City Council/Public Financing Authority
March 19, 2024

CITY OF
HUNTINGTON BEACH
California
Annual Comprehensive Financial Report
For The Fiscal
Year Ended
June 30, 2023

CITY OF HUNTINGTON BEACH, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

FOR THE YEAR ENDED
JUNE 30, 2023

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, 2023

TABLE OF CONTENTS

INTRODUCTORY SECTION

Table of Contents ........................................................................................................................................ i-ii Letter of Transmittal .................................................................................................................................... iii-x City Officials ................................................................................................................................................ xi Organizational Chart ................................................................................................................................... xii Certificate of Achievement in Excellence in Financial Reporting ................................................................. xiii

FINANCIAL SECTION

Independent Auditor’s Report................................................................................................... ................... 1-4 Management’s Discussion and Analysis (Required Supplementary Information) ....................................... 5-21 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position .................................................................................................... .............. 23 Statement of Activities ...................................................................................................... ................. 24 Fund Financial Statements:

Balance Sheet – Go vernmental Funds .............................................................................................. 25 Reconciliation of the Bal ance Sheet of Governmental Funds to the Statement of Net Position ......... 26 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ...... 27 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ....................................................................... 28 Statement of Net Positi on – Proprietary Funds .................................................................................. 29 Statement of Revenues , Expenses and Changes in Fund Net Position – Proprietary Funds ............ 30 Statement of Cash Flows – Proprietary Funds ................................................................................... 31 Statement of Fiduciary Fund Net Position – Fiduciary Funds ............................................................ 32 Statement of Changes in Fiduciary Fund Net Position – Fiduciary Funds ......................................... 33 Notes to Financ ial Statements .............................................................................................................. 34-117 Required Supplemental Information:

Notes to Required Suppl ementary Information .................................................................................. 120 Schedule of Revenues, Expenditures and Ch anges in Fund Balance – Budget And Actual – General Fund ............................................................................................................. 121 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget And Actual – Grants S pecial Revenue Fund ................................................................................... 122 Schedule of Changes in t he Net Pension Liability and Related Ratios .............................................. 123-125 Schedule of Changes in the Net OPEB Liability and Related Ratios ................................................. 126 Schedule of C ontributions .................................................................................................................. 127-129 Schedule of Money Market Wei ghted Rate of Return ........................................................................ 129 Schedule of Contributions for the OPEB Plan .................................................................................... 130

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FINANCIAL SECTION (Continued)

Supplementary Information:

Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet – Other Governmental Funds .................................................................. 133-136 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Governm ental Funds ..................................................................................................... ....... 137-140 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Other Governmental Funds ........................................................................... 141-149 Statement of Net Position – Internal Service Funds ........................................................................... 151 Statement of Revenues , Expenses, and Changes in Fund Net Position Internal Service Funds .................................................................................................................. 152 Statement of Cash Flows – Internal Service Funds ........................................................................... 153 Combining Statement of Fiduciary Fund Assets and Liabilities.......................................................... 155 Combining Statement of Changes in Fiduciary Net Position .............................................................. 155

STATISTICAL SECTION

Net Position by Component – Last Ten Fiscal Years ............................................................................. ..... 157-158 Changes in Net Position – Last Ten Fiscal Years ....................................................................................... 159-160 Fund Balances – Governmental Funds – Last Ten Fiscal Years ................................................................ 161 Changes in Fund Balances – Governmental Funds – Last Ten Fiscal Years ............................................. 163-164 Assessed and Actual Valuation of All Taxable Property (Excluding Redevelopment Agency) - Last Ten Fiscal Years ......................................................................................................... ..................... 165 Property Tax Rates – All Direct and Overlapping Government Tax Rate 04-001 Largest Area in City – Last Ten Fiscal Years ........................................................................................... 165 Property Tax Levies and Collections – Last Ten Fiscal Years .................................................................... 166 Top Ten Property Tax Payers – Current Year and Nine Years Ago ............................................................ 167 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ..................................................................... 169-170 Legal Debt Margin – Last Ten Fiscal Years ................................................................................................ 171 Statement of Direct and Overlapping Bonded Debt .................................................................................... 172 Principal Private Employers – Current Year and Nine Years Ago ............................................................... 173 Full-Time Actual and Budgeted City Employees by Function/Program– Last Ten Fiscal Years .................. 174 Operating Indicators by Function/Activity – Last Ten Fiscal Years .............................................................. 175-176 Capital Assets Statistics by Function/Activity .............................................................................................. 177

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CITY OF HUNTINGTON BEACH

December 21, 2023
Honorable Mayor, City Council and Citizens of the City of Huntington Beach:

In accordance with the requirements of the City Charter, and the City of Huntington Beach’s ongoing commitment to transparent financial reporting, I am pleased to present the Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2023.

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 independent auditing firm Davis Farr LLP. The goal of the audit was to provide reasonable assurance that the City’s financial statements are free from material misstatement. In addition, Davis Farr LLP audits the City’s major program expenditures of federal grants for compliance with Title 2 of the United States Code of Federal Regulations Part 200 (Uniform Guidance). The Single Audit Report 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 ensuring it is reported in a manner that fairly presents the financial position and operations of the various funds of the City. To provide a reasonable basis for making these representations, and assurance that the financial statements will be free from material misstatement, management has established a comprehensive internal control framework that is designed to both protect the government’s assets from theft, loss, or misuse and to compile sufficient reliable information for financial statement conformity with Generally Accepted Accounting Principles (GAAP). As the cost of internal controls should not outweigh their benefits, 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, 2023. 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 Analysis (MD&A). This transmittal 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 community, located on the Orange County coast, 35 miles south of Los Angeles and 90 miles north of San Diego. With a population of 194,310 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 largest in California by population, Huntington Beach is recognized as a prime location to live, work and play, ranking #1 in the nation for “Quality of City Services” and #21 for “Best-Run City” in the State of California by WalletHub (June 2023). Huntington Beach was also ranked one of the top ten “Best City for People with Disabilities” by WalletHub (September 2023). The City boasts an annual median household income of $104,728, 52 percent higher than the median household income for the United States, 25 percent higher than the State of California and 4 percent higher than Orange County. In addition, 45 percent of its residents have a college education. There are over 103,000 people employed by public and private entities in Huntington Beach.

Founded in the late 1880s, Huntington Beach was incorporated as a Charter City in 1909.

Huntington Beach has a Council/Manager form of government wherein 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 City 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 1002 full-time employees.

In 2011, the unincorporated oceanfront community of Sunset Beach was officially annexed by the City of Huntington Beach. Sunset Beach is a small beachfront community with approximately 1,000 residents and 1.5 square miles of land. Beachfront 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. Air Force Thunderbirds, U.S. Navy F-35C Demo Team, Canadian Forces Snowbirds, and many others.

This unique airshow, which first premiered in October 2016, has gained tremendous popularity and attracts visitors from all over the world to view the three-day event.

The City’s century-old traditional Fourth of July Fireworks Show and Parade, known nationally as “the largest Fourth of July Parade west of the Mississippi,” spans over a five-day period that includes a Main Street Block Party with free live music, carnival rides, and other family-friendly activities, Surf City 5K Run, and spectacular fireworks show overlooking the pier.

The City also hosts a variety of other exciting events for families and visitors such as the annual Concours d’Elegance, Civil War Days, International Surfing Association (ISA) World Surfing Games, and other events. In November 2023, the inaugural Darker Waves beachfront music festival featuring New Order, Tears for Fears, the B-52s, and others, performed to a sold-out crowd of 30,000.

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Economic Condition and Outlook

Coming off the heels of the COVID-19 pandemic, there are several reasons to reflect on the measures taken over the past couple years to protect the City’s finances. Through the leadership and support of the City Council, the City implemented significant cost saving measures, including a Citywide Separation Incentive Program and reorganization plan, refinancing the City’s pension debt, and proactive Budget Balancing Plan. Looking ahead, economic indicators point to recession. Although home sales during the pandemic resulted in a $2.9 billion increase in assessed property valuations, supply chain shortages and inflationary pressures on normal business activities set the tone for economic conditions within the next few years. Increases in utility rates such as electricity and gas contribute to a rise in projected Franchise and Utility Users Tax revenues, which help to balance the overall economic impact.

The City of Huntington Beach continues to thrive together through the motto “OneHB,” which reflects the City’s commitment to facing the potential upcoming recession created by inflationary conditions and supply chain shortages guided by the following principles:

x To stay committed to being One Team : working together to serve the people of Huntington Beach exceptionally to inspire pride in the community. x Work to have One Focus: to stay fanatical about achieving municipal excellence by being active caretakers of our unique, people-centric HB culture. x 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 2023/24 assessed property value grew 5.6 percent to $53.1 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 2021/22, secured property tax revenue collections totaled $62.9 million. For Fiscal Year 2022/23, secured property taxes totaled $68.5 million, reflecting a 9 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.

Autos and
Transportation
22%
Building and
Construction
7%
Business and
Industry
9%
Fuel and Service
Stations
8%
General Consumer
Goods
18%
Restaurants and
Hotels
15%
State and County
Pools
16%
Other
5%
City of Huntington Beach
Composition of Sales Tax Revenue
Fiscal Year 2022/23

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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. The City collected an impressive $17.3M in TOT revenues during FY22/23, reflecting a $1.6M, or 10 percent increase, affirming Huntington Beach’s Status as a premier vacation destination. FY 2022/23 includes the first full fiscal year of TOT revenues from the City’s Short- Term Vacation Rental Program totaling $971k.

*Fiscal Year 2017/18 reflects nine months of data only due to the change in the City’s fiscal year.

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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 30 th and may amend or revise
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, 2023 was 1.78 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 held a Strategic Planning Workshop on June 8, 2023, establishing eight goals to achieve over the next four years. The 2023-2027 Strategic Plan, approved by City Council on October 3, 2023, includes the eight Strategic Goals listed below to achieve over the next four years:

x Economic Development – greater business retention, investment and job growth in the City.
x Fiscal Stability – available funding to support a high-quality level of programs, services and capital investments and to build a structural surplus. x High Performing Organization – an engaged City workforce committed to responsive and exceptional public service for all.
x Homelessness – A continuum of care that reduces homelessness and maintains quality of life for the entire community.
x Housing – proactive programs to address diverse housing needs within the City’s jurisdiction.
x Infrastructure Investment – maintain and upgrade infrastructure that supports the community’s day-to-day needs in accordance with the City’s Infrastructure Report Card. x Public Engagement – a community that has easy access to clear, accurate, and timely City information and expresses increased awareness and involvement in City activities. x Public Safety – Ensure the safety and protection of all community members, both efficiently and effectively.

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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 Strategic Plan.

“One Stop Shop”

The City is in the process of developing a “One Stop Shop” to facilitate the permitting process.

The new “One Stop Shop” will streamline the permitting process and provide applicants with a comprehensive checklist to complete the necessary steps to obtain permits. The “One Stop Shop” approach aims to make the permitting process more efficient so that businesses and residents experience quicker and easier access to obtain permits for business licenses, short- term rentals, and building permits.

Infrastructure Report Card

Infrastructure provides essential services and affects quality of life for all Huntington Beach residents; to sustain these critical systems, it is important to routinely assess them. The City is preparing an Infrastructure Report Card (IRC) that will serve as a high-level summary to highlight the current condition of the City’s Infrastructure. This report card will assign grades (A- F) to various infrastructure categories, communicating the status of each and identifying priorities for improvement. The project structure is made up of three separate committees including the Outreach and Communications Committee. The Outreach and Communications Committee is comprised of approximately 100 Huntington Beach residents appointed by the City Council and/or are recognized members of the community who will act as ambassadors of this process through their networks. This will promote resident participation, education, and awareness of the project both during the assessments and after the final report is released.

Assessments began in August 2023 and the final report is anticipated to be publicly released in late April 2024.

Joint Youth Training Center

On November 16, 2023, the City’s Police and Fire Department broke ground on the new Joint Youth Training Center (Training Center) which will replace the existing 50-year old Search & Rescue structure. This state-of-the-art Training Center will be home to the City’s Fire & Police Explorer Program. Opening in late 2024, this facility will provide a much needed space to train the City’s future public safety leaders. In 2021, the Huntington Beach Search and Rescue Explorer (HBSAR) program was reorganized and shifted its focus to provide the proper training in the different disciplines. As a result, the HB Police Explorer and the HB Fire Explorer programs were created to provide the youth with more experience and extensive training. The revamped Explorer programs are vital in teaching the City’s youth not only the technical skills necessary to pursue a career in public safety, but also leadership and character building that will benefit the youth regardless of what career path they choose to pursue.

CivicRec Migration

On March 7, 2023, the Community & Library Services Department, in collaboration with the Information Services and City Treasurer Departments, successfully launched CivicRec, a new recreation registration software for the City’s programs and activities. Preceeding the launch, a marketing campaign encouraged customers to create CivicRec accounts for spring and summer activity registration. Despite the time-sensitive nature of the project, it was executed

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successfully, with $618,956 in transactions received on the first day, exceeding expectations.

The number of transactions for instructional classes alone increased by 49% from Spring 2022, and online transactions saw more than a 10% increase, indicating positive user experiences with the user-friendly registration software.

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 37 th 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, 2022, is valid for one year only. The City believes that this Annual Comprehensive Financial Report continues to 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 Zack Zithisakthanakul, Ian Wuh, Tara Mukund, Ming Zhai, Thuy Vi, and Shari Saraye for their hard work and dedication.

Respectfully,

Sunny Han
Chief Financial Officer

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City of Huntington Beach

City Council

Gracey Van Der Mark, Mayor
Pat Burns, Mayor Pro Tem

Rhonda Bolton, Councilmember
Casey McKeon, Councilmember
Dan Kalmick, Councilmember
Natalie Moser, Councilmember
Tony Strickland, Councilmember

Executive Team

Eric Parra, Interim City Manager
Travis Hopkins, Assistant City Manager

Elected Department Heads

Alisa Backstrom, City Treasurer
Robin Estanislau, City Clerk
Michael Gates, City Attorney

Department Directors

Sunny Han, Finance
Chau Vu, Public Works
Chief Scott Haberle, Fire
Chief Eric Parra, Police
Jennifer Villasenor, Community Development
Theresa St. Peter, Interim Human Resources Director
Ashley Wysocki, Community & Library Services

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FINANCIAL SECTION

In
dependent Auditor’s Report

City Co
uncil
City of Huntington Beach
Huntington Beach, California

Report on the Audit of the Financial Statements

Opinions

We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Huntington Beach (City), as of and for the year June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Huntington Beach as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter

As described further in Note 11 (10) to the financial statements, during the year ended June 30, 2023, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 96, Subscription-Based Information Technology Agreements. Our opinion is not modified with respect to this matter.

1 Res
ponsibilities of Management for the Financial Statements

The City’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for one year after the date that the financial statements are issued.

A
uditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

 Exercise professional judgment and maintain professional skepticism throughout the audit.
 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control.

Accordingly, no such opinion is expressed.
 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

2 Req
uired Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information and pension and other post employment benefit schedules be presented to supplement the basic financial statements.

Su
ch information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Sup
plementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America . In our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Manag
ement is responsible for the other information included in the Comprehensive Annual Financial Report. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

3 Other Repo
rting Required by Government Auditing Standards

In
accordance with Government Auditing Standards , we have also issued our report dated December 21, 2023 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance.

That
report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Irvine, California
December 21, 2023
4 MANAGEMENT DISCUSSION
AND

ANALYSIS
5 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

As management of the City of Huntington Beach, we offer readers of the City’s financial statements this narrative over view and analysis of the financia l activities of the City of Huntington Beach for the year ended June 30, 2023. 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-x 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 a ssets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $836,059,000. Total net position increased by $81,321,000 or

10.8 percent primarily becaus e of the increase in deferred outflows of resources and decrease in deferred inflows of resources. This change is related to GASB 68, Accounting and Financial Reporting for Pension , where the City must recognize adjustments in total pension liability and fi duciary net position. The CalPERS FY 2021/22 -7.5 percent investment loss wa s recognized in the June 30, 2023 financial statements per GASB 68 requirements, which eliminated the prior year’s net pension asset and created a net pension liability increase of $145,606,000.

 Long-term obligations increas ed by $142,296,000 or 31.7 percent. The increase is primarily the result of GASB 68 adjustm ents. As stated above, the adjustment increased net pension liability by $145,606,000 as a result of actuarial valuation adjustment of the City’s current net pension liability.

 Deferred outflows of resources increas ed by $123,704,000 or 400.5 percent while deferred inflow of resources decreas ed by $125,007,000 primarily due to the differences between projected and actual earnings on Pension Plan investments used to determine the City’s net pension liability.

June 30, 2023 June 30, 2022
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Assets 1,367,093 $ 1,418,959 $ (51,866) $ -3.7% Deferred Outflows of Resources 154,594 30,890 123,704 400.5% Liabilities 664,520 548,996 115,524 21.0% Deferred Inflows of Resources 21,108 146,115 (125,007) -85.6% Total Net Position 836,059 754,738 81,321 10.8% Unrestricted Net Position (136,350) (189,318) 52,968 28.0% Long-Term Obligations 590,950 448,654 142,296 31.7% Program Revenues 212,002 154,221 57,781 37.5% Taxes 221,607 205,853 15,754 7.7% Other General Revenues 9,214 107 9,107 8511.2% Expenses 361,502 297,173 64,329 21.6% Total Governmental and Business-Type Activities
6 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

 Program revenues increased by $57,781,000 or 37.5 percent. Most of this increase is due to the receipt of American Rescue Plan Act grant funding. The American Rescue Plan Act of 2021 provided funding to individuals, businesses, state, and local governments to help mitigate t he impacts of the COVID-19 pandemic. The City of Huntington Beach received $29,607,000 which was used for eligible police and fire expenditures. Community Development and Public Works related program revenue also saw an increase of $7,886,000 and $4,134,000 which can be attributed to an increase in permits iss ued, development fees, and affordable housing in-lieu fees from two new residential devel opment projects, Gisler Residential and Delaware Housing Project.

Expenses increased by $64,329,000 or 21.6 percent, largely due to the prior year’s pension expenses being subst antially lower than usual due to the 21.3 percent CalPERS investment return which resulted in a Net Pension Asset in FY 2021/22.

The -7.5 percent return in the subsequent fiscal year resulted in the creation of a Net Pension Liability and increased pensio n expense. The City also incurred additional expense for fuel, repairs, natur al gas, and other utilities, due to rising costs from inflationary pressures, supply-chain issues, and rate increases.

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) governm ent-wide financial stat ements; 2) fund financial statements; and 3) notes to the financ ial 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 informa tion 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).

The government-wide financial statements separate functi ons that are primarily supported by taxes and intergovernmental re venues (governmental activities) from functions that are supported by user fees (business-type activities). Governmental 7 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

activities include the City Council, City Manager, City Treasurer, City Attorney, City Clerk, Finance, Community Development, Fire, In formation Services, Police, Community Services, Library Services, and Public Wo rks 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 activiti es entirely support the City of Huntington Beach. The government-wide financial statements can be foun d on pages 23-24 of this report.

Fund Financial Statements
The City separates financial activities into funds to maintain control over resources that have been legally separated. All the funds of the City can be divided into three categories:
governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds
Governmental funds are used to account for the same functions reported in governmental activities in the government-wide 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 resources available for spending at the end of the fiscal year.

It is useful to compare information present ed for the governmental funds to information presented for governmental activities in t he government-wide financial statements. The reconciliations indicate to the reader the differences in financial reporting between the governmental activities section and the governmental funds section.

The City maintains 24 individual governmental funds. Information is presented separately in the governmental funds Bala nce Sheet and in the govern mental funds Statement of Revenue, Expenditures, and Changes in Fund Balances for the General Fund, Grants Special Revenue Fund, Low and Moderate Income Housing Asset Fund (LMIHAF), Pension Liability Debt Service Fund, and Infrastructure Fund, all of which are considered to be major funds. Data from the other 19 smaller funds are combined into a single, aggregated 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 governmental funds. Budgetary comparison schedules for the General Fund and Grants Special Revenue Fund are required to be presented and are included on pages 121-122. Other major governmental funds (LMIHAF Capital Projects Fund, P ension Liability Debt Service Fund and Infrastructure Fund) are presented in the Supplementary Information section on pages 148-149 of this report and demonstrate compliance with the budget. The basic governmental fund financial statements can be found on pages 25 and 27 of this report. 8 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

Proprietary Funds
The City maintains two different types of proprietary funds, enterprise and internal service, which are used to account for the same activi ties as the business-type activities in the government-wide financial stat ements. Enterprise funds are used to report the same functions presented as business-type acti vities in the gover nment-wide financial statements. The City us es enterprise funds to account for its Water, Sewer Service, Refuse, and Hazmat Service activities. Internal Service funds are used in accounting as a device to accumulate and allocate costs in ternally among the City's various functions.

The City uses internal service funds to account for its self-i nsurance worker’s compensation activities, self-insurance gener al 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 pr oprietary fund financial statements provide information for Water, Sewer Service, Refuse, Hazmat Service, Self-Insurance Workers’ Compensation, Self-Insurance General Liab ility, and Equipment Replacement Funds.

The basic proprietary fund financial stat ements can be found on pages 29-31 of this report.

Fiduciary Funds
Fiduciary funds are used to account for resour ces held for the benefit of parties outside the government. Fiduciary funds are not re flected in the gover nment-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 32-33 of this report.

Notes to the Financial Statements
The notes provide additional in formation that is essential to a full understanding of the data provided in the government -wide and fund financial stat ements. The notes to the financial statements can be found on pages 34-117 of this report. 9 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

Other information
In addition to the basic financial statement s and accompanying notes, this report also presents certain required suppl ementary 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 funds budget -to-actual comparisons. Required supplementary information can be found on pages 120-130 of this report.

The combining statements and schedules refe rred to earlier in connection with other governmental funds is presented immediatel y following the requir ed supplementary information on pensions. Combining and individ ual fund statements and schedules can be found on pages 133-140 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, t he City reported positive net position balances for both gov ernmental and business-type activities, with total assets plus deferred outflows exceeding liabilities plus deferred inflows by $836,059,000.

Below is a summary schedule of the City’s net position on June 30, 2023 (in thousands):

Governmental Activities June 30, 2023 June 30, 2022
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Current and Other Assets 360,136$ 331,062$ 29,074$ 8.8% Non-Current Assets 1,809 106,219 (104,410) -98.3% Capital Assets 772,038 746,371 25,667 3.4% Total Assets 1,133,983 1,183,652 (49,669) -4.2% Deferred Outflows of Resources 144,205 28,739 115,466 401.8% Current and Other Liabilities 61,970 92,861 (30,891) -33.3% Long-Term Obligations 559,315 426,186 133,129 31.2% Total Liabilities 621,285 519,047 102,238 19.7% Deferred Inflows of Resources 20,322 136,033 (115,711) -85.1% Net Position:

Net Investment in Capital Assets 727,051 712,289 14,762 2.1% Restricted 82,564 68,460 14,104 20.6% Unrestricted (173,034) (223,438) 50,404 22.6% Total Net Position 636,581$ 557,311 $ 79,270 $ 14.2% Business-Type Activities June 30, 2023 June 30, 2022
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Current and Other Assets 91,312$ 82,651$ 8,661$ 10.5% Non-Current Assets 215 8,658 (8,443) -97.5% Capital Assets 141,583 143,998 (2,415) -1.7% Total Assets 233,110 235,307 (2,197) -0.9% Deferred Outflows of Resources 10,389 2,151 8,238 383.0% Current and Other Liabilities 11,600 7,481 4,119 55.1% Long-Term Obligations 31,635 22,468 9,167 40.8% Total Liabilities 43,235 29,949 13,286 44.4% Deferred Inflows of Resources 786 10,082 (9,296) -92.2% Net Position:

Net Investment in Capital Assets 141,581 143,998 (2,417) -1.7% Restricted 21,213 19,309 1,904 9.9% Unrestricted 36,684 34,120 2,564 7.5% Total Net Position 199,478$ 197,427 $ 2,051 $ 1.0% 10 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

Analysis of the City’s Net Position

Current and Other Assets: The increase in current and other assets of $29,074,000 for governmental activities is mainly due to the increase in cash balances related to increased property tax, franchise tax, ut ility users tax, and transient occupancy tax revenues. The overall combined asset dec reased by $49,669,000 which is due to a $104,410,000 decrease in Non-current Assets.

The increase in current and other assets of $8,661,000 for business-type activities is primarily due to increased ca sh balance in the Water Ma ster Plan fund from revenue received for new development projects in Fiscal Year 2022/23. Two of the main projects are Gisler Residential which is for 85 single-family residential homes on 13.9 acres and Delaware Housing Project which is a 346-unit, five story residential apartment community.

The overall combined asset decreased by $2,197,000 or 0.9 percent.

Non-current Assets: Non-current Assets decreased by $104,410,000 in governmental activities and $8,443,000 in business-type activities due to GASB 68 adjustments. Fiscal Year 2022/23 saw an increase in net pensi on liability due to Ca lPERS’ 7.5percent investment loss in FY 2021/22 recognized in FY 2022/23, which resulted in a decrease in Net Pension Asset and an increase in Net Pension Liability.

Current and Other Liabilities: Current and Other Liabilities fo r governmental activities decreased by $30,891,000 and increased by $4,119,000 for business-type activities. For governmental activities, most of the decreas e is related to $29,607,000 of American Rescue Plan Act (ARPA) funds that were received and recorded as unearned revenue in prior years. These funds were recognized as revenue in Fiscal Year 2022/23 as they were expended on eligible public safety expenditures. The increase in business-type activities is due to normal fluctuations in accounts payable and payroll cycles.

Deferred Outflows and Inflows of Resources: The increase in deferred outflows of resources of $115,466,000 and $8,238,000 for governmental activities and business-type activities and decrease of deferred inflows of resources of $115,711,000 and $9,296,000 for governmental activities and business-type activities is the result of actuarially determined amortization 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 in creased by $133,129,000 for governmental activities and $9,167,000 for busi ness-type activities primarily due the FY 2021/22 7.5percent CalPERS investment loss recognized in FY 2022/23 which created a net pension liability totaling $151,970,000.

11 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

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 a ssets, net of related debt from governmental activities increased $14,762,000 or 2.1 percent, primarily due to street improvements and construction projects such as improvements to Rodger’s Senior Center Repurposing, Central Park Improvements, various fiber expansion projects and replacement of outdated equipment throughout the Cit y. Net position invested in capital assets net of related debt from business-type activities decreased $2,417,000 or 1.7 percent primarily due to depreciation expense and a reduction of sewer and lift station improvement cost.

Restricted Net Position: An additional portion of the City’ s net position is subject to external (legally imposed or statutory) restrictions ($82,564,000 for governmental activities, and $21,213,000 for business-type activities). These amounts represent 13.0 percent and 10.6 percent of net position for governmental activities and business-type activities, respectively. Restricted net position from governmental activities increased $14,104,000 or 20.6 percent, lar gely due to the change in restri cted net position in the Pension Liability Fund and Infrastructure Fund. The Pension Liability Fund increased due to revenues set aside from the voter-approv ed property tax override dedicated to the payment of pension costs. The Infrastructure Fund increased due to the City transferring $28,741,000 from the General Fund to cover future Infrastructure co st. Restricted net position from business-type activities incr eased by $1,904,000 or 9. 9 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 $173,034,000 for governmental activities and $36,684,000 for business-type activities) represent negative

27.2 percent and 18.4 percent, respectively, of net position for governmental activities and business-type activities. Unrestricted net position for governmental activities increased $50,404,000 or 22.6 per cent. Unrestricted net position for business-type activities increased by $2, 564,000 or 7.5 percent. These changes can be attributed to changes in Net Pension Liability and Other Postemployment Benefits.

12 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

A condensed summary of governmental activities (in thousands) follows:

The cost of all governmental activities this year was $287,068,000. However, as shown in the Statement of Activiti es, the amount that taxpayers ultimately financed for these activities was $150,157,000, as costs of $82,704,000 were paid by those who directly benefited from the programs, or by other governments and organizations that subsidized certain programs with operati ng grants and contributions of $43,005,000, and capital grants and contributions of $11,202,000. Overall, the Cit y’s governmental program revenues were $136,911,000. The City paid for t he remaining “public benefit” portion of governmental activities with $229,465,000 in taxes and general revenue (some of which may only be used for certain programs) and wit h other revenues, such as interest and general entitlements.

Revenues: June 30, 2023 June 30, 2022
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Program Revenues:

Charges for Current Services 82,704 $ 68,051 $ 14,653 $ 21.5% Operating Grants and Contributions 43,005 9,301 33,704 362.4% Capital Grants and Contributions 11,202 8,537 2,665 31.2% Total Program Revenues 136,911 85,889 51,022 59.4% General Revenues:

Property Taxes 109,467 102,539 6,928 6.8% Sales Taxes 57,164 57,652 (488) -0.8% Utility Taxes 22,558 19,528 3,030 15.5% Franchise Taxes 15,100 10,380 4,720 45.5% Transient Occupancy Tax 17,318 15,754 1,564 9.9% Use of Money and Property (Loss) 5,153 (1,895) 7,048 -371.9% From Other Agencies - Unrestricted 3,225 4,631 (1,406) -30.4% Disposal of Machinery and Equipment (Loss) (520) 1,699 (2,219) -130.6% Total General Revenues 229,465 210,288 19,177 9.1% Total Revenues 366,376 296,177 70,199 23.7% Expenses:

City Council 429 382 47 12.3% City Manager 5,780 5,412 368 6.8% City Treasurer 396 259 137 52.9% City Attorney 3,248 2,183 1,065 48.8% City Clerk 1,370 1,060 310 29.2% Finance 6,211 5,581 630 11.3% Community Development 20,550 11,634 8,916 76.6% Fire 71,737 52,808 18,929 35.8% Information Services 8,565 6,469 2,096 32.4% Police 89,430 73,964 15,466 20.9% Community Services 13,389 11,517 1,872 16.3% Library Services 7,225 5,212 2,013 38.6% Public Works 49,151 42,598 6,553 15.4% Interest on Long-Term Debt 9,587 9,548 39 0.4% Total Expenses 287,068 228,627 58,441 25.6% Change in Net Position Before Transfers 79,308 67,550 Transfers (38) (39)
Change in Net Position 79,270 67,511
Net Position - Beginning of Year 557,311 489,800 Net Position - End of Year 636,581$ 557,311$
Governmental Activities
13 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

Charges for current services increased $14,653,000, or 21.5 per cent. The largest increase in Charges for Current Services came from Community Development and Public Works. Community Development saw revenue go up by $7,864,000 while Public Works saw revenues go up by $4,066,000 due to an increase in permit issuance and fees collected for development projects such as the Gisler Residential and Delaware Housing Projects.

Operating Grants and Contributions incr eased by $33,704,000 or 362.4 percent and Capital Grants and Contributions have increased by $2,655,000 or 31.2 percent. The Operating Grants and Contribut ions increase is due to the $29,607,000 of American Rescue Plan Act (ARPA) funds the City recogni zed as revenue in the current year. The increase in Capital Grants and Contributions is related to increased traffic impact fee and commercial sanitation fee revenue received related to large development projects within the city.

Program expenses increased by $58,441,000, or 25.5 percent. As mentioned earlier, this is largely due to the prior year’s pension expenses being substantially lower than usual due to the 21.3 percent CalPERS investment return which resulted in a Net Pension Asset in FY 2021/22. The -7.5 percent return in the subsequent fiscal year resulted in the creation of a Net Pension Liability and increased pension expense. The City also incurred additional expense for fuel, repairs, natural gas, and other utilities, due to rising costs from inflationary pressures, supply-chain issues, and rate increases.

Total resources available during the year to finance government al operations were $923,687,000 consisting of net position at July 1, 2022 of $557,311,000, program revenues of $136,911,000, and general revenues of $229,465,000. Total expenses for governmental activities during the year were $287,068,000 plus tr ansfers of $38,000.

Thus, net position increased by $79,270,000 or 14.2 percent, to $636,581,000.

14 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

A condensed summary of business-type activities (in thousands) follows:

The City’s net position from business-type activities increased by $2,013,000 before transfers. This is mainly due to unrealized ma rket gains in the Cit y’s investments and increased revenue.

The cost of all business-type activities this year was $74,434,000. As shown in the Statement of Activities, charges for current services was $75,091,000 and unrealized market gain was $1,356,000, which was more than enough to cover business-type activities. Beginning net position was $197,427,000 and ending net position was $199,478,000, an increase of $2, 051,000, or 1.0 percent. Of the ending net position, $141,581,000, or 71.0 percent , was invested in capital assets, $21,213,000 or 10.6 percent was restricted for expenses for the Water Master Plan, and $36,684,000, or 18.4 percent was unrestricted.

Transfers in for business-type activities were $38,000 for the current year.

Financial Analysis of the City’s Major Governmental Funds

Below is an analysis of the City’s major gover nmental fund activities for the year (in thousands):

June 30, 2023 June 30, 2022
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Program Revenues:

Charges for Current Services 75,091$ 68,332 $ 6,759 $ 9.9% Total Program Revenues 75,091 68,332 6,759 9.9% Use of Money and Property (Loss) 1,356 (4,328) 5,684 -131.3% Total Revenues 76,447 64,004 12,443 19.4% Expenses:

Water Utility 47,974 44,182 3,792 8.6% Sewer Service 11,422 10,390 1,032 9.9% Refuse Collection 14,935 13,738 1,197 8.7% Hazmat Service 103 236 (133) -56.4% Total Expenses 74,434 68,546 5,888 8.6% Increase (Decrease) in Net Position
Before Transfers 2,013 (4,542)
Transfers 38 39
Total Change In Net Position 2,051 (4,503) Net Position - Beginning of Year 197,427 201,930 Net Position - End of Year 199,478$ 197,427 $ Business-Type Activities
June 30, 2023 June 30, 2022
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Total Fund Balance:

General Fund 126,537$ 102,824$ 23,713$ 23.1% Grants Special Revenue Fund 655 (4,311) 4,966 115.2% LMIHAF Capital Projects Fund 4,919 4,856 63 1.3% Pension Liability Fund 24,982 20,729 4,253 20.5% Infrastructure 33,398 20,485 12,913 63.0% Total Fund Balance: 190,491$ 144,583$ 45,908$ 31.8% Governmental Funds
15 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

The General Fund Balance increased by $23,713,000, primarily due to one-time savings from the use of American Re scue Plan Act funding for public safety expenditures which facilitated the creation of an HB Recovery Reserve totaling $10,886,000. Additionally, the City realized additional revenue primarily due to one-time spikes in natural gas prices during Winter 2022-23 and incr eased natural gas and electricity rates. Transient Occupancy Tax (TOT) remained strong, mainly due to higher average daily rates and a full fiscal year of TOT from the City’s Short-Term Vacation Rentals.

The Grants Special Revenue Fund Balance increased by $4,966,000 primarily due to a payment of $3,549,000 from the Monsanto class-action settlement.

The LMIHAF Capital Projects Fund Balance increased by $63,000 primarily due to the interest earned on City investments and loan payments received for developer loans.

The Pension Liability Fund increased by $4,253, 000, largely due to revenues set aside from the voter-approved property tax override dedicated to the payment of Public Safety pension costs.

The Infrastructure Fund increased by $12 ,913,000 due to the City transferring HB Recovery funds from the General Fund to the In frastructure fund for projects including:
construction of a Joint Youth Training Center for Police and Fire and various mobility, arterial beautification, and sustainability-related capital improvements.

Financial Analysis of the City’s Major Proprietary Funds

Below is an analysis of the fund net position of the City’s proprietary funds (in thousands):

The Water Fund total net position increased by $1,767,000 due to the City receiving one- June 30, 2023 June 30, 2022
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Net Position:

Water Fund 120,533$ 118,766$ 1,767$ 1.5% Sewer Fund 78,606 78,509 97 0.1% Refuse Fund 35 16 19 118.8% Hazmat Service Fund 304 136 168 123.5% Total Net Position 199,478$ 197,427$ 2,051$ 1.0% Unrestricted Net Position:

Water Fund 10,880$ 9,104$ 1,776$ 19.5% Sewer Fund 25,556 24,977 579 2.3% Refuse Fund (56) (97) 41 42.3% Hazmat Service Fund 304 136 168 123.5% Total Unrestricted Net Position 36,684$ 34,120$ 2,564$ 7.5% Enterprise Funds
16 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

time revenue from Orange County Water Dis trict in FY 2022/23, which caused the unrestricted net position to increase by $1, 776,000. All enterprise fu nds except for the Refuse Fund generated revenue that exceeded expenses due to supplies and operations cost exceeding revenue generated in FY 2022/23.

Long-Term Obligations

Below is a schedule of the changes to the City’s long-term obligations (in thousands):

Additional information on the City’s long-term debt is shown in Note 11 and Note 14 to the financial statements. Note 14, Leases, provides detail related to GASB Statement No. 87 Leases Payable while Note 11 provides detail related to all other long-term debt. The City of Huntington Beach is legally restricted to issuing g eneral obligation bonds to 12 percent of its assessed valuation. Sinc e the City has no gener al obligation bonds outstanding, the limit does not apply. The City’s total long-term obligations decreased by $1,487,000 or 0.3 percent from the prior fiscal year as there were more debt retirements than debt additions during the year.

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 Beac h and that same rating was mo st recently reaffirmed in February 2022.

The following are the ratings as determined by Standard and Poor’s and Fitch Ratings as of June 30, 2023.

Governmental Activities: June 30, 2022 Additions Retirements June 30, 2023 Revenue Bonds 27,365$ -$ (2,205)$ 25,160$ Compensated Absences 15,045 3,376 (3,603) 14,818 Claims Payable 56,431 28,002 (17,812) 66,621 Pollution Remediation 2,000 - - 2,000 LED Lighting Phase I 314 - (123) 191 I-Bank CLEEN Loan 1,586 - (303) 1,283 CEC Loan 2,063 - (266) 1,797 Pension Obligation Bonds 330,642 - (12,637) 318,005 Finance Purchase Agreement 11,714 7,742 (2,068) 17,388 Leases Payable 247 398 (189) 456 Subscriptions Payable 3,651 - (1,051) 2,600 Total Long-Term Obligations
Governmental Activities 451,058 39,518 (40,257) 450,319 Business-Type Activities:

Compensated Absences 1,686 529 (389) 1,826 Pension Obligation Bonds 21,368 - (888) 20,480 Business-Type Activities: 23,054 529 (1,277) 22,306 Total Long-Term Obligations 474,112$ 40,047$ (41,534)$ 472,625$ 17 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

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 G ASB Statement No. 34 for infrastructure reporting. The following infrastructure networks are recorded as capital a ssets in the government-wide financial statements:

 Storm drain system including pump st ations, drainage system and manholes.  Streets (including land under neath streets), traffic si gnals, curbs, gutters, and sidewalks.

Below is a schedule of the City’s capital a ssets, net of accumulated depreciation (in thousands):

Capital assets from governmental activities increased $22,016,000 or 2.9 percent. This increase is largely due to street replacem ent infrastructure costs and machinery and equipment replacement throughout the City. Capital assets from business-type activities Debt Instrument S & P Fitch
1999 Tax Allocation Refunding Bonds AA- AA
2002 Tax Allocation Refunding Bonds AA- N/A
2014 Lease Revenue Bonds, Series A AA AA+
2020(a) Lease Revenue Bonds AA AA+
2020(b) Lease Revenue Bonds AA AA+
2021 Pension Obligation Bonds AA+ AA+
Governmental Activities: June 30, 2023 June 30, 2022
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Land 369,538$ 369,538$ -$ 0.0% Buildings 127,820 127,310 510 0.4% Machinery and Equipment 32,401 19,510 12,891 66.1% Construction in Progress 11,249 12,235 (986) -8.1% Infrastructure 227,641 217,525 10,116 4.7% Right to Use Leased Asset 462 253 209 82.6% Right to Use SBITA Asset 2,927 3,651 (724) -19.8% Total Governmental Activities 772,038 750,022 22,016 2.9% Business-Type Activities:

Land 3,907 3,907 - 0.0% Buildings 66,089 68,693 (2,604) -3.8% Machinery and Equipment 6,064 6,863 (799) -11.6% Construction in Progress 839 109 730 669.7% Infrastructure 64,684 64,426 258 0.4% Total Business-Type Activities 141,583 143,998 (2,415) -1.7% Total Capital Assets 913,621$ 894,020$ 19,601$ 2.2% 18 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

decreased $2,415,000 or 1.7 per cent largely due disposal of outdated machinery and equipment. Information on the City’s capital assets can be found in Note 12 of the financial statements.

Furthermore, the newly implemented GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITA), requires the City to recognize subscription liability and an intangible right-to-use subscription asset. For FY 2022/23, the City reported $2,927,000 in right-to-use SBITA assets.

General Fund Budgetary Highlights

Changes to Original Budget

Comparing the FY 2022/23 General Fund Original (i.e. Adopted) Budget expenditures amount of $269,971,000 to the final budgeted amount of $298,423,000 shows a net increase of $28,452,000, or 10.5 percent. This overall increase is primarily due to budget carryovers of $5,264,000, increased transfers to the Infrastructure Fund of $4,586,000, Retirement Supplement Fund of $4,620,000, Section 115 Trust of $2,000,000, Self Insurance General Liability Fund of $4,500,000, Self Insurance Worker’s Compensation Fund of $5,800,000, appropriation of donation revenue totaling $986,000, and operating increases of $6,016,000.

Final budgeted revenues for the General Fund increased $27,026,000 or 9.5 percent from the original (adopted) budget for the Fiscal Year ended June 30, 2023. The change from original to final budget occu rred primarily as a result of adjustments made to budgeted property tax, sales tax, utility tax, other taxes, and transfers from other funds.

Variance with Final Budget

General Fund actual revenues were greater than the final budget by $1,707,000 for the Fiscal Year ended June 30, 2023. This budget va riance is due in large part to actual investment returns outperforming budgeted amounts in the Section 115 Trust.

General Fund expenditures were $7,714,000 less than the final budget. The favorable budget variance is due in large part to the following:

 The Information Services and Police Depar tments realized a total of $2,478,000 in savings primarily due to higher than average vacancies.

Economic Factors and Next Year’s Budget

The Adopted FY 2023/24 Budget totals $508.0 milli on in all funds. This reflects a $24.0 million, or 4.5 percent decrease from the FY 2022/23 Adopted All Funds Budget of $532.0 19 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

million. A significant portion of the decrease is due to the one-time redistribution of $29.6 million of American Rescue Plan Act (ARPA) funds to the General Fund in FY 2022/23 for the provision of core governmental services.

General Fund Budget expenditures total $285. 2 million and are supported by revenues of $283.9 million, plus the one time use of $8.8 million in General Fund Reserves. Use of reserves include the transfer of $3.9 million from the Equipment Replacement Reserve to the Equipment Replacement Fund for the purchase of critical infrastructure and public safety vehicles and equipment. The full balance of the AES Reserve ($4.9 million) is being transferred to a new AES Mitigation Fund to be used for various Capital Improvement Projects (CIP) as outlined in the Memo randum of Understanding between the City and AES Southland Development LLC. The Adopt ed General Fund Budget 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 51 cents for every dollar spent in the General fund. With more than half of the General Fund Budget committed to the Police and Fire Departments, the City has dedicated the greatest shar e of its resources, or $145.7 million, to these core services.

In the Police Department, the budget includes $2.0 million in equipment funds for the replacement of 22 police vehicles and other front line safety equipment. The Capital Improvement Program (CIP) in cludes $2,680,000 for relocati on and expansion of the Police Department Communications Center, updates to the women’s locker room, and fiber installations at the Bella Terra Police substation.

In the Fire Department, the Adopted Budget includes $825,000 for equipment replacement comprising of ten vehicles and the purchase of ambulance equipment and extraction tools. The CIP includes $345,000 for a traffic signal at Murdy Fire Station.

Revenue growth, reining in expenditures, strong reserves, and public service excellence are areas of focus for the organization. The City’s commitment to financial sustainability is also demonstrated by its proactive approach to addressing future budget challenges through the Adopted Budget Balancing Plan, which identifies $1.65 million in ongoing new revenues and $5.03 million in ongoing expenditure reductions, including $1.5 million in savings through implementation of a managed hiring program. As part of the process to identify where the City should fo cus its limited resources, a Q uality of Life survey is currently underway to identify the priorities of the City’s residents and other key stakeholders.

20 City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023

General Fund Revenue

General Fund revenue is projected to be $283.9 million, a $.7 m illion or 0.3 percent increase from the Fiscal Year 2022/23 Adopted Budget. The largest decrease is in Non- Operating Revenue, which is projected to be $2.8 million, a $27.3 million decrease from the FY 2022/23 Adopted Budget of $30.1 million. This is a ttributable to the one-time transfer of $29.6 million in ARPA funds for general governm ental services that was included in the FY 2022/23 Adopted Budget. Th is decrease is offset by increases in Property Tax, Franchise and Utility Users Tax, Use of Money & Property, and Charges for Current Services.

 Property Tax is the largest revenue categor y for the City and is anticipated to increase by $5.9 million or 6.0 perc ent to $104.2 million due to gai ns in assessed property valuations.
 Franchise and Utility Users Taxes are projected at $33. 0 million, a 21.8 percent increase, driven by increases in utility prices including gas and electricity.  Use of Money & Property is anticipated to increase by $4.9 million to $21.8 million due to parking rate increases and an expected rise in lease and concession income.  Charges for Current Services is project ed to increase $7.4 million due to increased demand for services, including medical transports, recreation classes and building and planning services.

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 Cit y’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 BASIC FINANCIAL STATEMENTS
22 ASSETS
Governmental
Activities
Business-Type
Activities Total
Current Assets:

Cash and Investments 291,761$ 76,936$ 368,697$ Cash and Investments with Fiscal Agent 12,285 - 12,285 Receivables, Net 41,373 10,532 51,905 Advances to Successor Agency 1,363 - 1,363 Lease Receivable 11,107 - 11,107 Inventories - 1,624 1,624 Prepaids 2,032 - 2,032 Joint Venture 215 2,220 2,435 Total Current Assets 360,136 91,312 451,448 Non-Current Assets:

Net Other Postemployment Benefits Asset 1,809 215 2,024 Total Non-Current Assets 1,809 215 2,024 Capital Assets:

Non-Depreciable 380,787 4,746 385,533 Depreciable, Net 391,251 136,837 528,088 Total Capital Assets 772,038 141,583 913,621 Total Assets 1,133,983 233,110 1,367,093

DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 138,290 9,685 147,975 Deferred Outflows Related to Other Postemployment Benefits 5,915 704 6,619 Total Deferred Outflows of Resources 144,205 10,389 154,594

LIABILITIES
Current Liabilities:

Accounts Payable 12,043 8,258 20,301 Accrued Payroll 1,914 282 2,196 Unearned Revenue 4,087 - 4,087 Accrued Interest Payable 632 22 654 Deposits 2,250 1,649 3,899 Long-Term Obligations Due Within One Year 41,044
1,389 42,433
Total Current Liabilities 61,970 11,600 73,570 Long-Term Obligations:

Long-Term Obligations Due in More than One Year 409,275 20,917 430,192 Net Pension Liability 150,040 10,718 160,758 Total Long-Term Obligations 559,315 31,635 590,950 Total Liabilities 621,285 43,235 664,520

DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 3,105 24 3,129 Deferred Inflows Related to Other Postemployment Benefits 6,397 762 7,159 Deferred Inflows Lease Related 10,820 - 10,820 Total Deferred Inflow of Resources 20,322 786 21,108

NET POSITION
Net Investment in Capital Assets 727,051
141,581 868,632
Restricted for:

Debt Service 4,461 - 4,461 Capital Projects 25,852 21,213 47,065 Public Works and Community Services Projects 52,251 - 52,251 Total Restricted Net Position 82,564 21,213 103,777 Unrestricted (173,034) 36,684 (136,350) Total Net Position 636,581$ 199,478 $ 836,059 $

CITY OF HUNTINGTON BEACH

STATEMENT OF NET POSITION
JUNE 30, 2023
(In Thousands)
See Notes to the Financial Statements
23 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 429$ 167$ -$ -$ (262)$ -$ (262)$ City Manager 5,780 4,976 311 23 (470) - (470) City Treasurer 396 153 - - (243) - (243) City Attorney 3,248 5 - - (3,243) - (3,243) City Clerk 1,370 299 - - (1,071) - (1,071) Finance 6,211 3,125 - - (3,086) - (3,086) Community Development 20,550 18,817 6,373 25 4,665 - 4,665 Fire 71,737 14,166 14,063 - (43,508) - (43,508) Information Services 8,565 623 - - (7,942) - (7,942) Police 89,430 6,139 17,994 - (65,297) - (65,297) Community Services 13,389 22,545 653 294 10,103 - 10,103 Library Services 7,225 388 585 - (6,252) - (6,252) Public Works 49,151 11,30
1 3,026 10,860 (23,964) - (23,964) Interest on Long-Term Debt 9,587 - - - (9,587) - (9,587) Total Governmental Activities 287,068 82,704 43,005 11,202 (150,157) - (150,157) Business-type Activities:

Water Utility 47,974 48,934 - - - 960 960 Sewer Service 11,422 10,982 - - - (440) (440) Refuse Collection 14,935 14,899 - - - (36) (36) Hazmat Service 103 276 - - - 173 173 Total Business-Type Activities 74,434 75,091 - - - 657 657 Total Governmental and
Business Type Activities 361,502$ 157,795 $ 43,005 $ 11,202 $ (150,157)$ 657 $ (149,500)$ General Revenues:

Taxes:

Property Taxes 109,467 $ - $ 109,467$ Sales Taxes 57,164 - 57,164 Utility Taxes 22,558 - 22,558 Franchise Taxes 15,100 - 15,100 Transient Occupancy Tax 17,318 - 17,318 Total Taxes 221,607 - 221,607 Other:

Use of Money and Property 5,153 1,356 6,509 From Other Agencies - Unrestricted 3,225 - 3,225 Disposal of Machinery and Equipment (Loss) (520) - (520) Total General Revenues 229,465 1,356 230,821 Transfers (38) 38 -
Total General Revenues and Transfers 229,427 1,394 230,821 Change in Net Position 79,270 2,051 81,321 Net Position - Beginning of Year 557,311 197,427 754,738 Net Position - End of Year 636,581 $ 199,478 $ 836,059 $ Net (Expense) Revenue and Changes in
Net Position

CITY OF HUNTINGTON BEACH

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)
See Notes to the Financial Statements
24 CITY OF HUNTINGTON BEACH

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2023
(In Thousands)
ASSETS General Fund
Grants Special
Revenue
LMIHAF
Capital
Projects
Pension
Liability Infrastructure
Other
Governmental
Funds Total
Cash and Investments 115,922$ 3,020$ 3,551$ 24,736$ 34,780$ 63,156$ 245,165$ Cash and Investments with Fiscal Agent - - - - - 12,285 12,285 Taxes Receivable 14,867 - - 148 - 1,308 16,323 Other Receivables, Net 7,599 7,323 8,339 98 196 1,330 24,885 Lease Receivable 11,107 - - - - - 11,107 Advances to Successor Agency - - 1,363 - - - 1,363 Prepaids 51 - - - - - 51 Total Assets 149,546 10,343 13,253 24,982 34,976 78,079 311,179

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES

LIABILITIES
Accounts Payable 6,701 1,056 10 - 1,478 2,093 11,338 Accrued Payroll 1,777 29 - - 43 57 1,906 Unearned Revenue 1,122 2,965 - - - - 4,087 Deposits Payable 2,250 - - - - - 2,250 Total Liabilities 11,850 4,050 10 - 1,521 2,150 19,581

DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Lease Related 10,820 - - - - - 10,820 Unavailable Revenue 339 5,638 8,324 - 57 - 14,358 Total Deferred Inflows of Resources 11,159 5,638 8,324 - 57 - 25,178

FUND BALANCES
Nonspendable
Prepaids 51 - - - - - 51 Restricted
Underground Utilities 364 - - - - - 364 Restitution 296 - - - - - 296 Donations 777 - - - - - 777 Section 115 Trust 18,141 - - - - - 18,141 Pollution Remediation - - - - - 336 336 Debt Service - - - 24,982 - 4,461 29,443 Highways, Streets and Transportation - - - - - 14,257 14,257 Low Income Housing - - 4,919 - - 10,891 15,810 Air Quality - - - - - 1,038 1,038 Other Capital Projects - - - - - 23,695 23,695 Other Purposes - 655 - - - 2,632 3,287 Committed
Economic Uncertainties 48,411 - - - - - 48,411 Parks - - - - - 5,316 5,316 Other Capital Projects 1,040 - - - 33,398 3,196 37,634 Other Purposes 1,779 - - - - 3,910 5,689 Assigned
Litigation Reserves 3,650 - - - - - 3,650 AES Reserve 4,900 - - - - 4,900 C
apital Improvement Reserve 9,086 - - - - 6,197 15,283 Equipment Replacement 8,295 - - - - - 8,295 General Plan Maintenance 1,515 - - - - - 1,515 HB Recovery Fund 10,886 - - - - - 10,886 Oceanview Estates 365 - - - - - 365 General Liability Plan Migration 2,801 - - - - - 2,801 Pension Rate Stabilization 4,160 - - - - - 4,160 Section 115 Trust 2,500 - - - - - 2,500 Other Purposes 7,520 - - - - - 7,520 Total Fund Balances 126,537 655 4,919 24,982 33,398 75,929 266,420 Total Liabilities, Deferred Inflows
of Resources and Fund Balances 149,546$ 10,343 $ 13,253 $ 24,982 $ 34,976 $ 78,079 $ 311,179 $ See Notes to the Financial Statements
25 Amounts reported for governmental activities in the statement of net position are different because:

Total Fund Balances Governmental Funds 266,420$
Net Other Postemployment Benefits Asset is not available to pay in the current period and therefore are not reported in the funds.

Net Other Postemployment Benefits Asset 1,799
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 1,163,909
Accumulated Depreciation (404,669)

Total Capital Assets 759,240
Joint Venture 215
Right to Use Leased/SBITA Assets used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds.

Right to Use Leased Assets 672
Right to Use SBITA Assets 3,651
Accumulated Amortization (934)
Total Right to Use Assets 3,389
Internal Service 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. (10,262) 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. 14,358
Deferred Outflows Related to Pensions 137,824
Deferred Outflows Related to Other Postemployment Benefits (OPEB) 5,883 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. (149,527) Deferred Inflows Related to Pensions (3,104)
Deferred Inflows Related to Other Postemployment Benefits (OPEB) (6,362) Other long-term liabilities are not due in the current period and, therefore, are not recorded in the governmental funds.

Accrued Interest Payable (632)
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 (21,944)
Long-Term Obligations Due in More than One Year (360,716)

Net Position of Governmental Activities 636,581$
(In Thousands)

CITY OF HUNTINGTON BEACH

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITION
JUNE 30, 2023
See Notes to the Financial Statements
26 REVENUES
General
Fund
Grants Special
Revenue
LMIHAF
Capital
Projects
Pension
Liability Infrastructure
Other
Governmental
Funds Total
Property Taxes 101,036 $ - $ - $ 8,431$ - $ - $ 109,467$ Sales Taxes 52,599 - - - - 4,565 57,164 Utility Taxes 22,558 - - - - - 22,558 Other Taxes 32,418 - - - - 8,320 40,738 Licenses and Permits 10,630 - - - - 5,058 15,688 Fines and Forfeitures 3,945 - - - - - 3,945 Use of Money and Property (Loss) 21,401 130 79 447 (1,565) 2,234 22,726 Intergovernmental 4,024 40,872 - - 501 2,029 47,426 Charges for Current Services 32,787 - - 16,111 - 11,112 60,010 Other 2,606 3,741 - - - 6 6,353 Total Revenues 284,004 44,743 79 24,989 (1,064) 33,324 386,075

EXPENDITURES
Current:

City Council 453 - - - - - 453 City Manager 5,892 300 - - - 309 6,501 City Treasurer 417 - - - - - 417 City Attorney 3,404 - - - - - 3,404 City Clerk 1,441 1 - - - - 1,442 Finance 7,372 37 - - - 11 7,420 Community Development 17,061 3,343 16 - - 1,149 21,569 Fire 65,658 488 - - - 6,353 72,499 Information Services 8,269 - - - - 294 8,563 Police 93,796 2,716 - - - 488 97,000 Community Services 12,500 343 - - 389 3,378 16,610 Library Services 6,951 204 - - - 89 7,244 Public Works 27,785 2,739 - - 14,375 17,262 62,161 Debt Service:

Principal 4,000 - - 12,594 - 2,205 18,799 Interest 310 - - 8,486 - 746 9,542 Total Expenditures 255,309 10,171 16 21,080 14,764 32,284 333,624 Excess (Deficiency) of Revenues Over
(Under) Expenditures 28,695 34,572 63 3,909 (15,828) 1,040 52,451

OTHER FINANCING SOURCES (USES)
Transfers In 30,020 1 - 344 28,741 6,263 65,369 Lease (as Lessee) 398 - - - - - 398 Issuance of Finance Purchase Agreement - - - - - 7,742 7,742 Transfers Out (35,400) (29,607) - - - (400) (65,407) Total Other Financing Sources (Uses) (4,982) (29,606) - 344 28,741 13,605 8,102 Net Change In Fund Balances 23,713 4,966 63 4,253 12,913 14,645 60,553 Fund Balances - Beginning of Year 102,824 (4,311) 4,856 20,729 20,485 61,284 205,867 Fund Balances - End of Year 126,537$ 655 $ 4,919$ 24,982 $ 33,398 $ 75,929 $ 266,420 $ (In Thousands)

CITY OF HUNTINGTON BEACH

STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
See Notes to the Financial Statements
27 Amounts reported for governmental activities in the statement of activities are different because:

Net Changes in Fund Balances - Total Governmental Funds 60,553$

Depreciable Assets Purchased 37,934
Depreciable Assets Disposition (87) Non-Depreciable Assets Purchased 3,886 Non-Depreciable Assets Disposition (4,872) Capital Asset Depreciation (18,028)
Joint Venture 16
Current Year Grant and Other Revenue Accrual 3,724 Prior Year Grant and Other Revenue Accrual (7,311) 234
Pension income reported in the statement of activities includes the change in the the net pension liability and related changes in pension amounts for deferred outflows and deferred inflows of resources. (11,938) 1,518
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. 2,790 Current Year Interest Accrual (632) Prior Year Interest Accrual 587
18,799
(8,140)
237
Change in Net Position of Governmental Activities 79,270$ FOR THE YEAR ENDED JUNE 30, 2023
(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 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
28 Governmental
Activities
Water
Fund
Sewer Service
Fund
Refuse
Fund
Hazmat
Service Fund Total
Internal Service
Funds
ASSETS
Current Assets:

Cash and Investments 23,384$ 31,240$ 490$ 609$ 55,723$ 46,596$ Restricted Cash and Investments 21,213 - - - 21,213 - Other Receivables, Net 6,350 628 688 18 7,684 165 Prepaids - - - - - 1,981 Joint Ventures 2,220 - - - 2,220 - Inventories 1,624 - - - 1,624 - Unbilled Receivables 1,766 457 625 - 2,848 - Total Current Assets 56,557 32,325 1,803 627 91,312 48,742 Non-Current Assets:

Net Other Postemployment Benefits Asset 155 53 5 2 215 10 Total Non-Current Assets 155 53 5 2 215 10 Capital Assets:

Land 3,907 - - - 3,907 - Buildings and Improvements 57,933 47,690 - - 105,623 67 Machinery and Equipment 15,463 3,905 215 - 19,583 12,957 Infrastructure 107,936 46,212 - - 154,148 - Construction in Progress - 839 - - 839 - Less Accumulated Depreciation (96,799) (45,595) (123) - (142,517) (3,615) Total Capital Assets 88,440 53,051 92 - 141,583 9,409 Total Assets 145,152 85,429 1,900 629 233,110 58,161

DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 6,779 2,535 227 144 9,685 466 Deferred Outflows Related to Other Postemployment Benefits 506 173 18 7 704 32 Total Deferred Outflows of Resources 7,285 2,708 245 151 10,389 498 Total Assets and Deferred Outflows of Resources 152,437 88,137 2,145 780 243,499 58,659

LIABILITIES
Current Liabilities:

Accounts Payable 6,502 607 1,149 - 8,258 705 Accrued Payroll 190 81 8 3 282 8 Deposits Payable 1,493 - 156 - 1,649 - Interest Payable 15 6 1 - 22 - Current Portion of Claims Payable - - - - - 19,043 Current Portion of Compensated Absences 356 130 12 - 498 14 Long-Term Obligations Due Within One Year 624 233 21 13 891 43 Total Current Liabilities 9,180 1,057 1,347 16 11,600 19,813 Non-Current Liabilities:

Compensated Absences 949 346 32 1 1,328 38 Long-Term Obligations Due in More than One Year 13,707 5,127 460 295 19,589 943 Net Pension Liability 7,504 2,806 252 156 10,718 513 Claims Payable - - - - - 47,578 Total Non-Current Liabilities 22,160 8,279 744 452 31,635 49,072 Total Liabilities 31,340 9,336 2,091 468 43,235 68,885

DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 17 7 - - 24 1 Deferred Inflows Related to Other Postemployment Benefits 547 188 19 8 762 35 Total Deferred Inflows of Resources 564 195 19 8 786 36

NET POSITION
Investment in Capital Assets 88,440 53,050 91 - 141,581 9,409 Restricted for:

Capital Projects 21,213 - - - 21,213 - Unrestricted 10,880 25,556 (56) 304 36,684 (19,671) Total Net Position 120,533 78,606 35 304 199,478 (10,262) Total Liabilities, Deferred Inflows
of Resources, and Net Position 152,437 $ 88,137 $ 2,145 $ 780 $ 243,499$ 58,659 $

PROPRIETARY FUNDS

STATEMENT OF NET POSITION

CITY OF HUNTINGTON BEACH
Business-Type Activities - Enterprise Funds
(In Thousands)
June 30, 2023
See Notes to the Financial Statements
29 Governmental
Activities
Water
Fund
Sewer Service
Fund
Refuse
Fund
Hazmat
Service Fund Total
Internal Service
Funds

OPERATING REVENUES
Sales 39,620$ - $ - $ - $ 39,620$ - $ Fees and Charges for Service - 10,892 14,812 276 25,980 32,668 Other 9,314 90 87 - 9,491 1,528 Total Operating Revenues 48,934 10,982 14,899 276 75,091 34,196

OPERATING EXPENSES
Water Purchases 17,981 - - - 17,981 - Supplies and Operations 11,063 8,944 14,901 95 35,003 3,604 Engineering 2,239 - - - 2,239 - Production and Distribution 9,400 - - - 9,400 - Maintenance 1 - - - 1 - Water Meters 1,824 - - - 1,824 - Water Quality 816 - - - 816 - Water Use Efficiency 298 - - - 298 - Claims and Judgments - - - - - 25,873 Depreciation 3,978 2,338 21 - 6,337 1,453 Total Operating Expenses 47,600 11,282 14,922 95 73,899 30,930 Operating Income (Loss) 1,334 (300) (23) 181 1,192 3,266

NON-OPERATING REVENUES (EXPENSES)
Investment Income 807 537 4 8 1,356 69 Interest Expense (374) (140) (13) (8) (535) (25) Disposal of Machinery and Equipment (Loss) - - - - - (520) Total Non-Operating Revenues (Expenses) 433 397 (9) - 821 (476) Income (Loss) Before Transfers 1,767 97 (32) 181 2,013 2,790

TRANSFERS
Transfers In - - 51 - 51 - Transfers Out - - - (13) (13) - Total Transfers - - 51 (13) 38 - Change in Net Position 1,767 97 19 168 2,051 2,790 Net Position - Beginning of Year 118,766 78,509 16 136 197,427 (13,052) Net Position - End of Year 120,533 $ 78,606 $ 35 $ 304 $ 199,478$ (10,262) $ Business-Type Activities - Enterprise Funds
(In Thousands)
FOR THE YEAR ENDED JUNE 30, 2023

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

CITY OF HUNTINGTON BEACH
See Notes to the Financial Statements
30 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 45,161 $ 10,888 $ 15,045 $ 268 $ 71,362$ 34,133 $ Cash Paid to Employees for Services (10,178) (4,189) (434) (91) (14,892) (363) Cash Paid to Suppliers of Goods and Services (29,186) (4,723) (14,388) (3) (48,300) (20,027) Other Operating Items
Net Cash and Investment Provided (Used) by
Operating Activities 5,797 1,976 223 174 8,170 13,743

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Transfers In - - 51 - 51 - Transfers Out - - - (13) (13) - Principal Paid (621) (233) (21) (13) (888) (43) Interest Paid (374) (140) (13) (8) (535) (26) Net Cash and Investments Provided (Used) by
Noncapital Financing Activities (995) (373) 17 (34) (1,385) (69)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Purchase of Capital Assets (2,065)
(1,857) - - (3,922) (5,156) Net Cash and Investments Provided (Used) by
Capital and Related Financing Activities (2,065) (1,857) - - (3,922) (5,156)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income 807 537 4 8 1,356 69 Net Cash and Investments Provided (Used) by
Investing Activities 807 537 4 8 1,356 69 Net Increase (Decrease) in Cash and Investments 3,544 283 244 148 4,219 8,587 Cash and Investments - Beginning of Year 41,053 30,957 246 461 72,717 38,009 Cash and Investments - End of Year 44,597 $ 31,240 $ 490 $ 609 $ 76,936$ 46,596 $

RECONCILIATION OF OPERATING

INCOME (LOSS) TO NET CASH AND INVESTMENTS

PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income (Loss) 1,334 $ (300) $ (23) $ 181 $ 1,192$ 3,266 $ Adjustments to Reconcile Operating Income (Loss) to Net Cash and Investments Provided (Used) by Operating Activities Depreciation 3,978 2,338 21 - 6,337 1,453 (Increase) Decrease in Other Receivables, Net (3,542) (49) 83 (8) (3,516) (63) (Increase) in Unbilled Receivables (204) (45) (93) - (342) - Decrease in Prepaids - - - - - (1,186) (Increase) in Joint Ventures (404) - - - (404) - (Increase) in Inventory (180) - - - (180) - (Increase) in Net Pension Asset 5,608 2,098 188 124 8,018 388 Decrease in Net Other Postemployment Benefits Asset 305 104 11 5 425 19 Increase (Decrease) in Accounts Payable 4,445 (81) 69 - 4,433 40 (Decrease) in Accrued Payroll (329) (133) (13) (9) (484) (11) (Decrease) in Deposits Payable (27) - 156 - 129 - Increase in Claims Payable - - - - - 10,190 Increase (Decrease) in Compensated Absences 127 16 3 (6) 140 11 (Increase) in Deferred Pension Outflow (5,624) (2,103) (189) (122) (8,038) (388) (Decrease) in Def
erred Pension Inflow (6,222) (2,327) (209) (134) (8,892) (428) Increase in Net Pension Liability 6,967 2,606 234 149 9,956 479 (Increase) in Deferred Other Postemployment Benefits Outflow (144) (49) (5) (2) (200) (9) (Decrease) in Deferred Other Postemployment Benefits Inflow (291) (99) (10) (4) (404) (18) Net Cash and Investments Provided
by Operating Activities 5,797 $
1,976 $ 223 $ 174 $ 8,170$ 13,743 $

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
There were no noncash investing, capital, or financing activities during the year ended June 30, 2023.

Business-Type Activities - Enterprise Funds

CITY OF HUNTINGTON BEACH

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)
See Notes to the Financial Statements
31 ASSETS Custodial Funds
Pension Trust Fund -
Retirement
Supplemental Fund
Huntington Beach
Redevelopment
Successor Agency
Private Purpose Trust
Cash and Investments 4,102$ 5$ 11,818$ Cash and Investments with Fiscal Agent 3,329 - 2,647 Mutual Funds - 63,268 - Money Market Funds - 554 - Accounts Receivable, Net 895 - - Interest Receivable - - 69 Total Assets 8,326 63,827 14,534

LIABILITIES
Current Liabilities:

Accounts Payable 1,522 - 319 Accrued Payroll - - 4 Advances from City of Huntington Beach - - 1,363 Long-Term Obligations Due Within One Year - - 4,123 Total Current Liabilities 1,522 - 5,809 Long-Term Obligations:

Long-Term Obligations Due in More than One Year - - 16,521 Total Long-Term Obligations - - 16,521 Total Liabilities 1,522 - 22,330

NET POSITION
Restricted for Pension Benefits - 63,827 - Restricted for Individuals and Organizations 6,804 - (7,796) Total Net Position 6,804$ 63,827 $ (7,796) $

CITY OF HUNTINGTON BEACH

STATEMENT OF FIDUCIARY FUND NET POSITION

FIDUCIARY FUNDS
JUNE 30, 2023
(In Thousands)
See Notes to the Financial Statements
32 ADDITIONS Custodial Funds
Pension Trust Fund -
Retirement
Supplemental Fund
Huntington Beach
Redevelopment
Successor Agency
Private Purpose Trust
Employer Contributions -$ 6,049$ -$ Collected from Property Owners 1,552 - 11,434 Business Improvement District Taxes 6,960 - - Parking Assessments 2,446 - - Total Additions Before Investment Income 10,958 6,049 11,434 Investment Income:

Investment Income (Loss) 127 4,935 217 Less: Investment Expense - (112) - Net Investment Income (Loss) 127 4,823 217 Total Additions 11,085 10,872 11,651

DEDUCTIONS
Benefits - 5,712 - Administrative Costs 20 334 - Payments to Other Organizations 7,785 - - Economic Development - - 250 Interest and Fiscal Agency Expenses 1,359 - 1,247 Principal 1,800 - - Total Deductions 10,964 6,046 1,497 Change in Net Position 121 4,826 10,154 Net Position - Beginning of Year 6,683 59,001 (17,950) Net Position - End of Year 6,804$ 63,827 $ (7,796) $

STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION

FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)

CITY OF HUNTINGTON BEACH
See Notes to the Financial Statements
33 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

Footnote
Number Description Page

1. Summary of Significant Accounting Policies ............................ 35-52

2. Cash and Investments Notes ...................................................... 53-60

3. Other Receivables ......................................................................... 60-61

4. Unearned Revenue ....................................................................... 62

5. Unavailable Revenue ................................................................... 62

6. Retirement Plan – Normal ........................................................... 63-74

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 ................................................................. 93-104

12. Capital Assets ................................................................................ 104-105

13. Investment in Joint Ventures ....................................................... 106

14. Leases ............................................................................................. 106

15. Successor Agency Trust for Assets of the Former
Redevelopment Agency of the City of Huntington Beach ..... 107-112

16. Commitments and Contingencies .............................................. 112-116

17. Other Information ......................................................................... 117

18. Subsequent Events ...................................................................... 117 34 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFIC ANT ACCOUNTING POLICIES

a. Reporting Entity

The City of Huntington Beach is the pr imary government. It was incorporated in 1909 as a charter, full-service city. The form of government is Council-Manager.

Component units are legally separate organi zations for which the City Council is financially accountable, or organizations that if excl uded from the accompanying financial statements, would make them misleading. The component units described below are blended (presented as if they are part of the prim ary government) or presented as a fiduciary trust fund with the primary government for financial 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 substantively t he same as the primary government and there is a financial benef it or burden relationship between the primary government and the component unit;

2. The component unit provides services entir ely, 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 Authority) 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 Rehabilitation 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 adopted a resolution designating the Housing Authority of the City of Huntington Beach to serve as the Housing Successor Agency. The Housing Successor Agency's financial data and transactions are included withi n the LMIHAF Capital Proj ects Fund. There is no separate Component Unit Financial Report (CUFR) prepared for the Authority.

35 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING 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 purch ases for the City and the former Redevelopment Agency. The Public Financ ing Authority’s governing body is the City Council, which also adopts its annual budget. The Public Financing Authority is financially dependent on the City. T here are no separately issued financial statements available for the Public Financing Authority.

The City of Huntington Beach Supplem ental Retirement Plan and Trust (Supplemental Retirement Plan and Trust) – The Trust was formed to provide a supplemental retirement plan for all empl oyees hired prior to 1997 (exact dates differed for various associ ations). The governing b oard of the Supplemental Retirement Plan consists of the City Treasurer, Chief Financial Officer, and the City Manager (or designee). The Retirement Board is responsible for supervising all investments, resolving benefit disputes, and ensuring that contributions 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. These statem ents present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. These 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 as in frastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in 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.

36 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 ident ifiable with a specific func tion or segment. Indirect expenses are allocated to the various func tions based on a proportionate use of services. The types of transactions report ed as program revenues for the City are reported in three categories: 1) charges for current se rvices; 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 interf und activity have been eliminated from the government-wide financial statements.

When both restricted and unrestr icted resources are avail able 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 financ ial statements, net positi on 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 ot her governments and restrictions imposed by law through constitutional prov isions or enabling legislation. The government-wide Statement of Net Posi tion reports $82,564,000 of governmental activities restricted net position, of which $45,438,000 is restricted by enabling legislation. The government-wide Statement of Net Position reports $21,213,000 of business-type activities restricted net position, of which all is restricted by enabling legislation. This category presents restrict ions placed on the categories of Capital Projects, Debt Service, and Specific Projects and Programs.

37 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 unrestric ted net position of $173,034,000 of governmental activities unrestricted net position, which is largely a result of the new CalPERS Unfunded Accrued Liabili ty incurred as a result of the -7.5 percent CalPERS investment loss in FY 2021/22 recognized in th e current year financial statements. The City’s Long-Term Obligations at June 30, 2023 is $590,950,000, of which, $559,315,000 is payable from Governmental Activities. The government- wide Statement of Net Position reports $ 36,684,000 of business-type activities unrestricted net position.

c. Fund Financial Statements

Separate fund financial statements ar e 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 fo r 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 ar e recognized in the accounting period in which they become both measurable and ava ilable to finance expenditures of the current period.

Revenues are recorded when received in ca sh, 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 f und liability is incurred. However, debt service expenditures as well as expenditures related to compensated absences and claims are recorded only when payment is due.
38 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING 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-major funds aggregated. Accompanying schedules are presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position pres ented in the governm ent-wide financial statements.

The City presents all major funds that meet those qualifications.

The City’s Governmental Fund Balanc es are comprised of the following components:
 Nonspendable fund balance includes amounts that ar e not in spendable form and typically includes inventories, pr epaid items, and other items that by definition cannot be appropriated.
 The restricted fund balance category in cludes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation.
 The committed fund balance classificati on 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 estab lish, modify, or rescind a fund balance commitment by formal action as specified by the City’s Fund Balance Policy.

Commitments to fund balance are made through adoption of a resolution by City Council.

 Amounts in the assigned fund balance classi fication 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 M anager or designee has the authority to establish, modify, or rescind a fund bal ance assignment as specified 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 other 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.

39 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 expen ditures are incurred for purposes for which 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 obligati ons, which have not yet been fulfilled, cancelled, or discharged. Encumbrances outstanding at year-end are recorded as part of committed or assigned fund balance.

Encumbrances outstanding as of June 30, 2023, 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 co mmit the value of tw o months of the General Fund expenditure adopted budget amount. Appropriations from the Economic Uncertainties Reserve commitm ents 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 ca tastrophic 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 mo re than 5% of the General Fund adopted revenue budget; and,
 Should the Economic Uncertainties Re serve 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 6,826$
Grants Special Revenue 3,024
LMIHAF Capital Projects 2,408
Infrastructure 14,762
Other Governmental Funds 32,010
Total Encumbrance All Funds 59,030$
40 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Proprietary Fund Financial Statements
The City’s enterprise and internal service funds are proprietary funds. Proprietary Fund Financial Statements in clude a Statement of Net Po sition, 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 accounti ng. Accordingly, all assets, deferred inflows/outflows, and liabilities (whether current or non-current) are included on the Statement of Net Positi on. The Statement of Revenues, Expenses, and Changes in Fund Net Position present increases (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 rev enues 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 internal se rvices funds are t he City’s governmental activities, the assets and liabilities of the internal service funds are consolidated into the governmental activities column of the government-wide Statement of Net Position. The costs of the internal service fund services are spread 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 st atements to avoid any doubl ing effect of these revenues and expenses.

41 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fiduciary Funds Financial Statements
Fiduciary Funds Financial Statements include a Statement of Net Position and a Statement of Changes in Net Position for Custodial and Trust Funds. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. The City's fiduciary funds include Custodial and Trust Funds. Custodial Funds report fiduciary acti vities that are not held in a trust or equivalent arrangement that m eets specific criteria. T he Custodial funds present results of operations and in clude net position. Trust Funds present results of operations and include net position. The Retirement Supplemental Trust Fund accounts for the activities of the Supplemental Retire ment Plan for all employees hired prior to 1997, which accumulates res ources for pension benefits to qualified employees. Contributions are made to the Supplemental Plan based on the City’s policy to fund the required contributions as determined by the Plan’s actuary and are recognized when they are made. The Retiree Medical Insurance Trust Fund accounts for the activities of the City’ s Other Post- Employ ment Benefits plans, which provide postemployment medical insurance to retirees.

The Huntington Beach Redev elopment Successor Agency Private Purpose Trust Fund accounts for the Successor Agency for the former Redevelopment Agency pursuant to Assembly Bill X1 26. Fiduc iary funds are not presented in the government-wide financial st atements 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 another 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.

Infrastructure – accounts for expenditures related to certain designate infrastructure.

Proprietary Funds
Water Fund – used to account for water sales to customers. 42 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Sewer Service Fund – accounts for user fees charged to residents and businesses for sewer service.

Refuse Fund – used to account for activities related to refuse collection and disposal.

Hazmat Service Fund – accounts for user fees c harged 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 expenditu re 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 Comm unity 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 a ccount 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.

43 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

d. Cash and Investments

The City pools cash resources of its various funds to facilitate cash management.

Cash in excess of daily needs is invest ed and reported as inve stments. It is the City’s intent to hold investments until maturity. However, the City may, in response to market conditions, sell investments prio r to maturity in or der to improve the quality, liquidity, or yield of the por tfolio. Interest earnings are apportioned among funds based on month-end cash and investm ent 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, investment s are adjusted to their fair value whenever the difference between fair value and the carrying amount is material.

Changes in fair value that occur dur ing the fiscal year are recognized as investments income report ed for that fiscal year. In vestment income includes interest earnings, changes in fair val ue and any gains or losses realized upon the liquidation or sale of investments.

The City participates in the Local Agency Investment Fund (LAIF), an investment pool managed by the State Treasurer of the State of Ca lifornia. 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 Council adopted a resolution authorizing 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 53.

The City pools all non-restricted cash for investment purchases and allocates interest income to the funds based on month-end cash balances. Funds that have restricted cash record interest income in the respective fund.

e. Prepaid Items

Certain payments to vendors an d individuals reflect costs applicable to a future accounting period and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items are recorded as expenditures/expenses during the periods benefited.
44 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

f. Capital Assets

Capital assets are tangible and intangi ble assets, which include property, plant, equipment, and infrastructure assets (e.g ., roads, bridges, sidewalks, and similar items), are reported in t he applicable governmental or business-type activities columns in the government- wide financial statements and in the proprietary funds 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 cost (where historical records are available) and at estimated hist orical cost where no historical records exist. The reported value excludes norma l maintenance and repairs, which are amounts spent in relation to capital assets that do not increase the asset’s capacity or efficiency or increase its estimated us eful life. Donated capital assets are recorded at acquisition value at the date of donation. Acquisition value is the price that would be paid to acquire an asset with equivalent service potential on the date of the donation. Intangible assets follow the same capitalization policies as tangible capital assets and are reported with tangible assets in the appropriate capital asset class.

In the government-wide and propri etary funds financial statements, tangible and intangible property, plant, equipment, th e right to use leased assets, and infrastructure are depreciated/amortized using the straight-line method over the estimated useful life of the assets as s hown below and charged to the respective activity or fund. Land and construction in progress are not depreciated. 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

g. Leases

The City is a lessee for a noncancellable lease of equipment and property. The City recognizes a lease liability and an intangible right -to-use lease asset (lease asset) in the government -wide financial statement s. The City recognizes lease liabilities with an initial, individual value of $50,000 or more.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term.

Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease 45 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.

Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.

 The City uses the interest rate charged by the lessor as the discount rate.

When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
 The lease term includes the noncanc ellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstanc es that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position.

The City is a lessor for a noncancellable lease of a building, land, and infrastructure.

The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements.

At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term.

Subsequently, the lease receivable is r educed by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted fo r lease payments received at or before the lease commencem ent date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts.
 The City uses its estimated incremental borrowing rate as the discount rate for leases.

46 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 The lease term includes the noncanc ellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the l ease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

h. Unearned Revenue

In the government-wide and the fund-level financial statements, unearned revenues are those where the asset recognition (ava ilability criteria) has been met, but the revenue recognition criteria have not been met.

i. 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 outflows of resources, re presents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until t hen. 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 assets that applies to 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 in clude revenues, notes, and long-term receivables) measured under the modified accrual basis of accounting reported in governmental funds. These amounts are deferred and will be recognized as an inflow of resources in the period that the amounts become available.

2. Changes in the net pension liabi lity not included in pension expense.

3. Changes in the net other postemploym ent benefits liability not included in OPEB expense.

4. Lease related deferrals

47 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

j. Inventories

Proprietary fund inventorie s are valued at weighted-av erage cost and consist of expendable supplies and repair parts. The cost of such inventories is recorded as expenditures/expenses when consumed rather than when purchased.

k. Interfund Transactions

As a general rule, interfund transac tions 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 t hese transactions would distort the direct costs and program revenues for the various functions. Certain eliminations have been made regarding interfund activities, payables, and receivables. All internal balances in the Statement of Net Posi tion have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as inter nal balances and eliminated in the total primary government column.

Numerous transactions occur between funds of the City resulting in transfers and amounts due to or from other funds. 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.

l. Long-Term Obligations

In the government-wide and proprietary funds financial statements, long-term obligations are recorded as liabilities in the applicable governmental activities, business-type activities, or proprietary f und-type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the debt. In the governmental fund financia l statements, bond discount s and premiums are recognized as another financing source or use. Issuance costs are recorded as a current year debt service expenditure.

m. 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.

48 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

n. Property Tax Revenue

Property tax in California is levied accord ing 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 require two-thirds approval by voters 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 re ceived. 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 collection agent fo r property tax for all of the local governmental units. Property taxes are no rmally 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 In stallment - December 10
 Delinquent Date, Second Installment - April 10

49 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

o. Redevelopment Property Tax Trust Funds

Under ABX1 26, revenues that were pr eviously distributed to redevelopment agencies (prior to their dissolution) in t he form of property tax 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 RPTTF 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 denoted on the Recognized Obligation Payment Schedules (ROPS) to Recognized Oblig ation Retirement Funds (RORF) established in the treasury of the Successor Agencies, and various allowed administrative fees and allowances. Any re maining balance is then distributed by the County Auditor back to affected taxing en tities 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-June ROPS period, January 2

p. Cash Flow Statements

For purposes of the Statement of Cash Fl ows, the Proprietary Funds consider all cash and investments to be cash equivalent s, as these funds participate in the citywide cash and investment pool.

q. Estimates

The accompanying financial statements re quire management to make estimates and assumptions that affect certain reported amounts and di sclosures. Actual results could differ from those estimates.

50 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

r. Pensions and OPEB

For purposes of measuring the net pensio n liability, net OPEB liability, related deferred outflows of resources and defe rred 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 t he CalPERS’ Financial Office and the City’s Defined Benefit Pension Plan. For this purpose, benefit payments (including refunds of employee contributions) are recogni zed 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 time frames. For this re port, the following timeframes are used.

Supplemental
Employee
Retirement Plan
CalPERS
Pension Plans
Other
Post-Employment
Benefit Plan
Valuation Date (VD) June 30, 2021 June 30, 2021 June 30, 2021 Measurement Date (MD) June 30, 2023 June 30, 2022 June 30, 2022 Measurement Period (MP) July 1, 2022 to
June 30, 2023
July 1, 2021 to
June 30, 2022
July 1, 2021 to
June 30, 2022
51 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

s. Fair Value Measurements

Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarch y that prioritizes the inputs to valuation techniques used to measure fair value. The hierarch y gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:

Level 1 - Inputs to the valuation met hodology 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, ei ther 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 a ssets or liabilities in markets that are inactive;
 Inputs other than quoted pric es that are observable for the asset or liability;  Inputs that are der ived principally from or corroborated by observable market data by correlation or other means.

Level 3 - Inputs to the va luation methodology are unobservable and significant to the fair value measurement. These unobs ervable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information ava ilable in the circumstances and may include the City’s own data.

52 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive).

The table also identifies certain provisions of the California Government Code 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 trus tees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

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
Supranationals: IBRD, IFC, IDB 5 years 30% "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 / $75,000,000 See 10.0N of IPS 53 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

2. CASH AND INVESTMENTS (Continued)

Investments Authorized by Debt Agreements

Investments of debt proceeds held by bond tr ustee 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 tr ustee, but bond indentures do allow for other forms of investments if approved in writing by t he bond insurer 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 54 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

2. CASH AND INVESTMENTS (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 fo r 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 respons ible 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%
55 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 in terest 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 in terest 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 368,697$
Cash and Investments with Fiscal Agent 12,285
Total Primary Government 380,982
Fiduciary Funds:

Cash and Investments 15,925
Cash and Investments with Fiscal Agent 69,798
Total Fiduciary Funds 85,723
Total Deposits and Investments 466,705$
INVESTMENTS: Fair Value Less th an 1 1 to 3 3 to 5 Total US Treasuries 79,016$ 26,521$ 37,881$ 14,614$ 79,016$ US Agency Securities* 179,931 30,547 107,163 42,221 179,931 Mutual Funds 63,268 63,268 - - 63,268 Money Market Funds 1,691 1,691 - - 1,691 Medium Term Notes - IADB 27,325 8,980 18,345 - 27,325 Corporate Bonds 44,687 9,636 28,668 6,383 44,687 Local Agency Investment Fund 3,090 3,090 - - 3,090 California Asset Mgmt Program 32,548 32,548 - - 32,548 PARS Pension Rate Stabilization Program 18,141 18,141 - - 18,141 Total Investments 449,697$ 194,422 $ 192,057 $ 63,218 $ 449,697 Total Deposits 17,008
Total Deposits and Investments 466,705$
* Security is callable, but classified above according to original maturity date Investment Maturities (In Years)
56 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

2. CASH AND INVESTMENTS (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 investm ent. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below are the minimum ratings required by, where applicable, the California Government 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 limits investm ents in any one issuer, except for U.S.

Treasury Securities, U.S. Government Ag encies and the Local Agency Investment Fund, to no more than 10% of the portfolio . In addition, no more 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 issuer (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. Government Sponsored Enterprise Securities 129,305$ Federal Farm Credit Bank U.S. Government Sponsored Enterprise Securities 22,587$ Int'l Bank for Recon & Development IBRD 18,345$
U.S. Treasury Notes Obligations of the United States Treasury 79,016 $ Remaining as of Year End
INVESTMENTS: Minimum
Legal Rating Total AAA AA A Not Rated
US Treasuries N/A 79,016 $ 79,016$ - $ - $ - $ US Agency Securities* N/A 179,931 179,931 - - - Mutual Funds N/A 63,268 - - - 63,268 Money Market Funds AAA 1,691 1,691 - - - Medium Term Notes - IADB AA 27,325 27,325 - - - Corporate Bonds A 44,687 - 8,972 35,715 - Local Agency Investment Fund N/A 3,090 - - - 3,090 California Asset Mgmt Program N/A 32,548 32,548 - - - PARS Pension Rate Stabilization Program N/A 18,141 - - - 18,141 Total Investments 449,697$ 320,511 $ 8,972 $ 35,715 $ 84,499 $ Note: All US Agencies are rated AAA by Moody's and AA by S&P 57 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 investments is the ri sk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a tr ansaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than th e following provisions for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110 percent of the total am ount 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, 2023, the City’s deposits with financial institutions were covered by FDIC up to $250,000, and the remaining amounts were collateralized as described above.

None of the City’s investments were subject to custodial credit risk. Per the Investment Policy’s statement, the City of Huntington Beach is t he 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 t he State of California.

The fair value of the City’s investment in this pool is report ed 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 withdraw al is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

58 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

2. CASH AND INVESTMENTS (Continued)

Investment in California Asset Management Program Pool

The City is a voluntary participant in the California Asset Management Program (CAMP). CAMP is an investment pool o ffered by the California Asset Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under t he provisions of the California Joint Exercise of Powers Act (California Govern ment Code Sections 6500 et seq., or the “Act”) for the purpose of exercising the common power of its Part icipants to invest certain proceeds of debt issues and surplus funds. The Trust’s activities are directed by a Board of Trustees, all of whom ar e employees of the Ca lifornia public agencies which are participants in the Trust. The City r eports investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share.

The Pool is managed to maintain a dollar-w eighted average portfolio 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 obli gations of U.S. companies and financial institutions. The Pool is a permitted investment for all local agencies under California Government Code Section 53601(p).

Investment in Public Agency Retirement Services Pension Rate Stabilization Program

The City established a Section 115 pension tr ust account within the Public Agency Retirement Services Pension Rate Stabilization Program (PARS PRSP) to hold assets that are legally restricted for use in adm inistering the City’s defined benefit pension plan. The pension trust fund’s specific cash and investments are managed by a third- party portfolio manager under guidelines approved by the City.

59 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

2. CASH AND INVESTMENTS (Continued)

Fair Value Measurement

The City categorizes its fair value inve stments within the fa ir value hierarchy established by generally accepted accounting principles. The City has the following recurring fair value measurements as of June 30, 2023 (in thousands):

3. OTHER RECEIVABLES

A summary of Other Receivables as of June 30, 2023 is as follows (in thousands):

INVESTMENTS: Level 1 Level 2 Level 3 Total
U.S. Treasuries -$ 79,016$ - $ $ 79,016 U.S. Agency Securities - 179,931 - 179,931 Mutual Funds 63,268 - - 63,268 Medium Term Notes - IADB - 27,325 - 27,325 Corporate Bonds - 44,687 - 44,687 Total Investments 63,268$ 330,959 $ - $ 394,227$ Fair Value Hierarchy
FY2022-23
Description Amount
Developer Loans Receivable 39,679$
Emerald Cove Loan Receivable 6,694
Housing Rehabilitation Loans Receivable 2,310
First Time Homebuyers Receivable 1,630
Emergency Medical Fee Receivable 3,301
CDBG Program Receivable 975
Other Grants Receivable 3,321
Other Receivable 6,654
Total Other Receivables 64,564
Allowance for Uncollectible Developer Loans (39,679)
Net Other Receivables on Governmental Fund Financial Statements 24,885$ Other Receivables Reconciliation
Net Receivable on Government-wide Financial Statements 41,373$ Taxes Receivable on Governmental Fund Financial Statements (16,323) Other Receivables on Internal Service Fund (165)
Net Other Receivables on Governmental Fund Financial Statements 24,885$ 60 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

3. OTHER RECEIVABLES (Continued)

a. Developer Loans

Loans made to developers to construct or rehabilitate certain facilities under deferred loan agreements total $39,679,000 at year-end. These loans are allowed until a future event occurs. Loans to the Low and Moderate Income Housing Asset Fund total $20,109,000, loans made under the Home Pr ogram total $14,483,000 and loans made under the Affordable Housi ng In-Lieu Program total $5,087,000.

Interest rates on these loans range from 0% to 10%. The allowance for uncollectible developer loans is $36,679,000 due to the te rms 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 Redevelopm ent 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 resi dual 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, 2023 is $6,694,000.

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 $2,310,000 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 $1,630,000 at year-end. These loans are deferred until a future event occurs.

61 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

4. UNEARNED REVENUE
Governmental and enterprise funds defer revenue recognition in connection with resources that have been received as of year-end, but not yet earned (unearned revenue). The amounts are as follows (in thousands):

5. UNAVAILABLE REVENUE
Certain revenues in governmental funds are considered unavailable revenue until received. All revenues incl uding property and sales tax ar e recognized in the year earned or levied in the gover nment-wide financial statements, but 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.

General Fund
Grants
Special
Revenue
Total
Unearned
Revenue
Community Services Unearned Revenue (Classes) 1,090$ -$ 1,090$ Public Works - Unearned Revenue 32 - 32
Grants - 2,965 2,965
Total $ 1,122 $ 2,965 $ 4,087 General Fund
Grants Special
Revenue LMIHAF
Other
Governmental
Funds
Total
Unavailable
Revenue
Grants -$ 2,735$ -$ -$ 2,735$ Deferred Loans:

Emerald Cove - - 6,694 - 6,694
Housing Rehabilitation - 2,310 - - 2,310
First Time Homebuyers - - 1,630 - 1,630
Other Unavailable Revenue 339 593 - 57 989
Total 339$ 5,638$ 8,324$ 57$ 14,358$ 62 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL

a. Summary

Net Pension Liability/(Asset)

Net Pension Liability/(Asset) 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 report ed in the accompanying statement of net position as follows:

Net Pension
Liability/(Asset)
CalPERS Miscellaneous Plan 59,878$
CalPERS Safety Plan 92,092
Supplemental Plan (Note 7) 8,788
Total 160,758 $
Differences between
Expected and
Actual Experience Total
CalPERS Miscellaneous Plan 148$ 148$ CalPERS Safety Plan 2,981 2,981
Total 3,129$ 3,129 $
Change to Net Deferred employer
Difference Between Differences between pension contributions Projected and Actual Changes Expected and made after
Investment Earnings in assumptions Actual Experience measurement date Total CalPERS Miscellaneous Plan 37,275$ 11,564$ 263$ 7,451$ 56,553$ CalPERS Safety Plan 53,093 21,764 77 13,220 88,154 Supplemental Plan (Note 7) 3,268 - - - 3,268 Total 93,636$ 33,328 $ 340 $ 20,671 $ 147,975 $ 63 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

Pension expenses for the measurement period ending June 30, 2022 (the measurement date), are included in the accompany ing financial statements as follows:

b. Plan Description

Substantially all City empl oyees working the equivalent of 1,000 hours per fiscal year are eligible to participate in t he Safety Plan and Miscellaneous Plan Agent multiple-employer defined benefit plans administered by California Public Employees Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit Provisions under the Plans are established by State statutes within the Public Employee’s Retirement Law. Following the passage of AB340, Public Employees’ Pension Reform Act (PEPRA) by the California Legi slature, 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 which provides a benefit level that is lower than the benefits provided for CalPERS employ ees that do not meet the PEPRA qualifications previously described. CalPERS issues publicly available reports that include a full description of the pensio n plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Copies of the CalPERS annual fi nancial report may be obtained from the CalPERS Executive Office – 400 P Street, Sacramento, CA 95814.

Net Pension
Expense/(Income)
CalPERS Miscellaneous Plan 15,828$
CalPERS Safety Plan 21,878
Supplemental Plan (Note 7) 2,047
Total 39,753$
64 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

Benefits Provided

CalPERS provides retirement and di sability benefits, annual cost-of-living adjustments, and death benefits to plan me mbers and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment.

Benefit provisions and all other requirem ents 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 re ceive 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 t he 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 se cond calendar year after the year of retirement, retirement and survivor a llowances will be annua lly adjusted on a compound basis by 2 percent.

65 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

The Plans’ provisions and benefits in effect at June 30, 2023 are 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, respectiv ely

1.0% - 2.5%, 52 years - 67+
years, respectively
Required employee contribution rates 8.000% 6.250%
Required employer contribution rates
July 1, 2022 - June 30, 2023 15.000% 15.000%
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% 11.75%/13.00% (Fire PEPRA)
Required employer contribution rates
July 1, 2022 - June 30, 2023 27.590% 27.590%
Mis cellaneous Agent Plans
Safety Agent Plans
66 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

c. Contributions

Section 20814(c) of the California Publ ic Employees’ Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and sha ll 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, 2022, miscellaneous participants under the Classic and PEPRA plans are required to contribut e 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.

Fire PEPRA participants are now required to contribute 13%. In addition, the City is required to make employer contributions at the actuarially determined rates of

15.000% and 27.590% for the miscellaneous and safety plans, respectively, for the period July 1, 2022 through June 30, 2023.

At June 30, 2021, the valuation date, the following employees were covered by the benefit terms for each Plan:

Mis cellaneous Safety
Active members 553 384
Transferred members 476 75
Terminated members 369 65
Retired members and beneficiaries 1097 650
67 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

d. Net Pension Liability

The City’s net pension liability is measur ed as the total pension liability, less the pension plan’s fiduciary net position. Th e net pension liability of the Plan is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 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 liability in the June 30, 2021 actuarial valuation, rolled forward to June 30, 2022 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 Actuarial Cost Method
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 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.

6.90% Net of Pension Plan Investment and Administrative Expenses; includes Inflation
Derived using CalPERS’ membership data for all funds
The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter

6.90%

2.30%
Varies by entry age and service
68 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

Long-term Expected Rate of Return – The long-term expected rate of return on pension plan investments was determined usi ng 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 ma rket return expectations as well as the expected pension fund cash flows. Using historical re turns 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) us ing a building-block approach. Using the expected nominal returns for both short-te rm 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 eq uivalent expected return t hat 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:

Assumed asset
Asset Class1 Allocation Real Return1,2
Global Equity - Cap-weighted 30.00% 4.54%
Global Equity - Non-Cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage (5.00)% (0.59)%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study. 69 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

Discount Rate – The discount rate used to measure the total pension liability was

6.90%. The projection of cash flows us ed to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investm ents was applied to all peri ods of projected benefit payments to determine the total pension liability.

Subsequent Events – July 12, 2021, Ca lPERS reported a pre liminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, th e excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its fi nal decision on the a sset allocation in November 2021. On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of in vestment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduct ion in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assu mptions. This study also recommended modifications to retirement rate s, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.

70 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

e. Changes in the Net Pension Liability/(Asset)

The following table shows the changes in net pension liability/(asset) recognized over the measurement period:

Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability (Asset)
Balance at June 30, 2021 (Valuation Date) 619,966$ 671,565$ (51,599)$ Changes in the year:

Serv ice cost 8,174 - 8,174 Interest on the total pension liabilities 43,253 - 43,253 Changes of Assumptions 19,824 - 19,824 Differences between expected and actual experience 451 - 451 Benefit payments, including refunds of members contributions (34,942) (34,942) - Contributions - employer - 6,951 (6,951) Contributions - employee - 3,533 (3,533) Net investment income - (49,840) 49,840 Administrative expenses - (419) 419 Net changes 36,760 (74,717) 111,477 Balance at June 30, 2022 (Measurement Date) 656,726 $ 596,848 $ 59,878 $ Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability (Asset)
Balance at June 30, 2021 (Valuation Date) 825,437 $ 882,705 $ (57,268) $ Changes in the year:

Serv ice cost 14,683 - 14,683 Interest on the total pension liabilities 57,872 - 57,872 Changes of Assumptions 28,785 - 28,785 Differences between expected and actual experience 102 - 102 Benefit payments, including refunds of members contributions (45,876) (45,876) - Contributions - employer - 13,579 (13,579) Contributions - employee - 4,985 (4,985) Net investment income - (65,933) 65,933 Administrative expenses - (549) 549 Net changes 55,566 (93,794) 149,360 Balance at June 30, 2022 (Measurement Date) 881,003 $ 788,911 $ 92,092 $ Miscellaneous Plan
Safety Plan
71 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

Sensitivity of the Net Pension Liabili ty/(Asset) 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 Income and Deferred Outflows/Inflows of Resources Related to Pensions

As of the start of the measurement period (July 1, 2021), the net pension asset was $51,599,000 for the Miscellaneous Plan and $57,268,000 for the Safety Plan. For the measurement period ending June 30, 2022 (the meas urement date), the City incurred a pension expense of $15,828,000 and $21,878,000 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 ov er the average expected remaining service lives of all members t hat are provided with benefits (active, inactive and retired) as of the beginning of the measurement period.

Discount Rate - 1% Current Discount Discount Rate + 1%
(5.90% ) Rate (6.90% ) (7.90% )
Miscellaneous Plan 145,638$ 59,878 $ (10,540) $ Safety Plan 210,004 92,092 (4,315) Aggregate Total 355,642$ 151,970 $ (14,855) $ Plan's Aggregate Net Pension Liability/(Asset)
72 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

The Expected Average Remaining Service Lifetime (“EARSL”) is calculated by dividing the total future serv ice years of active employees by the total number of plan participants (active, inactive, and retired) in the risk pool. For the 2021-22 measurement period, the EARSL for each plan is as follows:

At June 30, 2023 the City r eported 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 4.1 Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual earning on
pension plan investments 37,275$ -$ Changes in assumptions 11,564 - Difference between expected and actual experience 263 (148) Contributions made subsequent to the
measurement date 7,451 -
Total 56,553$ (148) $
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual earning on
pension plan investments 53,093 $ - $ Changes in assumptions 21,764 - Difference between expected and actual experience 77 (2,981) Contributions made subsequent to the
measurement date 13,220 -
Total 88,154$ (2,981) $
Miscellaneous Plan
Safety Plan
73 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

6. RETIREMENT PLAN – NORMAL (Continued)

For the Miscellaneous Plan and Safety Plan, $7,451, 000 and $13,220,000, respectively, was reported as deferred outfl ows of resources related to pensions resulting from City’s cont ributions subsequent to t he measurement date will be recognized as a reduction of the net pensio n liability in the year ended June 30, 2024. Other amounts reported as deferr ed 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 sing le-employer defined benefit retirement plan (Supplemental Plan) fo r all employees hired prio r to 1997 (exact dates are different for various asso ciations). The Plan is governed by a three-member Supplemental Employee Retirement Plan a nd 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 ea ch bargaining period, which are then approved through resolutions of the City C ouncil. In Fiscal Year 2008/09, the City established the Supplemental Employee Retirement Plan and Trust, and transferred $24,918,000 to an irrevocable tr ust 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
2023 15,232 $ 15,306 $
2024 9,922 16,022
2025 4,749 14,747
2026 19,050 25,877
48,953$ 71,952 $
Deferred Outflows / (Inflows) of Resources
74 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)

The Supplemental Plan will pay the reti ree 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 t he City for the duration of the life of the member, and shall cease upon the employee’s death. As of June 30, 2021, the date of the Plan’s most recent actuarial valuation, the average monthly benefit received by inactive plan members and beneficiaries re ceiving benefits is $626. 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, 2023, the measur ement date, the following employees were covered by the benefit terms for the Plan:

c. Employer Contributions

The City’s policy is to make requir ed contributions as determined by the Supplemental Plan’s actuary. The required contributions were determined as part of the June 30, 2021 actuarial valuation. The City is required to contribute the actuarially determined rate of 3.5% of total payroll for all permanent employees for the year ended June 30, 2023. There are no employee contributions required for the plan. Survivor and termination benef its are not included in the plan.

Administrative costs of this plan are financed through investment earnings.

For the year ended June 30, 2023, the contributions were (in thousands):

Inactive employees receiving benefits 742
Active employees 49
Total 791
Contributions - employer 6,046$
75 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 supervi sing 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 2022 with an effective date of July 1, 2022. Please refer to No te 2 for a detailed description of the Supplemental Plan’s Investment Policy. The major asset class allocation for the Supplemental Plan as of June 30, 2023 is listed below:

Quoted market prices have been used to val ue investments as of June 30, 2023.

These investments are held by the Trust or by an agent in the Trust’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 investments held in any one organization that represents five percent or more of the Plan’s investment portfolio at June 30, 2023:

Asset Class Strategic Allocation
Allocation as of
June 30,2023
Long-Term
Expected Rate of
Return
Fixed Income 40.00% 37.60% 1.55%
Equities 27.00% 55.49% 5.35%
Real Estate 10.00% 6.03% 0.00%
Commodities 2.00% 0.00% 0.00%
Cash and Equivalents 0.00% 0.88% 0.45%
Total 79.00% 100.00%
Fidelity 500 Index Fund 25.21%
Fidelity US Bond Index 18.79%
Vanguard Ftse Developed Etf 17.04%
Baird Aggregate Bond Fd Instl 6.93%
Doubleline Total Ret Bd I 6.89%
Ishares Core US Reit Etf 6.03%
Concentration of Investments Equaling or Exceeding 5%
76 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)

All Supplemental Plan investments are reflected in the schedule included in Section c of the Note, with the exc eption of amounts held in t he City’s investment pool account. The City maintains an investment pool account for City funds. Monthly contributions for the Plan are held in t he 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 Fiscal Year ended June 30, 2023, the annual money-weighted rate of return on the Plan’s investments, net of pension plan investment expenses, was 8.37%.

The money-weighted rate of return ex presses 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, 2023, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30, 2023 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, 2023

7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)

Actuarial Assumptions – The total pension liabilities in the June 30, 2021 actuarial valuations for the June 30, 2023 measur ement date were determined using the following actuarial assumptions:

The changes in actuarial assumptions include the following:

All other actuarial assumptions used in the June 30, 2021 valuation were based on the results of an actuarial experience study for the period from 1997 to 2015, including updates to salary increase, mort ality, and retirement rates. The future service retirement liabilities load increas ed from 15% to 23% to 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 the fund to meet benefit obligations in the future. To make this determination, employee contributions, benefit payments, expenses, and investment returns are projected into t he 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 valuation, the discount rate is 5.50%, based on the inflation assu mption 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 5.50%
Inflation 2.50%
Salary Increases CalPERS 1997-2015 Experience Study plus 2.75% aggregate increase Investment Rate of Return 5.50% 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-2021
78 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 excluding administra tive expenses would have been 5.50 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 investment 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 expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required 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 year s) using a building-block approach. Using the expected nominal returns for both short-te rm 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 re turn that arrived at the same present value of benefits for cash flows as t he one calculated using both 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 nearest one quarter of one percent.

79 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)

Changes in the Net Pension Liability

The following table shows the changes in ne t 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:

Total
Pension
Liability
Plan
Fiduciary
Net Position
Net Pension
Liability
Balance at June 30, 2022 74,151 $ 58,999 $ 15,152 $ Changes in the year:

Service cost 237 - 237
Interest on the total pension liabilities 3,934 - 3,934 Differences between expected and actual experience - - - Changes of Assumptions - - - Benefit payments, including refunds of members contributions (5,712) (5,712) - Contributions - employer - 6,046 (6,046) Net investment income - 4,823 (4,823) Administrative expenses - (334) 334 Net changes (1,541) 4,823 (6,364)
Balance at June 30, 2023 72,610 $ 63,822 $ 8,788 $ Supplemental Plan
Discount Rate -
1% (4.50%)
Current
Discount Rate
(5.50%)
Discount Rate +
1% (6.50%)
15,814$ 8,788$ 2,792$
Plan's Aggregate Net Pension Liability/(Asset)
(in thousands)
80 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)

f. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions

For the year ended June 30, 2023, the Cit y recognized pension expense in the amount of $2,047,000 for the Supplemental Plan.

At June 30, 2023, the City r eported deferred outflows of resources related to the supplemental pension plan from the following source (in thousands):

For the Supplemental Plan, $3,268,000 wa s reported as deferred outflows of resources related to pensions which wi ll be recognized in pension expense as follows (in thousands):

Deferred Outflows
of Resources
Difference between projected and actual earnings on
pension plan investments 3,268 $
Year Ended June 30,
Deferred Outflows/
(Inflows) of
Resources
2024 598 $
2025 288
2026 2,696
2027 (314)
3,268$
81 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 contra ct, with each employee association to provide postemployment medical insurance to re tirees. These Other Postemployment 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 retirem ent, the employee has a minimu m of ten years of service credit or is granted a service connected disability retirement.  Following official separation from t he City, CalPERS grants a retirement allowance.

The City’s obligation to provide the benefits to a retiree ceases when either of the following occurs:

 During any period the retiree is eligible to receive health insurance at the expense of another employer; and/or
 The retiree becomes eligible to enroll aut omatically 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 serv ice. 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. The reti ree 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-emplo yer defined benefit healthcare plan to retirees through CalPERS under the Calif ornia Public Employees Medical and Hospital Care Act (PEMHCA), commonly referred to as PERS Health. PEMHCA provides health insurance through a vari ety of Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) options. The PEMHCA benefits are applied to all 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 Association (MSOA), Police Management Association (P MA), and Police Officers’ Association (POA) - joined in 2004.

82 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

8. OTHER POST EMPLOYMENT BENEFITS (Continued)

Safety employees are eligible for PEMHCA benefits if they retire from the City on or after age 50 with at least five years of serv ice or disability, and are eligible for a PERS pension.

As of the June 30, 2022 measurement dat e, 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 $904,000 for year ended June 30, 2023. The assets of the CERBT are excluded from the accompanying financial statements since they are in an irrevocable trust administered by CalPERS. Copies of CalPERS’ annual financial report may be obtained from their executive office: 400 P Street, Sacramento, CA, 95814 or on their website: www.calpers.ca.gov. The City’s policy is to make 100% of each y ear’s ARC, with an additional amount to prefund benefits as determined annually by Cit y Council in order to improve the funded status of the plan.

For PEMHCA, the City selected the “unequal” method for the contribution. Under this method, the City offered a lesser co ntribution for retir ees than for active employees. The City paid the PEMHCA mini mum for actives ($143 in 2021, $149 in 2022, and $151 in 2023). Be ginning in 2008, Assembly Bill 2544 changed the computation for annual increases to annuitant health care under the unequal method. Under the new provisions, t he 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 $90.60 per employee for the Huntington Beach Firefighter’s Association (HBFA) and $143.45 for all other Safety groups in 2023. The annual increase in minimum PEMHCA contribution to CalPERS will continue until the time that the City contribution for retirees equa ls the City contribution paid for active employees.

Postemployment
Medical Insurance PEMHCA
Retirees and beneficiaries receiving benefits 307 212 Inactive employees not yet receiving benefits 312 - Active Plan Members 858 391
Total Plan Participants 1,477 603
83 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

8. OTHER POST EMPLOYMENT BENEFITS (Continued)

The City’s net OPEB liability was measured as of June 30, 2022 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2021, based on t he following actuarial methods and assumptions:

 Actuarial Cost Method – Entry Age Normal
 Discount rate – 5.50%
 Projected salary increases for cover ed employees due to inflation – aggregate increases of 2.75% per annum
 Investment Rate of Return – 5. 50%, assuming actuarially determined 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
 PEMHCA minimum increases for actives - $151 in 2023, with 4.00% annual increases thereafter
 Healthcare Trend Rate – The medica l trend rate represents the long-term expected growth of medica l benefits paid by the plan, due to non-age-related factors such as general medical inflati on, utilization, new technology, and the like. The following table sets forth t he 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-21.

2. The pre-retirement turnover information was developed bas ed on CalPERS’ specific data. For more details, please refer to the 2007 to 2011 Experience Study Report. The Experience Study Report may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications.

Calendar Annual Rate Calendar Annual Rate
Year Non-Medicare Medicare Year Non-Medicare Medicare
2023 6.50% 5.65% 2030 4.95% 4.45%
2024 6.25% 5.45% 2031-35 4.80% 4.35%
2025 6.00% 5.25% 2036-45 4.65% 4.25%
2026 5.75% 5.05% 2046-55 4.50% 4.20%
2027 5.55% 4.90% 2056-65 4.35% 4.15%
2028 5.35% 4.75% 2066-75 4.05% 3.95%
2029 5.15% 4.60% 2076+ 3.75% 3.75%
84 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 allocation percentage and by adding expected inflation.

The target allocation and best estimates of arithmetic real rates 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 5.75 percent. The projection of cash flows used to determi ne the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all pr ojected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-te rm expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Asset Class
Target
Allocation
Long-Term
Expected Real Rate
of Return
Global Equity 34% 4.56%
Fixed Income 41% 1.56%
Treasury Inflation-Protected Securities ("TIPS") 5% -0.08% Commodities 3% 1.22%
Real Estate Investment Trusts ("REITS") 17% 4.06%
Total 100%
* Long-term expected rate of return is 5.75%
CERBT Strategy 2
85 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

8. OTHER POST EMPLOYMENT BENEFITS (Continued)

The changes in the net OPEB Liability/(Asset) for the plan are as follows (in thousands):

Sensitivity of the Net OPEB Liability/(Asset) 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 per centage point higher than the current rate, for the measurement period ended June 30, 2022 (in thousands):

1% Decrease Current Discount Rate 1% Increase
(4.75%) (5.75%) (6.75%)
Net OPEB Liability 1,828$ (2,024) $ (5,189) $ Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB Liability
/ (Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2022 30,276$ 36,286$ (6,010)$ (Measurement Date June 30, 2021)
Changes recognized for the measurement period:

Service Cost 1,004 - 1,004 Interest 1,655 - 1,655 Assumption Changes (891) - (891) Contributions - Employer - 2,499 (2,499) Net Investment Income - (4,561) 4,561 Benefit Payments (2,352) (2,352) - Administrative Expenses - (156) 156 Net Changes (584) (4,570) 3,986 Balance at June 30, 2023 29,692$ 31,716 $ (2,024) $ (Measurement Date June 30, 2022)
Increase / (Decrease)
86 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

8. OTHER POST EMPLOYMENT BENEFITS (Continued)

Sensitivity of the Net OPEB Liability/(Asset) to Changes in the Health Care Cost Trend Rates

The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one perc entage point lower or one percentage point higher than the current rate, for the m easurement period ended June 30, 2022 (in thousands):

OPEB Plan Fiduciary Net Position

The CERBT issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained from the California Public Employees’ Retire ment 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 tota l 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 def erred outflows and deferred 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% Decrease Current Trend 1% Increase
(5.50% Non-Medicare /

4.65% Medicare,
decreasing to 2.75%
Non-Medicare /

2.75% Medicare)
(6.50% Non-Medicare /

5.65% Medicare,
decreasing to 3.75%
Non-Medicare /

3.75% Medicare)
(7.50% Non-Medicare /

6.65% Medicare,
decreasing to 4.75%
Non-Medicare /

4.75% Medicare)
Net OPEB Liability (5,447)$ (2,024) $ 2,335 $ 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, 2023

8. OTHER POST EMPLOYMENT BENEFITS (Continued)

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB

As of June 30, 2023, the City incurred OPEB expense of $292,000. As of June 30, 2023, the City reported deferred outflows of resources related to OPEB from the following sources:

The $1,997,000 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2022 measurement date will be recognized as a reduction of the net OPEB liability during the Fiscal Year ending June 30, 2024. Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows (in thousands):

Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB Contributions subsequent to the measurement date 1,997$ - $ Difference between expected and actual experience 639 4,682 Changes in Assumptions 1,191 2,477 Net difference between projected and actual earnings on OPEB Plan Investments 2,792 -
6,619$ 7,159$
Measurement Periods
Ended June 30,
2023 (568) $
2024 (482)
2025 (531)
2026 482
2027 (739)
Thereafter (699)
(2,537)$
Deferred
Outflows/ (Inflows)
of Resources
88 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 Ox nard, 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 cl aims 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 agencie s 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 mark etplace, 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 inclus ive 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 are two claims that exceed the self-insured retention of $1,000,000 and is not covered under the City’ s liability insurance plan. Re fer to note 18 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 clai ms from $1,000,000 to the maximum limit discussed above are covered by the excess li ability coverage purchased by the City.

Any claims exceeding the maximum limit ar e 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 Insuranc e 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, 2023

9. RISK MANAGEMENT (Continued)

Workers’ Compensation Claims
Workers’ compensation claims of up to $1,000,000 per claim are paid from the Self Insured Workers’ Comp Internal Service Fund. Excess workers’ compensation coverage is purchased through the CSAC/P rism-Excess Insurance Authority.

Payments for claims from $1,000,000 to stat utory limits are covered by CSAC/Prism- Excess Insurance Authority.

The Self Insurance Workers’ Comp Internal Service Fund has a $24.3 million deficit at year-end at the 55 percent confidence level. The City has established plans to help reduce the deficit in this f und. This will be accomplished by additional transfers from the General Fund, Proprietary funds, and other governmental funds 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, 2021 34,794 $ 11,985 $ 46,779 $ Additions 16,278 7,993 24,271 Reductions (8,309) (6,310) (14,619) Net Increase (Decrease) 7,969 1,683 9,652 Balance June 30, 2022 42,763 13,668 56,431 Additions 12,154 15,848 28,002 Reductions (10,830) (6,982) (17,812) Net Increase (Decrease) 1,324 8,866 10,190 Balance June 30, 2023 44,087$ 22,534 $ 66,621 $ 90 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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, 2023 for Main Pier property acquisitions prior to the dissolution of the Redevelopment Agency on February 1, 2012. No set interest ra tes 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, 2023

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:

 $29,607,000 was transferred fr om the Grant Fund to t he General Fund to fully expend ARPA funds for eligible police and fire personnel costs.  $51,000 was transferred from the General Fund to the Refuse Enterprise Fund to fund the senior citizen rate reduction on refuse charges.  $6,263,000 was transferred from the G eneral Fund to Other Governmental Funds for debt service payments of $2,963,000 and technology upgrades within the Police Department totalling $3,300,000.
 $13,000 was transferred from the Hazmat Service Enterprise Fund to the General Fund to cover administrative and overhead expenditures.  $28,741,00 was transferred fr om the General Fund to t he Infrastructure Fund for infrastructure-related projects such as road repairs and enhancement and other capital improvement projects.

Transfers In
General
Fund
Grants
Special
Revenue
Other
Governmental
Funds
Total
Governmental
Funds
Hazmat
Service
Fund
Total
Transfers In
General Fund -$ 29,607$ 400 $ 30,007$ 13 $ 30,020$ Grants Special Revenue 1 - - 1 - 1 Pension Liability 344 - - 344 - 344 Infrastructure 28,741 - - 28,741 - 28,741 Other Governmental Funds 6,263 - - 6,263 - 6,263 Total Governmental Funds 35,349 29,607 400 65,356 13 65,369 Refuse Fund 51 - - 51 - 51 Total Enterprise Funds 51 - - 51 - 51 Total Transfers Out 35,400$ 29,607 $ 400 $ 65,407$ 13 $ 65,420$ Transfers Out
92 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGATIONS

Below is a schedule of changes in long-term governmental obligations for the year (in thousands):

Governmental Activities:

June 30,
2022 Additions Retirements
June 30,
2023
Accrued
Interest
Due Within
One Year
Public Financing Authority:
2014(a) Lease Revenue Bonds 11,215$ -$ (685)$ 10,530$ 121$ 720$ 2020(a) Lease Revenue Bonds 4,835 - - 4,835 36 - 2020(b) Lease Revenue Bonds 11,315 - (1,520) 9,795 21 1,530 Total Public Financing Authority 27,365 - (2,205) 25,160 178 2,250 Other Long-Term Obligations:

Compensated Absences 15,045 3,376 (3,603) 14,818 - 2,039 Claims Payable 56,431 28,002 (17,812) 66,621 - 19,043 Pollution Remediation 2,000 - - 2,000 - - LED Lighting Phase I 314 - (123) 191 1 126 I-Bank CLEEN Loan 1,586 - (303) 1,283 12 310 CEC Loan 2,063 - (266) 1,797 - 269 Pension Obligation Bonds 330,642 - (12,637) 318,005 347 12,683 Finance Purchase Agreement 11,714 7,742 (2,068) 17,388 61 3,097 Leases Payable 247 398 (189) 456 - 216 Subscriptions Payable 3,651 - (1,051) 2,600 33 1,011 Total Other Long-Term Obligations 423,693 39,518 (38,052) 425,159 454 38,794 Total Long-Term Obligations -
Governmental Activities 451,058 $ 39,518 $ (40,257)$ 450,319 $ 632 $ 41,044$ 93 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGATIONS (Continued)

a. Public Financing Authority

(1) 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 c onstruction of a new Senior Center

Debt service requirements to maturity are (in thousands):

Year Ending
June 30 Principal Interest Total
2024 720 $ 352 $ 1,072 $
2025 750 319 1,069
2026 785 289 1,074
2027 810 265 1,075
2028 835 240 1,075
2029-2033 4,580 789 5,369
2034-2035 2,050 83 2,133 Total 10,530$ 2,337 $ 12,867 $
94 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGA TIONS (Continued)

(2) 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 Ma y 1st, November 1st
Principal Payment Dates Ma y 1st
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):

Year Ending
June 30 Principal Interest Total
2024 -$ 224 $ 224 $
2025 - 224 224
2026 - 224 224
2027 - 224 224
2028 - 224 224
2029-2032 4,835 679 5,514
Total 4,835 $ 1,799 $ 6,634 $
95 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGA TIONS (Continued)

(3) 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 0.329% to 1.831%
Interest Payment Dates Ma y 1st, November 1st
Principal Payment Dates Ma y 1st
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):

Year Ending
June 30 Principal Interest Total
2024 1,530$ 129 $ 1,659 $
2025 1,545 117 1,662
2026 1,560 103 1,663
2027 1,575 83 1,658
2028 1,600 61 1,661
2029-2030 1,985 41 2,026 Total 9,795 $ 534 $ 10,329$
96 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGA TIONS (Continued)

b. Other Long-Term Obligations

(1) Compensated Absences

There is no repayment schedule to pay the compensated absences amount of $14,818,000 relating to governmental operations. The General Fund typically liquidates the vacation and sick leave liability.

(2) Claims Payable

There is no repayment schedule for the claims payable for governmental activities of $66,621,000 described in Note 9. The City pays the claims upon final settlement. The General Fund typi cally liquidates the claims 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 remediation is estimated to be $2,000,000 and is reported as a long-term liability in the government-wide financial statements. The liability was measured by estimating a reasonable range of potent ial outlays and multiplying those outlays by their probability of occurring.

(4) LED Lighting Phase I

Year of Issuance 2014
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 Rate 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

97 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGA TIONS (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 Rate 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
2024 310 $ 26 $ 336 $
2025 317 19 336
2026 324 11 335
2027 332 4 336
Total 1,283 $ 60 $ 1,343$
Year Ending
June 30 Principal Interest Total
2024 126 $ 5 $ 131$
2025 65 1 66
Total 191 $ 6 $ 197$
98 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 Rate 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
2024 269 $ 17 $ 286 $
2025 272 15 287
2026 274 12 286
2027 277 9 286
2028 280 6 286
2029-2030 425 4 429 Total 1,797 $ 63 $ 1,860$
99 City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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.

Debt service requirements to maturity are (in thousands):

Year Ending
June 30 Principal Interest Total
2024 12,683$ 8,463 $ 21,146 $
2025 12,768 8,385 21,153
2026 12,898 8,248 21,146
2027 13,076 8,074 21,150
2028 13,291 7,855 21,146
2029-2033 70,952 34,789 105,741
2034-2038 81,029 24,703 105,732
2039-2043 87,758 10,848 98,606
2044 13,550 457 14,007
Total 318,005$ 111,822 $ 429,827 $
100
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGATIONS (Continued)

(8) Finance Purchase Agreement

Year of Issuance 2021
Type of Debt Capital Purchase Agreement
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 May 2023, a new purchase agreement was approved by City Council in the amount of $7,742,143 to finance fire equipments, engines and truck.

Debt service requirements to maturity are (in thousands):

(9) Lease Payable

The City of Huntington Beach has entered into three leases as a lessee for the use of land and equipment and is re quired to make monthly fixed payments ranging from $4, 982 to $7,195 over the leas e terms. As of June 30, 2023, the value of the lease liabi lity was $456,340. The future principal and interest lease payments as of June 30, 2023, were as follows:

Year Ending
June 30 Principal Interest Total
2024 216$ 8$ 224$ 2025 155 4 159 2026 85 1 86 Total 456$ 13$ 469$ Year Ending
June 30 Principal Interest Total
2024 3,097 $ 427 $ 3,524 $
2025 2,473 361 2,834
2026 2,266 302 2,568
2027 2,324 245 2,569
2028 2,038 186 2,224
2029-2031 5,190 223 5,413
Total 17,388$ 1,744$ 19,132$
101
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGATIONS (Continued)

(10) Subscription Payable

For the year ended June 30, 2023, the financial statements include the adoption of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. Th e primary objective of this statement is to enhance the relevance and consistency of information about governments' subscription activities. This statement establishes a single model for subscription accounting based on the principle that subscriptions are financings of the right to use an underlying asset. Under this Statement, an organization is required to recognize a subscription liability and an intangible right-to-use subscription asset.

The City of Huntington Beach has ent ered into six subscription agreements for the use of various IT software and is required to make annual fixed payments ranging from $15,018 to $544,839 over the subscription terms. As of June 30, 2023, the value of the subscription liability was $2,600,000. The future principal and interest subscription payment as of June 30, 2023, were as follows:

Year Ending
June 30 Principal Interest Total
2024 1,011$ 58$ 1,069$
2025 963 36 999
2026 441 13 454
2027 91 4 95 2028 94 2 96 Total 2,600$ 113$ 2,713$
102
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

11. LONG-TERM OBLIGATIONS (Continued)

c. Long-Term Obligations – Business-Type Activities

Below is a schedule of the long-term oblig ations of business-type activities (in thousands):

(1) Compensated Absences

There is no repayment schedule for the compensated absences amount of $1,826,000 relating to business-type activities. The balance for the outstanding business-type compensated absences is predominately related to the Water and Sewer funds.

(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.

Debt service requirements to maturity are (in thousands):

June 30,
2022 Additions Retirements
June 30,
2023
Accrued
Interest
Due Within
One Year
Compensated Absences 1,686$ 529$ (389)$ 1,826$ -$ 498$ Pension Obligation Bonds 21,368 - (888) 20,480 22 891 Total Long-Term Obligations -
Business-Type Activities 23,054 $ 529 $ (1,277)$ 22,306 $ 22 $ 1,389$ Long-Term Obligations - Business-Type
Activities:

Year Ending
June 30 Principal Interest Total
2024 891 $ 531 $ 1,422$
2025 897 527 1,424 2026 907 518 1,425
2027 919 504 1,423
2028 934 489 1,423
2029-2033 4,989 2,129 7,118 2034-2038 5,696 1,420 7,116 2039-2042 5,247 446 5,693 Total 20,480$ 6,564 $ 27,044 $
103
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

Governmental Activities
June 30,
2022 Additions Dispositions
June 30,
2023
Capital Assets, Not Depreciated:

Land 369,538$ -$ -$ 369,538$ Construction in Progress 12,235 3,886 (4,872) 11,249 Total Capital Assets -Not Depreciated 381,773 3,886 (4,872) 380,787 Capital Assets Being Depreciated
Buildings 221,759 5,757 (441) 227,075 Machinery and Equipment 75,098 18,451 (3,977) 89,572 Infrastructure 461,990 18,485 (976) 479,499 Right to Use Leased Asset 448 398 (174) 672 Right to Use SBITA Asset 3,651 - - 3,651 Total Capital Assets Being Depreciated 762,946 43,091 (5,568) 800,469 Less Accumulated Depreciation:

Buildings (94,449) (5,247) 441 (99,255) Machinery and Equipment (55,588) (5,016) 3,433 (57,171) Infrastructure (244,465) (8,369) 976 (251,858) Right to Use Leased Asset (195) (126) 111 (210) Right to Use SBITA Asset - (724) - (724) Total Accumulated Depreciation (394,697) (19,482) 4,961 (409,218) Total Depreciated - Net 368,249 23,609 (607) 391,251 Total Capital Assets 1,144,719 46,977 (10,440) 1,181,256 Total Accumulated Depreciation (394,697) (19,482) 4,961 (409,218) Capital Assets of Governmental Activities - Net 750,022$ 27,495 $ (5,479) $ 772,038 $

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):

12. CAPITAL ASSETS

a. Changes in Capital Assets

Capital asset activity for the year was (in thousands):

June 30,
2022 Additions Retirements
June 30,
2023
Community Facilities District No. 2000-1
2013 Special Tax Refunding Bonds 8,405 $ - $ (675)$ 7,730 $ Community Facilities District No. 2002-1
Special Assessment Tax Bonds 3,605 - (200) 3,405 Community Facilities District No. 2003-1
2013 Special Tax Refunding Bonds 14,670 - (925) 13,745 Total Community Facilities Districts 26,680 - (1,800) 24,880 Total Obligations Not Recorded in
Financial Statements 26,680$ - $ (1,800)$ 24,880 $ Community Facilities Districts:
104
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

Department:

City Manager 54$
City Attorney 2
City Clerk 1
Finance 416
Community Development 135
Fire 288
Information Services 444
Police 222
Community Services 3,065
Library Services 358
Public Works 13,043
Internal Service Fund depreciation charged to functions 1,454 Total 19,482$

12. CAPITAL ASSET S (Continued)

b. Depreciation Expense

Depreciation in governmental acti vities was charged to the following functions/programs in the Statement of Activities (in thousands):

Depreciation in business-type activities was charged to the following functions/programs in the Statement of Activities (in thousands):

Business-Type Activities:

June 30,
2022 Additions Dispositions
June 30,
2023
Capital Assets, Not Depreciated:

Land 3,907 $ - $ - $ 3,907$ Construction in Progress 109 730 - 839 Total Capital Assets -Not Depreciated 4,016 730 - 4,746 Capital Assets Being Depreciated
Buildings 105,623 - - 105,623 Machinery and Equipment 22,388 479 (3,284) 19,583 Infrastructure 151,668
2,725 (245) 154,148
Total Capital Assets Being Depreciated 279,679 3,204 (3,529) 279,354 Less Accumulated Depreciation:

Buildings (36,930) (2,604) - (39,534) Machinery and Equipment (15,525) (1,266) 3,272 (13,519) Infrastructure (87,242)
(2,467) 245 (89,464)
Total Accumulated Depreciation (139,697) (6,337) 3,517 (142,517) Total Depreciated - Net 139,982 (3,133) (12) 136,837 Total Capital Assets 283,695 3,934 (3,529) 284,100 Total Accumulated Depreciation (139,697) (6,337) 3,517 (142,517) Capital Assets of Business Activities - Net 143,998 $ (2,403) $ (12) $ 141,583$ Fund:

Water 3,978$
Sewer Service 2,338
Refuse 21
Total 6,337$
105
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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. LEASES

The City of Huntington Beach has entered in to 27 leases as a lessor for the use of City land and infrastructures. The lessees are required to make fixed monthly payments ranging from $322 to $44,314 over the lease terms. The City recognized $1,662,482 in lease revenue and $104,926 in interest revenue during the current fiscal year related to these agreements. As of June 30, 2023, the lease receivable is $11,106,832 and deferred inflow of resources is $10,819,540. The future principal and interest payments as of June 30, 2023, were as follows:

Year Ending
June 30 Principal Interest Total
2024 1,612$ 105$ 1,717$
2025 1,491 95 1,586 2026 1,501 87 1,588 2027 1,423 78 1,501 2028 833 70 903 2029-2033 1,590 243 1,833 2034-2038 840 201 1,041 2039-2043 808 139 947 2044-2048 640 79 719 2049-2053 369 22 391 Total 11,107$ 1,119$ 12,226$
106
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 Californi a 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 that was previously reported as a Redevelopment Agency within the City as a blended component unit.

ABX1 26 provides that upon dissolution of a Redevelopment Agency, either the City or another unit of lo cal 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 elected to become the Successor 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, Redevelopment Agencies in the State of Califor nia generally cannot enter into new projects, obligations or commitments. Subject to the control of a newly established Oversight Board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the co mpletion of any unfinished projects that were subject to legally enforceable contractual commitments).

In future fiscal years, Successor Agencie s will only be allocated revenue in the amount that is necessary to pay the es timated annual instal lment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior Redevelopment Agency have been paid in full and all assets have been liquidated.

ABX1 26 directs the State C ontroller of the State of California to review the propriety of any transfers of assets between Redevelopment Agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as of successor agency by ABX1 26.

107
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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):

(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):

Successor Agency:

June 30,
2022 Additions Retirements
June 30,
2023
Accrued
Interest
Due Within
One Year
Bonds Payable
1999 Tax Allocation Refunding Bonds 1,190$ - $ (405)$ 785 $ 16$ 425$ 2002 Tax Allocation Bonds 2,575 - (875) 1,700 35 920 Total Bonds Payable 3,765 - (1,280) 2,485 51 1,345 Other Long-Term Obligations
Mayer DDA 626 - (626) - - - Bella Terra OPA (Parking) 3,481 - (1,613) 1,868 - 1,619 Bella Terra AHA (Phase II) 12,118 - (789) 11,329 - 789 CIM DDA (Parking & Infrastructure) 4,971 - (330) 4,641 243 353 CIM DDA (Additional Parking) 337 - (16) 321 24 17 Total Other Long-Term Obligations 21,533 - (3,374) 18,159 267 2,778 Total Long-Term Obligations 25,298 $ - $ (4,654)$ 20,644 $ 318 $ 4,123$ Year Ending
June 30 Principal Interest Total
2024 425 $ 29 $ 454 $
2025 360 9 369
Total 785 $ 38 $ 823 $
108
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 $2,605,000, principal and interest, for the outstanding 1999 and 2002 Tax Al location Refunding Bonds as of June 30, 2022 from semi-annual Redevelop ment Property Tax Trust Fund (RPTTF) revenue allocations.

The 1999 and 2002 Tax Allocation Refundi ng 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
2024 920 $ 62 $ 982 $
2025 780 20 800
Total 1,700 $ 82$ 1,782$
109
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 and development agreement (DDA) with Robert Mayer Corporation (Corporation) concerning additional development adjacent to the Waterfront Hotel. Under the agreement, the Corpor ation would advance pay ments for the project costs with the Agency reimbursing up to $16,750,000 of the costs. Project- generated revenues as available will r epay these amounts over the time needed to fully amortize the advance. The in terest rate of this obligation is

6.32%. The DDA has been approved as an enforceable obligation by the DOF. As of year-end, the Successor Agency obligation under the agreement was completed.

(4) Bella Terra Parking Structure

In Fiscal Year 2005/06, the Agency ent ered into an owner participation agreement with Bella Terra Associates , LLC (formerly Huntington Center Associates, LLC). Under the agreemen t, the Corporation would construct 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 $1,868,000. 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 housing agreement with BTDJM Phase II Associates (DJM). The agreement would 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 trans ferred the site to UDR, and as of year-end, the Successor Agency obligation under the agreement amounted to $11,329,000. Reimbursement of the affordable units will be based upon the site-generated tax increment for the mi xed use project as well as the 20% housing fund from the site- generated Bella Terra I. The interest rate of this obligation is 4.00%. The agreement has been approved as an enforceable obligation by the DOF.

110
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 A gency obligation under the agreement amounted to $4,641,000. 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 Schedu le (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.

111
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

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 A gency obligation under the agreement amounted to $321,000. 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 Schedu le (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.

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-Inc ome Housing Fund to the Redevelopment 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.

112
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

16. COMMITMENTS AND CONT INGENCIES (Continued)

b. Sales Tax Sharing Agreements

City Council has agreed to provide sales ta x rebates to various companies, based upon various factors such as increased job- base or new sales tax to the City. The sales tax rebates serve to attract and retain various companies in the City of Huntington Beach. The Cit y of Huntington Beach has four sales tax sharing agreements that extend until 2024, 2033, and 2038. Sales tax rebates totaled $1,245,883 for the year ended June 30, 2023. Sales tax sharing agreements include an agreement with Surf City Auto Group II, Inc. wherein t he sales tax sharing is a 50%/50% Auto Group/City split with base sales of $1,767,586 (Jeep sales for 2023) and increases by 1% each year. The other sales tax sharing agreements are with Pinnacle Petroleum through 2024, with base sales of $100,000, and McKenna Subaru Huntington Beach through 2033 wit h a 45%/55% McKenna/City split with base sales of $150,800.

c. Cooperation and Owner Participation Agreements

On September 2, 2003, the Redevel opment Agency Approved a Cooperation Agreement Regarding Capi tal 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 reauthorizatio n of the loans between the City and former Redevelopment Agency in FY 2016/17. The State Department of Finance (DOF) has denied the validity of the loans and the City has filed suit against the State. On April 22, 2022, the Superior Court of California issued a Proposed Judgment stating that the agreement did not constitute an enforceable obligation and that repayment was not required. The Cit y requested a hearing with the Court to appeal this determination. On February 17, 2023, the Superior Court of California issued a final ruling stating that the agreement did not constitute an enforceable obligation; thus, repayment was not required.

d. Redevelopment Successor Agency Debt to City

The City has advanced money to the Redevelopment Agency for major capital improvements, economic development pr ojects, 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. 113
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

16. COMMITMENTS AND CONT INGENCIES (Continued)

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) hav e approved and reauthorized the loans between the City and former Redevelopment Agency in FY 2016/17. The State Department of Finance has denied the validit y of the loans and the City has filed suit against the State. On April 22, 2022, the Superior C ourt of California issued a Proposed Judgment stating that the majority of the agreements between the City and the former Redevelopment Agency were not considered enforceable obligations and that repaym ent was not required, wit h the exception of the $22,400,000 loan for the purchase of the Waterfront property. The DOF denied this obligation in a follow up letter to the Cit y dated August 24, 2022. The City has requested a hearing with the Court to appeal this determination. On February 17, 2023, the Superior Court of California issu ed a final ruling confirming the April 22, 2022 determination.

Below is a schedule of the activity for the year (in thousands):

June 30,
2022 Additions Reductions
June 30,
2023
General Fund
Direct Advances 2,312 $ - $ -$ 2,312$ Indirect Advances 6,567 - - 6,567 Land Sales 32,833 - - 32,833 Interest 31,163 1,696 - 32,859 Total General Fund 72,875 1,696 - 74,571 Sewer Fund
Direct Advances 301 7 - 308 Deferred Development Fees 188 4 - 192 Total Sewer Fund 489 11 - 500 Drainage Fund
Direct Advances 727 16 - 743 Deferred Development Fees 201 4 - 205 Total Drainage Fund 928 20 - 948 Park Acquisition and Development Fund
Direct Advances 5,983 140 - 6,123 Deferred Development Fees 444 10 - 454 Total Park Acquisition and Development Fund 6,427 150 - 6,577 Water Fund
Direct Advances 4,503 17 - 4,520 Total Water Fund 4,503 17 - 4,520 Total All Funds 85,222$ 1,894 $ - $ 87,116$ 114
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

16. COMMITMENTS AND CONT INGENCIES (Continued)

e. Low Moderate Income Hous ing 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 rela ted to the Emerald Cove Housing Project. The note is secured by a pledg e 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 reco rded the advances in the accompanying financial statements due to uncertainties surrounding ABX1 26 and Assembly Bill 1484 and related litigation (see note 16f). On April 22, 2022, the Superior Court of California issued a Proposed Judgment stat ing that this loan is considered an enforceable obligation to be paid on the FY 2023-24 Recognized Obligation Payment Schedule (ROPS). Below is a schedul e of the activity for the year (in thousands):

f. Successor Agency Litigation

Until 2012, the Huntington Beach Redev elopment Agency existed and received property tax increment from property within the “City Redevelopment Project Area.” In 2012, the State Legislature dissolved all redevelopment agencies, and all tax increment was returned to the County for payment to other taxing entities. The only exception was that tax increment woul d continue to be paid to the Successor Agency to the City Redevelopment Agency to pay any pre-dissolution, legally binding obligations established prior to the dissolution of the agencies. Further, the City transferred the former Redevelopment Agency’s housing obligations to the Huntington Beach Housing Authority pursuant to Health and Safety Code section 34176.

The Successor Agency contended that it s payments to retire the former Redevelopment Agency’s portion of t he 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. Pacific 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.

June 30,
2022 Additions Reductions
June 30,
2023
General Fund
Emerald Cove 3,245$ - $ - $ 3,245$ 115
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

16. COMMITMENTS AND CONT INGENCIES (Continued)

On April 22, 2022, the Superior Court of California issued a Proposed Judgment stating that the majority of the agr eements between the City and the former Redevelopment Agency were not considered enforceable obligations and that repayment was not required, with the exception of the $22,400,000 loan for the purchase of the Waterfront property and the Promissory Note related to the Emerald Cove Housing Project. The City has r equested a hearing with the Court to appeal this determination. On February 17, 2023, the Superior Court of California issued a final ruling confirming the April 22, 2022 determination. On May 19, 2023, the DOF issued a letter confirming the Court ruling.

The Housing Authority is reviewing opt ions on meeting the affordable housing requirements for Pacific City with other projects. The City itself does not require a reserve for either case.

g. 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 dec ision was made by City leadership to cancel the third day of the Pacific Airshow on October 3rd. 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 occu rring 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 Co mmand Team that includes the U.S. Coast Guard, California Department of Fish and Wildlife, and Amplify Energy Corporation was established to investigate the oil spill incident.

The City has submitted a claim for $653, 259 with Amplify for lost revenues and expenditures incurred for response efforts. The claim is still under review with Amplify at this time.

116
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2023

17. OTHER INFORMATION

Fund and Accumulated Deficits

The following funds have total fund deficits at year-end (in thousands):

The Self Insurance Workers’ Compensation fund has a deficit due to increases in statutory benefits related to workers’ compensation claims and rising healthcare costs. The Self Insurance General Liability fund has a def icit due to increases in claims judgements, cost of litigation and rising number of lawsuits against the City.

As such, the City has 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 deficits in the Self Insurance Workers’ Compensation and General Liability Internal Service Funds.

18. SUBSEQUENT EVENTS

Kennedy Commission v. Huntington Beach

The Kennedy Commission case arises fr om an amendment to City’s Beach and Edinger Corridors Specific Element Plan to limit the developmen t of multifamily housing. The case, filed by the Kennedy Commission in July 2015 stating that the amendment was in violation of California’s Housing El ement 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. The City submitted an appeal, which was denied on July 19, 2023. The settlement was paid in full in September 2023.

Internal Service Fund:

Self Insurance Workers' Comp 24,342$
Self Insurance General Liability 8,420$
117

REQUIRED SUPPLEMENTARY INFORMATION

118

THIS PAGE INTENTIONALLY LEFT BLANK

119

City of Huntington Beach
Notes to Required Supplementary Information
For the Year Ended June 30, 2023

Budgetary Information

The City Council must annually adopt a budget by June 30 of the prior fiscal year. The budgeted expenditures become the appropr iations 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 a ll governmental fund expenditures with the exception of capital improvement projects (capital projects funds) carried forward from prior years, which constitute a legally author ized non-appropriated budget. The City Council may amend the budget at any time. T he 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 ca tegories 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 supplem ental appropriations which included carryovers of prior year encumbrances, all of which were within available fund balance and estimated revenue amounts.

The City Council adopts governm ental 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 28
th 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 and Grants Special Revenue.

The original budget, revised budget, actual expenditures, and variance amounts are shown.

The City uses an encumbrance syst em as an aid in controllin g expenditures. When the City issues a purchase order for goods or services , it records an encumbrance until the vendor delivers the goods or performs t he service. At year-end, t he City reports all outstanding encumbrances as committed or assigned fund balan ce 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 and Grants Special Revenue Fund’s Revenues, and Expenditures and Changes in Fund Balance (in thousands).
120
REVENUES Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Property Taxes 98,259$ 101,036$ 101,036$ -$ Sales Taxes 53,343 52,599 52,599 - Utility Taxes 18,457 22,558 22,558 - Other Taxes 23,075 32,390 32,418 28 Licenses and Permits 8,201 10,630 10,630 - Fines, Forfeitures and Penalties 4,534 3,945 3,945 - Use of Money and Property 16,997 20,008 21,401 1,393 Intergovernmental 2,729 3,988 4,024 36 Charges for Current Service 26,596 32,596 32,787 191 Other 1,626 2,516 2,606 90 Total Revenues 253,817 282,266 284,004 1,738

EXPENDITURES
Current:

City Council 403 456 453 3 City Manager 4,743 7,592 5,892 1,700 City Treasurer 275 417 417 - City Attorney 2,752 3,404 3,404 - City Clerk 1,143 1,521 1,441 80 Finance 6,420 8,093 7,372 721 Community Development 15,409 19,309 17,061 2,248 Fire 51,570 65,658 65,658 - Information Services 7,733 9,242 8,269 973 Police 78,443 95,301 93,796 1,505 Community Services 9,762 12,669 12,500 169 Library Services 5,451 7,149 6,951 198 Public Works 21,630 27,785 27,785 - Debt Service:

Principal 696 4,000 4,000 - Interest 63 310 310 - Total Expenditures 206,493 262,906 255,309 7,597 Excess of Revenues Over Expenditures 47,324 19,360 28,695 9,335

OTHER FINANCING SOURCES (USES)
Transfers In 31,474 30,051 30,020 (31) Leases (as Lessee) - - 398 398 Transfers Out (63,478) (35,517) (35,400) 117 Total Other Financing Sources (Uses) (32,004) (5,466) (4,982) 484 Net Change In Fund Balance 15,320 13,894 23,713 9,819 Fund Balance - Beginning of Year 102,824 102,824 102,824 - Fund Balance - End of Year 118,144 $ 116,718 $ 126,537 $ 9,819 $

CITY OF HUNTINGTON BEACH

SCHEDULE OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)
General Fund
See Accompanying Notes to Required Supplementary Information 121
REVENUES Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 130$ 130$ Intergovernmental 15,035 27,662 40,872 13,210 Other - - 3,741 3,741 Total Revenues 15,035 27,662 44,743 17,081

EXPENDITURES
Current:

City Manager 6 2,007 300 1,707 City Clerk - 1 1 - Finance - 37 37 - Community Development 2,947 7,710 3,343 4,367 Fire - 492 488 4 Police 1,016 5,019 2,716 2,303 Community Services 311 370 343 27 Library Services 60 285 204 81 Public Works 12,131 21,661 2,739 18,922 Total Expenditures 16,471 37,582 10,171 27,411 Excess of Revenues Over (Under)
Expenditures (1,436) (9,920) 34,572 44,492

OTHER FINANCING USES
Transfers In - - 1 1 Transfers Out (29,669) (29,607) (29,607) - Total Other Financing Sources (Uses) (29,669) (29,607) (29,606) 1 Net Change In Fund Balance (31,105) (39,527) 4,966 44,493 Fund Balance - Beginning of Year (4,311) (4,311) (4,311) - Fund Balance - End of Year (35,416)$ (43,838) $ 655 $ 44,493$ (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, 2023
See Accompanying Notes to Required Supplementary Information 122

Measurement Period 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 Total Pension Liability
Service cost 8,174$ 8,005$ 7,779$ 8,327$ 8,314$ 8,084$ 7,436$ 7,102$ 7,263$ Interest on total pension liability 43,253 42,217 41,058 40,150 38,769 37,749 37,194 35,653 34,412 Differences between expected and actual experience 451 (891) (6,087) (183) (2,042) (9,148) 1,072 (2,900) - Changes in assumptions 19,824 - - - (3,634) 30,762 - (8,565) - Benefit payments, including refunds of employee contributions (34,942) (33,392) (30,321) (28,508) (26,685) (25,312) (24,316) (23,377) (22,444) Net change in total pension liability 36,760 15,939 12,429 19,786 14,722 42,135 21,386 7,913 19,231 Total pension liability - beginning 619,966 604,027 591,598 571,812 557,090 514,955 493,569 485,656 466,425 Total pension liability - ending (a) 656,726$ 619,966$ 604,027$ 591,598$ 571,812$ 557,090$ 514,955$ 493,569$ 485,656$ Plan Fiduciary Net Position
Contributions - employer 6,951$ 150,917$ 16,879$ 14,816$ 13,495$ 12,316$ 10,982$ 9,747$ 9,066$ Contributions - employee 3,533 3,450 3,630 3,779 3,649 3,869 3,736 3,790 3,909 Investment income (49,840) 107,447 21,485 27,288 32,963 40,328 1,856 8,230 56,429 Administrative Expense (419) (443) (609) (296) (614) (536) (226) (418) (472) Benefit payments (34,942) (33,392) (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 (74,717) 227,979 11,064 17,067 21,643 30,665 (7,968) (2,026) 46,488 Plan fiduciary net position - beginning 671,565 443,586 432,522 415,455 393,812 363,147 371,115 373,141 326,653 Plan fiduciary net position - ending (b) 596,848$ 671,565$ 443,586$ 432,522$ 415,455$ 393,812$ 363,147$ 371,115$ 373,141$ Net pension liability - beginning (51,599) 160,441 159,076 156,357 163,278 151,808 122,454 112,515 139,771 Net pension liability (asset) - ending (a)-(b) 59,878$ (51,599)$ 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 li
ability (asset) 90.88% 108.32% 73.44% 73.11% 72.66% 70.69% 70.52% 75.19% 76.83% Covered payroll 46,824$ 45,740$ 45,952$ 45,419$ 45,431$ 44,848$ 44,365$ 44,233$ 41,142$ Net pension liability as a percentage of covered
payroll 127.88% N/A 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 nine years are shown. * For covered employee payroll, the measurement period of July 1, 2021 to June 30, 2022 was used.

Benefit changes: the figures above include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.

Changes in assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long- term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates 2017 through 2021, 7.65% for measurement dates 2015 through 2016, and 7.50% for measurement date 2014.

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
123

(in Thousands)
Measurement Period 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 Total Pension Liability
Service cost 14,683$ 13,386 $ 13,226 $ 13,644 $ 13,509 $ 13,657 $ 12,159$ 11,119$ 11,096 $ Interest on total pension liability 57,872 56,114 54,597 53,048 51,223 49,350 48,390 46,160 44,246 Differences between expected and actual experience 102 (3,882) (4,721) (1,220) 2,584 (10,819) 2,678 (820) - Changes in assumptions 28,785 - - - (3,657) 40,352 - (11,054) - Benefit payments, including refunds of employee contributions (45,876) (44,362) (41,247) (38,958) (37,128) (34,222) (32,116) (30,535) (29,540) Net change in total pension liability 55,566 21,256 21,855 26,514 26,531 58,318 31,111 14,870 25,802 Total pension liability - beginning 825,437 804,181 782,326 755,812 729,281 670,963 639,852 624,982 599,180 Total pension liability - ending (a) 881,003$ 825,437 $ 804,181$ 782,326$ 755,812 $ 729,281 $ 670,963$ 639,852 $ 624,982$ Plan Fiduciary Net Position
Contributions - employer 13,579 $ 257,381$ 25,848$ 23,063 $ 21,058 $ 20,629 $ 18,703$ 17,791$ 15,152 $ Contributions - employee 4,985 4,395 4,355 4,337 4,164 4,570 4,058 4,110 3,850 Investment income (65,933) 133,170 25,784 32,776 39,336 48,413 2,144 9,661 66,805 Administrative Expense (549) (532) (731) (355) (736) (640) (270) (497) (555) Benefit payments (45,876) (44,362) (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 (93,794) 350,052 14,009 20,877 25,293 38,750 (7,510) 530 55,712 Plan fiduciary net position - beginning 882,705 532,653 518,644 497,767 472,474 433,724 441,234 440,704 384,992 Plan fiduciary net position - ending (b) 788,911$ 882,705 $ 532,653$ 518,644$ 497,767 $ 472,474 $ 433,724$ 441,234 $ 440,704$ Net pension liability - beginning (57,268) 271,528 263,682 258,045 256,807 237,239 198,618 184,278 214,188 Net pension liability (asset) - ending (a)-(b) 92,092$ (57,268)$ 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 (asset) 89.55% 106.94% 66.24% 66.30% 65.86% 64.79% 64.64% 68.96% 70.51% Covered payroll 48,023$ 45,665 $ 43,783 $ 43,684 $ 43,371 $ 43,283 $ 42,619$ 42,252$ 38,397 $ Net pension liability as a percentage of covered
payroll 191.77% N/A 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 nine years are shown. * For covered employee payroll, the measurement period of July 1, 2021 to June 30, 2022 was used.

Changes in assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long- term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates 2017 through 2021, 7.65% for measurement dates 2015 through 2016, and 7.50% for measurement date 2014.

Benefit changes: the figures above include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.

City of Huntington Beach
Required Supplementary Information (Unaudited)
Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period Last Ten Fiscal Years*
CalPERS City Safety Plan - 100
124

Total Pension Liability 2022-23 2021-22 2020-21 2019-20 2018-19 2017-18** 2016-17 2015-16 2014-15 2013-14 Service cost 237$ 299 $ 350 $ 338 $ 398 $ 344 $ 487 $ 552 $ 495 $ 544$ Interest on total pension liability 3,934 3,897 4,292 3,954 3,990 2,964 3,976 3,945 3,919 3,828 Differences between expected and actual experience - 492 - 4,594 - (794) - 982 - - Changes in assumptions - (1,638) 6,547 1,756 - 2,115 1,515 2,928 - - Benefit payments, including refunds of employee contributions (5,712) (5,668) (5,494) (5,012) (4,771) (3,388) (4,144) (3,773) (3,588) (3,548) Net change in total pension liability (1,541) (2,618) 5,695 5,630 (383) 1,241 1,834 4,634 826 824 Total pension liability - beginning 74,151 76,769 71,074 65,444 65,827 64,586 62,752 58,118 57,292 56,468 Total pension liability - ending (a) 72,610$ 74,151 $ 76,769 $ 71,074$ 65,444$ 65,827$ 64,586$ 62,752$ 58,118$ 57,292$ Plan Fiduciary Net Position
Contributions - employer 6,046$ 6,006$ 1,435$ 3,506$ 4,962$ 3,507$ 5,346$ 7,277$ 0 4,678$ 0 4,539$ Investment income 4,823 (11,362) 15,717 2,114 2,582 2,128 6,373 4,282 (1,313) 3,465 Administrative Expense (334) (338) (314) (444) (191) (145) (182) (189) (170) (176) Benefit payments (5,712) (5,668) (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 4,823 (11,362) 11,344 164 2,582 (1,686) 7,393 7,597 2,790 4,538 Plan fiduciary net position - beginning 58,999 70,361 59,017 58,853 56,271 57,957 50,564 42,967 40,177 35,639 Plan fiduciary net position - ending (b) 63,822$ 58,999 $ 70,361 $ 59,017$ 58,853$ 56,271$ 57,957$ 50,564$ 42,967$ 40,177$ Net pension liability - beginning 15,152 6,408 12,057 6,591 9,556 6,629 12,188 15,151 17,115 20,829 Net pension liability - ending (a)-(b) 8,788$ 15,152 $ 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 87.90% 79.57% 91.65% 83.04% 89.93% 85.48% 89.74% 80.58% 73.93% 70.13% Covered payroll 5,497$ 6,670$ 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 159.87% 227.17% 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 ten 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
125

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 2022 2021 2020 2019 2018 2017
Total OPEB Liability
Service cost 1,004$ 1,120$ 1,096$ 1,241$ 1,205$ 877$ Interest on the total OPEB liability 1,655 2,119 2,064 1,859 1,787 1,293 Actual and expected experience difference - (6,296) - 1,411 - - Changes in assumptions (891) 1,603 (298) (3,358) - - Benefit payments (2,352) (2,129) (1,848) (1,742) (1,683) (1,036) Net change in total OPEB liability (584) (3,583) 1,014 (589) 1,309 1,134 Total OPEB liability - beginning 30,276 33,859 32,845 33,434 32,125 30,991 Total OPEB liability - ending (a) 29,692 $ 30,276 $ 33,859 $ 32,845 $ 33,434 $ 32,125 $ Plan Fiduciary Net Position
Contribution - employer** 2,499$ 1,882$ 1,959$ 2,270$ 4,191$ 1,036$ Net investment income (4,561) 6,025 1,580 1,901 1,126 471 Benefit payments (2,352) (2,129) (1,848) (1,742) (1,683) (1,036) Administrative expense (156)
(131) (245) (61) (131) (9) Net change in plan fiduciary net position (4,570) 5,647 1,446 2,368 3,503 462 Plan fiduciary net position - beginning 36,286 30,639 29,193 26,825 23,322 22,860 Plan fiduciary net position - ending (b) 31,716 $ 36,286 $ 30,639 $ 29,193 $ 26,825 $ 23,322 $ Net OPEB liability (asset) - ending (a)-(b) (2,024) $ (6,010) $ 3,220 $ 3,652 $ 6,609 $ 8,803 $ Plan fiduciary net position as a percentage of the total OPEB liability (asset) 106.82% 119.85% 90.49% 88.88% 80.23% 72.60% Covered employee payroll 72,524$ 70,881$ 76,521$ 79,682$ 81,458$ 60,985$ Net OPEB liability as a percentage of covered employee payroll N/A N/A 4.21% 4.58% 8.11% 14.43% Notes to Schedule:
* Fiscal year 2017/18 was the first year of implementation, therefore only six 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
126

2022-23 1 2021-22 1 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 7,451$ 6,951$ 18,086$ 16,878$ 14,819$ 9,734$ 11,921$ 11,238$ 10,510$ 8,685$ Contributions in relation to the actuarially
determined contributions (7,451) (6,951) (18,086) (16,878) (14,819) (9,734) (11,921) (11,238) (10,510) (8,685) Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Covered payroll 51,089$ 46,824$ 45,740$ 45,952$ 45,419$ 33,210$ 45,118$ 44,253$ 46,337$ 43,327$ Contributions as a percentage of covered payroll 14.58% 14.84% 39.54% 36.73% 32.63% 29.31% 26.42% 25.39% 22.68% 20.05% Notes to Schedule
Valuation date: 6/30/2013 through 06/30/2020
Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation
Salary increases Varies by entry age and service
Payroll growth
Discount Rate
Retirement age
Mortality
Last Ten Fiscal Years*
CalPERS City Miscellaneous Plan - 99
Schedule of Contributions
For the Year Ended June 30, 2023
(in Thousands)
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.
*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.

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 7/1/19-6/30/22, 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.

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- 6/30/22, the probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

The prescribed discount rate assumption, adopted by the board on November 17, 2021, is 6.80 percent compounded annually (net of investment and administrative expenses) as of June 30, 2022.

2.75% for 10/1/2013-6/30/2020, and 2.80% for 7/1/2020-6/30/2022.

2.75% for 10/1/2013-6/30/2019, 2.50% for 7/1/2019-6/30/2020, and 2.80% for 7/1/2020-6/30/2022.

For 10/1/14-6/30/15, 15 Year Smoothed Market (for details, see June 30, 2012 Funding Valuation Report). For 7/1/15-6/30/22, Fair Value (for details, see the Funding Valuation Reports for the years ended June 30, 2013-2022).

For details, see Miscellaneous Plan of the City of Huntington Beach Annual Valuation Report as of June 30, 2022. 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. 127

2022-23 1 2021-22 1 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 13,220$ 13,579$ 27,691$ 25,847 $ 23,062 $ 15,223 $ 19,468 $ 19,129$ 18,125$ 14,759$ Contributions in relation to the actuarially
determined contributions (13,220) (13,579) (27,691) (25,847) (23,062) (15,223) (19,468) (19,129) (19,125) (14,759) Contribution deficiency (excess) -$ -$ - $ - $ - $ - $ - $ -$ (1,000)$ -$ Covered payroll 48,601$ 48,023$ 45,665$ 43,783 $ 43,684 $ 31,943 $ 43,269 $ 42,607$ 44,055$ 41,167$ Contributions as a percentage of covered payroll 27.20% 28.28% 60.64% 59.03% 52.79% 47.66% 44.99% 44.90% 43.41% 35.85% Notes to Schedule
Valuation date: 6/30/2013 through 06/30/2020
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, 2022.

Asset valuation method
Inflation
Salary increases Varies by entry age and service.

Payroll growth
Discount Rate
Retirement age
Mortality
For the Year Ended June 30, 2023
Schedule of Contributions
Required Supplementary Information
City of Huntington Beach

2.75% for 10/1/2013-6/30/2020, and 2.80% for 7/1/2020-6/30/2022.

CalPERS City Safety Plan - 100
Last Ten Fiscal Years*
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 7/1/15-6/30/22, Fair Value (for details, see the Funding Valuation Reports for the years ended June 30, 2013-2022).

2.75% for 10/1/2013-6/30/2019, 2.50% for 7/1/2019-6/30/2020, and 2.80% for 7/1/2020-6/30/2022.

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 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 prescribed discount rate assumption, adopted by the board on November 17, 2021, is 6.80% compounded annually (net of invesment and administrative expenses) as of June 30, 2022. (in Thousands)
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 7/1/19-6/30/22, 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 7/1/19-6/30/22, 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. 128

2022-23 1 2021-22 1 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 1,413$ 889$ 933$ 1,689$ 2,258$ 2,879 $ 3,895 $ 3,576$ 3,634$ 4,534$ Contributions in relation to the actuarially
determined contributions (6,046) (6,006) (1,435) (3,506) (4,962) (3,507) (5,346) (7,277) (4,678) (4,539) Contribution deficiency (excess) (4,633)$ (5,117)$ (502)$ (1,817)$ (2,704)$ (628)$ (1,451)$ (3,701)$ (1,044)$ (5)$ Covered payroll 5,497$ 6,670$ 7,684 $ 8,469$ 12,863$ 10,890 $ 17,167 $ 19,517 $ 22,069$ 22,004$ Contributions as a percentage of covered payroll 109.99% 90.04% 18.68% 41.40% 38.58% 32.20% 31.14% 37.29% 21.20% 20.63% Notes to Schedule
Valuation date: 6/30/2021 6/30/2021 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 3% for 10/1/2013-6/30/2020 and 2.50% per annum for 7/1/2020-6/30/2023.

Salary increases Aggregate - 2.75% annually. Merit - CalPERS 1997-2015 Experience Study.

Payroll growth
Investment rate of return
Retirement age
Mortality
2023 2022 2021 2020 2019 2018
2 2017 2016 2015 2014
Annual Money Weighted Rate of Return, net
of investment expense 8.37% -15.97% 26. 88% 3.79% 4.79% 4.04% 12.87% 10.20% -2.82% 9.20% 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. 19-year closed period for 2021/2022. 20-year fixed period for 2022/23. Level dollar amortization.

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 2.7 5% annually increase for the July 1, 2021 - June 30, 2023 period.

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 administrati ve expenses, for the July 1, 2019 - June 30, 2022 measurement per iod. 5.50%, net of pension plan investment and administrative expenses, for the July 1, 2022 - June 30, 2023 measurement period.

The probabilities of mortality are based on the CalPERS 1997-2015 Experience Study. Pre-retirement and Post-retirement mortalit y rates include mortality projected fully generational with Scale MP-2019, modified to converge to ultimate improvement rates in 2022 for the O ctober 1, 2013 to June 30, 2018 measurement period. Mortality projected fully gener ational with Scale MP-2019 for the July 1, 2021 to June 30, 2 022 measurement period. Mortality projected fully generational with Scale MP-2021 for the July 1, 2022 to June 30, 2023 measurement period.

Schedule of Contributions
Required Supplementary Information
City of Huntington Beach
1 Historical information is required only for meas urement 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.

Supplemental Retirement Plan
Last Ten Fiscal Years*
(in Thousands)
For the Year Ended June 30, 2023
1 Historical information is required only for meas urement periods for which GASB 68 is applicable. 2 The 2017-18 period reflects nine months of activity only as t he fiscal year change resulted in a nine month reporting period from October 1, 2017 to June 30, 2018.

Schedule of Money Weighted Rate of Return
The probabilities of retirement are based on the CalPERS 1997-2015 Experience Study.

Investment gains/losses spread over a 3-year rolling period. 129

Fiscal Year Ended June 30 2023 2022 2021 2020 2019 2018** Actuarially Determined Contribution (ADC) 856$ 1,401$ 1,364$ 1,793$ 1,746$ 2,022$ Contributions in relation to the ADC*** (1,997) (2,499) (1,882) (1,959) (2,270) (4,192) Contribution deficiency (excess) (1,141)$ (1,098) $ (518) $ (166) $ (524) $ (2,170) $ Covered-employee payroll** 72,558 $ 72,524 $ 70,881 $ 76,521 $ 79,682 $ 59,589 $ Contributions as a percentage of covered-employee payroll 2.75% 3.45% 2.66% 2.56% 2.85% 7.03% Notes to Schedule:

Valuation date: 6/30/2021 6/30/2021 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 20-year fixed period Asset Valuation Method Investment gains and losses spread over 5-year rolling period.

Inflation
Payroll Growth 2.75% 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 6/30/21.

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, 2023
3% for 10/1/17-6/30/18 and 2.75% per annum for the measurement period 7/1/2018 to 6/30/2022. 2.50% per annum for the measurement period 7/1/2022 to 6/30/2023.
6% for the October 1, 2017 - June 30, 2018 period. 6.25% for the July 1, 2018 - June 30, 2020. 5.50% for the July 1, 2020 - June 30, 2021 period. 5.75% for the July 1, 2021 to June 30, 2023 period. Assumes investing in California Employers' Retiree Benefit Trust asset allocation Strategy 3, moving to Strategy 2 beginning March 2019.

Last Ten Fiscal Years*
Other Post Employment Benefits Plan
(in Thousands)
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
130

SUPPLEMENTARY INFORMATION

131

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 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 Lease Capital Project Fund records activity for leases 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 Sewer Development Fund accounts for fees received from developers to construct and maintain sewer facilities.
 The Technology Fund accounts for technology infrastructure project expenditures.

132
ASSETS Air Quality
Development
Impact Fee
Disability
Access Drainage
Strand Parking
Structures Gas Tax
Cash and Investments 1,032$ 8,379$ 409$ 4,126$ 3,907$ 4,985$ Taxes Receivable - - - - - 297 Other Receivables 71 34 2 18 16 797 Total Assets 1,103 8,413 411 4,144 3,923 6,079

LIABILITIES
Accounts Payable 65 187 - 15 13 1,265 Accrued Payroll - 3 - - - 18 Total Liabilities 65 190 - 15 13 1,283

FUND BALANCES
Restricted
Pollution Remediation - - - - - - Highways, Streets and Transportation - - - - - 4,796 Low Income Housing - - - - - - Air Quality 1,038 - - - - - Other Capital Projects - 8,223 - 4,129 - - Other Purposes - - 411 - - - Committed
Parks - - - - - - Other Purposes - - - - 3,910 - Total Fund Balances 1,038 8,223 411 4,129 3,910 4,796 1,103$ 8,413 $ 411 $ 4,144$ 3,923 $ 6,079 $ Total Liabilities, Deferred Inflows
of Resources and Fund Balances

SPECIAL REVENUE FUNDS

CITY OF HUNTINGTON BEACH

COMBINING BALANCE SHEET

OTHER GOVERNMENTAL FUNDS
June 30, 2023
(In Thousands)
133
Housing
Residual Receipt
Park Acquisition
and Development Surf City "3"
ELM Automation
Fund
Traffic
Congestion
Relief
Traffic Impact
Fee Transportation
Total Special
Revenue Funds
1,296$ 5,486$ 1,482$ 671$ 1,464$ 4,165$ 3,386$ 40,788$ - - 119 - 143 - 749 1,308 5 166 6 3 6 17 14 1,155 1,301 5,652 1,607 674 1,613 4,182 4,149 43,251 - - 37 20 283 1 166 2,052 - - - 3 - - 33 57 - - 37 23 283 1 199 2,109 - 336 - - - - - 336 - - - - 1,330 4,181 3,950 14,257 1,301 - - - - - - 1,301 - - - - - - - 1,038 - - - - - - - 12,352 - - 1,570 651 - - - 2,632 - 5,316 - - - - - 5,316 - - - - - - - 3,910 1,301 5,652 1,570 651 1,330 4,181 3,950 41,142 1,301$ 5,652 $ 1,607 $ 674 $ 1,613$ 4,182 $ 4,149 $ 43,251 $ June 30, 2023
(In Thousands)
(continued)

SPECIAL REVENUE FUNDS

CITY OF HUNTINGTON BEACH

COMBINING BALANCE SHEET

OTHER GOVERNMENTAL FUNDS
134
ASSETS
Public Financing
Authority
Total Debt Service
Fund
Affordable Housing
In-Lieu
Lease Capital
Project
Cash and Investments 3,386 $ 3,386 $ 9,551 $ 39 $ Cash and Investments with Fiscal Agent 1,075 1,075 - 11,210 Taxes Receivable - - - - Other Receivables 2 2 39 94 Total Assets 4,463 4,463 9,590 11,343

LIABILITIES
Accounts Payable 2 2 - - Accrued Payroll - - - - Total Liabilities 2 2 - -

FUND BALANCES
Restricted
Pollution Remediation - - - - Debt Service 4,461 4,461 - - Highways, Streets and Transportation - - - - Low Income Housing - - 9,590 - Air Quality - - - - Other Capital Projects - - - 11,343 Other Purposes - - - - Committed
Parks - - - - Other Capital Projects - - - - Other Purposes - - - - Assigned
Capital Improvement Reserve - - - - Total Fund Balances 4,461 4,461 9,590 11,343 4,463$ 4,463 $ 9,590 $ 11,343 $

CITY OF HUNTINGTON BEACH

COMBINING BALANCE SHEET

OTHER GOVERNMENTAL FUNDS
June 30, 2023
(In Thousands)
Total Liabilities, Deferred Inflows
of Resources and Fund Balances

DEBT SERVICE FUNDS CAPITAL PROJECT FUNDS
(continued)
135
Parking In-Lieu Sewer Development Technology
Total Capital Projects
Funds
Total Other
Governmental Funds
767$ 2,454$ 6,171 $ 18,982 $ 63,156 $ - - - 11,210 12,285 - - - - 1,308 3 11 26 173 1,330 770 2,465 6,197 30,365 78,079 1 38 - 39 2,093 - - - - 57 1 38 - 39 2,150 - - - - 336 - - - - 4,461 - - - - 14,257 - - - 9,590 10,891 - - - - 1,038 - - - 11,343 23,695 - - - - 2,632 - - - - 5,316 769 2,427 - 3,196 3,196 - - - - 3,910 - - 6,197 6,197 6,197 769 2,427 6,197 30,326 75,929 770$ 2,465$ 6,197 $ 30,365 $ 78,079 $ (continued)

CITY OF HUNTINGTON BEACH

COMBINING BALANCE SHEET

OTHER GOVERNMENTAL FUNDS
June 30, 2023
(In Thousands)

CAPITAL PROJECT FUNDS
136
REVENUES Air Quality
Development
Impact Fee
Disability
Access Drainage
Strand
Parking
Structures Gas Tax
Sales Taxes -$ -$ -$ -$ -$ -$ Other Taxes - - - - - 7,822 Licenses and Permits - - 70 - - - Use of Money and Property (Loss) 15 140 6 32 1,625 - Intergovernmental 324 - - - - 75 Charges for Current Service - 1,978 - 1,003 - - Other - - - - - - Total Revenues 339 2,118 76 1,035 1,625 7,897

EXPENDITURES
Current:

City Manager - - - - - - Finance - - 6 - - - Community Development - - - - 1,143 - Fire - 1 - - - - Information Systems - - - - - - Police - 488 - - - - Community Services - 2,973 - - - - Library Services - 89 - - - - Public Works 515 - - 392 - 8,698 Total Expenditures 515 3,551 6 392 1,143 8,698 Excess Of Revenues Over
(Under) Expenditures (176) (1,433) 70 643 482 (801) Other Financing Sources (Uses):

Transfers Out - - - - (400) - Total Other Financing Sources (Uses) - - - - (400) - Net Change in Fund Balances (176) (1,433) 70 643 82 (801) Fund Balances - Beginning of Year 1,214 9,656 341 3,486 3,828 5,597 Fund Balances - End of Year 1,038 $ 8,223 $ 411 $ 4,129$ 3,910 $ 4,796 $

OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)

SPECIAL REVENUE FUNDS

CITY OF HUNTINGTON BEACH

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
137
Housing
Residual Receipt
Park Acquisition
and Development Surf City "3"
ELM Automation
Fund
Traffic
Congestion
Relief
Traffic Impact
Fee Transportation
Total Special
Revenue Funds
-$ -$ -$ -$ -$ -$ 4,565$ 4,565$ - - 498 - - - - 8,320 - - - - - - - 70 20 (169) 23 (13) 31 60 57 1,827 - - - - 1,618 - - 2,017 - 4,614 - 683 - 1,516 - 9,794 6 - - - - - - 6 26 4,445 521 670 1,649 1,576 4,622 26,599 - - 309 - - - - 309 - - - - - - - 6 - - - - - - - 1,143 - - - - - - - 1 - - - 286 - - - 286 - - - - - - - 488 - 405 - - - - - 3,378 - - - - - - - 89 - - - - 2,496 42 3,888 16,031 - 405 309 286 2,496 42 3,888 21,731 26 4,040 212 384 (847) 1,534 734 4,868 - - - - - - - (400) - - - - - - - (400) 26 4,040 212 384 (847) 1,534 734 4,468 1,275 1,612 1,358 267 2,177 2,647 3,216 36,674 1,301$ 5,652 $ 1,570 $ 651 $ 1,330$ 4,181 $ 3,950 $ 41,142 $

SPECIAL REVENUE FUNDS

OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)
(continued)

CITY OF HUNTINGTON BEACH

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
138

REVENUES
Public Financing
Authority
Total Debt Service
Funds
Affordable Housing
In-Lieu
Lease Capital
Project
Sales Taxes -$ -$ -$ -$ Other Taxes - - - - Licenses and Permits - - 4,932 - Use of Money and Property (Loss) 22 22 117 326 Intergovernmental - - - - Charges for Current Service - - - - Other - - - - Total Revenues 22 22 5,049 326

EXPENDITURES
Current:

City Manager - - - - Finance 5 5 - - Community Development - - - - Fire - - - 6,352 Information Systems - - - - Police - - - - Community Services - - - - Library Services - - - - Public Works - - - - Debt Service:

Principal 2,205 2,205 - - Interest 746 746 - - Total Expenditures 2,956 2,956 - 6,352 Excess Of Revenues Over
(Under) Expenditures (2,934) (2,934) 5,049 (6,026) Other Financing Sources (Uses):

Transfers In 2,963 2,963 - - Issuance of Long-Term Debt - - - 7,742 Transfers Out - - - - Total Other Financing Sources (Uses) 2,963 2,963 - 7,742 Net Change in Fund Balances 29 29 5,049 1,716 Fund Balances - Beginning of Year 4,432 4,432 4,541 9,627 Fund Balances - End of Year 4,461 $ 4,461 $ 9,590 $ 11,343 $

DEBT SERVICE FUNDS CAPITAL PROJECT FUNDS
(In Thousands)
(continued)

CITY OF HUNTINGTON BEACH

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
139
Parking In-Lieu Sewer Development Technology
Total Capital Projects
Funds
Total Other
Governmental Funds
-$ -$ -$ -$ 4,565$ - - - - 8,320 56 - - 4,988 5,058 - 58 (116) 385 2,234 - 12 - 12 2,029 - 1,318 - 1,318 11,112 - - - - 6 56 1,388 (116) 6,703 33,324 - - - - 309 - - - - 11 6 - - 6 1,149 - - - 6,352 6,353 - - 8 8 294 - - - - 488 - - - - 3,378 - - - - 89 - 1,231 - 1,231 17,262 - - - - 2,205 - - - - 746 6 1,231 8 7,597 32,284 50 157 (124) (894) 1,040 - - 3,300 3,300 6,263 - - - 7,742 7,742 - - - - (400) - - 3,300 11,042 13,605 50 157 3,176 10,148 14,645 719 2,270 3,021 20,178 61,284 769$ 2,427$ 6,197 $ 30,326 $ 75,929 $ (In Thousands)
(continued)

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, 2023
140
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 15$ 15$ Intergovernmental 250 250 324 74 Total Revenues 250 250 339 89 EXPENDITURES:

Current:

Public Works 788 1,508 515 993 Total Expenditures 788 1,508 515 993 Net Change in Fund Balance (538) (1,258) (176) 1,082 Fund Balance - Beginning of Year 1,214 1,214 1,214 - Fund Balance - End of Year 676 $ (44) $ 1,038$ 1,082 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property - $ - $ 140$ 140 $ Charges for Current Service 1,035 1,035 1,978 943 Total Revenues 1,035 1,035 2,118 1,083 EXPENDITURES:

Current:

Fire - 827 1 826 Police 415 1,529 488 1,041 Community Services 1,636 5,301 2,973 2,328 Library Services 350
388 89 299
Total Expenditures 2,401 8,045 3,551 4,494 Net Change in Fund Balance (1,366) (7,010) (1,433) 5,577 Fund Balance - Beginning of Year 9,656 9,656 9,656 - Fund Balance - End of Year 8,290 $ 2,646 $ 8,223 $ 5,577 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 84 $ 84 $ 70 $ (14) $ Use of Money and Property - - 6 6 Total Revenues 84 84 76 (8) EXPENDITURES:

Current:

Finance 84
84 6 78
Total Expenditures 84 84 6 78 Net Change in Fund Balance - - 70 70 Fund Balance - Beginning of Year 341 341 341 - Fund Balance - End of Year 341 $ 341 $ 411 $ 70 $ (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, 2023
141
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 32$ 32$ Charges for Current Service 200 200 1,003 803 Total Revenues 200 200 1,035 835 EXPENDITURES:

Current:

Public Works 2,845 3,830 392 3,438 Total Expenditures 2,845 3,830 392 3,438 Net Change in Fund Balance (2,645) (3,630) 643 4,273 Fund Balance - Beginning of Year 3,486 3,486 3,486 - Fund Balance - End of Year 841 $ (144) $ 4,129 $ 4,273 $ Strand Parking Structure
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property 1,450$ 1,450 $ 1,625 $ 175 $ Total Revenues 1,450 1,450 1,625 175 EXPENDITURES:

Current:

Community Development 1,147
1,466 1,143 323
Total Expenditures 1,147 1,466 1,143 323 OTHER FINANCING SOURCES (USES):

Transfers Out (400) (400) (400) - Total Other Financing Sources (Uses) (400) (400) (400) - Net Change in Fund Balance (97) (416) 82 498 Fund Balance - Beginning of Year 3,828 3,828 3,828 - Fund Balance - End of Year 3,731 $ 3,412 $ 3,910 $ 498 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Other Taxes 8,273 $ 8,276 $ 7,822 $ (454) $ Intergovernmental - - 75 75 Total Revenues 8,273 8,276 7,897 (379) EXPENDITURES:

Current:

Public Works 8,140
13,436 8,698 4,738
Total Expenditures 8,140 13,436 8,698 4,738 OTHER FINANCING SOURCES (USES):

Transfers Out (122) - - - Total Other Financing Sources (Uses) (122) - - - Net Change in Fund Balance 11 (5,160) (801) 4,359 Fund Balance - Beginning of Year 5,597 5,597 5,597 - Fund Balance - End of Year 5,608 $ 437 $ 4,796$ 4,359 $ 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, 2023
(In Thousands)
Gas Tax
142
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 20$ 20$ Other 32 32 6 (26) Total Revenues 32 32 26 (6) EXPENDITURES:

Current:

Community Development 32 32 - 32 Total Expenditures 32 32 - 32 Net Change in Fund Balance - - 26 26 Fund Balance - Beginning of Year 1,275 1,275 1,275 - Fund Balance - End of Year 1,275 $ 1,275 $ 1,301 $ 26 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property (Loss) - $ - $ (169)$ (169) $ Charges for Current Service - - 4,614 4,614 Total Revenues - - 4,445 4,445 EXPENDITURES:

Current:

Community Services -
425 405 20
Total Expenditures - 425 405 20 Net Change in Fund Balance - (425) 4,040 4,465 Fund Balance - Beginning of Year 1,612 1,612 1,612 - Fund Balance - End of Year 1,612 $ 1,187 $ 5,652 $ 4,465 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Other Taxes 500 $ 500 $ 498 $ (2) $ Use of Money and Property - - 23 23 Total Revenues 500 500 521 21 EXPENDITURES:

Current:

City Manager 623
843 309 534
Total Expenditures 623 843 309 534 Net Change in Fund Balance (123) (343) 212 555 Fund Balance - Beginning of Year 1,358 1,358 1,358 - Fund Balance - End of Year 1,235 $ 1,015 $ 1,570 $ 555 $

CITY OF HUNTINGTON BEACH

SCHEDULE OF REVENUES, EXPENDITURES, AND
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)
Park Acquisition and Development

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

OTHER GOVERNMENTAL FUNDS
Housing Residual Receipt
Surf City "3"
143
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property (Loss) -$ -$ (13)$ (13)$ Charges for Current Service 360 360 683 323 Total Revenues 360 360 670 310 EXPENDITURES:

Current:

Information Systems 422 439 286 153 Total Expenditures 422 439 286 153 OTHER FINANCING SOURCES (USES):

Transfers In 118 118 - (118) Transfers Out (18) - - - Total Other Financing Sources (Uses) 100 118 - (118) Net Change in Fund Balance 38 39 384 345 Fund Balance - Beginning of Year 267 267 267 - Fund Balance - End of Year 305 $ 306 $ 651 $ 345 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property - $ - $ 31 $ 31 $ Intergovernmental 1,939 1,939 1,618 (321) Total Revenues 1,939 1,939 1,649 (290) EXPENDITURES:

Current:

Public Works 2,135
3,507 2,496 1,011
Total Expenditures 2,135 3,507 2,496 1,011 Net Change in Fund Balance (196) (1,568) (847) 721 Fund Balance - Beginning of Year 2,177 2,177 2,177 - Fund Balance - End of Year 1,981 $ 609 $ 1,330$ 721 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property - $ - $ 60 $ 60 $ Charges for Current Service 100 100 1,516 1,416 Total Revenues 100 100 1,576 1,476 EXPENDITURES:

Current:

Public Works 290
2,150 42 2,108
Total Expenditures 290 2,150 42 2,108 Net Change in Fund Balance (190) (2,050) 1,534 3,584 Fund Balance - Beginning of Year 2,647 2,647 2,647 - Fund Balance - End of Year 2,457 $ 597 $ 4,181$ 3,584 $

SCHEDULE OF REVENUES, EXPENDITURES, AND
Traffic Impact Fee

CITY OF HUNTINGTON BEACH
(In Thousands)
ELM Automation Fund
Traffic Congestion Relief

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
144
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Sales Taxes 4,056$ 4,056$ 4,565$ 509$ Use of Money and Property - - 57 57 Total Revenues 4,056 4,056 4,622 566 EXPENDITURES:

Current:

Public Works 4,171 6,417 3,888 2,529 Total Expenditures 4,171 6,417 3,888 2,529 OTHER FINANCING SOURCES (USES):

Transfers Out 208 - - - Total Other Financing Sources (Uses) 208 - - - Net Change in Fund Balance 93 (2,361) 734 3,095 Fund Balance - Beginning of Year 3,216 3,216 3,216 - Fund Balance - End of Year 3,309 $ 855 $ 3,950$ 3,095 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property - $ - $ 22$ 22 $ Total Revenues - - 22 22 EXPENDITURES:

Current:

Finance 12 12 5 7 Debt Service:

Principal 2,205 2,205 2,205 - Interest 746
746 746 -
Total Expenditures 2,963 2,963 2,956 7 OTHER FINANCING SOURCES (USES):

Transfers In 2,963 2,963 2,963 - Total Other Financing Sources (Uses) 2,963 2,963 2,963 - Net Change in Fund Balance - - 29 29 Fund Balance - Beginning of Year 4,432 4,432 4,432 - Fund Balance - End of Year 4,432 $ 4,432 $ 4,461 $ 29 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 747 $ 747 $ 4,932 $ 4,185 $ Use of Money and Property - - 117 117 Total Revenues 747 747 5,049 4,302 Net Change in Fund Balance 747 747 5,049 4,302 Fund Balance - Beginning of Year 4,541 4,541 4,541 - Fund Balance - End of Year 5,288 $ 5,288 $ 9,590 $ 4,302 $ Transportation
Public Financing Authority
Affordable Housing In-Lieu
(In Thousands)

CITY OF HUNTINGTON BEACH

SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023

OTHER GOVERNMENTAL FUNDS
145
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ - $ 326$ 326 $ Total Revenues - - 326 326 EXPENDITURES:

Current:

Fire - 17,360 6,352 11,008 Total Expenditures - 17,360 6,352 11,008 OTHER FINANCING SOURCES (USES):

Issuance of Long-Term Debt - 7,742 7,742 - Total Other Financing Sources (Uses) - 7,742 7,742 - Net Change in Fund Balance - (9,618) 1,716 11,334 Fund Balance - Beginning of Year 9,627 9,627 9,627 - Fund Balance - End of Year 9,627 $ 9 $ 11,343$ 11,334 $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 394 $ 394 $ 56 $ (338)$ Total Revenues 394 394 56 (338) EXPENDITURES:

Current:

Community Development 100
100 6 94
Total Expenditures 100 100 6 94 Net Change in Fund Balance 294 294 50 (244) Fund Balance - Beginning of Year 719 719 719 - Fund Balance - End of Year 1,013 $ 1,013 $ 769 $ (244) $ REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property - $ - $ 58 $ 58 $ Intergovernmental 12 12 12 - Charges for Current Service 155 155 1,318 1,163 Total Revenues 167 167 1,388 1,221 EXPENDITURES:

Current:

Public Works -
1,900 1,231 669
Total Expenditures - 1,900 1,231 669 Net Change in Fund Balance 167 (1,733) 157 1,890 Fund Balance - Beginning of Year 2,270 2,270 2,270 - Fund Balance - End of Year 2,437 $ 537 $ 2,427$ 1,890 $ Sewer Development
Parking In-Lieu
(In Thousands)
Lease Capital Project

OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

CITY OF HUNTINGTON BEACH

SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
146
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property (Loss) -$ - $ (116)$ (116) $ Total Revenues - - (116) (116) EXPENDITURES:

Current:

Information Systems 1,000 3,094 8 3,086 Total Expenditures 1,000 3,094 8 3,086 OTHER FINANCING SOURCES (USES):

Transfers In 3,300 3,300 3,300 - Total Other Financing Sources (Uses) 3,300 3,300 3,300 - Net Change in Fund Balance 2,300 206 3,176 2,970 Fund Balance - Beginning of Year 3,021 3,021 3,021 - Fund Balance - End of Year 5,321 $ 3,227 $ 6,197 $ 2,970 $ Technology

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, 2023
(In Thousands)
147
LMIHAF Capital Projects Fund
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property 200$ 200$ 79$ (121)$ Total Revenues 200 200 79 (121) EXPENDITURES:

Current:

Community Development 25 2,425 16 2,409 Total Expenditures 25 2,425 16 2,409 Net Change in Fund Balance 175 (2,225) 63 2,288 Fund Balance - Beginning of Year 4,856 4,856 4,856 - Fund Balance - End of Year 5,031$ 2,631$ 4,919$ 2,288$ Pension Liability Debt Service Fund
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Property Taxes 6,621$ 6,621$ 8,431$ 1,810$ Use of Money and Property - - 447 447 Charges for Current Service - 15,950 16,111 161 Other -
Total Revenues 6,621 22,571 24,989 2,418 EXPENDITURES:

Debt Service:

Principal 14,525 14,525 12,594 1,931 Interest 9,046 9,046 8,486 560 Total Expenditures 23,571 23,571 21,080 2,491 Excess of Revenues Over (Under) Expenditures (16,950) (1,000) 3,909 4,909 OTHER FINANCING SOURCES (USES):

Transfers In 17,325 1,375 344 1,031 Total Other Financing Sources (Uses) 17,325 1,375 344 1,031 Net Change in Fund Balance 375 375 4,253 5,940 Fund Balance - Beginning of Year 20,729 20,729 20,729 - Fund Balance - End of Year 21,104$ 21,104$ 24,982$ 5,940$

CITY OF HUNTINGTON BEACH
(In Thousands)

SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
148
REVENUES: Original Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property (Loss) -$ -$ (1,565)$ (1,565)$ Intergovernmental - 135 501 366 Total Revenues - 135 (1,064) (1,199) EXPENDITURES:

Current:

Community Services 158 455 389 66 Public Works 24,707 46,698 14,375 32,323 Total Expenditures 24,865 47,153 14,764 32,389 Excess of Revenues Over (Under) Expenditures (24,865) (47,018) (15,828) 31,190 OTHER FINANCING SOURCES (USES):

Transfers In 24,355 28,741 28,741 - Transfers Out 218 - - - Total Other Financing Sources (Uses) 24,573 28,741 28,741 - Net Change in Fund Balance (292) (18,277) 12,913 31,190 Fund Balance - Beginning of Year 20,485 20,485 20,485 - Fund Balance - End of Year 20,193$ 2,208$ 33,398$ 31,190$ (In Thousands)
Infrastructure

CITY OF HUNTINGTON BEACH

SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
149

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.

150
Self Insurance
Workers' Comp
Self Insurance
General Liability
Equipment
Replacement
Fund
Internal Service
Fund Total
ASSETS
Current Assets:

Cash and Investments 20,503$ 14,184$ 11,909$ 46,596$ Other Receivables, Net 76 40 49 165 Prepaids 600 - 1,381 1,981 Total Current Assets 21,179 14,224 13,339 48,742 Non-Current Assets:

Net Other Postemployment Benefits Asset 7 3 - 10 Total Non-Current Assets 7 3 - 10 Capital Assets:

Buildings and Improvements - - 67 67 Machinery and Equipment - - 12,957 12,957 Less Accumulated Depreciation - - (3,615) (3,615) Total Capital Assets - - 9,409 9,409 Total Assets 21,186 14,227 22,748 58,161

DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 466 - - 466 Deferred Outflows Related to Other Postemployment Benefits 22 10 - 32 Total Deferred Outflows of Resources 488 10 - 498 Total Assets and Deferred Outflows of Resources 21,674 14,237 22,748 58,659

LIABILITIES
Current Liabilities:

Accounts Payable 353 104 248 705 Accrued Payroll 4 4 - 8 Current Portion of Claims Payable 8,604 10,439 - 19,043 Current Portion of Compensated Absences 13 1 - 14 Long-Term Obligations Due Within One Year 43 - - 43 Total Current Liabilities 9,017 10,548 248 19,813 Non-Current Liabilities:

Compensated Absences 35 3 - 38 Long-Term Obligations Due in More than One Year 943 - - 943 Net Pension Liability 513 - - 513 Claims Payable 35,483 12,095 - 47,578 Total Non-Current Liabilities 36,974 12,098 - 49,072 Total Liabilities 45,991 22,646 248 68,885

DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 1 - - 1 Deferred Inflows Related to Other Postemployment Benefits 24 11 - 35 Total Deferred Inflows of Resources 25 11 - 36

NET POSITION
Net Investment in Capital Assets - - 9,409 9,409 Unrestricted (24,342) (8,420) 13,091 (19,671) Total Net Position (24,342) (8,420) 22,500 (10,262) Total Liabilities, Deferred Inflows
of Resources, and Net Position 21,674 $ 14,237 $ 22,748 $ 58,659 $ Governmental Activities

CITY OF HUNTINGTON BEACH

STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDS
June 30, 2023
(In Thousands)
151
Self Insurance
Workers' Comp
Self Insurance
General Liability
Equipment
Replacement
Fund
Internal Service
Fund Total

OPERATING REVENUES
Fees and Charges for Service 13,628$ 10,750$ 8,290$ 32,668$ Other 846 442 240 1,528 Total Operating Revenues 14,474 11,192 8,530 34,196

OPERATING EXPENSES
Supplies and Operations 1,710 390 1,504 3,604 Claims and Judgments 10,419 15,454 - 25,873 Depreciation - - 1,453 1,453 Total Operating Expenses 12,129 15,844 2,957 30,930 Operating Income (Loss) 2,345 (4,652) 5,573 3,266

NON-OPERATING REVENUES (EXPENSES)
Investment Income (Loss) 46 39 (16) 69 Interest Expense (25) - - (25) Disposal of Machinery and Equipment (Loss) - - (520) (520) Total Non-Operating Revenues (Expenses) 21 39 (536) (476) Income (Loss) Before Transfers 2,366 (4,613) 5,037 2,790 Change in Net Position 2,366 (4,613) 5,037 2,790 Net Position - Beginning of Year (26,708) (3,807) 17,463 (13,052) Net Position - End of Year (24,342)$ (8,420) $ 22,500 $ (10,262) $

CITY OF HUNTINGTON BEACH

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)
Governmental Activities
152
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 14,444$ 11,179$ 8,510$ 34,133$ Cash Paid to Employees for Services (180) (183) - (363) Cash Paid to Suppliers of Goods and Services (10,848) (6,711) (2,468) (20,027) Net Cash and Investment Provided (Used) by
Operating Activities 3,416 4,285 6,042 13,743

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Debt Service (43) - - (43) Interest Paid (26) - - (26) Net Cash and Investments Provided (Used) by
Noncapital Financing Activities (69) - - (69)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Purchase of Capital Assets -
- (5,156) (5,156) Net Cash and Investments Provided (Used) by
Capital and Related Financing Activities - - (5,156) (5,156)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment (Loss) 46 39 (16) 69 Net Cash and Investments Provided (Used) by
Investing Activities 46 39 (16) 69 Net Increase in Cash and Investments 3,393 4,324 870 8,587 Cash and Investments - Beginning of Year 17,110 9,860 11,039 38,009 Cash and Investments - End of Year 20,503$ 14,184 $ 11,909 $ 46,596 $

RECONCILIATION OF OPERATING

INCOME (LOSS) TO NET CASH AND INVESTMENTS

PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income (Loss) 2,345 $ (4,652) $ 5,573 $ 3,266 $ Adjustments to Reconcile Operating
Income (Loss) to Net Cash and Investments
Provided (Used) by Operating Activities
Depreciation - - 1,453 1,453 Decrease (Increase) in Other Receivables, Net (30) (13) (20) (63) Decrease in Prepaids - - (1,186) (1,186) (Increase) in Net Pension Asset 388 - - 388 (Increase) in Net Other Postemployment Benefits Asset 13 6 - 19 Increase (Decrease) in Accounts Payable (260) 78 222 40 Increase in Accrued Payroll (15) 4 - (11) Increase in Claims Payable 1,324 8,866 - 10,190 (Decrease) in Compensated Absences 7 4 - 11 Decrease in Deferred Pension Outflow (388) - - (388) Increase in Deferred Pension Inflow (428) - - (428) (Decrease) in Net Pension Liability 479 - - 479 (Increase) in Deferred Other Postemployment Benefits Outflow (6) (3) - (9) Increase in Deferred Other Postemployment Benefits Inflow (13) (5) - (18) Net Cash and Investments Provided (Used)
by Operating Activities 3,416$ 4,285 $ 6,042 $ 13,743 $

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
There were no noncash investing, capital, or financing activities during the year ended June 30, 2023.

Governmental Activities

CITY OF HUNTINGTON BEACH

STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
(In Thousands)
153

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.

154
Custodial Funds
ASSETS:

Community
Facilities
Districts
Business
Improvement
Districts
Parking
Structure - Bella
Terra
Total Custodial
Funds
Current Assets:

Cash and Investments 1,372$ 695$ $ 2,035 $ 4,102 Cash with Fiscal Agent 1,615 - 1,714 3,329 Accounts Receivable, Net 9 841 45 895 Total Assets 2,996 1,536 3,794 8,326 LIABILITIES:

Current Liabilities:

Accounts Payable - 1,271 251 1,522 Total Current Liabilities - 1,271 251 1,522 Total Liabilities - 1,271 251 1,522

NET POSITION
Restricted for:

Restricted for Individuals and Organizations 2,996 265 3,543 6,804 Total Net Position 2,996$ 265$ 3,543$ 6,804$

CITY OF HUNTINGTON BEACH

COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
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 1,552$ -$ -$ 1,552$ Business Improvement District Taxes - 6,960 - 6,960 Parking Assessments - - 2,446 2,446 Interest Income 54 - 73 127 Total Additions 1,606 6,960 2,519 11,085

DEDUCTIONS
Administrative Costs 20 - - 20 Payments to other Organizations - 7,006 779 7,785 Interest and Fiscal Agency Expenses 625 - 734 1,359 Principal 875 - 925 1,800 Total Deductions 1,520 7,006 2,438 10,964 Change in Net Position 86 (46) 81 121 Net Position - Beginning of Year 2,910 311 3,462 6,683 Net Position - End of Year 2,996$ 265$ 3,543$ 6,804$

CITY OF HUNTINGTON BEACH

COMBINING STATEMENT OF FIDUCIARY FUND ASSETS AND LIABILITIES

FIDUCIARY FUNDS
JUNE 30, 2023
155

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 Trend s – 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.

156

Governmental Activities 2023 2022 2021 2020 2019
Net investment in capital assets 727,051$ 712,289$ 699,204$ 673,498$ 664,281$ Restricted 82,564 68,460 65,755 79,926 66,089 Unrestricted (173,034) (223,438) (275,159) (274,523) (251,022) Total Governmental Activities Net Position 636,581$ 557,311 $ 489,800 $ 478,901 $ 479,348 $ Business-Type Activities
Net investment in capital assets 141,581$ 143,998 $ 142,469 $ 142,785 $ 145,696 $ Restricted 21,213 19,309 20,332 22,248 21,153 Unrestricted 36,684 34,120 39,129 38,482 36,747 Total Business-Type Activities Net Position 199,478$ 197,427 $ 201,930 $ 203,515 $ 203,596 $ Primary Government
Net investment in capital assets 868,632$ 856,287$ 841,673$ 816,283$ 809,977$ Restricted 103,777 87,769 86,087 102,174 87,242 Unrestricted (136,350) (189,318) (236,030) (236,041) (214,275) Total Primary Government Net Position 836,059$ 754,738 $ 691,730 $ 682,416 $ 682,944 $ Expenses:

Governmental Activities: 2023 2022 2021 2020 2019
City Council 429 $ 382 $ 423 $ 405 $ 360 $ City Manager 5,780 5,412 11,163 3,328 4,501 City Treasurer 396 259 340 317 246 City Attorney 3,248 2,183 3,140 3,136 2,886 City Clerk 1,370 1,060 1,147 949 976 Finance 6,211 5,581 6,828 6,661 6,245 Human Resources**** - - - - 6,261 Community Development* 20,550 11,634 19,716 15,722 6,144 Fire 71,737 52,808 65,960 62,840 56,494 Information Services 8,565 6,469 6,230 8,643 7,530 Police 89,430 73,964 102,415 97,204 87,355 Community Services 13,389 11,517 11,365 12,539 13,369 Library Services 7,225 5,212 6,181 5,776 5,206 Public Works 49,151 42,598 40,270 45,834 40,803 Non-Departmental*** - - - - - Interest on Long-Term Debt 9,587 9,548 2,706 1,686 1,823 Total Governmental Activities 287,068 228,627 277,884 265,040 240,199 Business-Type Activities
Water Utility 47,974 44,182 46,054 44,463 43,405 Sewer Service 11,422 10,390 9,284 9,828 9,442 Refuse Collection 14,935 13,738 12,936 12,609 12,051 Hazmat Service 103 236 241 235 234 Total Business-Type Activities 74,434 68,546 68,515 67,135 65,132 Total Business and Government Type Activities 361,502 $ 297,173 $ 346,399 $ 332,175 $ 305,331 $ * Planning and Building departments were combined in Fiscal Year ended September 30, 2011. The combined department was later renamed to Community Development in Fiscal Year ended September 30, 2016. ** 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.

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,
157

June 30,
Governmental Activities 2018** 2017 2016 2015 2014
Net investment in capital assets 650,466$ 646,336$ 624,180$ 615,512$ 618,825$ Restricted 58,537 41,888 41,555 52,270 34,018 Unrestricted (254,528) (262,874) (222,863) (222,787) 89,524 Total Governmental Activities Net Position 454,475$ 425,350 $ 442,872 $ 444,995 $ 742,367 $ Business-Type Activities
Net investment in capital assets 143,954$ 140,478 $ 142,566 $ 142,616 $ 140,770 $ Restricted 25,886 30,444 32,049 28,096 27,951 Unrestricted 27,492 22,228 21,997 28,476 53,166 Total Business-Type Activities Net Position 197,332$ 193,150 $ 196,612 $ 199,188 $ 221,887 $ Primary Government
Net investment in capital assets 794,420$ 786,814 $ 766,746 $ 758,128 $ 759,595 $ Restricted 84,423 72,332 73,604 80,366 61,969 Unrestricted (227,036) (240,646) (200,866) (194,311) 142,690 Total Primary Government Net Position 651,807$ 618,500 $ 639,484 $ 644,183 $ 964,254 $ Expenses: June 30,
Governmental Activities: 2018** 2017 2016 2015 2014
City Council 218 $ 347 $ 321 $ 270 $ 258 $ City Manager 2,063 4,691 3,849 3,302 3,878 City Treasurer 101 216 208 158 169 City Attorney 1,536 3,307 2,598 2,284 2,321 City Clerk 475 889 806 855 747 Finance 3,455 6,201 5,765 5,208 5,314 Human Resources**** 4,760 5,693 6,814 5,169 4,616 Community Development* 4,301 7,576 7,208 6,605 7,091 Fire 26,688 52,941 47,965 42,162 43,194 Information Services 4,375 7,047 6,852 6,552 6,456 Police 42,109 84,786 74,943 64,048 66,681 Community Services 6,768 15,558 9,935 13,809 12,509 Library Services 2,890 5,064 4,611 4,246 4,024 Public Works 23,898 35,373 31,791 27,979 31,691 Non-Departmental*** 18,164 29,368 35,240 24,080 21,602 Interest on Long-Term Debt 1,467 2,063 2,119 2,245 1,946 Total Governmental Activities 143,268 261,120 241,025 208,972 212,497 Business-Type Activities
Water Utility 28,414 45,940 41,643 38,614 41,499 Sewer Service 6,127 9,351 8,729 8,192 9,712 Refuse Collection 8,916 10,821 11,277 11,308 11,145 Hazmat Service 117 224 244 204 231 Total Business-Type Activities 43,574 66,336 61,893 58,318 62,587 Total Business and Government Type Activities 186,842 $ 327,456 $ 302,918 $ 267,290 $ 275,084 $ *** Beginning with 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 Fiscal Year ended June 30, 2020.

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,
158

Program Revenues:

Governmental Activities: 2023 2022 2021 2020 2019
Charges for Services
City Council 167 $ 162 $ 162 $ 177 $ 149 $ City Manager 4,976 4,131 4,208 5,315 3,300 City Treasurer 153 149 149 163 135 City Attorney 5 5 6 7 7 City Clerk 299 269 30 220 327 Finance 3,125 3,036 3,055 3,302 2,899 Human Resources**** - - - - 751 Community Development* 18,817 10,953 8,353 10,037 7,459 Fire 14,166 13,401 8,877 10,122 9,831 Information Services 623 604 610 636 628 Police 6,139 6,687 6,477 5,329 6,044 Community Services 22,545 21,117 15,558 17,631 23,530 Library Services 388 302 153 266 308 Public Works 11,301 7,235 6,045 6,614 6,368 Non-Departmental*** - - - - - Total Charges for Services 82,704 68,051 53,683 59,819 61,736 Operating Grants 43,005 9,301 6,013 8,141 6,644 Capital Grants 11,202 8,537 10,192 14,483 8,361 Total Governmental Activities Program Revenue 136,911 85,889 69,888 82,443 76,741 Business-Type Activities:

Water Utility 48,934 43,590 42,523 40,518 43,958 Sewer Service 10,982 10,791 10,828 10,900 11,868 Refuse Collection 14,899 13,675 13,014 12,573 12,022 Hazmat Service 276 276 266 279 276 Total Business-Type Activities Program Revenues 75,091 68,332 66,631 64,270 68,124 Total Primary Government Program Revenue 212,002 154,221 136,519 146,713 144,865 Net (Expense) Revenue:

Governmental Activities (150,157) (142,738) (207,996) (182,597) (163,458) Business-Type Activities 657 (214) (1,884) (2,865) 2,992 Total Net (Expense) Revenue (149,500) (142,952) (209,880) (185,462) (160,466) General Revenue and Other Changes in Net Position
Governmental Activities:

Property Taxes 109,467 102,539 99,958 94,263 89,124 Sales Taxes 57,164 57,652 51,162 44,616 47,437 Utility Taxes 22,558 19,528 18,374 18,149 18,788 Other Taxes 32,418 26,134 17,293 18,635 20,227 Use of Money and Property 5,153 (1,895) 4,399 3,208 8,746 From Other Agencies 3,225 4,631 22,000 3,317 4,046 Gain on Sale of Property (520) 1,699 - - - Other - - - - - Transfers (38) (39) (38) (38) (37) Total Governmental Activities General Revenues 229,427 210,249 213,148 182,150 188,331 Business-Type Activities:

Use of Money and Property 1,356 (4,328) 261 2,746 3,235 Transfers 38 39 38 38 37 Total Business-Type Activities General Revenues 1,394 (4,289) 299 2,784 3,272 Total General Revenues and Transfers 230,821 205,960 213,447 184,934 191,603 Extraordinary Gain - - - - - Changes in Net Position - Governmental Activities 79,270 67,511 5,152 (447) 24,873 Changes in Net Position - Business-Type Activities 2,051 (4,503) (1,585) (81) 6,264 Total Changes in Net Position 81,321 63,008 3,567 (528) 31,137 Net Position - Beginning of Year 754,738 691,730 682,416 682,944 651,807 Prior Period Adjustment - Governmental Activities - - 5,747 - - Prior Period Adjustment - Business-Type Activities - - - - - Net Position - Beginning of Year as restated 754,738 691,730 688,163 682,944 651,807 Net Position - End of Year 836,059 $ 754,738 $ 691,730 $ 682,416 $ 682,944 $ * Planning and Building departments were combined in the Fiscal Year ended September 30, 2011. The combined department was later renamed to Community Development in Fiscal Year ended September 30, 2016. ** 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.

CITY OF HUNTINGTON BEACH
(In Thousands)
Fiscal Year Ended

CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
June 30,
159

Program Revenues: June 30,
Governmental Activities: 2018** 2017 2016 2015 2014
Charges for Services
City Council 91$ 108$ 116$ 71$ 68$ City Manager 2,374 3,515 3,029 2,994 2,835 City Treasurer 81 100 101 639 621 City Attorney 4 5 4 143 139 City Clerk 229 257 201 199 321 Finance 1,746 2,047 2,277 1,353 1,313 Human Resources**** 373 654 513 1,263 2,499 Community Development* 5,448 7,448 9,252 10,670 9,357 Fire 9,104 10,296 9,894 8,625 8,672 Information Services 381 501 521 834 809 Police 4,703 4,968 5,958 5,512 5,170 Community Services 19,245 21,693 18,853 18,569 18,055 Library Services 237 476 408 495 434 Public Works 4,392 5,392 5,733 6,474 6,367 Non-Departmental*** 916 1,116 1,290 327 318 Total Charges for Services 49,324 58,576 58,150 58,168 56,978 Operating Grants 3,976 7,329 4,723 7,458 7,958 Capital Grants 6,055 3,408 5,939 9,809 5,486 Total Governmental Activities Program Revenue 59,355 69,313 68,812 75,435 70,422 Business-Type Activities:

Water Utility 29,530 39,938 35,765 35,350 36,944 Sewer Service 8,362 10,854 11,280 11,239 10,665 Refuse Collection 8,820 11,282 11,215 11,221 11,006 Hazmat Service 25 287 235 222 183 Total Business-Type Activities Program Revenues 46,737 62,361 58,495 58,032 58,798 Total Primary Government Program Revenue 106,092 131,674 127,307 133,467 129,220 Net (Expense) Revenue:

Governmental Activities (83,913) (191,807) (172,213) (133,537) (142,075) Business-Type Activities 3,163 (3,975) (3,398) (286) (3,789) Total Net (Expense) Revenue (80,750) (195,782) (175,611) (133,823) (145,864) General Revenue and Other Changes in Net Position
Governmental Activities:

Property Taxes 61,185 82,925 87,128 82,615 81,355 Sales Taxes 33,844 43,551 34,289 33,063 29,243 Utility Taxes 14,014 19,303 19,482 20,229 20,621 Other Taxes 14,883 17,991 17,313 16,464 15,601 Use of Money and Property 2,158 3,370 3,618 5,551 3,725 From Other Agencies 2,263 3,896 4,397 5,653 4,279 Gain on Sale of Property - - - - - Other 2,811 2,438 5,693 4,440 6,903 Transfers (332) (51) (38) 35 (38) Total Governmental Activities General Revenues 130,826 173,423 171,882 168,050 161,689 Business-Type Activities:

Use of Money and Property 279 462 939 1,281 1,015 Transfers 332 51 38 (35) 38 Total Business-Type Activities General Revenues 611 513 977 1,246 1,053 Total General Revenues and Transfers 131,437 173,936 172,859 169,296 162,742 Extraordinary Gain - - - - - Changes in Net Position - Governmental Activities 46,913 (18,384) (331) 34,513 19,614 Changes in Net Position - Business-Type Activities 3,774 (3,462) (2,421) 960 (2,736) Total Changes in Net Position 50,687 (21,846) (2,752) 35,473 16,878 Net Position - Beginning of Year 618,500 639,484 642,236 964,254 962,179 Prior Period Adjustment - Governmental Activities (17,788) 862 - (333,677) (457) Prior Period Adjustment - Business-Type Activities 408 - - (23,814) (14,346) Net Position - Beginning of Year as restated 601,120 640,346 642,236 606,763 947,376 Net Position - End of Year 651,807 $ 618,500 $ 639,484 $ 642,236 $ 964,254 $ *** 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 Fiscal Year ended June 30, 2020. (continued)

CHANGES IN NET POSITION - LAST TEN FISCAL YEARS

CITY OF HUNTINGTON BEACH
(In Thousands)
Fiscal Year Ended
September 30,
160

2023 2022 2021 2020 2019
General Fund:

Nonspendable 51$ 82$ 115$ 120$ 23$ Restricted 19,578 14,623 13,561 9,320 8,154 Committed 51,230 26,665 25,565 25,010 25,011 Assigned 55,678 61,454 55,368 45,638 45,825 Unassigned - - - - - Total General Fund 126,537 $ 102,824 $ 94,609 $ 80,088 $ 79,013 $ Other Governmental Funds:

Nonspendable -$ -$ 105$ 50$ 64$ Restricted 87,866 75,774 70,161 71,671 59,213 Committed 45,820 28,559 26,857 21,735 20,308 Assigned 6,197 3,021 3,280 3,527 3,614 Unassigned - (4,311) - - - Total Other Governmental Funds 139,883$ 103,043 $ 100,403 $ 96,983 $ 83,199 $ Fiscal Year Ended
June 30,
2018 2017 2016 2015 2014
General Fund:

Nonspendable 41 $ - $ - $ 4,479$ 4,378 $ Restricted 6,384 2,671 2,637 2,871 2,070 Committed 25,011 25,011 25,011 25,011 25,011 Assigned 34,464 33,498 35,199 32,431 29,595 Unassigned 2,734 - - - - Total General Fund 68,634 $ 61,180 $ 62,847 $ 64,792 $ 61,054 $ Other Governmental Funds:

Nonspendable 726$ -$ -$ -$ -$ Restricted 52,742 40,588 40,293 45,515 27,214 Committed 20,800 17,686 21,368 21,659 16,447 Assigned 2,701 826 838 161 151 Unassigned - - - - - Total Other Governmental Funds 76,969$ 59,100 $ 62,499 $ 67,335 $ 43,812 $ Fiscal Year Ended September 30,

CITY OF HUNTINGTON BEACH

FUND BALANCES - GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS (In Thousands)
(Modified Accrual Basis of Accounting)
Fiscal Year Ended June 30,
161

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162

2023 2022 2021 2020 2019
REVENUES:

Property Taxes 109,467$ 102,539$ 99,958$ 94,263$ 89,367$ Sales Taxes 57,164 57,652 51,162 44,616 47,437 Utility Taxes 22,558 19,528 18,374 18,149 18,788 Other Taxes 40,738 33,720 25,745 24,578 27,196 Licenses and Permits 15,688 9,596 8,213 11,266 8,574 Fines and Forfeitures 3,945 5,144 4,619 3,403 4,300 From Use of Money and Property 22,726 14,365 19,163 27,863 23,276 From Other Agencies 47,426 13,060 29,836 11,309 13,072 Charges for Current Service/Other Revenue 66,363 52,809 27,428 34,772 33,787 TOTAL REVENUES 386,075 308,413 284,498 270,219 265,797

EXPENDITURES
Current:

City Council 453 426 1,043 394 369
City Manager 6,501 5,265 15,976 4,342 6,598
City Treasurer 417 326 837 297 248
City Attorney 3,404 2,995 7,714 2,898 2,874
City Clerk 1,442 1,295 2,810 886 981
Finance 7,420 7,259 16,173 6,200 6,484
Human Resources***** - - - - 6,362
Community Development** 21,569 14,412 39,212 14,692 8,138 Fire 72,499 62,880 149,726 56,477 54,431
Information Systems 8,563 7,871 19,095 8,473 8,342 Police 97,000 93,976 232,438 87,682 83,546
Community Services 16,610 18,455 25,064 14,429 11,720 Library Services 7,244 6,300 14,099 5,199 4,944 Public Works 62,161 50,158 88,007 47,655 46,878 Non-Departmental**** - - - - -
Capital Outlay*** - - - - -
Debt Service:

Principal 18,799 15,918 3,983 5,122 5,346
Interest 9,542 11,299 937 1,748 1,890
TOTAL EXPENDITURES 333,624 298,835 617,114 256,494 249,151

EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER) EXPENDITURES 52,451 9,578 (332,616) 13,725 16,646 OTHER FINANCING SOURCES (USES):

Transfers In 65,369 21,642 13,058 10,009 11,190 Issuance of Long-Term Debt - - 372,010 1,172 -
Issuance Premium - - 1,743 - -
Issuance Discount - - (649) - -
Payments to Escrow - - (28,256) - -
Lease (as Lessee) 398 448 - - -
Issuance of Finance Purchase Agreement 7,742 868 - - - Transfers Out (65,407) (21,681) (13,096) (10,047) (11,227) TOTAL OTHER FINANCING SOURCES (USES) 8,102 1,277 344,810 1,134 (37) INCREASE (DECREASE) IN FUND BALANCES 60,553 $ 10,855 $ 12,194 $ 14,859 $ 16,609 $

DEBT SERVICE AS A PERCENTAGE OF
NON-CAPITAL EXPENDITURES 9.7% 10.1% 0.9% 3.0% 3.3%
* 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 Fiscal Year ended September 30, 2011. The department was later renamed to Community Development in Fiscal Year ended September 30, 2016. *** 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.

CITY OF HUNTINGTON BEACH

CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
Fiscal Year Ended
June 30,
163

June 30,
2018* 2017 2016 2015 2014
REVENUES:

Property Taxes 80,614 $ 80,826 $ 86,382 $ 82,472 $ 79,460 $ Sales Taxes 33,844 43,551 39,305 32,234 30,454 Utility Taxes 14,014 19,303 19,482 20,229 20,621 Other Taxes 18,409 17,991 17,313 16,464 15,601 Licenses and Permits 6,293 8,812 9,820 9,270 7,976 Fines and Forfeitures 3,048 3,995 5,144 4,746 4,392 From Use of Money and Property 11,600 17,210 18,055 17,473 16,695 From Other Agencies 10,384 15,293 13,712 18,634 16,804 Charges for Current Service/Other Revenue 30,216 32,351 32,506 35,869 33,886 TOTAL REVENUES 208,422 239,332 241,719 237,391 225,889

EXPENDITURES
Current:

City Council 279 333 318 278 258 City Manager 3,143 4,116 3,092 2,703 3,040 City Treasurer 134 201 204 167 169 City Attorney 2,037 3,052 2,539 2,425 2,321 City Clerk 602 830 790 895 747 Finance 4,376 5,763 5,659 5,452 5,314 Human Resources***** 5,323 5,535 6,776 4,606 4,298 Community Development** 5,554 6,963 7,062 6,954 7,091 Fire 36,347 46,831 46,200 45,008 42,602 Information Systems 5,385 6,603 6,742 6,846 6,456 Police 57,916 75,015 72,612 68,940 66,628 Community Services 7,958 14,124 10,768 10,223 10,040 Library Services 3,436 4,422 4,247 4,146 3,739 Public Works 30,357 38,635 23,659 23,820 22,872 Non-Departmental***** 22,432 28,396 24,670 20,067 21,033 Capital Outlay**** - - 27,269 14,986 10,729 Debt Service:

Principal 311 5,091 5,933 5,454 4,797 Interest 96
5 2,066 2,138 2,226 1,987 TOTAL EXPENDITURES 186,555 247,976 250,678 225,196 214,121

EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER) EXPENDITURES 21,867 (8,644) (8,959) 12,195 11,768 OTHER FINANCING SOURCES (USES):

Transfers In 13,261 6,692 9,034 12,158 9,832 Issuance of Long-Term Debt - 2,767 10,197 Issuance Premium - - - - - Issuance Discount - - - - - Payments to Escrow - - - - - Lease (as Lessee) - - - - - Issuance of Finance Purchase Agreement - - - - - Transfers Out (13,593) (6,743) (17,053) (14,238) (9,870) TOTAL OTHER FINANCING SOURCES (USES) (332) 2,716 2,178 (2,080) (38) INCREASE (DECREASE) IN FUND BALANCES 21,535 $ (5,928) $ (6,781) $ 10,115 $ 11,730 $

DEBT SERVICE AS A PERCENTAGE OF
NON-CAPITAL EXPENDITURES 0.7% 3.2% 3.6% 3.7% 3.3%
**** 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 Fiscal Year ended June 30, 2020.

CITY OF HUNTINGTON BEACH

CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
Fiscal Year Ended
September 30,
(continued)
164

Fiscal Year
Common
Property Public Utilitie s Total Secured Unsecured
Total Assessed
Valuation
Total Direct Tax
Rate
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 2021-2022 40,789,946 518 40,790,464 1,041,429 41,831,893 0.17082 2022-2023 43,432,681 948 43,433,629 1,232,123 44,665,752 0.17082 Source: County of Orange Auditor Controller
Fiscal Year
City Basic Rate
(1), (2) City Other School Districts
Metro Water
District Others
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 0.08788 0.00350 0.84418 1.10638 2020-2021 0.15582 0.01500 0.07983 0.00350 0.84418 1.09833 2021-2022 0.15582 0.01500 0.07541 0.00350 0.84418 1.09391 2022-2023 0.15582 0.01500 0.07449 0.00350 0.84418 1.09299 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
165

Fiscal Year Total Levy Amount
Percentage
of Levy
Delinquent
Tax
Collections Amount
Percentage
of Levy
Delinquent
Taxes
Receivable
Delinquency
Percent
Secured Taxes
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% 2021-2022 72,014 69,871 97.0% 714 70,585 98.0% 1,510 2.1% 2022-2023 78,388 76,256 97.3% 547 76,803 98.0% 1,501 1.9% Unsecured Taxes
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% 2021-2022 2,267 2,059 90.8% 46 2,105 92.9% 90 4.0% 2022-2023 2,233 2,102 94.1% 42 2,144 96.0% 59 2.6% Community Facilities Districts
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% 2021-2022 3,987 3,975 99.7% - 3,975 99.7% - 0.0% 2022-2023 4,006 3,962 98.9% - 3,962 98.9% 31 0.8% Note:

The levy and tax year is for July 1st through June 30th and does not include the Redevelopment Agency. 2013/2014 to current fiscal year includes the following:

Unsecured: includes aircraft unsecured tax. Does not include CFDs.

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 Community Facilities District CFDs.

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
166

2022-2023
Taxable Assessed Value Percent
(In Thousands) of Total TAV
AES Huntington Beach Energy, LLC 780,550 $ 1.75% Bella Terra Associates LLC 401,138 0.90% Social Holding LLC 278,251 0.62% DCO Pacific City LLC 227,698 0.51% Huntington Gateway Industrial LLC 218,039 0.49% PCH Beach Resort LLC 204,525 0.46% The Boening Company/McDonnell Douglas 150,918 0.34% The Waterfront Hotel LLC 147,891 0.33% Monogram Residential Huntington Beach 141,850 0.32% One Pacific Plaza Owner LLC 131,445 0.29% Total Top Ten 2,682,305 6.01% All Other Property Taxpayers 41,983,447 93.99% City Total 44,665,752$ 100.00%
2013-2014
Taxable Assessed Value Percent
(In Thousands) of Total TAV
OXY USA Inc 568,551$ 1.95%
Boeing/McDonnell Douglas 333,126 1.14% Bella Terra Associates LLC 231,961 0.80% DCOR, LLC 202,939 0.70%
Mayer Financial LP 191,542 0.66% United Dominion Realty LP 137,308 0.47% CIM Huntington LLC 104,015 0.36% Pacific Sands LLC 88,516 0.30% Essex Huntington on Edinger LP 84,384 0.29% 21002 HB LLC 67,652 0.23% Total Top Ten 2,009,994 6.90% All Other Property Taxpayers 27,155,735 93.10% City Total 29,165,729$ 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
167

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168

Long-Term Indebtedness 2023 2022 2021 2020 2019
Governmental Activities:

Judgement Obligation Bonds -$ - $ - $ - $ - $ Public Financing Authority:
2010(a) Lease Revenue Bonds - - - 7,410 8,235 2011(a) Lease Revenue Bonds - - - 15,725 17,770 2014(a) Lease Revenue Bonds 10,530 11,215 11,880 12,530 13,145 2020(a) Lease Revenue Bonds 4,835 4,835 4,835 - - 2020(b) Lease Revenue Bonds 9,795 11,315 12,830 - - Total Public Financing Authority 25,160 27,365 29,545 35,665 39,150 Other Long-Term Obligations:

Finance Purchase Agreement 17,388 11,714 12,753 5,241 5,083 Leases Payable 456 247 - - - Subscriptions Payable 2,600 - - - - PARS Payable - - - - - Section 108 Loan City - - - - - LED Lighting Phase I 192 314 432 546 656 CEC 1,797 2,063 2,457 2,588 2,818 I-Bank 1,283 1,586 1,882 2,171 2,454 Pension Obligation Bonds 318,005 330,642 341,501 - - Total Other Long-Term Obligations 341,721 346,566 359,025 10,546 11,011 Total Long-Term Obligations - Governmental Activities 366,881 373,931 388,570 46,211 50,161 Long-Term Obligations - Business-Type Activities:

Pension Obligation Bonds 20,480 21,368 22,144 - - Total Long-Term Obligations - Business-Type Activities 20,480 21,368 22,144 - - Total Long Term Obligations - Governmental Activities and Business-Type Activities 387,361$ 395,299$ 410,714$ 46,211$ 50,161$ 2023 2022 2021 2020 2019
Population 198,373 197,437 198,039 200,748 202,265 Debt Per Capita 1,953$ 2,002$ 2,074$ 230$ 248$ Total Personal Income (In Thousands)* 10,841,878$ 9,995,248 $ 9,659,154 $ 9,450,814 $ 9,222,677 $ Per Capita Personal Income* 54,654$ 50,625$ 48,774$ 47,078$ 45,597$ Unemployment Rate** 3.60% 2.80% 4.70% 8.60% 2.60%
Total Employment** 103,900 104,300 100,700 96,200 107,700 * 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 perio d 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,
169

June 30,
Long-Term Indebtedness 2018*** 2017 2016 2015 2014
Governmental Activities:

Judgement Obligation Bonds - $ - $ 659$ 1,634$ 2,574 $ Public Financing Authority:
2010(a) Lease Revenue Bonds 9,030 9,030 9,795 10,525 11,230 2011(a) Lease Revenue Bonds 19,735 19,735 21,650 24,985 28,165 2014(a) Lease Revenue Bonds 13,740 13,740 14,315 14,865 - 2020(a) Lease Revenue Bonds - - - - - 2020(b) Lease Revenue Bonds - - - - - Total Public Financing Authority 42,505 42,505 45,760 50,375 39,395 Other Long-Term Obligations:

Finance Purchase Agreement 6,079 6,286 4,130 - - Leases Payable - - - - - Subscriptions Payable - - - - - PARS Payable - - - - 29 Section 108 Loan City 430 430 625 805 975 LED Lighting Phase I 762 866 966 1,063 - CEC 3,000 3,000 3,000 - - I-Bank 2,730 2,730 3,000 - - Pension Obligation Bonds - - - - - Total Other Long-Term Obligations 13,001 13,312 11,721 1,868 1,004 Total Long-Term Obligations - Governmental Activities 55,506 55,817 58,140 53,877 42,973 Long-Term Obligations - Business-Type Activities:

Pension Obligation Bonds - - - - - Total Long-Term Obligations - Business-Type Activities - - - - - Total Long Term Obligations - Governmental Activities and Business-Type Activities 55,506$ 55,817$ 58,140$ 53,877$ 42,973$ 2018*** 2017 2016 2015 2014
Population 201,761 202,413 201,919 198,389 195,999 Debt Per Capita 275 $ 276 $ 288 $ 272 $ 219 $ Total Personal Income (In Thousands)* 8,849,843$ 8,878,441 $ 8,880,801 $ 8,725,545$ 8,278,410 $ Per Capita Personal Income* 43,863$ 43,863$ 43,982$ 43,982$ 42,237$ Unemployment Rate** 2.70% 2.80% 3.90% 3.90% 3.60%
Total Employment** 106,900 103,200 107,200 104,000 120,200 Fiscal Year Ended

CITY OF HUNTINGTON BEACH

RATIOS OF OUTSTANDING DEBT BY TYPE

LAST TEN FISCAL YEARS
(In Thousands)
September 30,
170

2013-2014 -
2014-2015 -
2015-2016 -
2016-2017 -
2017-2018 -
2018-2019 -
2019-2020 -
2020-2021 -
2021-2022 -
2022-2023 - 5,359,890 5,359,890 44,665,752 4,867,347 4,867,347 40,561,224 5,019,827 5,019,827 41,831,893 37,120,729 4,454,487 4,454,487 38,887,451 4,666,494 4,666,494 33,663,879 4,039,665 4,039,665 35,340,214 4,240,826 4,240,826 30,787,185 3,694,462 3,694,462 32,392,741 3,887,129 3,887,129 29,165,729 3,499,887 3,499,887 (In Thousands)

LEGAL DEBT MARGIN

CITY OF HUNTINGTON BEACH

LAST TEN FISCAL YEARS
Assessed
Valuation
Debt Limit - 12% of
Assessed Valuation
Debt Applicable
to Limit
Legal Debt
MarginFiscal Year
171

2022-23 Assessed Valuation: $48,837,916,731
Debt Repaid with Property Taxes (Tax and Assessment Debt):

Overlapping Tax and Assessment Debt
Percent
Applicable*
Debt Applicable
to City
Metropolitan Water District 1.341% 257,673
Coast Community College District 28.162% 259,310,369
Huntington Beach Union High School District 73.088% 110,384,805 Fountain Valley School District 27.197% 15,616,517
Huntington Beach School District 99.942% 150,571,580
Ocean View School District 93.690% 118,962,878
Westminster School District 24.002% 32,894,635
Los Alamitos Unified School District Facilities District No. 1 1.146% 2,503,382 City of Huntington Beach Community Facilities Districts (1990-1, 2000-1, 2002-1, 2003-1) 100.000% 24,880,000 Total Overlapping Tax and Assessment Debt 715,381,839$
Direct and Overlapping General Fund Debt
Orange County General Fund Obligations 6.738% 30,399,498 Orange County Board of Education General Fund Obligations 6.738% 731,747 North Orange County Regional Occupation Program Certificates of Participation 0.085% 6,622 Coast Community College District General Fund Obligations 28.162% 416,798 Coast Community College District Pension Obligation Bonds 28.162% 388,636 Huntington Beach Union High School District Certificates of Participation 73.088% 40,261,321 Los Alamitos Unified School District Certificates of Participation 1.030% 335,494 Huntington Beach School District General Fund Obligations 99.942% 14,916,939 Ocean View School District Certificates of Participation 93.690% 13,636,580 Westminster School District General Fund Obligations 24.002% 6,210,518 City of Huntington Beach General Fund Obligations 100.000% 45,818,885 City of Huntington Beach Pension Obligation Bonds 100.000% 338,485,000 Total Direct and Overlapping General Fund Obligation Debt 491,608,038 $ Overlapping Tax Increment Debt (Successor Agency) 100.000% 2,485,000 Total Direct Debt 384,303,885$
Total Overlapping Debt 825,170,992
Combined Total Debt 1,209,474,877$
(1) Percentage of overlapping agency's assessed valuation located within boundaries of the City. (1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and non-bonded leases obligations.

Ratios to Adjusted Assessed Valuations
Combined Direct Debt ($384,303,885) 0.79%
Combined Total Debt 2.48%
Ratios to Redevelopment Successor Agency Incremental Valuation ($3,957,815,683) Total Overlapping Tax Increment Debt 0.06%
Source: California Municipal Statistics and City of Huntington Beach Finance Department

STATEMENT OF DIRECT AND

OVERLAPPING BONDED DEBT
JUNE 30, 2023

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.
172

2023 % of total
The Boeing Company 3,112 3.00%
Cambro Manufacturing 650 0.63%
Hyatt Regency Huntington Beach 641 0.62%
Safran Cabin Inc 633 0.61%
Boardriders Wholesale LLC 574 0.55%
Huntington Beach Hospital 527 0.51%
Wal-Mart 462 0.44%
No Ordinary Moments 458 0.44%
Waterfront Hilton Beach Resort 450 0.43%
Home Depot USA Inc 436 0.42%
Total of top 10 7,943 7.65%
All others 95,957 92.35%
Total employment (public and private) 103,900 100.00% 2014 % of total
Boeing 5,581 4.64%
Quiksilver 1,228 1.02%
Cambro MFG Co. 951 0.79%
Ensign United States Drilling 925 0.77%
Hyatt Regency Huntington Beach 641 0.53%
C & D Aerospace 555 0.46%
Huntington Beach Hospital 527 0.44%
Walter Wholesale Electronics 480 0.40%
Wal-Mart 462 0.38%
Rainbow Disposal 408 0.34%
Total of top 10 11,758 9.77%
All others 108,431 90.24%
Total employment (public and private) 120,189 100.00% Source: Finance Department, City of Huntington Beach

CITY OF HUNTINGTON BEACH

PRINCIPAL PRIVATE EMPLOYERS

CURRENT YEAR AND NINE YEARS AGO
173

General Government: 2023 2022 2021 2020 2019 2018*** 2017 2016 2015 2014 City Council 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 City Manager 30.00 27.00 20.00 18.00 12.50 12.50 11.50 11.50 11.50 11.50 City Treasurer 9.50 9.50 1.50 1.50 2.00 2.00 2.00 1.50 1.50 1.50 City Attorney 15.00 11.00 11.00 11.00 11.00 11.00 12.00 11.00 11.00 11.00 City Clerk 6.00 5.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Finance 28.50 28.50 32.50 31.50 33.00 33.00 33.00 32.50 31.50 31.50 Human Resources ** - - - - 15.00 15.00 15.00 15.00 15.00 15.00 Community Development 60.50 57.50 57.50 54.00 44.00 44.00 44.00 43.50 44.00 43.00 Information Systems 25.00 25.00 26.00 22.00 30.00 30.00 30.00 30.00 30.00 30.00 Library Services 29.25 29.25 29.25 23.25 28.25 28.25 28.25 28.25 28.25 28.25 Fire 201.00 201.00 201.00 200.00 198.00 198.00 198.00 198 .00 198.00 196.50
Police 353.00 353.00 357.00 356.00 365.50 364.50 364.50 364.50 361.50 360.50 Community Services 33.00 33.00 33.00 37.00 36.00 36.00 44.00 44.00 43.00 43.00 Public Works 211.00 211.00 207.00 199.00 207.00 207.00 199.00 199.00 198.00 196.00 1,002.75 991.75 980.75 958.25 987.25 986.25 986.25 983.75 978.25 972.75 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

174

Function/Program 2023 2022 2021 2020 2019
Finance:

Water Bills Processed 638,052 637,956 637,920 636,708 639,245 Active Business Licenses 18,787 18,849 19,011 20,910 21,414 Accounts Receivable Billings Processed 10,649 12,437 20,183 25,687 30,217 City Clerk:

Passports Issued **** 6,455 5,721 418 4,579 7,024 Planning:

Entitlements Processed 143 154 112 162 221 Plan Reviews 442 606 1,955 1,358 1,542 Field Inspection Complaints 15,247 7,403 11,899 11,610 8,183 Code Violation Cases 5,599 5,051 4,473 3,260 4,786 Building:

Number of Permits Issued 11,536 10,292 9,075 8,855 9,807 Number of Inspections Completed 33,983 31,080 26,710 32,859 36,562 Value of Construction Permits (Thousands of Dollars) 369,060 237,945 166,000 169,393 135,910 Processed Number of Certificate of Occupancies* 521 641 655 515 686 Completed Plan Reviews 6,916 5,701 4,673 3,469 3,491 Counter Visits 6,264 14,289 115 14,922 21,409 Fire:

Inspections 7,557 7,311 4,008 5,965 6,140 Responses 21,936 22,076 20,428 21,068 20,354 Ocean Rescues 3,027 4,160 4,116 2,487 4,953 Estimated Beach Visitors 9,101,188 8,345,139 7,910,293 6,712,125 10,577,290
Police:

Physical Arrests 5,358 5,585 5,363 5,785 5,979 Parking Violations 75,408 97,299 95,753 59,484 79,069 Traffic Violations 6,544 8,869 10,920 12,105 13,314 Community Services:

Park/Open Space Acreage 1,072 1,072 1,072 1,066 1,066 Enrollment in Recreation Classes 35,192 34,616 15,511 28,952 37,978 Public Works:

Water Sold (Acre Feet)** 23,358 26,459 27,731 25,966 26,251 Gallons of Sewage Pumped Per Day** 17 million 19 million 19 million 19 million 19 million Library:

Items in Collection 289,299 290,351 291,444 294,849 293,995 Items Borrowed 811,837 796,882 481,523 779,124 942,821 * 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
175

Function/Program 2018*** 2017 2016 2015 2014
Finance:

Water Bills Processed 476,290 632,997 635,052 536,684 630,240 Active Business Licenses 21,782 22,074 21,420 21,424 20,450 Accounts Receivable Billings Processed 25,000 34,963 30,826 38,594 42,360 City Clerk:

Passports Issued 5,757 7,408 5,623 5,121 4,598 Planning:

Entitlements Processed 206 216 221 280 204 Plan Reviews 1,466 1,376 1,653 1,595 1,466 Field Inspection Complaints 7,005 8,459 7,951 8,233 7,030 Code Violation Cases 4,219 3,981 4,324 4,710 2,545 Building:

Number of Permits Issued 7,490 9,728 10,981 10,670 9,348 Number of Inspections Completed 30,501 38,796 39,380 38,320 36,142 Value of Construction Permits (Thousands of Dollars) 109,462 216,252 283,910 234,946 216,343 Processed Number of Certificate of Occupancies* 523 740 n/a n/a n/a Completed Plan Reviews 2,771 4,172 4,172 3,815 3,148 Counter Visits 16,498 21,731 23,492 21,893 21,326 Fire:

Inspections 3,963 2,758 5,132 6,499 6,641 Responses 14,490 20,555 20,279 19,562 15,815 Ocean Rescues 3,530 3,639 3,977 5,371 6,426 Estimated Beach Visitors 12,522,640 13,339,518 12,272,030 11,803,943 12,035,134 Police:

Physical Arrests 4,614 5,298 5,112 4,854 4,303
Parking Violations 54,500 70,846 90,361 83,453 74,668 Traffic Violations 11,869 19,916 17,639 17,596 16,330 Community Services:

Park/Open Space Acreage 1,065 1,065 1,062 1,062 1,062 Enrollment in Recreation Classes 27,152 37,968 34,424 30,228 30,184 Public Works:

Water Sold (Acre Feet)** 19,777 25,944 24,505 24,763 29,279 Gallons of Sewage Pumped Per Day** 19 million 22 million 19 million 19 million 22 million Library:

Items in Collection 292,037 288,599 285,814 343,655 332,092 Items Borrowed 655,626 943,642 921,105 908,656 937,533

CITY OF HUNTINGTON BEACH

OPERATING INDICATORS BY FUNCTION/ACTIVITY

LAST TEN FISCAL YEARS
(Continued)
176

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 1,072
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, 2023

CAPITAL ASSET STATISTICS BY FUNCTION/ACTIVITY

CITY OF HUNTINGTON BEACH
177