,063 - - - - Mutual Funds N/A 69,928 - - - - 69,928 Money Market Funds AAA 1,578 1,578 - - - - Medium Term Notes - IADB AA 30,616 30,616 - - - - Corporate Bonds A 45,968 - 12,531 27,431 6,006 - Local Agency Investment Fund N/A 44,677 - - - - 44,677 Orange County Investment Pool N/A 65,337 - - - - 65,337 California Asset Mgmt Program N/A 2,773 2,773 - - - - PARS Pension Rate Stabilization Program N/A 11,378 - - - - 11,378 Total Investments 398,447$ 161,159$ 12,531$ 27,431$ 6 ,006$ 191,320$ Note: All US Agencies are rated AAA by Moody's and AA by S&P 58 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
2. CASH AND INVESTMENTS (Continued)
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for invest ments is the risk that, in the event of the failure of the counterparty (e.g., broker-deale r) to a transaction, a governme nt 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, oth er than the following provision s 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 regulat ed 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 percent 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 percent of the secured public deposits.
As of June 30, 2021, the City’s deposits with financial institutions were covered by FDIC up to $250,000, and the remaining amounts were collateralized a s described above.
None of the City’s investments were subject to custodial credit risk. Per the Investment Policy’s statement, the City of H untington Beach is the registered owner of all investments in the portfolio.
Investment in State Investment Pool
The City is a voluntary participant in LAIF, which is regulated by California Government Code Section 16429 under the oversi ght of the Treasurer of the State of California.
The fair value of the City’s inve stment in this pool is reporte d 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 (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on th e accounting records maintained by LAIF, which are recorded on an amortized cost bas is. Currently, LAIF does not have an investment rating.
59 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
2. CASH AND INVESTMENTS (Continued)
Investment in the Orange County Investment Pool
The City is a participant in t he County Treasurer’s Orange Coun ty Investment Pool (OCIP). The OCIP is an external investment pool, is not rated and is not registered with the Securities Exchange Commission (SEC). The County Treasury O versight Committee conducts OCIP oversight. Cash on deposit in the OCIP at June 30, 2021 is stated at fair value. The OCIP v alues participant shares on an amortized cost basis during the year and adjusts to fair value at year-end. For further information regarding the OCIP, refer to the County of Orange Annual Comprehensive Financial Report.
Investment in California Asset Management Program Pool
The City is a voluntary participant in the California Asset Man agement Program (CAMP). CAMP is an investment pool offered by the California As set Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of th e California Joint Exercise of Powers Act (California Government Code Sections 650 0 et seq., or the “Act”) for the purpose of exercis ing the common power of its Pa rticipants to invest certain proceeds of debt issues and surplus funds. The Trust’s activities are directed by a Board of Trustees, all of whom are employees of the Califo rnia public agencies which are participants in the Tr ust. The City reports investmen ts in CAMP at the fair value amounts provided by CAMP, w hich is the same as the value of the pool share.
The Pool is managed to maintain a dollar-weighted average portf olio maturity of 60 days or less and seeks to maintain a constant net asset value (NAV) per share of $1.00.
The Pool invests in obligations of the United States Government and its agencies, high- quality, short-term debt obligations of U.S. companies and financial institutions. The Pool is a permitted investment for all local agencies under California Government Code Section 53601(p). CAMP is rated AAAm by Standard & Poor's.
Investment in Public Agency Reti rement Services Pension Rate St abilization Program
The City established a Section 115 pension trust account within t h e P u b l i c A g e n c y Retirement Services Pension Rate Stabilization Program (PARS PRSP) to hold assets that are legally restricted for use in administering the City’s defined benefit pension plan. The pension trust fund’s s pecific cash and investments are managed by a third- party portfolio manager under guidelines approved by the City.
60 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
2. CASH AND INVESTMENTS (Continued)
Fair Value Measurement
The City categorizes its fair value investments within the fair value hierarchy established by generally accepted accounting principles. The City has the following recurring fair value measurements as of June 30, 2021 (in thousands):
3. OTHER RECEIVABLES
A summary of Other Receivables as of June 30, 2021 is as follows (in thousands):
INVESTMENTS: Level 1 Level 2 Level 3 Total
U.S. Treasuries -$ 13,129$ -$ $ 13,129 U.S. Agency Securities - 113,063 - 113,063 Medium Term Notes - IADB - 30,616 - 30,616 Corporate Bonds - 45,968 - 45,968 Total Investments -$ 202,776$ -$ 202,776$ Fair Value Hierarchy
Description Amount
Developer Loans Receivable 39,286$
Emerald Cove Loan Receivable 6,640
Housing Rehabilitation Loans Receivable 2,207
First Time Homebuyers Receivable 1,446
Emergency Medical Fee Receivable 1,500
CDBG Program Receivable 1,076
Affordable Housing In-Lieu Receivable 84
Infrastructure Fund 209
Other Grants Receivable 1,586
Other Receivable 7,195
Total Other Receivables 61,229
Allowance for Uncollectible Developer Loans (39,286)
Net Other Receivables on Governmental Fund Financial Statements 21,943$ Other Receivables Reconciliation
Net Receivable on Government-wide Financial Statements 36,889$ Taxes Receivable on Governmental Fund Financial Statements (14,850) Other Receivables on Internal Service Fund (96)
Net Other Receivables on Governmental Fund Financial Statements 21,943$ 61 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
3. OTHER RECEIVABLES (Continued)
a. Developer Loans
Loans made to developers to construct or rehabilitate certain facilities under deferred loan agreements total $39,286,000 at year-end. These loans are allowed until a future event occurs. Loans to the Low and Moderate Income Housing Asset Fund total $20,935,000, loans made under the Home Program total $14,040,000 and loans made under the Affordable Housing In-Lieu Program total $4,311,000.
Interest rates on these loans range from 0% to 10%. The allowance for uncollectible developer loans is $39,286,000 due to the terms of the agreement to forgive the balance of loans after a specified time period if all the conditions of loan forgiveness are met.
b. Emerald Cove Loan
On June 15, 2010, the former Redevelopment Agency loaned Emerald Cove, LP $8,000,000 to acquire and rehabilitate Emerald Cove Senior Apartments. The loan has an interest rate of 3% and is to be repaid annually from residual receipts over 60 years. The loan was transferred to the Low and Moderate Income Housing Asset Fund in Fiscal Year 2011-12. The loan balance as of June 30, 2021 is $6,640,000.
c. Housing Rehabilitation Loans
Loans made to qualified homeowners and landlords in the City of Huntington Beach to rehabilitate certain single-family homes or multifamily rental housing under deferred loan agreements total $2,207,000 at year-end. These loans are deferred until a future event occurs. The interest rates on these loans range from 0% to 6%.
d. Deferred Loans – First Time Homebuyers and Down Payment Assistance
Loans made for down payment assistance of qualified first time homebuyers under deferred loan agreements total $1,446,000 at year-end. These loans are deferred until a future event occurs.
62 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
4. UNEARNED REVENUE
Governmental and enterprise f unds defer revenue recognition in connection with resources that have been received as of year-end, but not yet e arned (unearned revenue). The amounts are as follows (in thousands):
5. UNAVAILABLE REVENUE
Certain revenues in governmental funds are considered unavailab le revenue until received. All revenues including property and sales tax are rec ognized in the year earned or levied in the governm ent-wide financia l statements, b ut are recorded as unavailable revenue in the fund financial statements to the extent they are not collected within 60 days after year-end. The amounts are as follows (in thousands):
Deferred Loans to developers and qualified individuals for housing rehabilitation and to first time homebuyers are discussed in Note 3.
Related Party Transaction related to the housing loan granted t o the City Manager is discussed in Note 14.
General Fund
Grants
Special
Revenue
Total
Unearned
Revenue
Comm Services Unearned Revenue (Classes) 1,020$ -$ 1,020$ Grants - 14,826 14,826 Total $ 1,020 $ 14,826 $ 15,846 General Fund
Grants Special
Revenue LMIHAF
Other
Governmental
Funds
Total
Unavailable
Revenue
Grants - $ 2,214$ - $ - $ 2,214$ Deferred Loans:
Emerald Cove - - 6,640 - 6,640 Housing Rehabilitation - 2,207 - - 2,207 First Time Homebuyers - - 1,446 - 1,446 Related Party Transaction
(City Manager's Housing Loan) 1,457 - - - 1,457 Other Unavailable Revenue 587 - - 209 796 Total 2,044$ 4,421$ 8,086$ 209$ 14,760$ 63 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL
a. Summary
Net Pension Liability
Net Pension Liability is reported in the accompanying statement of net position as follows:
Deferred Outflows of Resources
Deferred Outflows of Resources are reported in the accompanying statement of net position as follows:
Deferred Inflows of Resources
Deferred Inflows of Resources are reported in the accompanying statement of net position as follows:
Net Pension
Liability
CalPERS Miscellaneous Plan 160,441$
CalPERS Safety Plan 271,528
Supplemental Plan (Note 7) 6,408
Total 438,377$
Deferred employer
Investment earnings Differences between pension contributions less than Expected and made after
expected earnings Actual Experience measurement date Total CalPERS Miscellaneous Plan 3,239$ -$ 150,880$ 154,119$ CalPERS Safety Plan 4,106 489 257,329 261,924 Total 7,345$ 489$ 408,209$ 416,043$ Differences between
Changes Expected and
in assumptions Actual Experience Total
CalPERS Miscellaneous Plan -$ 3,587$ 3,587$ CalPERS Safety Plan 692 4,104 4,796 Supplemental Plan (Note 7) - 8,237 8,237 Total 692$ 15,928$ 16,620$ 64 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
Pension expenses for the measu rement period ending June 30, 202 0 (the measurement date), are included in the accompanying financial s tatements as follows:
b. Plan Description
Substantially all City employees working the equivalent of 1,00 0 hours per fiscal year are eligible to participat e in the Safety Plan and Miscell aneous Plan Agent multiple-employer defined benefit plans administered by Califor nia Public Employees Retirement System (CalPERS), which acts as a common i nvestment and administrative agent for its participating member employers. Benefit Provisions under the Plans are established by State statutes within the Public Employee’s Retirement Law. Following the passage of AB340, Public Employee s’ Pension Reform Act (PEPRA) by the California Legislature, employees hired on or after January 1, 2013, who were not previously enrolled in the PERS system elsewhere, or who have had a break in service of at least six months are required to be enrolled in this retirement program whi ch provides a benefit level that is lower than the benefits provided for CalPERS em ployees that do not meet the PE PRA qualifications previously described. CalPERS issues publicly available reports that include a full description of the pension plans regarding benef it provisions, assumptions and membership information that can be found on the CalPERS website. Copies of the CalPERS annual financial report may be o btained from the CalPERS Executive Office – 400 P Street, Sacramento, CA 95814.
Net Pension
Expense
CalPERS Miscellaneous Plan 14,962$
CalPERS Safety Plan 36,664
Supplemental Plan (Note 7) 5,381
Total 57,007$
65 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
Benefits Provided
CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment.
Benefit provisions and all other requirements are established by State statute and may be amended by city contracts with employee bargaining groups.
Participant is eligible for non-industrial disability retirement if becomes disabled and has at least 5 years of credited service. There is no special age requirement. The standard non-industrial disability retirement benefit is a monthly allowance equal to
1.8 percent of final compensation, multiplied by service.
Industrial disability benefits are not offered to miscellaneous employees. The City provides industrial disability retirement benefit to safety employees. The industrial disability retirement benefit is a monthly allowance equal to 50 percent of final compensation.
An employee's beneficiary may receive the basic death benefit if the employee dies while actively employed. The employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is eligible for any other pre- retirement death benefit may choose to receive that death benefit instead of this basic death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions, where interest is currently credited at 7.5 percent per year, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months preceding death.
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated survivor(s), or to the retiree's estate.
Benefit terms provide for annual cost-of-living adjustments to each employee’s retirement allowance. Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted on a compound basis by 2 percent.
66 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
The Plans’ provisions and benefits in effect at June 30, 2021 a re summarized as follows:
Classic PEPRA
Hire date Prior to January 1, 2013 January 1, 2013 and after Benefit formula 2.5% @ 55 2% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age minimum 50 years minimum 52 years
Monthly benefits, as a % of eligible compensation
2.0% - 2.5%, 50 years - 63+
years, respectively
1.0% - 2.5%, 52 years - 67+
years, respectively
Required employee contribution rates 8.000% 6.250%
Required employer contribution rates
July 1, 2020 - June 30, 2021 38.855% 38.855%
Classic PEPRA
Hire date Prior to January 1, 2013 January 1, 2013 and after Benefit formula 3% @ 50 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age minimum 50 years minimum 52 years
Monthly benefits, as a % of eligible compensation 3%, 50+ years
2.0% - 2.7%, 50 years - 57+
years, respectively
Required employee contribution rates 9.000% 11.750%
Required employer contribution rates
July 1, 2020 - June 30, 2021 60.780% 60.780%
Miscellaneous Agent Plans
Safety Agent Plans
67 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
c. Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be 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. For the measurement period ended June 30, 2020, miscellaneous participants under the Classic and PEPRA plans are required to contribute 8% and 6.25% of their annual covered salary, respectively. Safety participants under the Classic and PEPRA plans are required to contribute 9% and 11.75% of their annual covered salary, respectively.
In addition, the City is required to make employer contributions at the actuarially determined rates of 38.855% and 60.780% for the miscellaneous and safety plans, respectively, for the period July 1, 2020 through June 30, 2021.
At June 30, 2019, the valuation date, the following employees were covered by the benefit terms for each Plan:
Miscellaneous Safety
Active members 593 377
Transferred members 439 79
Terminated members 329 58
Retired members and beneficiaries 1003 610
68 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
d. Net Pension Liability
The City’s net pension liability is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2020, using an annual actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is illustrated below:
Actuarial Assumptions – The total pension liabilities in the June 30, 2019 actuarial valuation, rolled forward to June 30, 2020 using standard update procedures, were determined using the following actuarial assumptions:
Actuarial Methods and Assumptions Used to Determine Total Pension Liability Actuarial Cost Method Entry Age Normal in accordance with the requirement of GASB Statement No. 68 Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Mortality Rate Table*
Post Retirement Benefit Increase
*The mortality table used was developed based on CalPERS' specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and projected mortality improvement using Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.
7.15% Net of Pension Plan Investment and Administrative Expenses; includes Inflation
Derived using CalPERS’ Membership Data for all Funds.
The lesser of contract COLA or 2.50% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.50% thereafter.
7.15%
2.50%
Varies by Entry Age and Service
69 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
Long-term Expected Rate of Return – The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The expected real rates of return by asset class are as follows:
Current Target Real Return Real Return
Asset Class1
Allocation Years 1-102 Years 11+3
Global Equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation Assets 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
1 In the System's ACFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
2 An expected inflation of 2.00% used for this period
3 An expected inflation of 2.92% used for this period.
70 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
Discount Rate – The discount rate used to measure the total pension liabilit y at June 30, 2020 was 7.15 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rate s and that contributions from e mployers will be made at statutorily required rates, actuarially determined. Bas ed on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long- term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Subsequent Events – There were no subsequent events that would materially affect the results present ed in this disclosure.
e. Changes in the Net Pension Liability
The following table shows the changes in net pension liability recognized over the measurement period:
Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability
Balance at June 30, 2019 (Valuation Date) 591,598 $ 432,522 $ 159,076 $ Changes in the year:
Service cost 7,779 - 7,779 Interest on the total pension liabilities 41,058 - 41,058 Differences between expected and actual experience (6,087) - (6,087) Benefit payments, including refunds of members contributions (30 ,321) (30,321) - Contributions - employer - 16,879 (16,879) Contributions - employee - 3,630 (3,630) Net investment income - 21,486 (21,486) Administrative expenses - (610) 610 Net changes 12,429 11,064 1,365 Balance at June 30, 2020 (Measurement Date) 604,027$ 443,586$ 160,441$ Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability
Balance at June 30, 2019 (Valuation Date) 782,327 $ 518,645 $ 263,682 $ Changes in the year:
Service cost 13,226 - 13,226 Interest on the total pension liabilities 54,597 - 54,597 Differences between expected and actual experience (4,721) - (4,721) Benefit payments, including refunds of members contributions (41 ,247) (41,247) - Contributions - employer - 25,848 (25,848) Contributions - employee - 4,355 (4,355) Net investment income - 25,784 (25,784) Administrative expenses - (731) 731 Net changes 21,855 14,009 7,846 Balance at June 30, 2020 (Measurement Date) 804,182$ 532,654$ 271,528$ Miscellaneous Plan
Safety Plan
71 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The following presents the City’s net pension liability, calculated using the discount rate, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
As of the start of the measurement period (July 1, 2019), the net pension liability was $159,076,000 for the Miscellaneous Plan and $263,682,000 for the Safety Plan. For the measurement period ending June 30, 2020 (the measurement date), the City incurred a pension expense of $14,962,000 and $36,664,000 for the Miscellaneous and Safety Plans, respectively.
The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized over 5-years straight line. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive and retired) as of the beginning of the measurement period.
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
Miscellaneous Plan 237,719$ 160,441$ 96,583$ Safety Plan 376,752 271,528 184,923 Aggregate Total 614,471$ 431,969$ 281,506$ Plan's Aggregate Net Pension Liability/(Asset)
72 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
The Expected Average Remaining Service Lifetime (“EARSL”) is calculated by dividing the total future service years of active employees by the total number of plan participants (active, inactive, and retired) in the risk pool. For the 2019-20 measurement period, the EARSL for each plan is as follows:
At June 30, 2021 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Miscellaneous Safety
Expected Average Remaining Service Lifetime 2.4 3.9 Miscellaneous Plan
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual earning on
pension plan investments 3,239$ -$ Difference between expected and actual experience - (3,587) Contributions made subsequent to the
measurement date 150,880 -
Total 154,119$ (3,587)$
Safety Plan
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual earning on
pension plan investments 4,106$ -$ Changes in assumptions - (692) Difference between expected and actual experience 489 (4,104) Contributions made subsequent to the
measurement date 257,329 -
Total 261,924$ (4,796)$
73 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
6. RETIREMENT PLAN – NORMAL (Continued)
For the Miscellaneous Plan and Safety Plan, $150,880,000 and $257,329,000, respectively, was reported as deferred outflows of resources related to pensions resulting from City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
7. RETIREMENT PLAN – SUPPLEMENTAL
a. Plan Description and Benefits
The City administers a supplemental single-employer defined benefit retirement plan (Supplemental Plan) for all employees hired prior to 1997 (exact dates are different for various associations). The Plan is governed by a three-member Supplemental Employee Retirement Plan and Trust Board consisting of the City Treasurer, Chief Financial Officer, and the City Manager, or his/her designee. The Board has the authority, under the terms of the Trust agreement, to control and manage the operation and administration of the Plan. Benefit provisions are established and may be amended through negotiations between the City and employee bargaining associations during each bargaining period, which are then approved through resolutions of the City Council. In fiscal year 2008-09, the City established the Supplemental Employee Retirement Plan and Trust, and transferred $24,918,000 to an irrevocable trust from the prefunded amounts. The plan and trust are reported as a pension trust fund in the City’s financial statements on a full accrual basis.
Measurement Periods
Ended June 30, Miscellaneous Safety
2021 (4,427)$ (3,860)$
2022 101 (67)
2023 2,183 1,555
2024 1,795 2,171
(348)$ (201)$
Deferred Outflows/ (Inflows) of Resources
74 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
The Supplemental Plan will pay the retiree an additional amount to his or her CalPERS retirement benefit for life. In order to be eligible for the benefit, the retiree must retire from the City. The amount that is computed as a factor of an employee’s normal retirement allowance is computed at retirement and remains constant for his or her life. This benefit is payable by the City for the duration of the life of the member, and shall cease upon the employee’s death. As of June 30, 2019, the date of the Plan’s most recent actuarial valuation, the average monthly benefit received by inactive plan members and beneficiaries receiving benefits is $625.
Effective in 1998 (exact dates are different for various associations), new City employees are ineligible to participate in the Supplemental Employee Retirement Plan.
Employees Covered: At June 30, 2021, the measurement date, the following employees were covered by the benefit terms for the Plan:
b. Employer Contributions
The City’s policy is to make required contributions as determined by the Supplemental Plan’s actuary. The required contributions were determined as part of the September 30, 2018 actuarial valuation. The City is required to contribute the actuarially determined rate of 2.5% of total payroll for all permanent employees for the year ended June 30, 2021. There are no employee contributions required for the plan. Survivor and termination benefits are not included in the plan.
Administrative costs of this plan are financed through investment earnings.
For the year ended June 30, 2021, the contributions were (in thousands):
Contributions - employer 1,435 $
Inactive employees receiving benefits 753
Active employees 65
Total 818
75 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
c. Investments
Investments of the Supplemental Plan are held separately from those of other City funds by investment custodians. The Supplemental Employee Retirement Plan and Trust Board is responsible for supervising all investments. Changes to the Investment Policy require approval by the Board. The policy remained the same as last fiscal year. The most recent policy was reviewed in June 2021 with an effective date of July 1, 2021. Please refer to Note 2 for a detailed des cription of the Supplemental Plan’s Investment P olicy. The major asset class al location for the Supplemental Plan as of June 30, 2021 is listed below:
Quoted market prices have been used to value investments as of June 30, 2021.
These investments are held by the Trust or by an agent in the T rust’s name. A portion of these investments is subject to credit risk (including custodial credit risk and concentrations of credit risk), interest rate risk and/or foreign currency risk. The Governmental Accounting Standards Board (GASB) Statement No. 40 requires the disclosure of such risk. Please see below for a list of investm ents held in any one organization that represents five percent or more of the Plan’s investment portfolio at June 30, 2021:
Asset Class Strategic Allocation
Allocation as of
June 30,2019
Long-Term
Expected Rate of
Return
Fixed Income 40.00% 38.36% 1.55%
Equities 27.00% 56.08% 5.35%
Real Estate 10.00% 4.95% 0.00%
Commodities 2.00% 0.00% 0.00%
Cash and Equivalents 0.00% 0.61% 0.45%
Total 79.00% 100.00%
AssetsVanguard International Growth Adm 17.22%
Fidelity® US Bond Index 14.11%
DoubleLine Total Return Bond I 10.08%
PGIM Total Return Bond R6 10.06%
Harbor Capital Appreciation Inst 8.13%
Parnassus Core Equity Institutional 7.78%
Vanguard Equity-Income Adm 7.51%
Concentration of Investments Equaling or Exceeding 5%
76 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
All Supplemental Plan investments are reflected in the schedule included in Section c of the Note, with the exception of amounts held in the City’s investment pool account. The City maintains an investment pool account for City funds. Monthly contributions for the Plan are held in the City’s investment pool account and are used to pay recurring expenditures. Refer to Note 2 for a description of the City’s investments.
For the year ended June 30, 2021, the annual money-weighted rate of return on the Plan’s investments, net of pension plan investment expenses, was 26.88%. The money-weighted rate of return expresses investment performance, net of investment expenses, adjusted for the changing amounts actually invested.
d. Net Pension Liability
The City’s net pension liability is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2021, using an annual actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the City’s net pension liability is shown on the following page.
77 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
Actuarial Assumptions – The total pension liabilities in the June 30, 2019 actuarial valuations for the June 30, 2021 m easurement date were determin ed using the following actuarial assumptions:
The changes in actuarial assumptions include the following:
All other actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial expe rience study for the period fro m 1997 to 2015, including updates to salary inc rease, mortality, and retirement rates. The future service retirement liabilities load increased from 15% to 23% t o reflect recent experience of benefits being larger than anticipated.
e. Discount Rate & Sensitivity
The discount rate is used in the measurement of the Total Pensi on Liability. This rate considers the ability of t he fund to meet benefit obligati ons in the future. To make this determination, employee contributions, benefit payments, expenses, and investment returns are projected into the future. The Plan Net Position (assets) in future years can then be determined and compared to its obligation to make benefit payments in those years. As long as assets are projected to be on hand in a future year, the assumed valuation discount is used. For this valuatio n, the discount rate is 5.25%, based on the inflation assumption of 2.50% and a long -term asset allocation of 70% equities and 30% fixed income. The geometric real rates of return were assumed to be 5.35% for equities and 1.55% for fixed income. The long-term expected rate of return is applied to all future projected benefit payments.
Actuarial Methods and Assumptions Used to Determine Total Pension Liability Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll Actuarial Assumptions:
Discount Rate 5.25%
Inflation 2.50%
Salary Increases CalPERS 1997-2015 Experience Study plus 2.75% aggregate increase Investment Rate of Return 5.25% Net of Investment Expenses Mortality Rate Table
Retirement, Disability, Withdrawal CalPERS 1997-2015 Experience Study plus 23% load on future service retirement liability added to reflect recent benefits experience.
CalPERS 1997-2015 Experience Study, mortality projected fully generational with Scale MP-2019
78 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. An investment return ex cluding administrative expenses would have been 6.25 percent.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investme nt expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, both short-term and long-term market return expectations were taken into account along with e xpected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their requir ed contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) u sing a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flo ws as the one calculated using bo th short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the neares t one quarter of one percent.
79 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
Changes in the Net Pension Liability
The following table shows the changes in net pension liability recognized over the measurement period (in thousands):
Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The following presents the City’s net pension liability, calculated using the discount rate, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:
Discount Rate - 1%
(4.25%)
Current Discount
Rate (5.25%)
Discount Rate + 1%
(6.25% )
14,397$ 6,408 $ (368) $ Plan's Aggregate Net Pension Liability/(Asset)
(in thousands)
Total
Pension
Liability
Plan
Fiduciary
Net Position
Net Pension
Liability
Balance at June 30, 2020 71,074 $ 59,017 $ 12,057 $ Changes in the year:
Service cost 350 - 350
Interest on the total pension liabilities 4,292 - 4,292 Changes of Assumptions 6,547 - 6,547 Benefit payments, including refunds of members contributions (5, 494) (5,494) - Contributions - employer - 1,435 (1,435) Net investment income - 15,717 (15,717) Administrative expenses - (314) 314 Net changes 5,695 11,344 (5,649)
Balance at June 30, 2021 76,769$ 70,361$ 6,408$ Supplemental Plan
80 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
f. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2021, the City recognized pension expense in the amount of $5,381,000 for the Supplemental Plan.
At June 30, 2021, the City reported deferred inflows of resources related to the supplemental pension plan from the following source (in thousands):
For the Supplemental Plan, $8,237,000 was reported as deferred inflows of resources related to pensions which will be recognized in pension expense as follows (in thousands):
Deferred Outflows / (Inflows)
Year Ended June 30, of Resources
2022 (1,825)$
2023 (1,908)
2024 (2,097)
2025 (2,407)
(8,237)$
Deferred Inflows
of Resources
Difference between projected and actual earnings on (8,237)$ pension plan investments
81 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
8. OTHER POST EMPLOYMENT BENEFITS
a. Plan Description
The City administers the following two other post employment benefit (OPEB) plans:
Postemployment Medical Insurance
The City agreed, via contract, with each employee association t o provide postemployment medical insurance to retirees. These Other Poste mployment Benefits (OPEB) are based on years of service and are available to all retirees who meet all three of the following criteria:
At the time of retirement, the employee is employed by the City. At the time of retirement, the employee has a minimum of ten y ears of service credit or is granted a service connected disability retirement. Following official separation from the City, CalPERS grants a retirement allowance.
The City’s obligation to provide the benefits to a retiree ceas es when either of the following occurs:
During any period the retiree is eligible to receive health in surance at the expense of another employer; and/or
The retiree becomes eligible to enroll automatically or voluntarily in Medicare.
The subsidy a retiree is entitled to receive is based on the retiree’s years of service credit and is limited to $344 per month after 25 years of servi ce. If a retiree dies, the benefits that would be payable for his or her insurance are provided to the spouse or family for 12 months. T he retiree may use the subsidy for any of the medical insurance plans that the City’s active employees may enroll in. Employees hired on or after October 1, 2014 are not eligible for this benefit.
PEMHCA
The City provides an agent multiple-employer defined benefit he althcare plan to retirees through CalPERS under the California Public Employees Medical and Hospital Care Act (PEMHCA), commonly referred to as PERS Health. PEMHCA provides health insurance through a variety of Health Maintenan ce Organization (HMO) and Preferred Provider
Organization (PPO) options. The PEMHCA benefits
are applied to a
ll safety employee groups, based on retirement plan election.
The
benefits continue to the surviving spouse for one year. The Huntington Beach Firefighters’ Association (HBFA) joined PEMHCA in 2011. All other safety groups - Fire Management Association (FMA), Marine Safety Management Ass ociation (MSOA), Police Management Association
(PMA), and Police Officers’ Association
POA) - joined in 2004.
82 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
Safety employees are eligible f or PEMHCA benefits if they retir e from the City on or after age 50 with at least five years of service or disability, and are eligible for a PERS pension.
As of the June 30, 2020 measurem ent date, the following current and former employees were covered by the benefit terms under the plan:
b. Accounting and Funding
The City utilizes the California Employers’ Retiree Benefit Trust (CERBT), an agent multiple-employer plan, for the postemployment medical insurance benefit.
Benefits paid from the CERBT were $842,000 for year ended June 30, 2021. The assets of the CERBT are excluded from the accompanying financia l statements since they are in an irrevocable trust administered by CalPERS. C o p i e s o f CalPERS’ annual financial report may be obtained from their exe cutive office: 400 P Street, Sacramento, CA, 95814 or on their website: www.calper s.ca.gov. The City’s policy is to make 100% o f each year’s ARC, with an addit ional amount to prefund benefits as determined annua lly by City Council in orde r to improve the funded status of the plan.
For PEMHCA, the City selected t he “unequal” method for the cont ribution. Under this method, the City offered a lesser contribution for retirees than for active employees. The City paid the PEMHCA minimum for actives ($136 in 2019, $139 in 2020, and $143 in 2021). Beginning in 2008, Assembly Bill 25 44 changed the computation for annual increases to annuitant health care under the unequal method. Under the new provisions, the City increases annuitant health care contributions equal to an amount not less than five percent of the active employee contributions, multiplied by the number of years in PEMHCA. The City’s contribution for retirees is $71.50 per employee for the Huntington Beach Fi refighter’s Association (HBFA) and $121.55 f or all other Safety groups in 2 021. The annual increase in minimum PEMHCA contribution to CalPERS will continue until the time that the City contribution for retirees equals the City contrib ution paid for active employees.
Postemployment
Medical Insurance PEMHCA
Retirees and beneficiaries receiving benefits 263 189 Inactive employees not yet receiving benefits 301 - Active Plan Members 861 384
Total Plan Participants 1,425 573
83 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
The City’s net OPEB liability was measured as of June 30, 2020 and the total OPEB liability used to calculate the net OPEB liability was determin ed by an actuarial valuation dated June 30, 2019, bas ed on the following actuarial methods and assumptions:
Actuarial Cost Method – Entry Age Normal
Discount rate – 6.25%
Projected salary increases for covered employees due to inflat ion – aggregate increases of 3.00% per annum
Investment Rate of Return – 6. 25%, assuming actuarially determ ined contributions funded into CERBT Investment Strategy 2
Mortality Rate
1 – Derived using CalPERS’ membership data for all funds Pre-Retirement Turnover 2 – Derived using CalPERS’ membership data for all funds
PEMCHA minimum increases for a ctives - $145 in 2021, with 4.25 % annual increases thereafter
Healthcare Trend Rate – The medical trend rate represents the long-term expected growth of medical benef its paid by the plan, due to no n-age-related factors such as general medical in flation, utilization, new tec hnology, and the like. The following table sets f or the inflation trend assumption used for the valuation:
1 Mortality information was derived from data collected during 1997 to 2015 CalPERS Experience Study dated December 2017, which may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications. Post- retirement mortality rates include mortality projected fully generational with Scale MP-19.
2. The pre-retirement turnover information was developed based on CalPERS’ specific data. For more details, please refer to the 2007 to 2011 Experience Study Report. The Experien ce Study Report may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications.
Calendar Calendar
Year Non-Medicare Medicare Year Non-Medicare Medicare
2021 7.25% 6.30% 2029 5.40% 4.85%
2022 7.00% 6.10% 2030 5.20% 4.70%
2023 6.75% 5.90% 2031-35 5.05% 4.60%
2024 6.50% 5.70% 2036-45 4.90% 4.50%
2025 6.25% 5.50% 2046-55 4.75% 4.45%
2026 6.00% 5.30% 2056-65 4.60% 4.40%
2027 5.80% 5.15% 2066-75 4.30% 4.20%
2028 5.60% 5.00% 2076+ 4.00% 4.00%
Annual RateAnnual Rate
84 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
Long-Term Expected Rate of Return
The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class.
These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset al location percentage and by adding expected inflation.
The target allocation and best estimates of arithmetic real rat es of return for each major asset class are summarized in the following table:
Discount Rate
The discount rate used to measure the total OPEB liability was 6.25 percent. The projection of cash flows used to determine the discount rate as sumed that City contributions will be made at rat es equal to the actuarially de termined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary ne t position was projected to be available to make all projected OPEB payments f or current active and inactive employees and benefic iaries. Therefore, the long-t erm expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.
Asse t Cla ss
Target
Allocation
Long-Term
Expected Real
Rate of Return
Global Equity 40% 4.82%
Fixed Income 43% 1.47%
Treasury Inflation-Protected Securities ("TIPS") 5% 1.29% Commodities 4% 0.84%
Real Estate Inv estment Trusts ("REITS") 8% 3.76%
Total 100%
* Long-term expected rate of return is 6.25%
CERBT Strategy 2
85 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
The changes in the net OPEB Liability for the plan are as follows (in thousands):
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2020 (in thousands):
1% Decrease Current Discount Rate 1% Increase
(5.25%) (6.25%) (7.25%)
Net OPEB Liability 7,368$ 3,220$ (178)$ Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB Liability
/ (Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2020 32,845$ 29,193$ 3,652$ (Measurement Date June 30, 2019)
Changes recognized for the measurement period:
Service Cost 1,096 - 1,096 Interest 2,064 - 2,064 Assumption Changes (298) - (298) Contributions - Employer - 1,959 (1,959) Net Investment Income - 1,580 (1,580) Benefit Payments (1,848) (1,848) - Administrative Expenses - (245) 245 Net Changes 1,014 1,446 (432) Balance at June 30, 2021 33,859$ 30,639$ 3,220$ (Measurement Date June 30, 2020)
Increase / (Decrease)
86 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates
The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are o ne percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2020 (in thousands):
OPEB Plan Fiduciary Net Position
The CERBT issues a publicly available financial report that inc ludes financial statements and required supplementary information. That report may be obtained from the California Public Employees’ Retirement System, CERBT, P.O. Box 942703, Sacramento, CA 94429-2703.
Recognition of Deferred Outflows and Deferred Inflows of Resources
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time.
Amount are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and defe rred inflows of resources related to OPEB and are to be recognized in future OPEB expense.
The recognition period differs depending on the source of the gain or loss:
1% Decreas e Current Trend 1% Increas e
(6.25% Non-Medicare /
5.30% Medicare,
decreasing to 3.0%
Non-Medicare /
3.0% Medicare)
(7.25% Non-Medicare /
6.30% Medicare,
decreasing to 4.0%
Non-Medicare /
4.0% Medicare)
(8.25% Non-Medicare /
7.30% Medicare,
decreasing to 5.0%
Non-Medicare /
5.0% Medicare)
Net OPEB Liability (504)$ 3,220 $ 7,950 $ 5 Years
Net difference between projected and actual
earnings on OPEB plan investments
87 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
As of June 30, 2021, the City recognized OPEB expense of $1,373,000. As of June 30, 2021, the City reported deferred outflows of resources related to OPEB from the following sources:
The $1,882,000 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2020 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2022. Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows (in thousands):
Measurement Periods
Ended June 30,
2022 (205)$
2023 (302)
2024 (343)
2025 (257)
2026 (306)
Thereafter (142)
(1,555)$
Deferred
Outflows/ (Inflows)
of Resources
Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB Contributions subsequent to the measurement date 1,882$ -$ Difference between expected and actual experience 1,025 - Changes in Assumptions - 2,697 Net difference between projected and actual earnings on 117 - 3,024$ 2,697$
88 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
9. RISK MANAGEMENT
The City is exposed to various risks of losses related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City records the liability claims as expenditures in the Self Insurance General Liability Internal Service Fund and the workers’ compensation claims in the Self Insurance Workers’ Compensation Internal Service Fund.
BICEP was created in 1988 by a joint powers agreement between the City of Huntington Beach and four other local entities including Oxnard, Ventura, Santa Ana, and West Covina, for the purpose of providing joint insurance coverage and related risk management services for member cities. BICEP allows member entities to finance a claims payment pool for certain liability claims in excess of $1,000,000 to a maximum coverage limit of $27,000,000 for claims incurred through June 30, 2015, and $24,000,000 thereafter.
Effective July 1, 2019, the member agencies of BICEP agreed to dissolve the Joint Powers Authority. BICEP continues to exist for the purpose of disposing of all claims, the distribution of assets, and any other functions necessary to conclude the affairs of BICEP as provided in the Bylaws of the Authority. Upon dissolution of BICEP, the City purchased liability insurance in the open marketplace, which provides insurance for claims costs exceeding the City’s self-insured retention of $1,000,000. The maximum coverage limit is $30,000,000, which is inclusive of the self-insured retention. Claims that exceed the maximum limit of liability are covered by the City’s Self-Insurance General Liability Internal Service Fund.
There were no liability claims in the past three years that exceeded the coverage limit.
Although, there is a claim that exceeds the self-insured retention of $1,000,000 and is not covered under the City’s liability insurance plan. Refer to note 18d. for further details.
Liability Claims
Claims up to $1,000,000 are paid from the City’s Self Insurance General Liability Internal Service Fund. Payments for claims from $1,000,000 to the maximum limit discussed above are covered by the excess liability coverage purchased by the City.
Any claims exceeding the maximum limit are covered by the Self Insurance General Liability Internal Service Fund. The liability for these claims is recorded as part of long- term obligations in the Self Insurance General Liability Fund and government-wide financial statements. Liabilities include amounts incurred, but not reported.
89 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
9. RISK MANAGEMENT (Continued)
Workers’ Compensation Claims
Workers’ compensation claims o f up to $1,000,000 per claim are paid from the Self Insured Workers’ Comp Internal Service Fund. Excess workers’ co mpensation coverage is purchased through the CSAC/Prism-Excess Insurance A uthority.
Payments for claims from $1,000,000 to statutory limits are cov ered by CSAC/Prism- Excess Insurance Authority.
The Self Insurance Workers’ Comp Internal Service Fund has a $19.6 million deficit at year-end at the 55 percent confi dence level. The City has estab lished plans to help reduce the deficit in this fund. This will be accomplished by additional transfers from the General Fund, Proprietary funds, and other governmental fun ds in which employees are charged over the next nine years.
Claims activity and liabilities relating to the current and prior year are (in thousands):
Workers'
Compensation General Liability Total
Balance June 30, 2019 26,630 $ 8,396$ 35,026$ Additions 9,758 3,310 13,068 Reductions (6,782) (4,157) (10,939) Net Increase (Decrease) 2,976 (847) 2,129 Balance June 30, 2020 29,606 7,549 37,155 Additions 12,200 11,058 23,258 Reductions (7,012) (6,622) (13,634) Net Increase (Decrease) 5,188 4,436 9,624 Balance June 30, 2021 34,794 $ 11,985$ 46,779$ 90 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
10. INTERFUND TRANSACTIONS
a. Advances to/from Other Funds
The amounts at year-end were (in thousands):
There is a $1,363,000 advance from the LMIHAF Capital Projects Fund to the Redevelopment Agency Private Purpose Trust Fund as of June 30, 2021 for Main Pier property acquisitions prior to the dissolution of the Redevelopment Agency on February 1, 2012. No set interest rates or fixed repayment terms have been established.
Redevelopment
Agency Private
Purpose Trust
Advances from (Receivable):
Major Governmental Funds
LMIHAF Capital Projects 1,363$
Advances to
(Payable):
91 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
10. INTERFUND TRANSACTIONS (Continued)
b. Transfers In/Out
The amounts at year-end were (in thousands):
The following is a summary of the significant transfers:
$10,817,000 was transferred from the General Fund to Other Governmental Funds for debt service payments of $1,371,000 and for infrastructure related projects including road repairs, police facility repairs and enhancement, equipment, and other capital improvement projects of $9,400,000. $51,000 was transferred from the General Fund to the Refuse Enterprise Fund to fund the senior citizen rate reduction on refuse charges. $406,000 was transferred from the LMIHAF Fund to Other Governmental Funds for debt service payments.p
$135,000 was transferred from the Grants Special Revenue Fund to the General Fund for lost EMS revenue related to COVID-19 reimbursed by HHS Grant Funds.
$16,000 was transferred from the 2014A Bond Project Fund to the Infrastructure Fund to utilize bond funds on eligible Police Headquarters Modernization Project costs.
$13,000 was transferred from the Hazmat Service Enterprise Fund to the General Fund to cover administrative and overhead expenditures.
Transfers In
General
Fund
Grants
Special
Revenue
LMIHAF
Capital
Projects
Other
Governmental
Funds
Total
Governmental
Funds
Hazmat
Service
Fund
Total
Transfers In
General Fund -$ 135$ -$ 400$ 535$ 13$ 548$ Grants Special Revenue - 1,271 - - 1,271 - 1,271 Other Governmental Funds 10,817 - 406 16 11,239 - 11,239 Total Governmental Funds 10,817 1,406 406 416 13,045 13 13,058 Refuse Fund 51 - - - 51 - 51 Total Enterprise Funds 51 - - - 51 - 51 Total Transfers Out 10,868$ 1,406$ 406$ 416$ 13,096$ 13$ 13,109$ Transfers Out
92 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS
Below is a schedule of changes in long-term governmental obligations for the year (in thousands):
Governmental Activities:
June 30,
2020 Additions Retirements
June 30,
2021
Accrued
Interest
Due Within
One Year
Public Financing Authority:
2010(a) Lease Revenue Bonds 7,410$ - $ (7,410)$ - $ - $ - $ 2011(a) Lease Revenue Bonds 15,725 - (15,725) - - - 2014(a) Lease Revenue Bonds 12,530 - (650) 11,880 138 665 2020(a) Lease Revenue Bonds - 4,835 - 4,835 36 - 2020(b) Lease Revenue Bonds - 1 4 , 4 4 0 (1,610) 1 2,830 2 5 1 , 5 1 5 Total Public Financing Authority 35,665 1 9,275 ( 25,395) 2 9,545 1 99 2 ,180 Other Long-Term Obligations:
Compensated Absences 12,633 5,971 (5,199) 13,405 - 4,432 Claims Payable 37,155 23,258 (13,634) 46,779 - 10,108 Pollution Remediation 2,000 - - 2,000 - - LED Lighting Phase I 546 - (114) 432 2 119 I-Bank CLEEN Loan 2,171 - (289) 1,882 18 296 CEC Loan 2,588 - (131) 2,457 13 394 Pension Obligation Bonds - 341,501 - 341,501 2,101 10,859 Leases Payable 5,241 1 2,753 (5,241) 1 2,753 8 1 , 9 0 7 Total Other Long-Term Obligations 62,334 383,483 ( 24,608) 421,209 2 ,142 2 8,115 Total Long-Term Obligations -
Governmental Activities 97,999$ 402,758$ ( 50,003)$ 450,754$ 2 ,341$ 3 0,295$ 93 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
a. Public Financing Authority
(1) 2010(a) Public Financing Au thority Lease Revenue Bonds
Year of Issuance 2010
Type of Debt Lease Revenue Bonds
Original Principal Amount $14,745,000
Security Lease with City
Interest Rates 2.0% to 5.0%
Interest Payment Dates March 1 st, September 1st
Principal Payment Dates September 1 st
Purpose of Debt Defease 1997 Leasehold Revenue Bonds
(Construct Pier Plaza and Purchase 800
MHz System) and 2000 Lease Revenue
Bonds (Capital Improvements and
defeasance of Emerald Cove Certificates of
Participation)
Bonds of $6,545,000 were advance re funded by the 2020(a) Lease Revenue Bonds on September 1, 2020.
(2) 2011(a) Public Financing Au thority Lease Revenue Bonds
Year of Issuance 2011
Type of Debt Lease Revenue Bonds
Original Principal Amount $36,275,000
Security Lease with City
Interest Rates 2.0% to 5.0%
Interest Payment Dates March 1 st, September 1st
Principal Payment Dates September 1 st
Purpose of Debt Defease 2001(a) Leasehold Revenue
Bonds (Construct Sports Complex and
South Beach Phase II Improvements) and
2001(b) Lease Revenue Bonds (Defease
Civic Improvement Corporation Certificates)
Bonds of $13,570,000 were advance refunded by the 2020(b) Lease Revenue Bonds on August 12, 2020. The 2011(a) Lease Revenue wer e paid on September 1, 2021 but in substance defeased as of June 30, 2021.
94 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
(3) 2014(a) Public Financing Authority Lease Revenue Bonds
Year of Issuance 2014
Type of Debt Lease Revenue Bonds
Original Principal Amount $15,295,000
Security Lease with City
Interest Rates 3.0% to 5.0%
Interest Payment Dates March 1 st, September 1st
Principal Payment Dates September 1 st
Purpose of Debt Finance the construction of a new Senior Center
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2022 665$ 411$ 1,076$
2023 685 384 1,069
2024 720 352 1,072
2025 750 319 1,069
2026 785 289 1,074
2027-2031 4,305 1,067 5,372
2032-2035 3,970 310 4,280
Total 11,880$ 3,132$ 15,012$
95 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
(4) 2020(a) Public Financing Authority Lease Revenue Bonds
Year of Issuance 2020
Type of Debt Lease Revenue Bonds
Original Principal Amount $4,835,000
Security Lease with City
Interest Rates 4.0% to 5.0%
Interest Payment Dates May 1 st, November 1st
Principal Payment Dates May 1 st
Purpose of Debt Defease 2010(a) Lease revenue Bonds
which Defeased 1997 Leasehold
Revenue Bonds (Construct Pier Plaza
and Purchase 800 MHZ system), 2000
Lease Revenue Bonds (Capital
Improvements and defeasance of
Emerald Cove Certificate of Participation)
Debt service requirements to maturity are (in thousands):
On August 12, 2020, the Public Financing Authority issued $4,835,000 of 2020 Series A Lease Revenue Bonds on behalf of the City. The bond proceeds were used to advance refund the outstanding 2010 Series A Lease Revenue Bonds. The 2020 Series A bonds bear fixed interest rates ranging from 4.00 percent to 5.00 percent and have a final maturity date of May 1, 2032. The 2020 Series A bonds payments to escrow from net proceeds are reported as other financing uses. The 2010 Series A bonds in the amount of $6,545,000 were redeemed on September 1, 2020. The Public Financing Authority in effect reduced its aggregate debt service payments by approximately $2,118,000 over the next 12 years and obtained a net economic gain (difference between the present values of the old and new debt service payments) of $1,246,000.
Year Ending
June 30 Principal Interest Total
2022 -$ 223$ 223$
2023 - 223 223
2024 - 224 224
2025 - 224 224
2026 - 224 224
2027-2031 3,020 1,053 4,073
2032 1,815 73 1,888
Total 4,835$ 2,244$ 7,079$
96 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
(5) 2020(b) Public Financing Authority Lease Revenue Bonds
Year of Issuance 2020
Type of Debt Lease Revenue Bonds
Original Principal Amount $14,440,000
Security Lease with City
Interest Rates .329% to 1.831%
Interest Payment Dates May 1 st, November 1st
Principal Payment Dates May 1 st
Purpose of Debt Defease 2011(a) Lease revenue Bonds
which Defeased 2001(a) Leasehold
Revenue Bonds (Construct Sports
Complex and South Beach Phase II
Improvements) and 2001(b) Lease
Revenue Bonds (Defeased Civic
Improvement Corporation Certificates)
Debt service requirements to maturity are (in thousands):
On August 12, 2020, the Public Financing Authority issued $14,440,000 of 2020 Series B Lease Revenue Bonds on behalf of the City. The bond proceeds were used to advance refund the outstanding 2011 Series A Lease Revenue Bonds. The 2020 Series B bonds bear fixed interest rates ranging from 0.329 percent to 1.831 percent and have a final maturity date of May 1, 2030. The 2020 Series B bond payments to escrow from net proceeds are reported as other financing uses. The 2011 Series A bonds in the amount of $13,570,000 were paid on September 1, 2021 but in substance defeased as of June 30, 2021. The Public Financing Authority in effect reduced its aggregate debt service payments by approximately $4,533,000 over the next 10 years and obtained a net economic gain (difference between the present values of the old and new debt service payments) of $1,738,000.
Year Ending
June 30 Principal Interest Total
2022 1,515$ 145$ 1,660$
2023 1,520 138 1,658
2024 1,530 129 1,659
2025 1,545 117 1,662
2026 1,560 103 1,663
2027-2030 5,160 186 5,346
Total 12,830$ 818$ 13,648$
97 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
b. Other Long-Term Obligations
(1) Compensated Absences
There is no repayment schedule to pay the compensated absences amount of $13,405,000 relating to governm ental operations. The General F u n d typically liquidates the vacation and sick leave liability.
(2) Claims Payable
There is no repayment schedule fo r the claims payable for gover nmental activities of $46,779,000 described in Note 9. The City pays the claims upon final settlement. The General Fund typically liquidates the cla ims payable liability.
(3) Pollution Remediation
The City plans to remediate hazardous materials contamination of land located within Huntington Central Park used as a gun range facility prior to its close in 1997. The City is voluntarily planning to remediate the site in order to use the area for park purposes. The cost of the gun range re mediation is estimated to be $2,000,000 and is reported as a long-term liabi lity in the government-wide financial statement s. The liability was measure d by estimating a reasonable range of potential outlays and multiply ing those outlays by their probability of occurring.
(4) LED Lighting Phase I
Year of Issuance 2016
Type of Debt Leaseback from Capital One
Public Funding, LLC
Principal Amount Original $1,062,924
Security Loan Agreement with Capital One
Public Funding, LLC
Interest Rates Original 2.32%
Interest Payment Dates February 1 st and August 1st
Principal Payment Dates August 1 st
Purpose of Debt To purchase and upgrade street,
area and pole lighting to energy
efficient LED light sources
98 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
Debt service requirements to maturity are (in thousands):
(5) I-Bank CLEEN Loan
Year of Issuance 2016
Type of Debt CLEEN Loan from the California
Infrastructure and Economic
Development Bank (I-Bank)
Principal Amount Original $3,000,000
Security Edwards Fire Station
Interest Rates Original 2.32%
Interest Payment Dates February 1 st and August 1st
Principal Payment Dates August 1 st
Purpose of Debt To purchase and upgrade street
pole lighting to energy efficient
LED light sources
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2022 119 $ 14 $ 133$
2023 122 10 132
2024 126 5 131
2025 65 1 66
Total 432 $ 30 $ 462$
Year Ending
June 30 Principal Interest Total
2022 296 $ 40 $ 336 $
2023 303 33 336
2024 310 26 336
2025 317 19 336
2026 324 11 335
2027 332 4 336
Total 1,882 $ 133 $ 2,015$
99 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
(6) California Energy Commission (CEC) Loan
Year of Issuance 2016
Type of Debt Loan from the California Energy
Commission (CEC)
Principal Amount Original $3,000,000
Security Loan Agreement with CEC
Interest Rates Original 1.00%
Interest Payment Dates June 22 nd and December 22nd
Principal Payment Dates June 22 nd and December 22nd
Purpose of Debt To upgrade street pole lighting to
energy efficient LED light sources
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2022 394$ 34$ 428$
2023 266 20 286
2024 269 17 286
2025 272 13 285
2026 274 12 286
2027-2030 982 20 1,002 Total 2,457$ 116$ 2,573$
100
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
(7) Pension Obligation Bonds
Year of Issuance 2021
Type of Debt Pension Obligation Bonds
Principal Amount Original $341,501,000
Interest Rates 0.221% to 3.376%
Interest Payment Dates June 15th and December 15th
Principal Payment Dates June 15 th
Purpose of Debt Pay 85% of CalPERS UAL as of
the June 30, 2019 valuation report.
In June 2021, the City issued a Pension Obligation Bond to pay for 85 percent of its current unfunded pension liability with CalPERS.
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2022 10,859$ 10,290$ 21,149$
2023 12,637 8,511 21,148
2024 12,683 8,463 21,146
2025 12,768 8,384 21,152
2026 12,898 8,248 21,146
2027-2031 67,921 37,818 105,739
2032-2036 76,573 29,162 105,735
2037-2041 88,914 16,828 105,742
2042 46,248 2,919 49,167
Total 341,501$ 130,623$ 472,124$
101
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
(8) Leases Payable
Year of Issuance 2021
Type of Debt Capital Leases
Principal Amount Various
Security Master Lease Agreement
Interest Rates 1.249% and 1.775%
Interest Payment Dates Semi-Annually
Principal Payment Dates Semi-Annually
Purpose of Debt Public Safety Equipment Financing
In June 2021, a new ten-year lease agreement
was approved by City Council
in the amount of $12,753,130 to finance the replacement of a one fire engine, one rescue boat, three helicopters. Additionally, the City refinanced its existing capital leases into a single lease with a six-year term.
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2022 1,907$ 172$ 2,079 $
2023 1,901 177 2,078
2024 1,930 149 2,079
2025 1,268 121 1,389
2026 1,022 100 1,122
2027-2031 4,725 248 4,973
Total 12,753$ 967$ 13,720 $
102
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
c. Long-Term Obligations – Business-Type Activities
Below is a schedule of the long-term obligations of business-type activities (in thousands):
(1) Compensated Absences
There is no repayment schedule for the compensated absences amount of $1,426,000 relating to business-type activities. The balance for the outstanding business-type compensated absences is predominately related to the Water and Sewer funds.
June 30,
2020 Additions
Retirements
June 30,
2021
Accrued
Interest
Due Within
One Year
Compensated Absences 1,615$ 542$ (731)$ 1,426$ -$ 389$ Pension Obligation Bonds - 22,144 - 22,144 131 776 Total Long-Term Obligations -
Business-Type Activities 1,615$ 22,686$ (731)$ 23,570$ 131$ 1,165$ Long-Term Obligations - Business-Type Activities:
103
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
(2) Pension Obligation Bond
Year of Issuance 2021
Type of Debt Pension Obligation Bonds
Principal Amount Original $22,144,000
Interest Rates 0.221% to 3.376%
Interest Payment Dates June 15th and December 15th
Principal Payment Dates June 15 th
Purpose of Debt Pay 85% of CalPERS UAL as of
the June 30, 2019 valuation report.
In June 2021, the City issued a Pension Obligation Bond to pay for 85 percent of its current unfunded pension liability with CalPERS.
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2022 776$ 647$ 1,423$
2023 888 535 1,423
2024 892 531 1,423
2025 897 527 1,424
2026 907 518 1,425
2027-2031 4,774 2,342 7,116
2032-2036 5,382 1,734 7,116
2037-2041 6,251 866 7,117
2042 1,377 46 1,423
Total 22,144$ 7,746$ 29,890$
104
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
11. LONG-TERM OBLIGATIONS (Continued)
d. Long-Term Conduit Debt Obligations
Below is a schedule of the conduit debt obligations for which the City is not liable in any manner (in thousands):
June 30, 2020 Additions Retirements June 30, 2021
Community Facilities District No. 1990-1
Special Tax Refunding Bonds 170 $ - $ (170)$ - $ Community Facilities District No. 2000-1
2013 Special Tax Refunding Bonds 9,675 - (625) 9,050 Community Facilities District No. 2002-1
Special Assessment Tax Bonds 3,945 - (160) 3,785 Community Facilities District No. 2003-1
2013 Special Tax Refunding Bonds 16,415 - (855) 15,560 Total Community Facilities Districts 30,205 - (1,810) 28,395 Residential Redevelopment Bonds 2,900 - (2,900) - Total Obligations Not Recorded in
Financial Statements 33,105$ -$ (4,710)$ 28,395$ Community Facilities Districts:
105
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
12. CAPITAL ASSETS
a. Changes in Capital Assets
Capital asset activity for the year was (in thousands):
Governmental Activities
June 30,
2020 Additions Dispositions
June 30,
2021
Capital Assets, Not Depreciated:
Land 362,069$ 6,726$ -$ 368,795$ Construction in Progress 7,515 4,848 (3,779) 8,584 Total Capital Assets -Not Depreciated 369,584 11,574 (3,779) 377,379 Capital Assets Being Depreciated
Buildings 211,278 4,228 - 215,506 Machinery and Equipment 67,003 9,533 - 76,536 Infrastructure 434,072 17,704 (775) 451,001 Total Capital Assets Being Depreciated 712,353 31,465 (775) 743,043 Less Accumulated Depreciation:
Buildings (84,499) (4,885) - (89,384) Machinery and Equipment (53,041) (3,912) - (56,953) Infrastructure (229,638) (7,966) 775 (236,829) Total Accumulated Depreciation (367,178) (16,763) 775 (383,166) Total Depreciated - Net 345,175 14,702 - 359,877 Total Capital Assets 1,081,937 43,039 (4,554) 1,120,422 Total Accumulated Depreciation (367,178) (16,763) 775 (383,166) Capital Assets of Governmental Activities - Net 714,759$ 26,276$ (3,779)$ 737,256$ 106
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
12. CAPITAL ASSETS (Continued)
b. Depreciation Expense
Depreciation in governmental act ivities was charged to the following functions/programs in the Statement of Activities (in thousands):
Business-Type Activities:
June 30,
2020 Additions Dispositions
June 30,
2021
Capital Assets, Not Depreciated:
Land 3,907 $ - $ - $ 3,907$ Construction in Progress 442 1 ,340 - 1 ,782 Total Capital Assets -Not Depreciated 4,349 1,340 - 5 ,689 Capital Assets Being Depreciated
Buildings 100,082 - - 100,082 Machinery and Equipment 20,657 939 - 21,596 Infrastructure 145,961 3 ,566 (223) 149,304 Total Capital Assets Being Depreciated 266,700 4,505 (223) 270,982 Less Accumulated Depreciation:
Buildings (31,723) (2,512) - (34,235) Machinery and Equipment (13,632) (1,178) - (14,810) Infrastructure (82,909)
(2,471) 2 23 (85,157)
Total Accumulated Depreciation (128,264) (6,161) 223 (134,202) Total Depreciated - Net 138,436 (1,656) - 136,780 Total Capital Assets 271,049 5,845 (223) 276,671 Total Accumulated Depreciation (128,264) (6,161) 2 23 (134,202) Capital Assets of Business Activities - Net 142,785 $ (316)$ -$ 142,469$ Department:
City Manager 23$
Finance 30
Community Development 122
Fire 299
Information Services 25
Police 190
Community & Library Services 2,435
Library Services 334
Public Works 12,592
Internal Service Fund depreciation charged to functions 713 Total 16,763$
107
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
12. CAPITAL ASSETS (Continued)
Depreciation in business-type activities was charged to the following functions/programs in the Statement of Activities (in thousands):
13. INVESTMENT IN JOINT VENTURES
The City participates in a firefighter training center called Central Net Operations Authority (CNOA) through a joint powers agreement with the City of Fountain Valley.
The City of Huntington Beach records 76 percent of CNOA net assets as Joint Venture Investments.
14. RELATED PARTY TRANSACTION
The City has entered into a housing loan and equity sharing agreement in the principal sum of $1,510,000 with City Manager Oliver Chi in October 2019 to use as funding for the purchase of a home within the City. The property is held as security for repayment of the loan until it is paid, and will remain subject to the provisions of the loan agreement until sold. When or if the property is sold, the City will receive 50% of the increase in the value of the home. This housing loan and equity sharing agreement has a term of thirty (30) years. The balance as of the loan as of June 30, 2021 is $1,456,867.
Fund:
Water 3,986$
Sewer Service 2,153
Refuse 22
Total 6,161$
108
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
a. General Discussion
On December 29, 2011, the California Supreme Court upheld ABX1 26 that provided for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Huntington Beach t hat previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit.
ABX1 26 provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 9, 2012, the City Council el ected to become the Success or Agency for the former Redevelopment Agency in accordance with ABX1 26 as part of City resolution number 2012-01.
After enactment of the law, effective June 28, 2011, redevelopm ent agencies in the State of California generally cannot enter into new projects, o bligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in exist ence at the date of dissolution (including the comple tion of any unfinished project s that were subject to legally enforceable contractual commitments).
In future fiscal years, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payme nts on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.
ABX1 26 directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and o ther public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditur e or encumbrance of those assets, the State Controll er is required to order the ava ilable assets to be transferred to the public body designated as of successor agency by ABX1 26.
109
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
b. Long-Term Debt
Below is a schedule of changes in long-term obligations of the Successor Agency for the year (in thousands):
Successor Agency: June 30, 2020 Additions Retirements June 30, 2021 Accrued
Interest
Due Within
One Year
Bonds Payable
1999 Tax Allocation Refunding Bonds 1,935$ -$ (365)$ 1,570$ 33$ 380$ 2002 Tax Allocation Bonds 4,215 - (800) 3,415 71 840 Total Bonds Payable 6,150 - (1,165) 4,985 104 1,220 Other Long-Term Obligations
Mayer DDA 1,854 - (600) 1,254 20 599 Bella Terra OPA (Parking) 6,328 - (1,343) 4,985 - 1,343 Bella Terra AHA (Phase II) 13,553 - (686) 12,867 - 686 CIM DDA (Parking & Infrastructure) 5,567 - (288) 5,279 276 308 CIM DDA (Additional Parking) 364 - (13) 351 26 1 5 Total Other Long-Term Obligations 27,666 - (2,930) 24,736 322 2,951 Total Long-Term Obligations 33,816$ -$ (4,095)$ 29,721$ 426$ 4,171$ 110
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(1) 1999 Tax Allocation Refunding Bonds
Year of Issuance 1999
Type of Debt Tax Allocation Refunding Bonds
Original Principal Amount $10,835,000
Security Tax Increment
Interest Rates 3.00% to 5.05%
Interest Payment Dates February 1 st and August 1st
Principal Payment Dates August 1 st
Purpose of Debt Prepay Agency’s 1992 Loans to
Public Financing Authority
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2022 380$ 69$ 449$
2023 405 49 454
2024 425 29 454
2025 360 9 369
Total 1,570$ 156$ 1,726$
111
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(2) 2002 Tax Allocation Refunding Bonds
Year of Issuance 2002
Type of Debt Tax Allocation Refunding Bonds
Original Principal Amount $20,900,000
Security Tax Increment
Interest Rates 2.00% to 5.00%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt Prepay Agency’s 1992 Loans to
Public Financing Authority and
fully defease 1992 Public
Financing Authority bonds
Debt service requirements to maturity are (in thousands):
Pledged Revenues
The Successor Agency will repay a total of $5,480,000, principal and interest, for the outstanding 1999 and 2002 Tax Allocation Refunding Bonds as of June 30, 2021 from semi-annual Redevelopment Property Tax Trust Fund (RPTTF) revenue allocations.
The 1999 and 2002 Tax Allocation Refunding Bonds are not a debt of the City of Huntington Beach, the State of California, nor any of its political subdivisions, and neither the City, the State nor any of its political subdivision is liable therefore, not in any event shall the bonds be payable out of funds or properties other than those of the Redevelopment Agency as set forth in the bond indenture.
Year Ending
June 30 Principal Interest Total
2022 840$ 150$ 990$
2023 875 107 982
2024 920 62 982
2025 780 20 800
Total 3,415$ 339$ 3,754$
112
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(3) Mayer Disposition and Development Agreement
In fiscal year 1996-97, the Agency entered into a disposition a nd development agreement (DDA) with Robert Mayer Corporation (Corporation) concerning additional development adjacent to the Waterfront Hotel. Under the agreement, the Cor poration would advance payments for the p roject costs with the Agency reimbursing up to $16,750,000 of the costs. As of year- end, the Successor Agency obligation under the agreement amount ed to $1,254,000. Project-generated revenues as available will repay these amounts over the time needed to fully amortize the advance. Th e interest rate of this obligation is 6.32%. The DDA has been approved as a n enforceable obligation by the DOF.
(4) Bella Terra Parking Structure
In fiscal year 2005-06, the Agency entered into an owner partic ipation agreement with Bella Terra Associa tes, LLC (formerly Huntington C e n t e r Associates, LLC). Under the agreem ent, the Corporation would co nstruct various public improvements, including a parking structure, which would then be deeded to the City. The Agency would reimburse $15,000,000 of the costs of the public improvements. As of year-end, the Successor Agency obligation under the agreement amounted to $4,985,000. Project-generated revenues as available will repay these amounts over the time needed to fully amortize the advance. The interest rate of this obligation is 6.94%. The agreement has been approved as an enforceable obligation by the DOF.
(5) Bella Terra Phase II
In fiscal year 2010-11, the Agency entered into an affordable h ousing agreement with BTDJM Phase II Associates (DJM). The agreement w ould facilitate the construction of a 467 unit mixed use project, including 43 moderate units and 28 very low units. Under the terms of the agreement, the Agency would reimburse DJM for the construction of the affordable units up to $17,000,000. DJM has transferr ed the site to UDR, and as of year-end, the Successor Agency obligati on under the agreement amounted to $12,867,000. Reimbursement of the affordable units will be based upon the site-generated tax increment for t he mixed use project as well as the 20% housing fund from the site-generat ed Bella Terra I. The interes t rate of this obligation is 4.00%. The agreement has been approved as an enfo rceable obligation by the DOF.
113
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(6) CIM/Huntington Disposition and Development Agreement – Strand Parking Structure and Infrastructure
Year of Issuance 2009
Type of Debt Loan from CIM Group, LLC
Original Principal Amount $7,900,000
Security Tax Increment
Interest Rates 7.00%
Interest Payment Dates September 30 th
Principal Payment Dates September 30 th
Purpose of Debt Strand Parking Structure and
Infrastructure
As of year-end, the Successor Agency obligation under the agreement amounted to $5,279,000. Repayment shall be made solely from Redevelopment Property Tax Trust Fund (RPTTF) revenues received by the Huntington Beach Redevelopment Successor Agency Private Purpose Trust Fund in the amounts included in the Oversight Board approved Recognized Obligation Payment Schedule (ROPS) to the County Auditor Controller (CAC) and the Department of Finance (DOF). The DDA has been approved as an enforceable obligation by the DOF.
114
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(7) CIM/Huntington Disposition and Development Agreement – Additional Strand Parking
Year of Issuance 2009
Type of Debt Loan from CIM Group, LLC
Original Principal Amount $950,000
Security Tax Increment
Interest Rates 10.00%
Interest Payment Dates September 30 th
Principal Payment Dates September 30 th
Purpose of Debt Additional Strand Parking
Structure and Infrastructure
As of year-end, the Successor Agency obligation under the agreement amounted to $351,000. Repayment shall be made solely from Redevelopment Property Tax Trust Fund (RPTTF) revenues received by the Huntington Beach Redevelopment Successor Agency Private Purpose Trust Fund in the amounts included in the Oversight Board approved Recognized Obligation Payment Schedule (ROPS) to the County Auditor Controller (CAC) and the Department of Finance (DOF). The DDA has been approved as an enforceable obligation by the DOF.
115
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
c. Advances from the City Housing Fund
The Successor Agency has recorded advances from the City Housing Fund totaling $1,363,000 from the Low-Income H ousing Fund to the Redevelopmen t Agency Capital Projects Fund for Main Pier property acquisitions.
16. COMMITMENTS AND CONTINGENCIES
a. Legal Actions
There are legal actions pending against the City resulting from normal operations.
In the opinion of management and the City Attorney, the financial resolution of these actions should not have a significant impact on these financial statements.
b. Sales Tax Sharing Agreements
City Council has agreed to provide sales tax rebates to various companies, based upon various factors such as increased job-base or new sales ta x to the City. The sales tax rebates serve to attract and retain various companies in the City of Huntington Beach. The City of Huntington Beach has four sales tax sharing agreements that extend until 2024, 2033, and 2038. Sales tax r ebates totaled $1,097,750 for the year ended June 30, 2021. Sales tax sharing agreements include an agreement with Surf City Auto G roup II, Inc. wherein the sal es tax sharing is a 50%/50% Auto Group/City split with base sales of $1,681,797 (Jeep sales for 2016) and increases by 1% each year. The other sales tax sharing agre ements are with Pinnacle Petroleum through 2024, with base sales of $100,000, a nd McKenna Subaru Huntington Beach through 2033 with a 45%/55% McKenna/Cit y split with base sales of $150,800.
116
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
16. COMMITMENTS AND CONTINGENCIES (Continued)
c. Cooperation and Owner Participation Agreements
On September 2, 2003, the Redevelopment Agency Approved a Cooperation Agreement Regarding Capital Improvements in the Southeast Coastal Redevelopment Project with the City. This agreement commits the Redevelopment Agency to reimburse the City for a number of capital improvement projects to be undertaken as part of the Five Year Capital Improvement Program in the Southeast Redevelopment project area starting in FY 2003/04 as they are undertaken. The Successor Agency received its Finding of Completion notice from the Department of Finance on May 13, 2014. The Oversight Board (to the Successor Agency) have approved and reauthorization of the loans between the City and former Redevelopment Agency in FY 16/17. The State Department of Finance has denied the validity of the loans and the City has filed suit against the State.
d. Redevelopment Successor Agency Debt to City
The City has advanced money to the Redevelopment Agency for major capital improvements, economic development projects, and operations. In January 2011, the City Council and Redevelopment Agency Board approved a revised Cooperation Agreement, which included a Promissory Note that memorialized indebtedness previously incurred by the Agency and owed to the City from a series of loans made from the City to the Agency from 1982 to present. The City and Successor Agency have not recorded the advances in the accompanying financial statements due to uncertainties related to Health and Safety Code Section 34191.4, which establishes certain restrictions and limitations on the repayment of city- agency loans. In accordance with Health and Safety Code Section 34191.4(b)(3), all other loans between the city and former Redevelopment Agency will begin to be repaid, at a 3% interest rate, as determined by SB 107 upon approval of the Oversight Board and the Department of Finance. The Oversight Board (to the Successor Agency) have approved and reauthorization of the loans between the City and former Redevelopment Agency in FY 16/17. The State Department of Finance has denied the validity of the loans and the City has filed suit against the State.
117
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
16. COMMITMENTS AND CONTINGENCIES (Continued)
Below is a schedule of the activity for the year (in thousands):
e. Low Moderate Income Housing Asset Fund Debt to City
In May 2009, a Promissory Note was issued by the Redevelopment Agency to the City to pay for outstanding bonded debt related to the Emerald Cove Housing Project. The note is secured by a pledge of Set-Aside Funds. Based on the Promissory Note, the interest rate for the loan is 0% and the loan was scheduled to be repaid by 2021. The City has not recorded the advances in the accompanying financial statements due to uncertainties surrounding ABX1 26 and Assembly Bill 1484 and related litigation (see note 16f). Below is a schedule of the activity for the year (in thousands):
June 30,
2020 Additions Reductions
June 30,
2021
General Fund
Direct Advances 2,312$ -$ -$ 2,312$ Indirect Advances 6,567 - - 6,567 Land Sales 32,833 - - 32,833 Interest 30,480 404 - 30,884 Total General Fund 72,192 404 - 72,596 Sewer Fund
Direct Advances 298 2 - 300 Deferred Development Fees 186 1 - 187 Total Sewer Fund 484 3 - 487 Drainage Fund
Direct Advances 720 4 - 724 Deferred Development Fees 199 1 - 200 Total Drainage Fund 919 5 - 924 Park Acquisition and Development Fund
Direct Advances 5,927 33 - 5,960 Deferred Development Fees 440 2 - 442 Total Park Acquisition and Development Fund 6,367 35 - 6,402 Water Fund
Direct Advances 4,461 25 - 4,486 Total Water Fund 4,461 25 - 4,486 Total All Funds 84,423$ 472$ -$ 84,895$ June 30,
2020 Additions Reductions
June 30,
2021
General Fund
Emerald Cove 3,245$ -$ -$ 3,245$ 118
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
16. COMMITMENTS AND CONTI NGENCIES (Continued)
f. Successor Agency Litigation
Until 2012, the Huntington Beach Redevelopment Agency existed a nd received property tax increment from property within the “City Redevelopment Project Area.” In 2012, the State Legislature dissolved all redevelopment agen cies, and all tax increment was returned to the County for payment to other taxing entities. The only exception was that tax increm ent would continue to be paid to t he Successor Agency to the City Redevelopment Agency to pay any pre-dissolut ion, legally binding obligations established prior to the dissolution of the agencies. Further, the City transferred the former Redevelopment Agency’s housing obli gations to the Huntington Beach Housing Author ity pursuant to Health and Safet y Code section 34176.
The Successor Agency contended that its payments to retire the former Redevelopment Agency’s portion of the 2010 Lease Revenue Bonds used to finance the Emerald Cove low income housing project were such an obligation. The annual payment on these bonds is approximately $400,000 a year. The amount that the City contends to be due to pay the former Redevelopment Agency’s share of the bonds is $3,245,000.
The Successor Agency also contended that the 2012 Pacific City Development Agreement was a pre-dissolution, legally binding obligation. Pa cific City is a development project that was conditioned on providing 77 affordable housing units, of which the Successor Agency now was obliged to construct 26 units off-site, at a cost of $6,500,000. This would not be a City General Fund obligation.
The State Department of Finance rejected the City’s “Recognized Obligation Payment Schedule” (“ROPS”) to est ablish these two obligations a s entitled to be funded through tax increment. In response, the City sued the De partment of Finance.
All post-redevelopment matters are being heard in Sacramento be f o r e a s e l e c t panel of judges. On January 29, 2014, the Superior Court held that the Emerald Cove Bonds and the Pacific City housing were not preexisting Authority obligations payable with tax increment. The Successor Agency appealed the j udgment. The appellate decision was received in 2018 and the Successor Agency lost the appeal.
The Housing Authority is reviewing options on meeting the affor dable housing requirements for Pacific City with other projects. The City its elf does not require a reserve for either case.
119
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
16. COMMITMENTS AND CONTINGENCIES (Continued)
In addition, as stated above in section (c) and (d), the City of Huntington Beach has filed suit against the State of California regarding the Department of Finance’s denial of loans which were between the Redevelopment Agency and the City of Huntington Beach.
17. OTHER INFORMATION
a. Fund and Accumulated Deficits
The following funds have total fund deficits at year-end (in thousands):
The Self Insurance Workers’ Comp fund has a deficit due to increases in statutory benefits related to workers’ comp claims, rising healthcare costs, and the implementation of GASB Nos. 68 and 75. The Self Insurance General Liability fund has a deficit due to increases in claims judgement, cost of litigation and rising number of lawsuits against the City. As such, the City set aside $3,650,000 in litigation reserve for general liability claims in the General Fund.
The City has established plans to reduce and eliminate the deficits in these funds.
Additional transfers will be made over the next ten to twenty years from the General Fund, Proprietary funds, and other governmental funds to address the deficit in the Self Insurance Workers’ Comp Internal Service Fund.
18. SUBSEQUENT EVENTS
a. American Rescue Plan Act of 2021 (ARPA)
As a response to COVID-19, the federal government passed the American Rescue Plan Act of 2021 to help combat the disease outbreak and its impacts. Enacted March 11, 2021, the ARPA bill provides $1.9 trillion in pandemic relief and authorized $350 billion in state and local government financial assistance. Through the ARPA bill, the City is eligible to receive $29.6 million in funding for allowable expenditures. ARPA funding is provided in two tranches covering 50 percent each tranche. In fiscal year 2020/21, the City received its first tranche in May 2021 of $14.8 million and will be receiving the remaining $14.8 million one year later.
Internal Service Fund:
Self Insurance Workers' Comp 19,584 $
Self Insurance General Liability 1,834 $
120
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
18. SUBSEQUENT EVENTS (Continued)
A three-person City Council ARPA subcommittee was established in June 2021 to develop and review a list of potential projects. On September 7, 2021, City Council approved a spending plan which addresses both immediate, current needs of the City and transformative, “Plan for the Future” projects with long-term community impacts including Downtown Revitalization Improvements, Police Technology Infrastructure Improvements, and a comprehensive Homeless Response Plan.
b. Orange County Oil Spill Response
On October 2, 2021, the United State Coast Guard notified the City of a possible oil spill in the area of Huntington Beach, which was classified as a major spill later in the day. The oil spill was originally estimated to be 5.8 nautical miles long, running from the Huntington Beach Pier down to Newport Beach. Given the oil spill impacts, a decision was made by the City and State to close the ocean from the Pier to the Santa Ana River jetty. Additionally, a decision was made by City leadership to cancel the third day of the Pacific Airshow on October 3 rd. The oil spill was declared a State emergency by the Governor on October 4th, with a local emergency declaration following the same day. The oil spill has significantly affected the City, with substantial ecological impacts occurring at the beach and at the Huntington Beach Wetlands. In response, Huntington Beach Fire and Marine Safety personnel were deployed to implement oil containment efforts.
The U.S. Coast Guard, acting as the lead agency, formed an Incident Management Team (comprised of federal, state and regional agencies) to respond to the oil spill incident and coordinate clean-up efforts. A Unified Command Team that includes the U.S. Coast Guard, California Department of Fish and Wildlife, and Amplify Energy Corporation has also been established to investigate the oil spill incident. As of October 11, 2021, both City and State beaches have reopened after water quality testing results showed non- detectable amounts of oil associated toxins. The City continues to actively monitor the water quality so that any further impacts may be avoided and safety measures deployed as needed.
The financial impacts of the oil spill are still being evaluated at this time.
121
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
18. SUBSEQUENT EVENTS (Continued)
c. Community Choice Energy (CCE)
The City of Irvine began efforts to create a regional Community Choice Energy (CCE) program known as the Orange County Power Authority (OCPA), which would allow local governments to purchase energy on behalf of their communities, while still receiving transmission and distribution service from their existing utility provider. On December 10, 2020, Huntington Beach voted to join the OCPA as a founding member, along with the cities of Buena Park and Fullerton. There is no direct fiscal impact to join OCPA. Per the Joint Powers Agreement with OCPA, member agencies are not required to make any financial contributions, with the City of Irvine financing all initial start-up costs. Currently, commercial service is planned to begin April 2022, with residential service following in October 2022.
d. Kennedy Commission v. Huntington Beach
The Kennedy Commission case arises from an amendment to City’s Beach and Edinger Corridors Specific Element Plan to limit the development of multifamily housing. The case, filed by the Kennedy Commission in July 2015 stating that the amendment was in violation of California’s Housing Element laws, was tried in Superior Court and ruled in favor of the Plaintiff. The City appealed the trial court decision and prevailed upon appeal. The Kennedy Commission then appealed the decision with the Supreme Court, which upheld the Court of Appeal’s decision in favor of the City. In February 2020, the City adopted a revised Housing Element to comply with clarifying language in Senate Bill 1333 regarding the applicability of key provisions of state planning and zooming laws to charter cities which was certified by the California Department of Housing and Community Development as compliant with Housing Element Law. In response, the Kennedy Commission requested its remaining claims against the City be dismissed and filed a motion for attorney’s fees. In July 2021, the Superior Court awarded the Kennedy Commission $3.5 million in attorney’s fees, which is currently under appeal.
19. PRIOR PERIOD ADJUSTMENTS
During the fiscal year ended June 30, 2021, the City adopted new accounting guidance by implementing the provisions of GASB Statement No. 84, Fiduciary Activities, which establishes criteria for identifying and reporting fiduciary activities. The implementation of this change in accounting principles has resulted in altering the presentation of the financial statements as the City is no longer required to report the following three funds: General Deposit, Central Net Operation and West Orange County Water Board. The implementation also resulted in splitting the Parking Structure Fiduciary Fund into two separate funds, the Bella Terra Parking Structure Custodial Fund, and the Strand Parking Fund.
122
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2021
19. PRIOR PERIOD ADJUSTMENTS (Continued)
The implementation of the Statement required the City to make prior period adjustments as shown below (in thousands):
Statement
of Activities
Statement of
Changes in Fiduciary
Net Position
Governmental
Activities Fiduciary Activities
Beginning net position/fund
balance, as previously reported $ 478,901 $ - Implementation of GASB 84 5,747 6,586 Beginning net position/fund
balance, as restated $ 484,648 $ 6,586 123
REQUIRED SUPPLEMENTARY INFORMATION
124
THIS PAGE INTENTIONALLY LEFT BLANK
125
City of Huntington Beach
Notes to Required Supplementary Information
For the Year Ended June 30, 2021
Budgetary Information
The City Council must annually adopt a budget by June 30 of the prior fiscal year. The budgeted expenditures become the appropriations to the various departments. The budget includes estimates for revenue that, along with the appropriations, compute the budgetary fund balance.
The appropriated budget covers substantially all governmental fund expenditures with the exception of capital improvement projects (capital projects funds) carried forward from prior years, which constitute a legally authorized non-appropriated budget. The City Council may amend the budget at any time. The City Manager may transfer funds from between object purposes (personal services, operating expenditures, or capital outlay expenditures) within the same department without changing the total departmental budget. Department heads, with the Chief Financial Officer’s approval, may transfer funds from like object categories of the same department. The City Council must approve any changes to departmental budgets. Expenditures may not exceed appropriations at the departmental level. All unused appropriations lapse at year-end. During the year, the City Council made several supplemental appropriations which included carryovers of prior year encumbrances, all of which were within available fund balance and estimated revenue amounts.
The City Council adopts governmental fund budgets consistent with generally accepted principles as legally required. There are no significant non-budgeted financial activities.
Revenues for special revenue funds are budgeted by entitlements, grants and estimates of future development and economic growth. Expenditures and transfers are budgeted based upon available financial resources.
On or before February 28th of each year, each department submits data to the City Manager for budget preparation. Staff prepares the budget by fund, function, and activity. The budget includes information on past years, current year estimates and requested appropriations for the next fiscal year. Before May 1st, the City Council receives the proposed budget. The City Council holds public hearings and may amend the budget by a majority vote. Changes to the budget must be within the available revenues and reserves.
These financial schedules show budgetary data for the General, Grants Special Revenue, LMIHAF Capital Projects, and Pension Liability Debt Service Fund. The original budget, revised budget, actual expenditures, and variance amounts are shown.
The City uses an encumbrance system as an aid in controlling expenditures. When the City issues a purchase order for goods or services, it records an encumbrance until the vendor delivers the goods or performs the service. At year-end, the City reports all outstanding encumbrances as restricted, committed, or assigned fund balance in governmental fund types.
The City reappropriates these encumbrances into the new fiscal year.
The following pages present schedules of budget to actual comparison of the General, Grants Special Revenue, LMIHAF Capital Projects and Pension Liability Debt Service Fund’s Revenues, and Expenditures and Changes in Fund Balance (in thousands). 126
REVENUES Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Property Taxes 94,350$ 91,708$ 91,708$ -$ Sales Taxes 39,227 47,676 47,676 -
Utility Taxes 16,605 18,374 18,374 -
Other Taxes 12,416 18,428 18,428 -
Licenses and Permits 7,358 7,805 7,805 -
Fines, Forfeitures and Penalties 3,282 4,619 4,619 -
Use of Money and Property 14,500 14,183 16,196 2,013 Intergovernmental 3,138 9,881 9,967 86 Charges for Current Service 25,326 22,560 21,878 (682) Other 979 1,875 2,001 126 Total Revenues 217,181 237,109 238,652 1,543
EXPENDITURES
Current:
City Council 389 404 397 7 City Manager 4,075 3,873 3,867 6 City Treasurer 280 319 319 - City Attorney 2,980 3,103 2,938 165 City Clerk 988 1,080 1,068 12 Finance 6,054 6,529 6,025 504 Community Development 9,088 9,675 8,920 755 Fire 49,994 57,003 57,002 1 Information Services 7,341 7,248 6,991 257 Police 82,267 89,440 89,440 - Community Services 8,929 9,910 7,708 2,202 Library Services 5,259 5,706 5,150 556 Public Works 26,361 24,411 24,116 295 Debt Service:
Principal 1,861 1,861 1,723 138 Interest 194 194 182 12 Total Expenditures 206,060 220,756 215,846 4,910 Excess of Revenues Over Expenditures 11,121 16,353 22,806 6,453
OTHER FINANCING SOURCES (USES)
Transfers In 1,433 1,581 548 (1,033)
Transfers Out (11,426) (10,868) (10,868) - Total Other Financing Sources (Uses) (9,993) (9,287) (10,320) (1,033) Net Change In Fund Balance 1,128 7,066 12,486 5,420 Fund Balance - Beginning of Year 80,088 80,088 80,088 - Cumulative Effects of Changes in
Accounting Principles - - 2,035 2,035 Fund Balance - Beginning of Year as Restated 80,088 80,088 82,123 2,035 Fund Balance - End of Year 81,216$ 87,154$ 94,609$ 7,455$
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
General Fund
See Accompanying Notes to Required Supplementary Information 127
REVENUES Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ 6$ 222$ 216$ Intergovernmental 3,100 16,443 18,075 1,632 Total Revenues 3,100 16,449 18,297 1,848
EXPENDITURES
Current:
City Manager 6 5,530 5,453 77 City Clerk - 8 8 - Finance - 18 18 - Community Development 1,573 14,633 8,450 6,183 Fire - 1,919 1,880 39 Information Systems - 89 64 25 Police 1,039 3,547 2,141 1,406 Community Services 258 675 553 122 Library Services 70 239 233 6 Public Works 809 6,148 1,569 4,579 Total Expenditures 3,755 32,806 20,369 12,437 Excess of Revenues Over (Under)
Expenditures (655) (16,357) (2,072) 14,285
OTHER FINANCING USES
Transfers In - 1,271 1,271 - Transfers Out - (1,399) (1,406) (7) Total Other Financing Sources (Uses) - (128) (135) (7) Net Change In Fund Balance (655) (16,485) (2,207) 14,278 Fund Balance - Beginning of Year 4,561 4,561 4,561 - Fund Balance - End of Year 3,906$ (11,924)$ 2,354$ 14,278$ (In Thousands)
Grants Special Revenue
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2021
See Accompanying Notes to Required Supplementary Information 128
LMIHAF Capital Projects Fund
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property 380$ 380$ 964$ 584$ EXPENDITURES:
Community Development 334 6,579 6,421 158 Excess of Revenues Over (Under) Expenditures 46 (6,199) (5,457) 742 OTHER FINANCING SOURCES (USES):
Transfers Out (406) (406) (406) - Total Other Financing Sources (Uses) (406) (406) (406) - Net Change in Fund Balance (360) (6,605) (5,863) 742 Fund Balance - Beginning of Year 9,485 9,485 9,485 - Fund Balance - End of Year 9,125$ 2,880$ 3,622$ 742$ -
Pension Liability Debt Service Fund
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Property Taxes -$ 8,250$ 8,250$ -$ Use of Money and Property - 300 300 - Charges for Current Service - 1,493 1,493 - Total Revenues - 10,043 10,043 - EXPENDITURES:
Current:
City Council - 647 646 1 City Manager - 6,294 6,284 10 City Treasurer - 519 518 1 City Attorney - 4,784 4,776 8 City Clerk - 1,737 1,734 3 Finance - 9,803 9,788 15 Community Development - 14,514 14,492 22 Fire - 89,896 89,773 123 Information Systems - 11,375 11,358 17 Police - 141,052 140,857 195 Community Services - 12,542 12,523 19 Library Services - 8,380 8,367 13 Public Works - 39,238 39,177 61 Total Expenditures - 340,781 340,293 488 Excess of Revenues Over (Under) Expenditures - (330,738) (330,250) 488 OTHER FINANCING SOURCES (USES):
Proceeds of Long-Term Debt - 340,435 340,435 - Issuance of Long-Term Debt - (453) (453) - Issuance Discount - (649) (649) - Total Other Financing Sources (Uses) - 339,333 339,333 - Net Change in Fund Balance - 8,595 9,083 488 Fund Balance - Beginning of Year 7,860 7,860 7,860 - Fund Balance - End of Year 7,860$ 16,455$ 16,943$ 488$
CITY OF HUNTINGTON BEACH
(In Thousands)
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2021
See Accompanying Notes to Required Supplementary Information 129
Measurement Period 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 201 3-14 Total Pension Liability
Service cost 7,779$ 8,327$ 8,314$ 8,084$ 7,436$ 7,102$ 7,263$ Interest on total pension liability 41,058 40,150 38,769 37,749 37,194 35,653 34,412 Differences between expected and actual experience (6,087) (183) (2,042) (9,148) 1,072 (2,900) - Changes in assumptions - - (3,634) 30,762 - (8,565) - Benefit payments, including refunds of employee contributions (3 0,321) (28,508) (26,685) (25,312) (24,316) (23,377) (22,444) Net change in total pension liability 12,429 19,786 14,722 42,135 21,386 7,913 19,231 Total pension liability - beginning 591,598 571,812 557,090 514,955 493,569 485,656 466,425 Total pension liability - ending (a) 604,027$ 591,598$ 571,812$ 557,090$ 514,955$ 493,569$ 485,656$ Plan Fiduciary Net Position
Contributions - employer 16,879$ 14,816$ 13,495$ 12,316$ 10,982$ 9,747$ 9,066$ Contributions - employee 3,630 3,779 3,649 3,869 3,736 3,790 3,909 Investment income 21,485 27,288 32,963 40,328 1,856 8,230 56,429 Administrative Expense (609) (296) (614) (536) (226) (418) (472) Benefit payments (30,321) (28,508) (26,685) (25,312) (24,316) (23,377) (22,444) Plan to Plan Resource Movement - (13) 1 - - - -
Other - 1 (1,166) - - 2 - Net change in plan fiduciary net position 11,064 17,067 21,643 30,665 (7,968) (2,026) 46,488 Plan fiduciary net position - beginning 432,522 415,455 393,812 363,147 371,115 373,141 326,653 Plan fiduciary net position - ending (b) 443,586$ 432,522$ 415,455$ 393,812$ 363,147$ 371,115$ 373,141$ Net pension liability - beginning 159,076 156,357 163,278 151,808 122,454 112,515 139,771 Net pension liability - ending (a)-(b) 160,441$ 159,076$ 156,357$ 163,278$ 151,808$ 122,454$ 112,515$ Plan fiduciary net position as a percentage of the
total pension liability 73.44% 73.11% 72.66% 70.69% 70.52% 75.19% 76.8 3% Covered payroll 45,952$ 45,419$ 45,431$ 44,848$ 44,365$ 44,233$ 41,142$ Net pension liability as a percentage of covered
payroll 349.15% 350.24% 344.16% 364.07% 342.18% 276.84% 273.48% Notes to Schedule:
* Fiscal year 2013/14 was the first year of implementation, therefore only seven years are shown. * For covered employee payroll, the measurement period of July 1, 2019 to June 30, 2020 was used.
Benefit changes: the figures above include any liability impact that may have resulted from voluntary benefit changes that occurred after the June 30, 2019 valuation. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the June 30, 2019 valuation date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.
Changes in assumptions: None in 2019 or 2020. In 2018, 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. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.
City of Huntington Beach
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period (in Thousands)
Last Ten Fiscal Years*
CalPERS City Miscellaneous Plan - 99
130
City of Huntington Beach
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period (in Thousands)
Measurement Period 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 201 3-14 Total Pension Liability
Service cost 13,226$ 13,644$ 13,509$ 13,657$ 12,159$ 11,119$ 11,096$ Interest on total pension liability 54,597 53,048 51,223 49,350 48,390 46,160 44,246 Differences between expected and actual experience (4,721) (1,220) 2,584 (10,819) 2,678 (820) - Changes in assumptions - - (3,657) 40,352 - (11,054) - Benefit payments, including refunds of employee contributions (4 1,247) (38,958) (37,128) (34,222) (32,116) (30,535) (29,540) Net change in total pension liability 21,855 26,514 26,531 58,318 31,111 14,870 25,802 Total pension liability - beginning 782,326 755,812 729,281 670,963 639,852 624,982 599,180 Total pension liability - ending (a) 804,181 $ 782,326$ 755,812$ 729,281$ 670,963 $ 639,852$ 624,982$ Plan Fiduciary Net Position
Contributions - employer 25,848$ 23,063$ 21,058$ 20,629$ 18,703$ 17,791$ 15,152$ Contributions - employee 4,355 4,337 4,164 4,570 4,058 4,110 3,850 Investment income 25,784 32,776 39,336 48,413 2,144 9,661 66,805 Administrative Expense (731) (355) (736) (640) (270) (497) (555) Benefit payments (41,247) (38,958) (37,128) (34,222) (32,116) (30,535) (29,540) Net Plan to Plan Resource Movement - 13 (3)
- (29) - -
Other - 1 (1,398) - - - -
Net change in plan fiduciary net position 14,009 20,877 25,293 38,750 (7,510) 530 55,712 Plan fiduciary net position - beginning 518,644 497,767 472,474 433,724 441,234 440,704 384,992 Plan fiduciary net position - ending (b) 532,653 $ 518,644$ 497,767$ 472,474$ 433,724 $ 441,234$ 440,704$ Net pension liability - beginning 263,682 258,045 256,807 237,239 198,618 184,278 214,188 Net pension liability - ending (a)-(b) 271,528 $ 263,682$ 258,045$ 256,807$ 237,239 $ 198,618$ 184,278$ Plan fiduciary net position as a percentage of the
total pension liability 66.24% 66.30% 65.86% 64.79% 64.64% 68.96% 70.5 1% Covered payroll 43,783$ 43,684$ 43,371$ 43,283$ 42,619$ 42,252$ 38,397$ Net pension liability as a percentage of covered
payroll 620.17% 603.61% 594.97% 593.32% 556.65% 470.08% 479.93% Notes to Schedule:
* Fiscal year 2013/14 was the first year of implementation, therefore only seven years are shown. *
For c
overed employee payroll, the measurement period of July 1, 2019 to June 30, 2020 was used.
Changes in assumptions: None in 2019 or 2020. In 2018, 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. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.
Benefit changes: the figures above include any liability impact that may have resulted from voluntary benefit changes that occurred after the June 30, 2019 valuation. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the June 30, 2019 valuation date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.
Last Ten Fiscal Years*
CalPERS
City Safety Plan - 100
131
Total Pension Liability 2020-21 2019-20 2018-19 2017-18** 2016-17 2015-16 2014-15 2013-14 Service cost 350 $ 338 $ 398 $ 344 $ 487 $ 552 $ 495 $ 544 $ Interest on total pension liability 4,292 3,954 3,990 2,964 3,976 3,945 3,919 3,828 Differences between expected and actual experience - 4,594 - (794) - 982 - - Changes in assumptions 6,547 1,756 - 2,115 1,515 2,928 - - Benefit payments, including refunds of employee contributions (5,494) (5,012) (4,771) (3,388) (4,144) (3,773) (3,588) (3,548) Net change in total pension liability 5,695 5,630 (383) 1,241 1,834 4,634 826 824 Total pension liability - beginning 71,074 65,444 65,827 64,586 62,752 58,118 57,292 56,468 Total pension liability - ending (a) 76,769 $ 71,074 $ 65,444 $ 65,827 $ 64,586 $ 62,752 $ 58,118 $ 57,292 $ Plan Fiduciary Net Position
Contributions - employer 1,435 $ 3,506 $ 4,962 $ 3,507 $ 5,346 $ 7,277 $ 4,678 $ 4,539 $ Investment income 15,717 2,114 2,582 2,128 6,373 4,282 (1,313) 3,465 Administrative Expense (314) (444) (191) (145) (182) (189) (170) (176) Benefit payments (5,494) (5,012) (4,771) (3,388) (4,144) (3,773) (3,588) (3,548) Section 115 Trust Segregation - - - (3,788) - - - - Other - - - - - - 3,183 258 Net change in plan fiduciary net position 11,344 164 2,582 (1,686) 7,393 7,597 2,790 4,538 Plan fiduciary net position - beginning 59,017 58,853 56,271 57,957 50,564 42,967 40,177 35,639 Plan fiduciary net position - ending (b) 70,361 $ 59,017 $ 58,853 $ 56,271 $ 57,957 $ 50,564 $ 42,967 $ 40,177 $ Net pension liability - beginning 12,057 6,591 9,556 6,629 12,188 15,151 17,115 20,829 Net pension liability - ending (a)-(b) 6,408 $ 12,057 $ 6,591 $ 9,556 $ 6,629 $ 12,188 $ 15,151 $ 17,115 $ Plan fiduciary net position as a percentage of the
total pension liability 91.65% 83.04% 89.93% 85.48% 89.74% 80.58% 73.93% 70.13% Covered payroll 7,684 $ 8,469 $ 12,863 $ 10,890 $ 17,167 $ 19,517 $ 22,069 $ 22,004 $ Net pension liability as a percentage of covered payroll 83.39% 142.37% 51.24% 87.75% 38.61% 62.45% 68.65% 77.78% * Fiscal year 2013/14 was the first year of implementation, therefore only eight years are shown. ** The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1, 2017 to June 30, 2018.
Supplemental Retirement Plan
(in Thousands)
Last Ten Fiscal Years*
Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period City of Huntington Beach
Required Supplementary Information
132
City of Huntington Beach
Required Supplementary Information
Schedule of Changes in Net OPEB Liability and Related Ratios For the Measurement Periods Ended June 30
(in Thousands)
Measurement Period 2020 2019 2018 2017
Total OPEB Liability
Service cost 1,096$ 1,241$ 1,205$ 877$ Interest on the total OPEB liability 2,064 1,859 1,787 1,293 Actual and expected experience difference - 1,411 - - Changes in assumptions (298) (3,358) - - Benefit payments (1,848) (1,742) (1,683) (1,036) Net change in total OPEB liability 1,014 (589) 1,309 1,134 Total OPEB liability - beginning 32,845 33,434 32,125 30,991 Total OPEB liability - ending (a) 33,859$ 32,845$ 33,434$ 32,125$ Plan Fiduciary Net Position
Contribution - employer** 1,959$ 2,270$ 4,191$ 1,036$ Net investment income 1,580 1,901 1,126 471 Benefit payments (1,848) (1,742) (1,683) (1,036) Administrative expense (245) (61) (131) (9) Net change in plan fiduciary net position 1,446 2,368 3,503 462 Plan fiduciary net position - beginning 29,193 26,825 23,322 22,860 Plan fiduciary net position - ending (b) 30,639$ 29,193$ 26,825$ 23,322$ Net OPEB liability - ending (a)-(b) 3,220$ 3,652$ 6,609$ 8,803$ Plan fiduciary net position as a percentage of the total OPEB liability 90.49% 88.88% 80.23% 72.60% Covered employee payroll 76,521$ 79,682$ 81,458$ 60,985$ Net OPEB liability as a percentage of covered employee payroll 4.21% 4.58% 8.11% 14.43% Notes to Schedule:
* Fiscal year 2017/18 was the first year of implementation, therefore only four years of information are shown. **Contributions to the OPEB plan are not based on employee pay.
Last Ten Fiscal Years*
Other Post Employment Benefits Plan
133
2020-21 1 2019-20 1 2018-19 1 2017-18 1, 2 2016-17 1 2015-16 1 2014-15 1 2013-14 1 Actuarially determined contribution 18,086 $ 16,878 $ 14,819 $ 9,734 $ 11,921 $ 11,238 $ 10,510 $ 8,685 $ Contributions in relation to the actuarially
determined contributions (18,086) (16,878) (14,819) (9,734) (11,921) (11,238) (10,510) (8,685) Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ - $ - $ Covered payroll 45,740 $ 45,952 $ 45,419 $ 33,210 $ 45,118 $ 44,253 $ 46,337 $ 43,327 $ Contributions as a percentage of covered payroll 39.54% 36.73% 32.63% 29.31% 26.42% 25.39% 22.68% 20.05% Notes to Schedule
Valuation date: 6/30/2012 through 06/30/2018
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.50%
Salary increases Varies by entry age and service
Payroll growth
Discount Rate
Retirement age
Mortality
For 10/1/14-6/30/15, 15 Year Smoothed Market (for details, see June 30, 2012 Funding Valuation Report). For 7/1/15- 6/30/20, Fair Value (for details, see the Funding Valuation Reports for the years ended June 30, 2013, 2014, 2015, 2016 and 2017).
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30, 2021
(in Thousands)
Last Ten Fiscal Years*
CalPERS City Miscellaneous Plan - 99
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
For details, see Miscellaneous Plan of the City of Huntington Beach Annual Valuation Report as of June 30, 2020. 2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1, 2017 to June 30, 2018.
Note: The CalPERS Board of Administration has adopted a new amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy removes the 5-year ramp-down on investment gains/losses. These changes will apply only to new UAL bases established on or after June 30, 2019.
2.75%
The prescribed discount rate assumption, adopted by the Board on December 21, 2016, is 7.00 percent compounded annually (net of investment and administrative expenses) as of June 30, 2018.
For 10/1/13-6/30/16, the probabilities of retirement are based on the 2014 CalPERS Experience study for the period from 1997 to 2007. For 7/1/16-6/30/19, the probabilities of retirement are based on the 2014 CalPERS Experience study for the period from 1997 to 2011. For 7/1/19-6/30/20, the probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.
For 10/1/13-6/30/16, the probabilities of mortality are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. For 7/1/16-6/30/19, the probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. For 7/1/16-6/30/18, Pre-retirement and Post-retirement mortality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries. For 7/1/18-6/30/19, Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries. For 7/1/19-6/30/20, the probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. *Beginning with the June 30, 2013 valuations, CalPERS employed an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period. 134
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30, 2021
(in Thousands)
2020-21 1 2019-20 1 2018-19 1 2017-18 1, 2 2016-17 1 2015-16 1 2014-15 1 2013-14 1 Actuarially determined contribution 27,691 $ 25,847 $ 23,062 $ 15,223 $ 19,468 $ 19,129 $ 18,125 $ 14,759 $ Contributions in relation to the actuarially
determined contributions (27,691) (25,847) (23,062) (15,223) (19,468) (19,129) (19,125) (14,759) Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ (1,000) $ - $ Covered payroll 45,665 $ 43,783 $ 43,684 $ 31,943 $ 43,269 $ 42,607 $ 44,055 $ 41,167 $ Contributions as a percentage of covered payroll 60.64% 59.03% 52.79% 47.66% 44.99% 44.90% 43.41% 35.85% Notes to Schedule
Valuation date: 6/30/2012 through 06/30/2018
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period For details, see Safety Plan of the City of Huntington Beach Annual Valuation Report as of June 30, 2020.
Asset valuation method
Inflation 2.50%
Salary increases Varies by entry age and service.
Payroll growth
Discount Rate
Retirement age
Mortality
Last Ten Fiscal Years*
The prescribed discount rate assumption, adopted by the Board on December 21, 2016, is 7.00 percent compounded annually (net of investment and administrative expenses) as of June 30, 2018. *Beginning with the June 30, 2013 valuations, CalPERS employed an amortization and smoothing policy that will pay for all gains and losses over a fixed 30- year period with the increases or decreases in the rate spread directly over a 5-year period.
Note: The CalPERS Board of Administration has adopted a new amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy removes the 5-year ramp-down on investment gains/losses. These changes will apply only to new UAL bases established on or after June 30, 2019.
For 10/1/13-6/30/16, the probabilities of retirement are based on the 2014 CalPERS Experience study for the period from 1997 to 2007. For 7/1/16-6/30/19, the probabilities of retirement are based on the 2014 CalPERS Experience study for the period from 1997 to 2011. For 7/1/19-6/30/20, the probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.
For 10/1/13-6/30/16, the probabilities of mortality are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. For 7/1/16-6/30/19, the probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. For 7/1/16-6/30/18, Pre-retirement and Post-retirement mortality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries. For 7/1/18-6/30/19, Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries. For 7/1/19-6/30/20, the probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.
Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.
CalPERS City Safety Plan - 100
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
For 10/1/14-6/30/15, 15 Year Smoothed Market (for details, see June 30, 2012 Funding Valuation Report). For 7/1/15-6/30/20, Fair Value (for details, see the Funding Valuation Reports for the years ended June 30, 2013, 2014, 2015, 2016 and 2017).
2.75%
2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1, 2017 to June 30, 2018.
135
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30, 2021
(in Thousands)
2020-21 1 2019-20 1 2018-19 1 2017-18 1, 2 2016-17 1 2015-16 1 2014-15 1 2013-14 1 Actuarially determined contribution 933 $ 1,689 $ 2,258 $ 2,879 $ 3,895 $ 3,576 $ 3,634 $ 4,534 $ Contributions in relation to the actuarially
determined contributions (1,435) (3,506) (4,962) (3,507) (5,346) (7,277) (4,678) (4,539) Contribution deficiency (excess) (502) $ (1,817) $ (2,704) $ (628) $ (1,451) $ (3,701) $ (1,044) $ (5) $ Covered payroll 7,684 $ 8,469 $ 12,863 $ 10,890 $ 17,167 $ 19,517 $ 22,069 $ 22,004 $ Contributions as a percentage of covered payroll 18.68% 41.40% 38.58% 32.20% 31.14% 37.29% 21.20% 20.63% Notes to Schedule
Valuation date: 6/30/2019 6/30/2019 9/30/2017 9/30/2017 9/30/2015 9/30/2013 9/30/2013 9/30/2011 Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal, Level Percentage of Payroll Amortization method/period
Asset valuation method
Inflation 2.50%
Salary increases Aggregate - 2.75% annually. Merit - CalPERS 1997-2015 Experience Study.
Payroll growth
Investment rate of return
Retirement age
Mortality
2021
2 2020 2 2019 2 2018 2
2017 2016 2015 2014
Annual Money Weighted Rate of Return, net
of investment expense 26.88% 3.79% 4.79% 4.04% 12.87% 10.20% -2.82% 9.20% 2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1, 2017 to June 30, 2018.
The probabilities of mortality are based on the CalPERS 1997-2015 Experience Study. Pre-retirement and Post- retirement mortality rates include mortality projected fully generational with Scale MP-2019, modified to converge to ultimate improvement rates in 2022 for the October 1, 2013 to June 30, 2018 measurement period. Mortality projected fully generational with Scale MP-2019 for the July 1, 2019 to June 30, 2021 measurement period.
Schedule of Money Weighted Rate of Return
6.5%, net of pension plan investment and administrative expenses, including inflation for the October 1, 2013 to June 30, 2018 measurement period. 6.25%, net of pension plan investment and administrative expenses, for the July 1, 2019 - June 30, 2021 measurement period.
The probabilities of retirement are based on the CalPERS 1997-2015 Experience Study.
Investment gains/losses spread over a 3-year rolling period. 1 Historical information is required only for measurement periods for which GASB 68 is applicable. 2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from October 1, 2017 to June 30, 2018.
Last Ten Fiscal Years*
Supplemental Retirement Plan
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
Merit - CalPERS 1997-2011 Experience Study plus 3.25% aggregate increase for the October 1, 2013 to June 30, 2018 measurement period. 3% aggregate increase for the July 1, 2018 - June 30, 2019 measurement period. Merit - CalPERS 1997-2015 Experience Study plus 2.75% annually increase for the July 1, 2019 - June 30, 2020. 9/30/12 UAAL: fixed 10-year period, Gains/Losses: fixed 15-year period, Discount rate change loss: 10-year period, 6/30/18 UAAL: fixed 5-year period fresh start. 20-year closed period for 2020/2021. Level dollar amortization. 136
Fiscal Year Ended June 30 2021 2020 2019 2018**
Actuarially Determined Contribution (ADC) 1,364$ 1,793$ 1,746$ 2,022$ Contributions in relation to the ADC*** (1,882) (1,959) (2,270) (4,192) Contribution deficiency (excess) (518)$ (166)$ (524)$ (2,170)$ Covered-employee payroll** 70,881$ 76,521$ 79,682$ 59,589$ Contributions as a percentage of covered-employee payroll 2.66% 2.56% 2.85% 7.03% Notes to Schedule:
Valuation date: 6/30/2019 6/30/2017 6/30/2017 6/30/2015 Methods and assumptions used to determine contributions:
Actuarial Cost Method Entry Age Normal
Amortization Method/Period Level percent of payroll over a closed rolling 15-year period Asset Valuation Method Investment gains and losses spread over 5-year rolling period.
Inflation
Payroll Growth 3.00% per annum, in aggregate.
Investment Rate of Return
Healthcare cost-trend rates
Retirement Age
Mortality
*Historical information is required only for measurement periods for which GASB 75 is applicable.
Future years' information will be displayed up to 10 years as information becomes available. **For the nine-month period ending June 30, 2018. The City changed its fiscal year effective October 1, 2017. ***Contributions to the OPEB plan are not based on employee pay.
7.0% initial, 1.0% - 2.0% near term increase then decreasing 0.5% per year to trend rate that reflects medical price inflation to an ultimate rate of 4.0% in 2076.
Tier 1 employees - 2.5% @55 and Tier 2 employees - 2.0% @62. The probabilities of retirement are based on the 2014 CalPERS Experience Study for the period from 1997-2011. Tier 1 employees - 2.5% @55 and Tier 2 employees - 2.0% @ 62. The probabilities of retirement are based on the CalPERS 1997-2015 experience Study for Measurement period as of 6/30/20.
Pre-retirement mortality probability based on 2014 CalPERS 1997-2011 Experience Study covering CalPERS participants. Post-retirement mortality probability based on CalPERS Experience Study 2007-2011 covering participants in CalPERS. Mortality based on CalPERS 1997-2015 Experience Study covering participants in CalPERS.
For the Year Ended June 30, 2021
3% for 10/1/17-6/30/18 and 2.75% per annum for the measurement period July 1, 2019 to June 30, 2020.
6% for the October 1, 2017 - June 30, 2018 period. 6.25% for the July 1, 2018 - June 30, 2020.
Assumes investing in California Employers' Retiree Benefit Trust asset allocation Strategy 3, moving to Strategy 2 in March 2019.
Last Ten Fiscal Years*
Other Post Employment Benefits Plan
(in Thousands)
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
137
SUPPLEMENTARY INFORMATION
138
THIS PAGE INTENTIONALLY LEFT BLANK
139
City of Huntington Beach
Other Governmental Funds
Special Revenue Funds account for revenues and expenditures legally constrained to a specific purpose.
The Air Quality Fund accounts for revenues from the local agencies used to improve local air quality. The Development Impact Fee Fund accounts for fees collected for new developments to be used for transportation, park land acquisition and development, library and other public facilities in an effort to mitigate the impacts of those new developments.
The Disability Access Fund accounts for the State Mandated Disability Access Fee (SB 1186) to fund increased training certified access specialist (CASp) services for the public and to facilitate compliance with construction related accessibility requirements.
The Drainage Fund accounts for fees received from developers to construct and maintain the City’s drainage system.
The Fourth of July Parade Fund accounts for the activities of the City’s annual parade. The Strand Parking Structure Fund accounts for the activities of the Strand Parking Structure. The Gas Tax Fund accounts for monies allocated under the Streets and Highways Code of California. Expenditures may be made for any street related purpose allowed under the code. The Housing Residual Receipt Fund accounts for residual receipts received for housing activities. The Park Acquisition and Development Fund accounts for fees received from developers to develop and maintain the City’s park system.
The Surf City “3” Fund accounts for revenues and expenditures related to a 1% fee on cable television and other video subscription services to fund the purchase and acquisition of capital equipment and facilities necessary to program and broadcast PEG (public, education and government) events on the City’s cable channel. The ELM Automation Fund accounts for automation fee revenues and Enterprise Land Management (ELM) replacement costs and maintenance expenditures.
The Traffic Congestion Relief Fund accounts for moneys allocated for roadway maintenance as established by Assembly Bill 2928.
The Traffic Impact Fee Fund accounts for moneys received from the traffic impact fee levied on new developments in the City.
The Transportation Fund accounts for moneys received from the countywide half cent sales tax and other specific sources to be spent on transportation related expenditures.
Debt Service Funds account for the receipts for and payment of general long-term debt.
The Public Financing Authority accounts for the activity of the Huntington Beach Public Financing Authority.
Capital Projects Funds account for the acquisition and construction of capital assets other than those financed by proprietary fund types.
The Affordable Housing In-Lieu Fund accounts for the Affordable Housing In-Lieu Fee from developers of housing projects who have elected to pay the fee in-lieu of building the affordable housing in their project. The Infrastructure Fund records activity for certain designate infrastructure related expenditures. The Lease Capital Project Fund records activity for capital lease project expenditures. The Parking In-Lieu Fund records construction activity from developers who pay fees in-lieu of directly providing parking facilities to the City.
The Senior Center Development Fund records construction activity for the Senior Center Development at Central Park.
The Sewer Development Fund accounts for fees received from developers to construct and maintain sewer facilities.
The Technology Fund accounts for technology infrastructure project expenditures.
140
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2021
(In Thousands)
ASSETS Air Quality
Development
Impact Fee
Disability
Access Drainage
Fourth of
July Parade
Strand Parking
Structures
Cash and Investments 1,446$ 14,535$ 294$ 2,714$ -$ 3,797$ Taxes Receivable - - - - - - Other Receivables 72 43 1 8 - 11 Total Assets 1,518$ 14,578$ 295$ 2,722$ -$ 3,808$
LIABILITIES
Accounts Payable -$ 273$ 4$ -$ -$ 192$ Accrued Payroll - 5 - - - - Total Liabilities - 278 4 - - 192
FUND BALANCES
Restricted
Pollution Remediation - - - - - - Highways, Streets and Transportation - - - - - - Low Income Housing - - - - - - Air Quality 1,518 - - - - - Other Capital Projects - 14,300 - 2,722 - - Other Purposes - - 291 - - - Committed
Parks - - - - - - Other Purposes - - - - - 3,616 Total Fund Balances 1,518 14,300 291 2,722 - 3,616 Total Liabilities and Fund Balances 1,518$ 14,578$ 295$ 2,722$ -$ 3,808$
SPECIAL REVENUE FUNDS
141
Gas Tax
Housing
Residual
Receipt
Park Acquisition
and
Development Surf City "3"
ELM
Automation
Fund
Traffic
Congestion
Relief
Traffic Impact
Fee Transportation
Total Special
Revenue Funds
3,829$ 1,247$ 1,749$ 1,259$ 274$ 2,064$ 2,915$ 2,434$ 38,557$ 680 - - 229 - - - 585 1,494 11 4 5 4 1 6 9 7 182 4,520$ 1,251$ 1,754$ 1,492$ 275$ 2,070$ 2,924$ 3,026$ 40,233$ 1,803$ -$ 10$ 32$ -$ 35$ 2$ 158$ 2,509$ 48 - - - 8 - - 51 112 1,851 - 10 32 8 35 2 209 2,621 - - 355 - - - - - 355 2,669 - - - - 2,035 2,922 2,817 10,443 - 1,251 - - - - - - 1,251 - - - - - - - - 1,518 - - - - - - - - 17,022 - - - 1,460 267 - - - 2,018 - - 1,389 - - - - - 1,389 - - - - - - - - 3,616 2,669 1,251 1,744 1,460 267 2,035 2,922 2,817 37,612 4,520$ 1,251$ 1,754$ 1,492$ 275$ 2,070$ 2,924$ 3,026$ 40,233$
SPECIAL REVENUE FUNDS
(continued)
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2021
(In Thousands)
CITY OF HUNTINGTON BEACH
142
ASSETS
Public Financing
Authority
Total Debt Service
Fund
Affordable Housing
In-Lieu Infrastructure
Cash and Investments 3,350$ 3,350$ 1,359$ 18,712$ Cash and Investments with Fiscal Agent 1,086 1,086 - - Taxes Receivable - - - -
Other Receivables 1 1 88 250
Prepaids - - - 105
Total Assets 4,437$ 4,437$ 1,447$ 19,067$
LIABILITIES
Accounts Payable 2$ 2$ -$ 1,713$
Accrued Payroll - - - 80
Total Liabilities 2 2 - 1,793
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - - - 209
Total Deferred Inflows of Resources - - - 209
FUND BALANCES
Nonspendable
Prepaid Insurance - - - 105
Restricted
Pollution Remediation - - - -
Debt Service 4,435 4,435 - -
Highways, Streets and Transportation - - - -
Low Income Housing - - 1,447 -
Air Quality - - - -
Other Capital Projects - - - -
Other Purposes - - - -
Committed
Parks - - - -
Other Capital Projects - - - 16,960
Other Purposes - - - -
Assigned
Capital Improvement Reserve - - - -
Total Fund Balances 4,435 4,435 1,447 17,065
4,437$ 4,437$ 1,447$ 19,067$
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2021
(In Thousands)
(continued)
Total Liabilities, Deferred Inflows
of Resources and Fund Balances
DEBT SERVICE FUNDS CAPITAL PROJECT FUNDS
143
Lease Capital
Project Parking In-Lieu
Senior Center
Development
Sewer
Development Technology
Total Capital
Projects Funds
Total Other
Governmental
Funds
3$ 655$ -$ 4,540$ 3,271$ 28,540$ 70,447$ 8,750 - - - - 8,750 9,836 - - - - - - 1,494 - 3 - 13 10 364 547 - - - - - 105 105 8,753$ 658$ -$ 4,553$ 3,281$ 37,759$ 82,429$ -$ -$ -$ 319$ 1$ 2,033$ 4,544$ - - - - - 80 192 - - - 319 1 2,113 4,736 - - - - - 209 209 - - - - - 209 209
- - - - - 105 105 - - - - - - 355 - - - - - - 4,435 - - - - - - 10,443 - - - - - 1,447 2,698 - - - - - - 1,518 8,753 - - - - 8,753 25,775 - - - - - - 2,018 - - - - - - 1,389 - 658 - 4,234 - 21,852 21,852 - - - - - - 3,616 - - - - 3,280 3,280 3,280 8,753 658 - 4,234 3,280 35,437 77,484 8,753$ 658$ -$ 4,553$ 3,281$ 37,759$ 82,429$
CAPITAL PROJECT FUNDS
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2021
(In Thousands)
(continued)
144
REVENUES Air Quality
Development
Impact Fee
Disability
Access Drainage
Fourth of July
Parade
Strand Parking
Structures
Sales Taxes -$ - $ - $ - $ - $ - $ Other Taxes - - - - - - Licenses and Permits - - 69 - - - Use of Money and Property 8 19 2 12 16 1,232 Intergovernmental 263 - - - - - Charges for Current Service - 1,148 - 218 - - Other - - - - - - Total Revenues 271 1,167 7 1 230 1 6 1,232
EXPENDITURES
Current:
City Manager - - - - - - Community Development - - - - - 928 Finance - - 11 - - - Information Systems - - - - - - Community Services - 3,557 - - 99 - Library Services - 349 - - - - Public Works 15 - - 2 7 - - Total Expenditures 15 3,906 1 1 2 7 9 9 928 Excess Of Revenues Over
(Under) Expenditures 256 (2,739) 6 0 203 (83) 304 Other Financing Sources (Uses):
Transfers In - - - - 45 - Transfers Out - - - - - (400) Total Other Financing Sources (Uses) - - - - 4 5 (400) Net Change in Fund Balances 256 (2,739) 60 203 (38) (96) Fund Balances - Beginning of Year 1,262 17,039 231 2,519 3 8 - Cumulative Effect of Changes in Accounting Principles - - - - - 3,712 Fund Balance as Restated 1,262 17,039 231 2,519 3 8 3,712 Fund Balances - End of Year 1,518 $ 14,300$ 291$ 2,722$ - $ 3,616$
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
145
Gas Tax
Housing
Residual
Receipt
Park
Acquisition
and
Development Surf City "3"
ELM
Automation
Fund
Traffic
Congestion
Relief
Traffic Impact
Fee Transportation
Total Special
Revenue
Funds
-$ -$ -$ -$ -$ -$ -$ 3,486$ 3,486$ 6,783 - - 534 - - - - 7,317 - - - - - - - - 69 - 5 - 6 - 4 9 14 1,327 42 - - - - 1,456 - 21 1,782 - - - - 335 - 225 - 1,926 - 2 8 - - - - - - 2 8 6,825 3 3 - 540 335 1,460 234 3,521 15,935 - - - 372 - - - - 372 - - - - - - - - 928 - - - - - - - - 11 - - - - 428 - - - 428 - - 562 - - - - - 4,218 - - - - - - - - 349 11,262 - - - - 1,208 5 2 3,124 15,688 11,262 - 562 372 428 1,208 5 2 3,124 21,994 (4,437) 3 3 (562) 168 (93) 252 182 397 (6,059) - - - - - - - - 45 - - - - - - - - (400) - - - - - - - - (355) (4,437) 33 (562) 168 (93) 252 182 397 (6,414) 7,106 1,218 2,306 1,292 360 1,783 2,740 2,420 40,314 - - - - - - - - 3,712 7,106 1,218 2,306 1,292 360 1,783 2,740 2,420 44,026 2,669$ 1,251$ 1,744$ 1,460$ 267$ 2,035$ 2,922$ 2,817$ 37,612$
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
(continued)
146
REVENUES
Public Financing
Authority
Total Debt Service
Funds
Affordable Housing In-
Lieu Infrastructure
Sales Taxes -$ -$ -$ -$ Other Taxes - - - - Licenses and Permits - - 224 - Use of Money and Property 9 9 92 46 Intergovernmental - - - - Charges for Current Service - - - - Other - - - 1 0 Total Revenues 9 9 316 5 6
EXPENDITURES
Current:
City Manager - - - - Community Development - - 1 - Finance 331 331 - - Fire - - - - Information Systems - - - - Community Services - - - 62 Library Services - - - - Public Works - - - 4,503 Debt Service: -
Principal 2,260 2,260 - - Interest 700 700 - - Total Expenditures 3,291 3,291 1 4,565 Excess Of Revenues Over
(Under) Expenditures (3,282) (3,282) 315 (4,509) Other Financing Sources (Uses):
Transfers In 1,777 1,777 - 9,417 Proceeds of Long-Term Debt 19,275 19,275 - - Issuance Premium 1,743 1,743 - - Payments to Escrow (24,204) (24,204) - - Transfers Out - - - - Total Other Financing Sources (Uses) (1,409) (1,409) - 9,417 Net Change in Fund Balances (4,691) (4,691) 315 4,908 Fund Balances - Beginning of Year 9,126 9,126 1,132 12,157 Cumulative Effect of Changes in Accounting Principles - - - - Fund Balance As Restated 9,126 9,126 1,132 12,157 Fund Balances - End of Year 4,435 $ 4,435$ 1,447$ 17,065$
CAPITAL PROJECT FUNDS
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
(continued)
DEBT SERVICE FUNDS
147
Lease Capital
Project Parking In-Lieu
Senior Center
Development
Sewer
Development Technology
Total Capital
Projects Funds
Total Other
Governmental
Funds
-$ - $ - $ - $ - $ - $ 3,486$ - - - - - - 7,317 - 115 - - - 339 408 - - - - 7 145 1,481 - - - 12 - 12 1,794 - - - 92 - 92 2,018 - - - - - 1 0 3 8 - 115 - 104 7 598 16,542 - - - - - - 372 - - - - - 1 929 - - - - - - 342 1,071 - - - - 1,071 1,071 - - - - 254 254 682 - - - - - 62 4,280 - - - - - - 349 - - - 2,954 - 7,457 23,145 - - - - - - 2,260 55 - - - - 5 5 755 1,126 - - 2,954 254 8,900 34,185 (1,126) 115 - (2,850) (247) (8,302) (17,643) - - - - - 9,417 11,239 12,753 - - - - 12,753 32,028 - - - - - - 1,743 (4,052) - - - - (4,052) (28,256) - - (16) - - (16) (416) 8,701 - (16) - - 18,102 16,338 7,575 115 (16) (2,850) (247) 9,800 (1,305) 1,178 543 1 6 7,084 3,527 25,637 75,077 - - - - - - 3,712 1,178 543 1 6 7,084 3,527 25,637 78,789 8,753$ 658$ - $ 4,234$ 3,280$ 35,437$ 77,484$
CAPITAL PROJECT FUNDS
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
(continued)
148
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 8$ 8$ Intergovernmental 250 250 263 1 3 TOTAL REVENUES 250 250 271 2 1 EXPENDITURES:
Current:
Public Works 540 1,255 1 5 1 ,240 TOTAL EXPENDITURES 540 1,255 1 5 1 ,240 NET CHANGE IN FUND BALANCE (290) (1,005) 256 1,261 Fund Balance - Beginning of Year 1,262 1,262 1,262 - Fund Balance - End of Year 972$ 257$ 1,518$ 1 ,261$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property - $ - $ 19$ 19 $ Charges for Current Service 315 315 1,148 8 33 TOTAL REVENUES 315 315 1,167 8 52 EXPENDITURES:
Current:
Fire 280 900 - 900 Police - 115 - 115 Community Services 5,098 8,304 3,557 4,747 Library Services 200
490 349 1 41
TOTAL EXPENDITURES 5,578 9,809 3,906 5 ,903 NET CHANGE IN FUND BALANCE (5,263) (9,494) (2,739) 6,755 Fund Balance - Beginning of Year 17,039 17,039 17,039 - Fund Balance - End of Year 11,776$ 7,545$ 14,300$ 6 ,755$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 84 $ 84 $ 69 $ (15)$ Use of Money and Property - - 2 2 TOTAL REVENUES 84 8 4 7 1 (13) EXPENDITURES:
Current:
Finance 84
8 7 1 1 7 6 TOTAL EXPENDITURES 84 8 7 1 1 7 6 NET CHANGE IN FUND BALANCE - (3) 60 63 Fund Balance - Beginning of Year 231 231 231 - Fund Balance - End of Year 231$ 228$ 291$ 6 3$ (In Thousands)
Air Quality
Development Impact Fee
Disability Access
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
149
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
From Use of Money and Property -$ -$ 12$ 12$ Charges for Current Service 150 150 218 6 8 TOTAL REVENUES 150 150 230 8 0 EXPENDITURES:
Current:
Public Works 100 100 2 7 7 3 TOTAL EXPENDITURES 100 100 2 7 7 3 NET CHANGE IN FUND BALANCE 50 50 203 153 Fund Balance - Beginning of Year 2,519 2,519 2,519 - Fund Balance - End of Year 2,569$ 2,569$ 2,722$ 1 53$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property 120 $ 16 $ 16 $ - $ Intergovernmental 63 - - - Charges for Current Service 142 - - - Other 82 - - - TOTAL REVENUES 407 1 6 1 6 - EXPENDITURES:
Current:
Community Services 407
130 9 9 3 1
TOTAL EXPENDITURES 407 130 9 9 3 1 OTHER FINANCING SOURCES (USES):
Transfers In - 4 6 4 5 ( 1) TOTAL OTHER FINANCING SOURCES (USES) - 4 6 4 5 ( 1) NET CHANGE IN FUND BALANCE - (68) (38) 30 Fund Balance - Beginning of Year 38 3 8 3 8 - Fund Balance - End of Year 38$ (30)$ - $ 3 0$ Strand Parking Structure
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property 1,403$ 1,403$ 1,232$ (171)$ TOTAL REVENUES 1,403 1,403 1,232 (171) EXPENDITURES:
Current:
Community Development 1,041
1,041 928 1 13
TOTAL EXPENDITURES 1,041 1,041 928 1 13 OTHER FINANCING SOURCES (USES):
Transfers Out (400) (400) (400) - TOTAL OTHER FINANCING SOURCES (USES) (400) (400) (400) - NET CHANGE IN FUND BALANCE (38) (38) (96) (58) Fund Balance - Beginning of Year - - - - Cumulative Effect of Changes in Accounting Principles - - 3,712 3 ,712 Fund Balance as Restated - - 3,712 3 ,712 Fund Balance - End of Year (38)$ (38)$ 3,616$ 3 ,654$ Fourth of July Parade
Drainage
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
150
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Other Taxes 6,077$ 6,077$ 6,783$ 706$ Intergovernmental - - 42 42 TOTAL REVENUES 6,077 6,077 6,825 748 EXPENDITURES:
Current:
Public Works 5,530 11,985 11,262 723 TOTAL EXPENDITURES 5,530 11,985 11,262 723 NET CHANGE IN FUND BALANCE 547 (5,908) (4,437) 1,471 Fund Balance - Beginning of Year 7,106 7,106 7,106 - Fund Balance - End of Year 7,653$ 1,198$ 2,669$ 1,471$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 5$ 5$ Other 200 200 28 (172) TOTAL REVENUES 200 200 33 (167) EXPENDITURES:
Current:
Community Development 50
50 - 50
TOTAL EXPENDITURES 50 50 - 50 NET CHANGE IN FUND BALANCE 150 150 33 (117) Fund Balance - Beginning of Year 1,218 1,218 1,218 - Fund Balance - End of Year 1,368$ 1,368$ 1,251$ (117)$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Charges for Current Service 70$ 70$ -$ (70)$ TOTAL REVENUES 70 70 - (70) EXPENDITURES:
Current:
Community Services 625
1,979 562 1,417
TOTAL EXPENDITURES 625 1,979 562 1,417 NET CHANGE IN FUND BALANCE (555) (1,909) (562) 1,347 Fund Balance - Beginning of Year 2,306 2,306 2,306 - Fund Balance - End of Year 1,751$ 397$ 1,744$ 1,347$
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
Park Acquisition and Development
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
Gas Tax
Housing Residual Receipt
151
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Other Taxes 605$ 605$ 534$ (71)$ Use of Money and Property - - 6 6 TOTAL REVENUES 605 605 540 (65) EXPENDITURES:
Current:
City Manager 353 671 372 299 TOTAL EXPENDITURES 353 671 372 299 NET CHANGE IN FUND BALANCE 252 (66) 168 234 Fund Balance - Beginning of Year 1,292 1,292 1,292 - Fund Balance - End of Year 1,544$ 1,226$ 1,460$ 234$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Charges for Current Service 360$ 360$ 335$ (25)$ TOTAL REVENUES 360 360 335 (25) EXPENDITURES:
Current:
Information Systems 431 431 428 3 TOTAL EXPENDITURES 431 431 428 3 NET CHANGE IN FUND BALANCE (71) (71) (93) (22) Fund Balance - Beginning of Year 360 360 360 - Fund Balance - End of Year 289$ 289$ 267$ (22)$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 4$ 4$ Intergovernmental 1,535 1,535 1,456 (79) TOTAL REVENUES 1,535 1,535 1,460 (75) EXPENDITURES:
Current:
Public Works 1,200
2,744 1,208 1,536
TOTAL EXPENDITURES 1,200 2,744 1,208 1,536 NET CHANGE IN FUND BALANCE 335 (1,209) 252 1,461 Fund Balance - Beginning of Year 1,783 1,783 1,783 - Fund Balance - End of Year 2,118$ 574$ 2,035$ 1,461$
CITY OF HUNTINGTON BEACH
(In Thousands)
Surf City "3"
ELM Automation Fund
Traffic Congestion Relief
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
SCHEDULE OF REVENUES, EXPENDITURES, AND
152
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 9$ 9$ Charges for Current Service - - 225 225 TOTAL REVENUES - - 234 234 EXPENDITURES:
Current:
Public Works 195 722 52 670 TOTAL EXPENDITURES 195 722 52 670 NET CHANGE IN FUND BALANCE (195) (722) 182 904 Fund Balance - Beginning of Year 2,740 2,740 2,740 - Fund Balance - End of Year 2,545$ 2,018$ 2,922$ 904$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Sales Taxes 3,008$ 3,008$ 3,486$ 478$ Use of Money and Property - - 14 14 Intergovernmental - - 21 21 TOTAL REVENUES 3,008 3,008 3,521 513 EXPENDITURES:
Current:
Public Works 3,398
4,929 3,124 1,805
TOTAL EXPENDITURES 3,398 4,929 3,124 1,805 NET CHANGE IN FUND BALANCE (390) (1,921) 397 2,318 Fund Balance - Beginning of Year 2,420 2,420 2,420 - Fund Balance - End of Year 2,030$ 499$ 2,817$ 2,318$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 9$ 9$ TOTAL REVENUES - - 9 9 EXPENDITURES:
Current:
Finance 10 349 331 18 Debt Service:
Principal 2,575 3,125 2,260 865 Interest 1,387
1,906 700 1,206
TOTAL EXPENDITURES 3,972 5,380 3,291 2,089 OTHER FINANCING SOURCES (USES):
Transfers In 1,334 1,334 1,777 443 Proceeds of Long-Term Debt - 19,275 19,275 - Issuance Premium - 1,743 1,743 - Payments to Escrow - (23,135) (24,204) (1,069) TOTAL OTHER FINANCING SOURCES (USES) 1,334 (783) (1,409) (626) NET CHANGE IN FUND BALANCE (2,638) (6,163) (4,691) 1,472 Fund Balance - Beginning of Year 9,126 9,126 9,126 - Fund Balance - End of Year 6,488$ 2,963$ 4,435$ 1,472$ Traffic Impact Fee
(In Thousands)
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2021
OTHER GOVERNMENTAL FUNDS
Transportation
Public Financing Authority
153
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 546$ 546$ 224$ (322)$ Use of Money and Property - - 9 2 9 2 TOTAL REVENUES 546 546 316 (230) EXPENDITURES:
Current:
Community Development 200 203 1 2 02 TOTAL EXPENDITURES 200 203 1 2 02 NET CHANGE IN FUND BALANCE 346 343 315 (28) Fund Balance - Beginning of Year 1,132 1,132 1,132 - Fund Balance - End of Year 1,478 $ 1,475$ 1,447$ (28)$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property - $ - $ 46$ 46 $ Other - - 1 0 1 0 TOTAL REVENUES - - 5 6 5 6 EXPENDITURES:
Current:
Community Services 250 439 62 377 Public Works 4,071 16,330 4,503 11,827 TOTAL EXPENDITURES 4,321 16,769 4,565 12,204 OTHER FINANCING SOURCES (USES):
Transfers In 3,000 9,417 9,417 - TOTAL OTHER FINANCING SOURCES (USES) 3,000 9,417 9,417 - NET CHANGE IN FUND BALANCE (1,321) (7,352) 4,908 12,260 Fund Balance - Beginning of Year 12,157 12,157 12,157 - Fund Balance - End of Year 10,836 $ 4,805$ 17,065$ 12,260$ EXPENDITURES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Current:
Fire -$ 9,830$ 1,071 $ 8,759 $ Debt Service:
Interest - 55 5 5 - TOTAL EXPENDITURES - 9,885 1,126 8 ,759 OTHER FINANCING SOURCES (USES):
Proceeds of Long-Term Debt - 21,503 12,753 (8,750) Payments to Escrow - (4,052) (4,052) - TOTAL OTHER FINANCING SOURCES (USES) - 17,451 8,701 (8,750) NET CHANGE IN FUND BALANCE - 7,566 7,575 9 Fund Balance - Beginning of Year 1,178 1,178 1,178 - Fund Balance - End of Year 1,178 $ 8,744$ 8,753$ 9 $ Lease Capital Project
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
(In Thousands)
Infrastructure
Affordable Housing In-Lieu
154
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 38$ 3 8$ 115$ 7 7$ TOTAL REVENUES 38 3 8 115 7 7 EXPENDITURES:
Current:
Community Development 38 3 8 - 3 8 TOTAL EXPENDITURES 38 3 8 - 3 8 NET CHANGE IN FUND BALANCE - - 115 115 Fund Balance - Beginning of Year 543 543 543 - Fund Balance - End of Year 543$ 543$ 658$ 1 15$ OTHER FINANCING SOURCES (USES): Original Budget Final Budget Actual Variance with
Final Budget
Positive
(Negative)
Transfers Out - $ (16)$ ( 16)$ - $ TOTAL OTHER FINANCING SOURCES (USES) - (16) ( 16) - NET CHANGE IN FUND BALANCE - (16) (16) - Fund Balance - Beginning of Year 16 1 6 1 6 - Fund Balance - End of Year 16$ - $ - $ - $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Intergovernmental - $ - $ 12 $ 12 $ Charges for Current Service 160 160 9 2 (68) TOTAL REVENUES 160 160 104 (56) EXPENDITURES:
Current:
Public Works 150
6,348 2,954 3 ,394
TOTAL EXPENDITURES 150 6,348 2,954 3 ,394 NET CHANGE IN FUND BALANCE 10 (6,188) (2,850) 3,338 Fund Balance - Beginning of Year 7,084 7,084 7,084 - Fund Balance - End of Year 7,094$ 896$ 4,234$ 3 ,338$ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property - $ - $ 7 $ 7 $ TOTAL REVENUES - - 7 7 EXPENDITURES:
Current:
Information Systems -
418 254 1 64
TOTAL EXPENDITURES - 418 254 164 NET CHANGE IN FUND BALANCE - ( 418) (247) 171 Fund Balance - Beginning of Year 3,527 3,527 3,527 - Fund Balance - End of Year 3,527 $ 3,109$ 3,280$ 1 71$ Technology
Sewer Development
Senior Center Development
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
Parking In-Lieu
155
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156
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157
City of Huntington Beach
Internal Service Funds
Internal Services Funds are used to accumulate and allocate costs internally among the City’s various functions.
The Self Insurance Workers’ Comp Fund accounts for the City’s self insurance workers’ compensation program. The Self Insurance General Liability Fund accounts for the City’s self insurance general liability program. The Equipment Replacement Fund accounts for the City’s equipment replacement needs.
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159
Self Insurance
Workers' Comp
Self Insurance
General Liability
Equipment
Replacement
Fund
Internal Service
Fund Total
ASSETS
Current Assets:
Cash and Investments 16,197 $ 10,337 $ 7,322 $ 33,856 $ Other Receivables, Net 48 30 18 96 Prepaids 600 - 477 1,077 Total Current Assets 16,845 10,367 7,817 35,029 Capital Assets:
Machinery and Equipment - - 6,831 6,831 Less Accumulated Depreciation - - (1,527) (1,527) Total Capital Assets - - 5,304 5,304 Total Assets 16,845 10,367 13,121 40,333
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 1,234 - - 1,234 Deferred Outflows Related to Other Postemployment Benefits 10 5 - 1 5 Total Deferred Outflows of Resources 1,244 5 - 1,249 Total Assets and Deferred Outflows of Resources 18,089$ 10,372$ 13,121$ 41,582$
LIABILITIES
Current Liabilities:
Accounts Payable 359 $ 212 $ 144 $ 715 $ Accrued Payroll 16 - - 16 Interest Payable 4 - - 4 Current Portion of Claims Payable 6,268 3,840 - 10,108 Current Portion of Compensated Absences 12 - - 1 2 Total Current Liabilities 6,659 4,052 144 10,855 Non-Current Liabilities:
Compensated Absences 32 - - 32 Long-Term Obligations Due Within One Year 37 - - 37 Long-Term Obligations Due in More than One Year 1,029 - - 1,029 Net Pension Liability 1,309 - - 1,309 Net Other Postemployment Benefits Liability 11 5 - 16 Claims Payable 28,526 8,145 - 36,671 Total Non-Current Liabilities 30,944 8,150 - 39,094 Total Liabilities 37,603 12,202 144 49,949
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 61 - - 61 Deferred Inflows Related to Other Postemployment Benefits 9 4 - 1 3 Total Deferred Inflows of Resources 70 4 - 7 4
NET POSITION
Net Investment in Capital Assets - - 5,304 5,304 Unrestricted (19,584) (1,834) 7,673 (13,745) Total Net Position (19,584) (1,834) 12,977 (8,441) Total Liabilities, Deferred Inflows
of Resources, and Net Position 18,089 $ 10,372$ 13,121$ 41,582$ Governmental Activities
CITY OF HUNTINGTON BEACH
STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
June 30, 2021
(In Thousands)
160
Self Insurance
Workers' Comp
Self Insurance
General Liability
Equipment
Replacement
Fund
Internal Service
Fund Total
OPERATING REVENUES
Fees and Charges for Service 6,731 $ 2,399 $ 5,000 $ 14,130 $ Other 73 - - 7 3 Total Operating Revenues 6,804 2,399 5,000 14,203
OPERATING EXPENSES
Supplies and Operations 1,529 837 2,120 4,486 Claims and Judgments 10,667 11,406 - 22,073 Depreciation - - 714 714 Total Operating Expenses 12,196 12,243 2,834 27,273 Operating Income (5,392) (9,844) 2,166 (13,070)
NON-OPERATING REVENUES (EXPENSES)
Investment Income (Loss) (4) (78) (8) (90) Interest Expense (4) - - (4) Debt Service (4) - - ( 4) Total Non-Operating Revenues (Expenses) (12) (78) ( 8) (98) Income (Loss) Before Transfers (5,404) (9,922) 2,158 (13,168) Change in Net Position (5,404) (9, 922) 2,158 (13, 168) Net Position - Beginning of Year (14,180) 8,088 10,819 4,727 Net Position - End of Year (19,584)$ (1,834)$ 12,977$ (8,441)$
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
Governmental Activities
161
Self Insurance
Workers' Comp
Self Insurance
General Liability
Equipment
Replacement
Fund
Internal Service
Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers and Users 6,811 $ 2,424$ 5,006$ 14,241$ Cash Paid to Employees for Services (1,528) (33) - (1,561) Cash Paid to Suppliers of Goods and Services (6,513) (7,694) (2,555) (16,762) Net Cash and Investment Provided by
Operating Activities (1,230) (5,303) 2,451 (4,082)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Debt Service (4) - - (4)
Proceeds from Issuance of Debt 1,066 - - 1,066
Net Cash and Investments Used by
Noncapital Financing Activities 1,062 - - 1,062
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of Capital Assets -
- (1,960) (1,960)
Net Cash and Investments (Used) by
Capital and Related Financing Activities - - (1,960) (1,960)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income (Loss) (4) (78) ( 8) (90)
Net Cash and Investments Provided by
Investing Activities (4) (78) ( 8) (90)
Net Increase in Cash and Investments (172) (5,381) 483 (5,070) Cash and Investments - Beginning of Year 16,369 15,718 6,839 38,926 Cash and Investments - End of Year 16,197$ 10,337$ 7,322$ 33,856$
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET CASH AND INVESTMENTS
PROVIDED (USED) BY OPERATING ACTIVITIES
Operating (Loss) (5,392) $ (9,844)$ 2,166$ (13,070)$ Adjustments to Reconcile Operating
Income (Loss) to Net Cash and Investments
Provided (Used) by Operating Activities
Depreciation - - 714 714
Decrease in Other Receivables, Net 7 25 6 38
Decrease (Increase) in Prepaids - - (477) (477)
Increase (Decrease) in Accounts Payable 55 80 42 177
Increase (Decrease) in Accrued Payroll (7) - - (7)
Increase (Decrease) in Claims Payable 5,188 4,436 - 9,624 Decrease (Increase) in Deferred Pension Outflow (1,093) - - (1,093) Increase (Decrease) in Deferred Pension Inflow 32 - - 32 Increase in Net Pension Liability (19) - - (19)
Decrease in Deferred Other Postemployment Benefits Outflow 1 - - 1 Increase in Deferred Other Postemployment Benefits Inflow (1) - - (1) (Decrease) in Ending Net Other Postemployment Benefits Liability( 1) - - ( 1)
Net Cash and Investments Provided
by Ope
rating Activities (1,230)$ (5,303)$ 2,451$ (4,082)$
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
There were no noncash investing, capital, or financing activities during the year ended June 30, 2021.
Governmental Activities
CITY OF HUNTINGTON BEACH
STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(In Thousands)
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163
City of Huntington Beach
Fiduciary Funds
Fiduciary Funds account for assets held by the City as a custodian for other organizations or individuals.
The Community Facilities Districts Funds accounts for the debt service activity of the City’s three community facilities districts.
The Huntington Beach Business Improvement District Fund accounts for the activities of the City’s business improvement district.
The Bella Terra Parking Structure Fund accounts for the activities of the Bella Terra Parking Structure.
164
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165
Custodial Funds
Assets:
Community
Facilities
Districts
Business
Improvement
Districts
Parking
Structure - Bella
Terra
Total Custodial
Funds
Current Assets:
Cash and Investments 1,286$ 1,184$ $ 2,020 $ 4,490 Cash with Fiscal Agent 1,584 - 1,681 3,265 Accounts Receivable, Net - 697 2 699 Total Assets 2,870 1,881 3,703 8,454 Liabilities:
Current Liabilities:
Accounts Payable - 1,714 214 1,928 Total Current Liabilities - 1,714 214 1,928
NET POSITION
Restricted for Individuals and Organizations 2,870 167 3,489 6,526 Total Net Position 2,870$ 167$ 3,489$ 6,526$
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2021
Custodial Funds
ADDITIONS
Community
Facilities
Districts
Business
Improvement
Districts
Parking
Structure - Bella
Terra
Total Custodial
Funds
Special Assessments or Special Taxes
Collected from Property Owners 1,512$ -$ -$ 1,512$ Business Improvement District Taxes - 4,093 - 4,093 Parking Assessments - - 2,442 2,442 Interest Income 9 - 4 1 3 Total Additions 1,521 4,093 2,446 8,060
DEDUCTIONS
Administrative Costs 40 1 10 51 Payments to other Organizations - 4,121 627 4,748 Interest and Fiscal Agency Expenses 705 - 806 1,511 Principal 955 - 855 1,810 Total Deductions 1,700 4,122 2,298 8,120 Change in Net Position (179) (29) 148 (60) Net Position - Beginning of Year - - - - Cumulative Effect of Changes in
Accounting Principles 3,049 196 3,341 6,586 Net Position - Beginning of Year as Restated 3,049 196 3,341 6,586 Net Position - End of Year 2,870 $ 167$ 3,489$ 6,526$
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF FIDUCIARY FUND ASSETS AND LIABILITIES
FIDUCIARY FUNDS
JUNE 30, 2021
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167
City of Huntington Beach
Statistical Section
This part of the City of Huntington Beach’s Annual Comprehensive 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 City’s overall financial health.
Financial Trends – contains trend information to help the reader understand how the City’s financial performance has changed over time.
Revenue Capacity – contains information to help the reader assess the City’s most significant local revenue source, the property tax.
Debt Capacity – presents information to assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future.
Demographic and Economic Information – offers information to help the reader understand the environment within which the City’s financial activities take place.
Operating Information – contains service and infrastructure data to help the reader understand how the City’s financial report relates to the services the City provides and the activities it performs.
Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports for the relevant year.
168
September 30,
Governmental Activities 2021 2020 2019 2018*** 2017
Net investment in capital assets 699,204$ 673,498$ 664,281$ 650,466$ 646,336$ Restricted 65,755 79,926 66,089 58,537 41,888 Unrestricted (275,159) (274,523) (251,022) (254,528) (262,874) Total Governmental Activities Net Position 489,800$ 478,901$ 479,348$ 454,475$ 425,350$ Business-Type Activities
Net investment in capital assets 142,469$ 142,785$ 145,696$ 143,954$ 140,478$ Restricted 20,332 22,248 21,153 25,886 30,444 Unrestricted 39,129 38,482 36,747 27,492 22,228 Total Business-Type Activities Net Position 201,930$ 203,515$ 203,596$ 197,332$ 193,150$ Primary Government
Net investment in capital assets 841,673$ 816,283$ 809,977$ 794,420$ 786,814$ Restricted 86,087 102,174 87,242 84,423 72,332 Unrestricted (236,030) (236,041) (214,275) (227,036) (240,646) Total Primary Government Net Position 691,730$ 682,416$ 682,944$ 651,807$ 618,500$ Expenses: September 30,
Governmental Activities: 2021 2020 2019 2018*** 2017
City Council 423$ 405$ 360$ 218$ 347$ City Manager 11,163 3,328 4,501 2,063 4,691 City Treasurer 340 317 246 101 216 City Attorney 3,140 3,136 2,886 1,536 3,307 City Clerk 1,147 949 976 475 889 Finance 6,828 6,661 6,245 3,455 6,201 Human Resources***** - - 6,261 4,760 5,693 Community Development* 19,716 15,722 6,144 4,301 7,576 Fire 65,960 62,840 56,494 26,688 52,941 Information Services 6,230 8,643 7,530 4,375 7,047 Police 102,415 97,204 87,355 42,109 84,786 Economic Development** - - - - - Community Services 11,365 12,539 13,369 6,768 15,558 Library Services 6,181 5,776 5,206 2,890 5,064 Public Works 40,270 45,834 40,803 23,898 35,373 Non-Departmental**** - - - 18,164 29,368 Interest on Long-Term Debt 2,706 1,686 1,823 1,467 2,063 Total Governmental Activities 277,884 265,040 240,199 143,268 261,120 Business-Type Activities
Water Utility 46,054 44,463 43,405 28,414 45,940 Sewer Service 9,284 9,828 9,442 6,127 9,351 Refuse Collection 12,936 12,609 12,051 8,916 10,821 Hazmat Service 241 235 234 117 224 Total Business-Type Activities 68,515 67,135 65,132 43,574 66,336 Total Business and Government Type Activities 346,399$ 332,175$ 305,331$ 186,842$ 327,456$ * Planning and Building departments were combined in the year ended September 30, 2011. The combined department was later renamed to Community Development in the year ended September 30, 2016. ** Economic Development was combined with Community Development in the year ended June 30, 2020. Previously, it was combined with the City Manager's Office as of the year ended September 30, 2014. *** The 2018 period reflects nine months of activity only as the fiscal year change resulted in reporting period from October 1, 2017 to June 30, 2018. **** Beginning with the fiscal year ended June 30, 2019, non-departmental expenditures are no longer presented separately but are included as part of functional expenditures.
***** Human Resources was combined with the City Manager's Office in the year ended June 30, 2020.
June 30,
CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
(In Thousands)
Fiscal Year Ended
CITY OF HUNTINGTON BEACH
CITY OF HUNTINGTON BEACH
Fiscal Year Ended
(In Thousands)
NET POSITION BY COMPONENT - LAST TEN FISCAL YEARS
June 30,
169
Governmental Activities 2016 2015 2014 2013 2012
Net investment in capital assets 624,180$ 615,512$ 618,825$ 617,267$ 612,346$ Restricted 41,555 52,270 34,018 51,867 44,220 Unrestricted (222,863) (222,787) 89,524 54,076 53,098 Total Governmental Activities Net Position 442,872$ 444,995$ 742,367$ 723,210$ 709,664$ Business-Type Activities
Net investment in capital assets 142,566$ 142,616$ 140,770$ 145,886$ 134,129$ Restricted 32,049 28,096 27,951 27,488 27,804 Unrestricted 21,997 28,476 53,166 65,595 63,686 Total Business-Type Activities Net Position 196,612$ 199,188$ 221,887$ 238,969$ 225,619$ Primary Government
Net investment in capital assets 766,746$ 758,128$ 759,595$ 763,153$ 746,475$ Restricted 73,604 80,366 61,969 79,355 72,024 Unrestricted (200,866) (194,311) 142,690 119,671 116,784 Total Primary Government Net Position 639,484$ 644,183$ 964,254$ 962,179$ 935,283$ Expenses:
Governmental Activities: 2016 2015 2014 2013 2012
City Council 321$ 270$ 258$ 271$ 310$ City Manager 3,849 3,302 3,878 1,583 1,767 City Treasurer 208 158 169 132 141 City Attorney 2,598 2,284 2,321 2,221 2,313 City Clerk 806 855 747 797 689 Finance 5,765 5,208 5,314 4,825 4,573 Human Resources***** 6,814 5,169 4,616 5,032 4,743 Community Development* 7,208 6,605 7,091 6,155 6,123 Fire 47,965 42,162 43,194 36,323 35,336 Information Services 6,852 6,552 6,456 6,096 5,857 Police 74,943 64,048 66,681 60,466 60,690 Economic Development** - - - 8,395 3,703 Community Services 9,935 13,809 12,509 15,521 15,586 Library Services 4,611 4,246 4,024 3,873 3,777 Public Works 31,791 27,979 31,691 28,500 26,508 Non-Departmental**** 35,240 24,080 21,602 25,563 19,190 Interest on Long-Term Debt 2,119 2,245 1,946 2,289 2,376 Total Governmental Activities 241,025 208,972 212,497 208,042 193,682 Business-Type Activities
Water Utility 41,643 38,614 41,499 38,446 37,437 Sewer Service 8,729 8,192 9,712 7,253 7,623 Refuse Collection 11,277 11,308 11,145 10,882 10,785 Hazmat Service 244 204 231 220 216 Total Business-Type Activities 61,893 58,318 62,587 56,801 56,061 Total Business and Government Type Activities 302,918$ 267,290$ 275,084$ 264,843$ 249,743$
CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
(In Thousands)
(continued)
Fiscal Year Ended
September 30,
CITY OF HUNTINGTON BEACH
CITY OF HUNTINGTON BEACH
NET POSITION BY COMPONENT - LAST TEN FISCAL YEARS
(In Thousands)
(continued)
Fiscal Year Ended
September 30,
170
Program Revenues: September 30,
Governmental Activities: 2021 2020 2019 2018*** 2017
Charges for Services
City Council 162$ 177$ 149$ 91$ 108$ City Manager 4,208 5,315 3,300 2,374 3,515 City Treasurer 149 163 135 81 100 City Attorney 6 7 7 4 5 City Clerk 30 220 327 229 257 Finance 3,055 3,302 2,899 1,746 2,047 Human Resources***** - - 751 373 654 Community Development* 8,353 10,037 7,459 5,448 7,448 Fire 8,877 10,122 9,831 9,104 10,296 Information Services 610 636 628 381 501 Police 6,477 5,329 6,044 4,703 4,968 Economic Development** - - - - - Community Services 15,558 17,631 23,530 19,245 21,693 Library Services 153 266 308 237 476 Public Works 6,045 6,614 6,368 4,392 5,392 Non-Departmental**** - - - 916 1,116 Total Charges for Services 53,683 59,819 61,736 49,324 58,576 Operating Grants 6,013 8,141 6,644 3,976 7,329 Capital Grants 10,192 14,483 8,361 6,055 3,408 Total Governmental Activities Program Revenue 69,888 82,443 76,741 59,355 69,313 Business-Type Activities:
Water Utility 42,523 40,518 43,958 29,530 39,938 Sewer Service 10,828 10,900 11,868 8,362 10,854 Refuse Collection 13,014 12,573 12,022 8,820 11,282 Hazmat Service 266 279 276 25 287 Total Business-Type Activities Program Revenues 66,631 64,270 68,124 46,737 62,361 Total Primary Government Program Revenue 136,519 146,713 144,865 106,092 131,674 Net (Expense) Revenue:
Governmental Activities (207,996) (182,597) (188,299) (180,844) (73,955) Business-Type Activities (1,884) (2,865) 989 (18,395) 18,787 Total Net (Expense) Revenue (209,880) (185,462) (187,310) (199,239) (55,168) General Revenue and Other Changes in Net Position
Governmental Activities:
Property Taxes 99,958 94,263 61,185 82,925 87,128 Sales Taxes 51,162 44,616 33,844 43,551 34,289 Utility Taxes 18,374 18,149 14,014 19,303 19,482 Other Taxes 17,293 18,635 14,883 17,991 17,313 Use of Money and Property 4,399 3,208 2,158 3,370 3,618 From Other Agencies 22,000 3,317 2,263 3,896 4,397 Other - - 2,811 2,438 5,693 Transfers (38) (38) (332) (51) (38) Total Governmental Activities General Revenues 213,148 182,150 130,826 173,423 171,882 Business-Type Activities:
Use of Money and Property 261 2,746 279 462 939 Transfers 38 38 332 51 38 Total Business-Type Activities General Revenues 299 2,784 611 513 977 Total General Revenues and Transfers 213,447 184,934 131,437 173,936 172,859 Extraordinary Gain - - - - - Changes in Net Position - Governmental Activities 5,152 (447) (57,473) (7,421) 97,927 Changes in Net Position - Business-Type Activities (1,585) (81) 3,603 3,676 (2,998) Net Position - Beginning of Year 682,416 682,944 627,548 630,431 535,502 Prior Period Adjustment - Governmental Activities 5,747 - (17,788) 862 - Prior Period Adjustment - Business-Type Activities - - 408 - - Net Position - Beginning of Year as restated 688,163 682,944 610,168 631,293 535,502 Net Position - End of Year 691,730$ 682,416$ 556,298$ 627,548$ 630,431$ * Planning and Building departments were combined in the year ended September 30, 2011. The combined department was later renamed to Community Development in the year ended September 30, 2016. ** Economic Development was combined with Community Development in the year ended June 30, 2020. Previously, it was combined with the City Manager's Office as of the year ended September 30, 2014. *** The 2018 period reflects nine months of activity only as the fiscal year change resulted in reporting period from October 1, 2017 to June 30, 2018. **** Beginning with the fiscal year ended June 30, 2019, non-departmental expenditures are no longer presented separately but are included as part of functional expenditures.
***** Human Resources was combined with the City Manager's Office in the year ended June 30, 2020.
Fiscal Year Ended
CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
CITY OF HUNTINGTON BEACH
(In Thousands)
June 30,
171
Program Revenues:
Governmental Activities: 2016 2015 2014 2013 2012
Charges for Services
City Council 116$ 71$ 68$ 66$ 65$ City Manager 3,029 2,994 2,835 134 130 City Treasurer 101 639 621 602 585 City Attorney 4 143 139 135 131 City Clerk 201 199 321 248 170 Finance 2,277 1,353 1,313 1,275 1,238 Human Resources***** 513 1,263 2,499 1,236 1,150 Community Development* 9,252 10,670 9,357 9,411 7,706 Fire 9,894 8,625 8,672 9,482 9,497 Information Services 521 834 809 786 763 Police 5,958 5,512 5,170 4,653 5,073 Economic Development** - - - 2,505 2,303 Community Services 18,853 18,569 18,055 17,832 17,792 Library Services 408 495 434 634 466 Public Works 5,733 6,474 6,367 7,315 5,482 Non-Departmental**** 1,290 327 318 306 281 Total Charges for Services 58,150 58,168 56,978 56,620 52,832 Operating Grants 4,723 7,458 7,958 7,303 5,088 Capital Grants 5,939 9,809 5,486 7,191 6,624 Total Governmental Activities Program Revenue 68,812 75,435 70,422 71,114 64,544 Business-Type Activities:
Water Utility 35,765 35,350 36,944 38,679 35,926 Sewer Service 11,280 11,239 10,665 12,267 11,546 Refuse Collection 11,215 11,221 11,006 10,950 10,786 Hazmat Service 235 222 183 278 154 Total Business-Type Activities Program Revenues 58,495 58,032 58,798 62,174 58,412 Total Primary Government Program Revenue 127,307 133,467 129,220 133,288 122,956 Net (Expense) Revenue:
Governmental Activities (192,308) (165,590) (138,550) (141,383) (143,498) Business-Type Activities (7,841) (3,861) 480 (413) 1,611 Total Net (Expense) Revenue (200,149) (169,451) (138,070) (141,796) (141,887) General Revenue and Other Changes in Net Position
Governmental Activities:
Property Taxes 82,615 81,355 74,795 74,856 86,056 Sales Taxes 33,063 29,243 30,276 30,051 25,339 Utility Taxes 20,229 20,621 20,764 20,152 19,135 Other Taxes 16,464 15,601 14,568 12,930 13,368 Use of Money and Property 5,551 3,725 2,816 3,434 3,239 From Other Agencies 5,653 4,279 6,003 6,585 5,647 Other 4,440 6,903 5,240 4,941 3,060 Transfers 35 (38) (38) (38) (38) Total Governmental Activities General Revenues 168,050 161,689 154,424 152,911 155,806 Business-Type Activities:
Use of Money and Property 1,281 1,015 137 1,100 1,135 Transfers (35) 38 38 38 38 Total Business-Type Activities General Revenues 1,246 1,053 175 1,138 1,173 Total General Revenues and Transfers 169,296 162,742 154,599 154,049 156,979 Extraordinary Gain - - (4,669) 23,960 - Changes in Net Position - Governmental Activities (24,258) (3,901) 11,205 35,488 12,308 Changes in Net Position - Business-Type Activities (2,152) 767 (3,614) 6,511 3,524 Net Position - Beginning of Year 919,403 937,340 921,228 879,229 863,397 Prior Period Adjustment - Governmental Activities (333,677) (457) 719 - - Prior Period Adjustment - Business-Type Activities (23,814) (14,346) 7,802 - - Net Position - Beginning of Year as restated 561,912 922,537 929,749 879,229 863,397 Net Position - End of Year 535,502$ 919,403$ 937,340$ 921,228$ 879,229$ September 30,
CITY OF HUNTINGTON BEACH
CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
(In Thousands)
Fiscal Year Ended
(continued)
172
Fiscal Year Ended
September 30,
2021 2020 2019 2018 2017
General Fund:
Nonspendable 115$ 120$ 23$ 41$ -$ Restricted 13,561 9,320 8,154 6,384 2,671 Committed 25,565 25,010 25,011 25,011 25,011 Assigned 55,368 45,638 45,825 34,464 33,498 Unassigned - - - 2,734 - Total General Fund 94,609$ 80,088$ 79,013$ 68,634$ 61,180$ Other Governmental Funds:
Nonspendable 105$ 50$ 64$ 726$ -$ Restricted 70,161 71,671 59,213 52,742 40,588 Committed 26,857 21,735 20,308 20,800 17,686 Assigned 3,280 3,527 3,614 2,701 826 Total Other Governmental Funds 100,403$ 96,983$ 83,199$ 76,969$ 59,100$ 2016 2015 2014 2013 2012
General Fund:
Nonspendable -$ 4,479$ 4,378$ 4,040$ 4,633$ Restricted 2,637 2,871 2,070 1,878 1,387 Committed 25,011 25,011 25,011 24,011 - Assigned 35,199 32,431 29,595 24,578 48,415 Total General Fund 62,847$ 64,792$ 61,054$ 54,507$ 54,435$ Other Governmental Funds:
Restricted 40,293$ 45,515$ 27,214$ 27,425$ 27,722$ Committed 21,368 21,659 16,447 11,098 6,745 Assigned 838 161 151 316 1,181 Unassigned - - - (210) (395) Total Other Governmental Funds 62,499$ 67,335$ 43,812$ 38,629$ 35,253$ Fiscal Year Ended September 30,
Fiscal Year Ended June 30,
CITY OF HUNTINGTON BEACH
FUND BALANCES - GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS (In Thousands)
(Modified Accrual Basis of Accounting)
173
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174
September 30,
2021 2020 2019 2018* 2017
REVENUES:
Property Taxes 99,958$ 94,263$ 89,367$ 80,614$ 80,826$ Sales Taxes 51,162 44,616 47,437 33,844 43,551 Utility Taxes 18,374 18,149 18,788 14,014 19,303 Other Taxes 25,745 24,578 27,196 18,409 17,991 Licenses and Permits 8,213 11,266 8,574 6,293 8,812 Fines and Forfeitures 4,619 3,403 4,300 3,048 3,995 From Use of Money and Property 19,163 27,863 23,276 11,600 17,210 From Other Agencies 29,836 11,309 13,072 10,384 15,293 Charges for Current Service/Other Revenue 27,428 34,772 33,787 30,216 32,351 TOTAL REVENUES 284,498 270,219 265,797 208,422 239,332
EXPENDITURES
Current:
City Council 1,043 394 369 279 333 City Manager 15,976 4,342 6,598 3,143 4,116 City Treasurer 837 297 248 134 201 City Attorney 7,714 2,898 2,874 2,037 3,052 City Clerk 2,810 886 981 602 830 Finance 16,173 6,200 6,484 4,376 5,763 Human Resources****** - - 6,362 5,323 5,535 Community Development** 39,212 14,692 8,138 5,554 6,963 Fire 149,726 56,477 54,431 36,347 46,831 Information Systems 19,095 8,473 8,342 5,385 6,603 Police 232,438 87,682 83,546 57,916 75,015 Economic Development*** - - - - - Community Services 25,064 14,429 11,720 7,958 14,124 Library Services 14,099 5,199 4,944 3,436 4,422 Public Works 88,007 47,655 46,878 30,357 38,635 Non-Departmental***** - - - 22,432 28,396 Capital Outlay**** - - - - - Debt Service:
Principal 3,983 5,122 5,346 311 5,091 Interest 937 1,748 1,890 965 2,066 TOTAL EXPENDITURES 617,114 256,494 249,151 186,555 247,976
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES
(332,616) 13,725 16,646 21,867 (8,644) OTHER FINANCING SOURCES (USES):
Transfers In 13,058 10,009 11,190 13,261 6,692 Issuance of Long-Term Debt (453) 1,172 - - 2,767 Issuance Premium 1,743 - - - - Issuance Discount (649) - - - - Proceeds of Long Term Debt 372,463 - - - - Payments to Escrow (28,256) - - - - Transfers Out (13,096) (10,047) (11,227) (13,593) (6,743) TOTAL OTHER FINANCING SOURCES (USES) 344,810 1,134 (37) (332) 2,716 Extraordinary Item - Dissolution of RDA - - - - - INCREASE (DECREASE) IN FUND BALANCES 12,194$ 14,859$ 16,609$ 21,535$ (5,928)$
DEBT SERVICE AS A PERCENTAGE OF
NON-CAPITAL EXPENDITURES 0.8% 3.0% 3.3% 0.7% 3.2%
* The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from October 1, 2017 to June 30, 2018.
** Planning and Building departments were combined in the year ended September 30, 2011. The department was later renamed to Community Development in the year ended September 30, 2016. *** Economic Development was combined with Community Development in the year ended June 30, 2020. Previously, it was combined with the City Manager's Office as of the year ended September 30, 2014. (Modified Accrual Basis of Accounting)
Fiscal Year Ended
June 30,
CITY OF HUNTINGTON BEACH
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS
(In Thousands)
175
(continued)
2016 2015 2014 2013 2012
REVENUES:
Property Taxes 86,382$ 82,472$ 79,460$ 74,442$ 74,554$ Sales Taxes 39,305 32,234 30,454 29,763 29,126 Utility Taxes 19,482 20,229 20,621 20,764 20,152 Other Taxes 17,313 16,464 15,601 14,568 12,930 Licenses and Permits 9,820 9,270 7,976 9,880 7,773 Fines and Forfeitures 5,144 4,746 4,392 4,058 4,252 From Use of Money and Property 18,055 17,473 16,695 16,046 16,855 From Other Agencies 13,712 18,634 16,804 18,237 18,537 Charges for Current Service/Other Revenue 32,506 35,869 33,886 34,150 30,051 TOTAL REVENUES 241,719 237,391 225,889 221,908 214,230
EXPENDITURES
Current:
City Council 318 278 258 260 310 City Manager 3,092 2,703 3,040 1,574 1,758 City Treasurer 204 167 169 132 141 City Attorney 2,539 2,425 2,321 2,221 2,313 City Clerk 790 895 747 797 689 Finance 5,659 5,452 5,314 4,825 4,573 Human Resources****** 6,776 4,606 4,298 5,661 5,213 Community Development** 7,062 6,954 7,091 6,155 6,119 Fire 46,200 45,008 42,602 35,920 35,145 Information Systems 6,742 6,846 6,456 6,096 5,857 Police 72,612 68,940 66,628 60,460 60,249 Economic Development*** - - - 7,012 3,389 Community Services 10,768 10,223 10,040 13,952 14,082 Library Services 4,247 4,146 3,739 3,588 3,492 Public Works 23,659 23,820 22,872 22,169 22,666 Non-Departmental***** 24,670 20,067 21,033 19,684 15,455 Capital Outlay**** 27,269 14,986 10,729 10,745 11,096 Debt Service:
Principal 5,933 5,454 4,797 9,381 6,012 Interest 2,138 2,226 1,987 2,321 2,564 TOTAL EXPENDITURES 250,678 225,196 214,121 212,953 201,123
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES (8,959) 12,195 11,768 8,955 13,107 OTHER FINANCING SOURCES (USES):
Transfers In 9,034 12,158 9,832 9,501 18,904 Issuance of Long-Term Debt 10,197 - - Issuance Premium - - - - - Issuance Discount - - - - - Proceeds of Long Term Debt - - - - - Payments to Escrow - - - - - Transfers Out (17,053) (14,238) (9,870) (10,339) (18,942) TOTAL OTHER FINANCING SOURCES (USES) 2,178 (2,080) (38) (838) (38) Extraordinary Item - Dissolution of RDA - - - (4,669) (11,839) INCREASE (DECREASE) IN FUND BALANCES (6,781)$ 10,115$ 11,730$ 3,448$ 1,230$
DEBT SERVICE AS A PERCENTAGE OF
NON-CAPITAL EXPENDITURES 3.6% 3.7% 3.3% 5.8% 4.5%
**** Beginning with the fiscal year ended September 30, 2017, capital outlay expenditures are no longer presented separately but are included as part of functional expenditures. However, capital outlay expenditures are excluded in the calculation of debt service as a percentage of non-capital expenditures.
***** Beginning with the fiscal year ended June 30, 2019, non-departmental expenditures are no longer presented separately but are included as part of functional expenditures.
****** Human Resources was combined with the City Manager's Office in the year ended June 30, 2020.
CITY OF HUNTINGTON BEACH
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS
(In Thousands)
September 30,
(Modified Accrual Basis of Accounting)
Fiscal Year Ended
176
Fiscal Year
Common
Property Public Utilities Total Secured Unsecured
Total Assessed
Valuation
Total Direct Tax
Rate
2011-2012 25,480,770 72,602 25,553,372 1,170,004 26,723,376 0.17082 2012-2013 26,927,738 60,802 26,988,540 1,056,938 28,045,478 0.17082 2013-2014 28,005,989 53,702 28,059,691 1,106,038 29,165,729 0.17082 2014-2015 29,723,274 74,102 29,797,376 989,809 30,787,185 0.17082 2015-2016 31,193,211 66,802 31,260,013 1,132,728 32,392,741 0.17082 2016-2017 32,540,317 55,802 32,596,119 1,067,760 33,663,879 0.17082 2017-2018 34,199,035 41,102 34,240,137 1,100,077 35,340,214 0.17082 2018-2019 35,941,648 61,202 36,002,850 1,117,879 37,120,729 0.17082 2019-2020 37,741,095 518 37,741,613 1,145,838 38,887,451 0.17082 2020-2021 39,449,688 518 39,450,206 1,111,018 40,561,224 0.17082 Source: County of Orange Auditor Controller
Fiscal Year
City Basic Rate
(1), (2) City Other School Districts
Metro Water
District Others
2011-2012 0.15582 0.01500 0.58334 0.00370 0.32513 1.08299 2012-2013 0.15582 0.01500 0.60412 0.00350 0.30798 1.08642 2013-2014 0.15582 0.01500 0.59841 0.00350 0.31444 1.08717 2014-2015 0.15582 0.01500 0.62448 0.00350 0.29444 1.09324 2015-2016 0.15582 0.01500 0.07615 0.00350 0.84418 1.09465 2016-2017 0.15582 0.01500 0.07786 0.00350 0.83599 1.08817 2017-2018 0.15582 0.01500 0.09970 0.00350 0.84418 1.11820 2018-2019 0.15582 0.01500 0.09246 0.00350 0.84418 1.11096 2019-2020 0.15582 0.01500 0.07541 0.00350 0.85665 1.10638 2020-2021 0.15582 0.01500 0.07541 0.00350 0.84418 1.09391 Note: Rates are per $100 of assessed valuation
Source: County of Orange Auditor Controller
(1) Excludes rates associated with Mello-Roos Districts (2) In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1% fixed amount. This 1% is shared by all taxing agencies for which the subject property resides. In 1986, the State Constitution was amended to allow rates over the 1% base rate for voter approved general obligation debt. Valuations of real property are frozen at the value of the property in 1975, with an allowable adjustment up to 2% per year for inflation. However, property is assessed to its current value when a change of ownership occurs. New construction, including tenant improvements, is assessed at its current value.
Direct
Total Direct and
Overlapping
Overlapping
CITY OF HUNTINGTON BEACH
ASSESSED AND ACTUAL VALUATION
OF ALL TAXABLE PROPERTY (EXCLUDING REDEVELOPMENT AGENCY)
LAST TEN FISCAL YEARS
LAST TEN FISCAL YEARS
(In Thousands)
PROPERTY TAX RATES
ALL DIRECT AND
OVERLAPPING GOVERNMENTS
TAX RATE 04-001
LARGEST AREA IN CITY
177
Fiscal Year Total Levy Amount
Percentage
of Levy
Delinquent
Tax
Collections Amount
Percentage
of Levy
Delinquent
Taxes
Receivable
Delinquency
Percent
Secured Taxes
2011-2012 44,304 42,611 96.2% 951 43,562 98.3% 660 1.5% 2012-2013 47,162 45,722 96.9% 855 46,577 98.8% 565 1.2% 2013-2014 49,808 48,452 97.3% 656 49,108 98.6% 545 1.1% 2014-2015 52,188 50,759 97.3% 576 51,335 98.4% 519 1.0% 2015-2016 55,886 53,916 96.5% 546 54,462 97.5% 1,263 2.3% 2016-2017 58,258 56,481 96.9% 525 57,006 97.9% 1,253 2.2% 2017-2018 62,418 59,731 95.7% 474 60,205 96.5% 2,073 3.3% 2018-2019 63,934 62,222 97.3% 622 62,844 98.3% 920 1.4% 2019-2020 66,411 64,767 97.5% 496 65,263 98.3% 1,092 1.6% 2020-2021 69,341 67,887 97.9% 626 68,513 98.8% 926 1.3% Unsecured Taxes
2011-2012 1,863 1,731 92.9% 28 1,759 94.4% 68 3.7% 2012-2013 1,882 1,653 87.8% 23 1,676 89.1% 62 3.3% 2013-2014 1,922 1,693 88.1% 33 1,726 89.8% 76 4.0% 2014-2015 2,016 1,839 91.2% 37 1,876 93.1% 69 3.4% 2015-2016 1,925 1,740 90.4% 35 1,775 92.2% 39 2.0% 2016-2017 1,899 1,692 89.1% 23 1,715 90.3% 34 1.8% 2017-2018 1,964 1,829 93.1% 28 1,857 94.6% 26 1.3% 2018-2019 1,964 1,804 91.9% 20 1,824 92.9% 29 1.5% 2019-2020 2,038 1,906 93.5% 15 1,921 94.3% 43 2.1% 2020-2021 2,143 1,955 91.2% 26 1,981 92.4% 82 3.8% Community Facilities Districts
2011-2012 4,106 4,091 99.6% 3 4,094 99.7% 2 0.0% 2012-2013 4,093 4,077 99.6% 4 4,081 99.7% 4 0.1% 2013-2014 3,968 3,957 99.7% 6 3,963 99.9% - 0.0% 2014-2015 3,981 3,967 99.6% 1 3,968 99.7% 2 0.1% 2015-2016 4,121 4,106 99.6% 9 4,115 99.9% 2 0.0% 2016-2017 4,098 4,085 99.7% 2 4,087 99.7% - 0.0% 2017-2018 4,141 4,128 99.7% 5 4,133 99.8% - 0.0% 2018-2019 4,099 4,086 99.7% 3 4,089 99.8% 1 0.0% 2019-2020 4,053 4,027 99.4% 2 4,029 99.4% 14 0.3% 2020-2021 3,949 3,937 99.7% - 3,937 99.7% - 0.0% Note:
The levy and tax year is for July 1st through June 30th and does not include the Redevelopment Agency. 2011/2012 to current fiscal year includes the following:
Unsecured: includes aircraft unsecured tax. Does not include CFD.
Miscellaneous: excluded from all tables.
Delinquency Amount: reflects the "unpaid" amounts as stated in the OC Auditor-Controller website.
Secured: includes supplemental, st ltg reorg, nuisance abatement, weed abatement, retirement override, tax admin charges, and community interest. Does not include CFD.
CITY OF HUNTINGTON BEACH
Collected within the Fiscal
Year of the Levy Total Collections
Source: County of Orange Auditor Controller's Office
(In Thousands)
LAST TEN FISCAL YEARS
PROPERTY TAX LEVIES AND COLLECTIONS
178
2020-2021
Taxable Assessed Value Percent
(In Thousands) of Total TAV
AES Huntington Beach Energy, LLC 793,339$ 1.96% Bella Terra Associates LLC 389,326 0.96% PCH Beach Resort LLC 225,367 0.56% DCO Pacific City LLC 221,223 0.55% The Waterfront Hotel LLC 145,907 0.36% One Pacific Plaza Owner LLC 127,420 0.31% Pacific City Hotel LLC 118,448 0.29% Bella Terra Villas LLC 110,349 0.27% PC Group Retail LLC 92,869 0.23% Onni Huntington Beach LLC 89,960 0.22% Total Top Ten 2,314,208 5.71% All Other Property Taxpayers 38,247,016 94.29% City Total 40,561,224$ 100.00%
2011-2012
Taxable Assessed Value Percent
(In Thousands) of Total TAV
The Boeing Company/McDonnell Douglas Corporation 302,894$ 1.13% Bella Terra Associates LLC 299,064 1.12% Mayer Financial LP 199,083 0.74% CIM Huntington LLC 151,838 0.57% Pacific Sands LLC 84,960 0.32% AES Huntington Beach LLC 72,600 0.27% United Dominion Realty LP 68,702 0.26% Seacliff Village Shopping Center Inc 64,483 0.24% Cambro Manufacturing Company 60,817 0.23% NF Huntington Plaza LP 59,496 0.22% Total Top Ten 1,363,937 5.10% All Other Property Taxpayers 25,359,439 94.90% City Total 26,723,376$ 100.00%
Source: County of Orange Auditor Controller's Office
Note: Information provided for the period from July 1st through June 30th.
TOP TEN PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
CITY OF HUNTINGTON BEACH
179
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180
September 30,
Long-Term Indebtedness 2021 2020 2019 2018*** 2017
Governmental Activities:
Judgement Obligation Bonds -$ -$ -$ -$ -$ Public Financing Authority:
2010(a) Lease Revenue Bonds - 7,410 8,235 9,030 9,030 2011(a) Lease Revenue Bonds - 15,725 17,770 19,735 19,735 2014(a) Lease Revenue Bonds 11,880 12,530 13,145 13,740 13,740 2020(a) Lease Revenue Bonds 4,835 - - - - 2020(b) Lease Revenue Bonds 12,830 - - - - Total Public Financing Authority 29,545 35,665 39,150 42,505 42,505 Other Long-Term Obligations:
Leases Payable 12,753 5,241 5,083 6,079 6,286 PARS Payable - - - - - Section 108 Loan City - - - 430 430 LED Lighting Phase I 432 546 656 762 866 CEC 2,457 2,588 2,818 3,000 3,000 I-Bank 1,882 2,171 2,454 2,730 2,730 Pension Obligation Bonds 341,501 - - - - Total Other Long-Term Obligations 359,025 10,546 11,011 13,001 13,312 Total Long-Term Obligations - Governmental Activities 388,570 46,211 50,161 55,506 55,817 Long-Term Obligations - Business-Type Activities:
Leases Payable - - - - - Pension Obligation Bonds 22,144 - - - - Total Long-Term Obligations - Business-Type Activities 22,144 - - - - Total Long Term Obligations - Governmental Activities and Business-Type Activities 410,714$ 46,211$ 50,161$ 55,506$ 55,817$ 2021 2020 2019 2018*** 2017
Population 198,039 200,748 202,265 201,761 202,413 Debt Per Capita 2,074$ 230$ 248$ 275$ 276$ Total Personal Income (In Thousands)* 9,659,154$ 9,450,814$ 9,222,677$ 8,849,843$ 8,878,441$ Per Capita Personal Income* 48,774$ 47,078$ 45,597$ 43,863$ 43,863$ Unemployment Rate** 4.70% 8.60% 2.60% 2.70% 2.80%
Total Employment** 105,600 96,200 110,500 109,900 103,200 * Source: Claritas, Inc.
** Source: State of California Employment Development Department *** The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from October 1, 2017 to June 30, 2018.
Fiscal Year Ended
CITY OF HUNTINGTON BEACH
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(In Thousands)
June 30,
181
Long-Term Indebtedness 2016 2015 2014 2013 2012
Governmental Activities:
Judgement Obligation Bonds 659 $ 1,634 $ 2,574$ 3,474 $ 4,339$ Public Financing Authority:
2010(a) Lease Revenue Bonds 9,795 10,525 11,230 11,910 12,565 2011(a) Lease Revenue Bonds 21,650 24,985 28,165 31,195 34,155 2014(a) Lease Revenue Bonds 14,315 14,865 - - - 2020(a) Lease Revenue Bonds - - - - - 2020(b) Lease Revenue Bonds - - - - - Total Public Financing Authority 45,760 50,375 39,395 43,105 46,720 Other Long-Term Obligations:
Leases Payable 4,130 - - - 290 PARS Payable - - 29 56 4,517 Section 108 Loan City 625 805 975 1,135 1,285 LED Lighting Phase I 966 1,063 - - - CEC 3,000 - - - - I-Bank 3,000 - - - - Pension Obligation Bonds - - - - - Total Other Long-Term Obligations 11,721 1,868 1,004 1,191 6,092 Total Long-Term Obligations - Governmental Activities 58,140 53,877 42,973 47,770 57,151 Long-Term Obligations - Business-Type Activities:
Leases Payable - - - - 3 Pension Obligation Bonds - - - - - Total Long-Term Obligations - Business-Type Activities - - - - 3 Total Long Term Obligations - Governmental Activities and Business-Type Activities 58,140$ 53,877$ 42,973$ 47,770$ 57,154$ 2016 2015 2014 2013 2012
Population 201,919 198,389 195,999 193,616 192,524 Debt Per Capita 288$ 272$ 219$ 247$ 297$ Total Personal Income (In Thousands)* 8,880,801$ 8,725,545$ 8,278,410$ 7,839,899$ 7,573,894$ Per Capita Personal Income* 43,982$ 43,982$ 42,237$ 40,492$ 39,340$ Unemployment Rate** 3.90% 3.90% 3.60% 3.60% 4.30%
Total Employment** 107,200 104,000 120,200 120,200 119,600 September 30,
Fiscal Year Ended
CITY OF HUNTINGTON BEACH
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(In Thousands)
182
2011-2012 -
2012-2013 -
2013-2014 -
2014-2015 -
2015-2016 -
2016-2017 -
2017-2018 -
2018-2019 -
2019-2020 -
2020-2021 -
CITY OF HUNTINGTON BEACH
LAST TEN FISCAL YEARS
Assessed
Valuation
Debt Limit - 12% of
Assessed Valuation
Debt Applicable
to Limit
Legal Debt
MarginFiscal Year
(In Thousands)
LEGAL DEBT MARGIN
26,723,376 3,206,805 3,206,805 28,045,478 3,365,457 3,365,457 29,165,729 3,499,887 3,499,887 30,787,185 3,694,462 3,694,462 32,392,741 3,887,129 3,887,129 33,663,879 4,039,665 4,039,665 35,340,214 4,240,826 4,240,826 4,867,347 4,867,347
37,120,729 4,454,487 4,454,487 38,887,451 4,666,494 4,666,494 40,561,224
183
2020/21 Assessed Valuation: $44,615,313,174
Debt Repaid with Property Taxes (Tax and Assessment Debt):
Overlapping Tax and Assessment Debt
Percent
Applicable*
Debt Applicable
to City
Metropolitan Water District 1.365% 366,230
Coast Community College District 28.593% 253,416,850
Huntington Beach Union High School District 73.089% 127,602,429 Fountain Valley School District 26.863% 15,812,905
Huntington Beach City School District 99.949% 153,985,389 Ocean View School District 93.589% 33,205,377
Westminster School District 23.996% 26,967,358
Los Alamitos Unified School District Facilities District No. 1 1.190% 2,394,342 City of Huntington Beach Community Facilities Districts (1990-1, 2000-1, 2002-1, 2003-1) 100.000% 28,395,000 Total Overlapping Tax and Assessment Debt 642,145,880$
Direct and Overlapping General Fund Debt
Orange County General Fund Obligations 6.806% 25,991,093 Orange County Pension Obligations 6.806% 33,030,757
Orange County Board of Education Certificates of Participation 6 .806% 837,819 North Orange County Regional Occupation Program Certificates of Participation 0.087% 7,473 Coast Community College District General Fund Obligations 28.593 % 640,483 Coast Community College District Pension Obligation Bonds 28.593 % 651,920 Huntington Beach Union High School District Certificates of Participation 73.089% 44,884,752 Los Alamitos Unified School District Certificates of Participation 1.069% 390,500 Huntington Beach School District General Fund Obligations 99.949 % 17,288,610 Ocean View School District Certificates of Participation 93.589% 16,836,661 Westminster School District General Fund Obligations 23.993% 7,48 0,753 City of Huntington Beach General Fund Obligations: 100.000% 47,06 9,157 City of Huntington Beach Pension Obligation Bonds 100.000% 363,64 5,000 Total Direct and Overlapping General Fund Obligation Debt 558,754,978$ Overlapping Tax Increment Debt (Successor Agency) 100.000% 4,985, 000 Total Direct Debt 410,714,157$
Total Overlapping Debt 795,171,701
Combined Total Debt 1,205,885,858$
(1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and non-bonded capital lease obligations.
Ratios to Adjusted Assessed Valuations
Combined Direct Debt ($393,621,687) 0.92%
Combined Total Debt 2.70%
Ratios to Redevelopment Successor Agency Incremental Valuation ($3,835,496,390) Total Overlapping Tax Increment Debt 0.13%
Source: California Municipal Statistics and City of Huntington Beach Finance Department
STATEMENT OF DIRECT AND
OVERLAPPING BONDED DEBT
JUNE 30, 2021
CITY OF HUNTINGTON BEACH
* 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.
184
2021 % of total
The Boeing Company 3,112 2.95%
Safran Cabin Inc 884 0.84%
No Ordinary Moments 646 0.61%
Hyatt Regency Huntington Beach 641 0.61%
Boardriders Wholesale LLC 559 0.53%
Cambro Manufacturing 550 0.52%
Huntington Beach Hospital 527 0.50%
Wal-Mart 462 0.44%
Waterfront Hilton Beach Resort 450 0.43%
Huntington Valley Healthcare 381 0.36%
Total of top 10 8,212 7.78%
All others 97,388 92.22%
Total employment (public and private) 105,600 100.00%
2012 % of total
The Boeing Company 4,676 4.06%
Quiksilver 1,594 1.38%
Cambro MFG Co. 951 0.83%
Ensign United States Drilling 925 0.80%
Hyatt Regency Huntington Beach 641 0.56%
C & D Aerospace 555 0.48%
Huntington Beach Hospital 520 0.45%
Rainbow Disposal 408 0.35%
Huntington Beach Healthcare 381 0.33%
Wal-Mart 379 0.33%
Total of top 10 11,030 9.58%
All others 104,070 90.42%
Total employment (public and private) 115,100 100.00%
Source: Finance Department, City of Huntington Beach
CITY OF HUNTINGTON BEACH
PRINCIPAL PRIVATE EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
185
General Government: 2021 2020 2019 2018*** 2017 2016 2015 2014 2013 2012 City Council 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 City Manager 18.00 18.00 12.50 12.50 11.50 11.50 11.50 11.50 7.00 7.00 City Treasurer 1.50 1.50 2.00 2.00 2.00 1.50 1.50 1.50 1.50 1.50 City Attorney 11.00 11.00 11.00 11.00 12.00 11.00 11.00 11.00 11.00 11.00 City Clerk 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Finance 31.50 31.50 33.00 33.00 33.00 32.50 31.50 31.50 29.50 29.50 Human Resources ** - - 15.00 15.00 15.00 15.00 15.00 15.00 14.50 15.00 Community Development 54.00 54.00 44.00 44.00 44.00 43.50 44.00 43.00 42.75 42.75 Information Systems 23.00 22.00 30.00 30.00 30.00 30.00 30.00 30.00 29.50 29.50 Economic Development * - - - - - - - - 4.50 5.50 Library Services 27.25 23.25 28.25 28.25 28.25 28.25 28.25 28.25 27.75 27.75 Fire 200.00 200.00 198.00 198.00 198.00 198.00 198.00 196.50 176.50 176.50 Police 357.00 356.00 365.50 364.50 364.50 364.50 361.50 360.50 358.50 363.00 Community Services 33.00 37.00 36.00 36.00 44.00 44.00 43.00 43.00 56.00 61.00 Public Works 201.00 199.00 207.00 207.00 199.00 199.00 198.00 196.00 196.00 196.00 962.25 958.25 987.25 986.25 986.25 983.75 978.25 972.75 960.00 971.00 Source: Finance Department, City of Huntington Beach
* Economic Development was combined with Community Development in the year ended June 30, 2020. Previously, it was combined with the City Manager's Office as of the year ended September 30, 2014. ** Human Resources was combined with City Manager's Office in the year ended June 30, 2020. *** The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from October 1, 2017 to June 30, 2018.
Actual
CITY OF HUNTINGTON BEACH
FULL-TIME ACTUAL AND BUDGETED CITY EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
186
Function/Program 2021 2020 2019 2018*** 2017
Finance:
Water Bills Processed 637,920 636,708 639,245 476,290 632,997 Active Business Licenses 19,011 20,910 21,414 21,782 22,074 Accounts Receivable Billings Processed 20,183 25,687 30,217 25,000 34,963 City Clerk:
Passports Issued **** 418 4,579 7,024 5,757 7,408 Planning:
Entitlements Processed 112 162 221 206 216
Plan Reviews 1,955 1,358 1,542 1,466 1,376
Field Inspection Complaints 11,899 11,610 8,183 7,005 8,459 Code Violation Cases 4,473 3,260 4,786 4,219 3,981 Building:
Number of Permits Issued 9,075 8,855 9,807 7,490 9,728 Number of Inspections Completed 26,710 32,859 36,562 30,501 38,796 Value of Construction Permits (Thousands of Dollars) 166,000 169,393 135,910 109,462 216,252 Processed Number of Certificate of Occupancies* 655 515 686 523 740 Completed Plan Reviews 4,673 3,469 3,491 2,771 4,172 Counter Visits 115 14,922 21,409 16,498 21,731
Fire:
Inspections 4,008 5,965 6,140 3,963 2,758
Responses 20,428 21,068 20,354 14,490 20,555
Ocean Rescues 4,116 2,487 4,953 3,530 3,639
Estimated Beach Visitors 7,910,293 6,712,125 10,577,290 12,522,640 13,339,518 Police:
Physical Arrests 5,363 5,785 5,979 4,614 5,298
Parking Violations 95,753 59,484 79,069 54,500 70,846 Traffic Violations 10,920 12,105 13,314 11,869 19,916 Community Services:
Park/Open Space Acreage 1,072 1,066 1,066 1,065 1,065 Enrollment in Recreation Classes 15,511 28,952 37,978 27,152 37,968 Public Works:
Water Sold (Acre Feet)** 27,731 25,966 26,251 19,777 25,944 Gallons of Sewage Pumped Per Day** 19 million 19 million 19 million 19 million 22 million Library:
Items in Collection 291,444 294,849 293,995 292,037 288,599 Items Borrowed 481,523 779,124 942,821 655,626 943,642 * Beginning the 2013/14 Fiscal Year, the Building Department no longer processes Certificate of Occupancies. ** Reduction of estimate is the result of the Governor's executive order to reduce water consumption. *** The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from October 1, 2017 to June 30, 2018.
**** Passport acceptance was closed to the public from June 2020 through May 2021 due to COVID-19. It was reopened on June 15, 2021 Source: Various departments of the City of Huntington Beach
CITY OF HUNTINGTON BEACH
OPERATING INDICATORS BY FUNCTION/ACTIVITY
LAST TEN FISCAL YEARS
187
Function/Program 2016 2015 2014 2013 2012
Finance:
Water Bills Processed 635,052 536,684 630,240 628,207 646,229 Active Business Licenses 21,420 21,424 20,450 21,127 22,304 Accounts Receivable Billings Processed 30,826 38,594 42,360 45,422 45,422 City Clerk:
Passports Issued 5,623 5,121 4,598 4,220 3,850
Planning:
Entitlements Processed 221 280 204 231 205
Plan Reviews 1,653 1,595 1,466 1,575 1,184
Field Inspection Complaints 7,951 8,233 7,030 7,301 6,105 Code Violation Cases 4,324 4,710 2,545 2,385 2,573 Building:
Number of Permits Issued 10,981 10,670 9,348 8,970 8,444 Number of Inspections Completed 39,380 38,320 36,142 33,962 31,224 Value of Construction Permits (Thousands of Dollars) 283,910 234,946 216,343 248,246 190,992 Processed Number of Certificate of Occupancies* n/a n/a n/a 477 647 Completed Plan Reviews 4,172 3,815 3,148 n/a n/a
Counter Visits 23,492 21,893 21,326 20,854 19,777 Fire:
Inspections 5,132 6,499 6,641 5,087 6,974
Responses 20,279 19,562 15,815 15,608 15,040
Ocean Rescues 3,977 5,371 6,426 4,195 4,669
Estimated Beach Visitors 12,272,030 11,803,943 12,035,134 11,016,615 8,906,592 Police:
Physical Arrests 5,112 4,854 4,303 4,237 5,774
Parking Violations 90,361 83,453 74,668 72,347 77,282 Traffic Violations 17,639 17,596 16,330 13,016 16,916 Community Services:
Park/Open Space Acreage 1,062 1,062 1,062 1,062 1,062 Enrollment in Recreation Classes 34,424 30,228 30,184 30,218 32,817 Public Works:
Water Sold (Acre Feet)** 24,505 24,763 29,279 28,354 27,784 Gallons of Sewage Pumped Per Day** 19 million 19 million 22 million 22 million 22 million Library:
Items in Collection 285,814 343,655 332,092 385,901 420,956 Items Borrowed 921,105 908,656 937,533 892,543 888,019
CITY OF HUNTINGTON BEACH
OPERATING INDICATORS BY FUNCTION/ACTIVITY
LAST TEN FISCAL YEARS
(Continued)
188
Library Services One Main Library and Four Branches
Fire:
Fire Stations 8
Police:
Stations One Main Station and Three Substations
Community Services:
Acreage of Parks 1,066
Community Centers 6
Public Works:
Centerline Square Miles of Streets Maintained 451
Miles of Beach Maintained 4.7
Miles of Storm Drains Maintained 120
Miles of Sewer Maintained 362
Source: Various departments of the City of Huntington Beach JUNE 30, 2021
CAPITAL ASSET STATISTICS BY FUNCTION/ACTIVITY
CITY OF HUNTINGTON BEACH
189