CITY OF LAGUNA BEACH, CALIFORNIA
TRANSPORTATION DEVELOPMENT ACT FUND ACTIVITY
FINANCIAL STATEMENTS
June 30, 2025 and 2024
Attachment 1
3 CITY OF LAGUNA BEACH, CALIFORNIA
TRANSPORTATION DEVELOPMENT ACT FUND ACTIVITY
FINANCIAL STATEMENTS
June 30, 2025 and 2024
TABLE OF CONTENTS
INDEPENDENT AUDITORS REPORT .................................................................................................... 1
FINANCIAL STATEMENTS
STATEMENTS OF NET POSITION ................................................................................................... 4 STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION ........................ 5 STATEMENTS OF CASH FLOWS ..................................................................................................... 6 NOTES TO FINANCIAL STATEMENTS ............................................................................................ 7
ADDITIONAL INFORMATION
SCHEDULE OF THE ARTICLE 4 ALLOCATIONS RECEIVED AND
EXPENDED, BY PROJECT YEAR .................................................................................................. 9 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ........................................................ 10 INDEPENDENT AUDITORS REPORT ON COMPLIANCE WITH TDA REQUIREMENTS AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE ........................................................ 12 4 (Continued)
1. Crowe LLP
Independent Member Crowe Global
INDEPENDENT AUDITORS REPORT
Board of Directors
Orange County Transportation Authority
Orange, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the Transportation Development Act (TDA) Article 4 Fund Activity (TDA Fund Activity) of the City of Laguna Beach, California (City), as of and for the years ended June 30, 2025 and 2024, and the related notes to the financial statements, as listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of the TDA Fund Activity of the City, as of June 30, 2025 and 2024, and the changes in its financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits 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 (Government Auditing Standards). 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 audits.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the TDA Fund Activity, and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2025 and 2024, the changes in its financial position or, where applicable, its cash flows, for the years then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
5 (Continued)
2. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility 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 opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Citys 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.
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.
Additional Information
Management is responsible for the accompanying Schedule of the Article 4 Allocations Received and Expended by Project Year (the additional information), which is presented for purposes of additional analysis and is not a required part of the financial statements. Our opinion on the financial statements does not cover the additional information, and we do not express an opinion or any form of assurance thereon.
We read the additional information and considered whether a material inconsistency existed between the additional information and the financial statements, or the additional information otherwise appeared to be materially misstated. If, based on the work performed, we had concluded that an uncorrected material misstatement of the additional information existed, we would have described it in our report. 6 3.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 16, 2026 on our consideration of the Citys internal control over financial reporting of the TDA Fund Activity, and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Citys 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 Citys internal control over financial reporting and compliance of the TDA Fund Activity.
Crowe LLP
Costa Mesa, California
March 16, 2026
7 CITY OF LAGUNA BEACH, CALIFORNIA
TRANSPORTATION DEVELOPMENT ACT FUND ACTIVITY
STATEMENTS OF NET POSITION
June 30, 2025 and 2024
See notes to financial statements.
4. 2025 2024
ASSETS
Due from other governments $ 114,029 $ 110,076
Total assets $ 114,029 $ 110,076
LIABILITIES
Due to other City funds $ 114,029 $ 110,076
Total liabilities 114,029 110,076
NET POSITION
Unrestricted - - Total net position - - Total liabilities and net position $ 114,029 $ 110,076 8 CITY OF LAGUNA BEACH, CALIFORNIA
TRANSPORTATION DEVELOPMENT ACT FUND ACTIVITY
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Years ended June 30, 2025 and 2024
See notes to financial statements.
5. 2025 2024
Operating expenses
TDA expenditures $ 1,433,700 $ 1,443,801
Operating loss (1,433,700) (1,443,801)
Non-operating revenues
TDA allocation 1,433,700 $ 1,443,801
Total non-operating revenues 1,433,700 1,443,801
Change in net position - - Net position, beginning of year - - Net position, end of year $ - $ - 9 CITY OF LAGUNA BEACH, CALIFORNIA
TRANSPORTATION DEVELOPMENT ACT FUND ACTIVITY
STATEMENTS OF CASH FLOWS
Years ended June 30, 2025 and 2024
See notes to financial statements.
6. 2025 2024
Cash flows from operating activities
Cash payment to suppliers for goods and services $ (1,433,700) $ (1,443,801) Transfer from (to) other City fund 3,953 (133)
Net cash used for operating activities (1,429,747) (1,443,934) Cash flows from noncapital financing activities
Cash received from operating grants (TDA Allocation) 1,429,747 1,443,934 Net cash provided by noncapital financing activities 1,429,747 1,443,934 Net change in cash and cash equivalents - - Cash and cash equivalents at beginning of year - - Cash and cash equivalents at end of year $ - $ - Reconciliation of operating loss to net cash used for operating activities Operating loss $ (1,433,700) $ (1,443,801)
Adjustments to reconcile operating loss to
net cash used for operating activities
Changes in assets and liabilities:
Change in due to/from other City funds 3,953 (133)
Net cash used for operating activities $ (1,429,747) $ (1,443,934) 10 CITY OF LAGUNA BEACH, CALIFORNIA
TRANSPORTATION DEVELOPMENT ACT FUND ACTIVITY
NOTES TO FINANCIAL STATEMENTS
June 30, 2025 and 2024
(Continued)
7. NOTE 1 GENERAL INFORMATION
The financial statements are intended to reflect the financial position and changes in financial position of the Transportation Development Act (TDA) Article 4 Fund Activity only, and do not purport to, and do not, present fairly the position of the City of Laguna Beach, California (City), the changes in its financial position or, where applicable, its cash flows, in accordance with accounting principles generally accepted in the United States of America.
The City receives Transportation Development Act (TDA) Article 4 funding pursuant to Section 99260 of the California Public Utilities Code. Article 4 monies may be used for the support of public transportation systems, aid to public transportation research and demonstration projects, and contributions for the construction of grade separation projects.
The City submits claims to the Orange County Transportation Authority (OCTA) for disbursement of Article 4 funds. The City may submit claims either prior or subsequent to incurring allowable expenses. After review and approval of the claim, OCTA issues the allocation disbursement instructions to the County of Orange Auditor-Controller. Following instructions from OCTA, funds are disbursed from the County of Orange, Local Transportation Fund, to the City.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
Fund Accounting: The accounts are organized on the basis of funds. A fund is defined as an independent fiscal and accounting entity wherein operations of each fund are accounted for in a separate set of selfbalancing accounts that record assets, deferred outflows/inflows of resources, related liabilities, obligations, and net position segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The City accounts for the activity of the TDA Article 4 in its Municipal Transit Lines Fund, which is an Enterprise Fund.
Enterprise Funds are used to account for operations that are financed primarily through user charges, or where the governing body has decided that determination of net income is appropriate. Passenger fares represent the primary operating revenues of the fund. All other revenues are non-operating.
Measurement Focus and Basis of Accounting: Enterprise funds of the City are accounted for using the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that could affect certain reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.
NOTE 3 DUE FROM OTHER GOVERNMENTS
Included in due from other governments is a receivable from OCTA for reimbursement of eligible TDA Article 4 expenses in the amount of $114,029 and $110,076 as of June 30, 2025 and 2024, respectively. 11 CITY OF LAGUNA BEACH, CALIFORNIA
TRANSPORTATION DEVELOPMENT ACT FUND ACTIVITY
NOTES TO FINANCIAL STATEMENTS
June 30, 2025 and 2024
8. NOTE 4 DUE TO OTHER CITY FUNDS
Due to other City funds of $114,029 and $110,076 as of June 30, 2025 and 2024, respectively, represent the amounts paid by the City on behalf of TDA Fund Activity. The amounts will be repaid by the TDA Fund Activity as disbursements are received from OCTA.
12 ADDITIONAL INFORMATION
13 CITY OF LAGUNA BEACH, CALIFORNIA
TRANSPORTATION DEVELOPMENT ACT FUND ACTIVITY
SCHEDULE OF THE ARTICLE 4 ALLOCATIONS RECEIVED AND EXPENDED,
BY PROJECT YEAR
Year ended June 30, 2025
9. Unspent Unspent
Project Project Year Allocation Allocations Allocations Project Description Type Allocated Amount at 06/30/2024 Receipts Expenditures at 06/30/2025 Status Transit Program Local 2024-2025 $ 1,433,700 $ - $ 1,433,700 $ 1,433,700 $ - Closed Totals $ 1,433,700 $ - $ 1,433,700 $ 1,433,700 $ -
14 (Continued)
10. Crowe LLP
Independent Member Crowe Global
INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of Directors
Orange County Transportation Authority
Orange, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Transportation Development Act Article 4 Fund Activity (TDA Fund Activity) of the City of Laguna Beach, California (City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, and have issued our report thereon dated March 16, 2026.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Citys internal control over financial reporting of the TDA Fund Activity (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Citys internal control. Accordingly, we do not express an opinion on the effectiveness of the Citys internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entitys financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. 15 11.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the financial statements of the TDA Fund Activity of the City are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entitys internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entitys internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Crowe LLP
Costa Mesa, California
March 16, 2026
16 (Continued)
12. Crowe LLP
Independent Member Crowe Global
INDEPENDENT AUDITORS REPORT ON COMPLIANCE WITH TDA COMPLIANCE REQUIREMENTS
AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE
To the Board of Directors
Orange County Transportation Authority
Orange, California
Report on Compliance with the Transportation Development Act We have audited City of Laguna Beachs (City) compliance with the types of compliance requirements described in Section 6667 of Part 21 of the California Code of Regulations related to the Transportation Development Act Article 4 (TDA), that could have a direct and material effect on the Citys compliance with the TDA for the year ended June 30, 2025.
In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on its compliance with the TDA for the year ended June 30, 2025.
Basis for Opinion on the TDA
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the TDA. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance. Our audit does not provide a legal determination of the Citys compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the TDA. 17 (Continued)
13. Auditors Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Citys compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the TDA requirements will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the Citys compliance with the requirements of the TDA.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the TDA, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the Citys compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of the Citys internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the TDA, but not for the purpose of expressing an opinion on the effectiveness of the Citys internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of the TDA on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of the TDA will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of the TDA that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditors Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
18 14.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the TDA.
Accordingly, this report is not suitable for any other purpose.
Crowe LLP
Costa Mesa, California
March 16, 2026
19