CITY OF LAGUNA NIGUEL
CITY CoUNCIL AGENDA ITEM
To: Honorable Mayor and Council Members
FROM: Kristin Forier, Interim Finance Director
DATE: February 7, 2023
SUBJECT: Fiscal Year 2021-2022 Annual Comprehensive Financial Report
RECOMMENDATION
Staff recommends that the City Council receive and file the City's Annual Comprehensive Financial Report (ACFR) and related audit reports of the City of Laguna Niguel for the fiscal year ended June 30, 2022.
BACKGROUND
The City's independent accounting firm Davis Farr, LLP has completed its audit work of the financial statements of the City of Laguna Niguel for the year ended June 30, 2022.
Attached are the following items:
Annual Comprehensive Financial Report for fiscal year ended June 30, 2022 (Attachment A)
Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit for Fiscal Year 2021-2022 (Attachment B) • Independent Accountants' Report on Agreed-Upon Procedures Applied to Compensation of City Manager, Executive Team, and Employees (Attachment C)
• Independent Accountants' Report on Agreed-Upon Procedures Applied to Selected Bank Reconciliations of the City of Laguna Niguel (Attachment D) • Independent Accountants' Report on Agreed-Upon Procedures Applied to Journal Entries of the City of Laguna Niguel (Attachment E) In the opinion of Davis Farr, LLP, the financial statements reflect fairly the financial position of the City at June 30, 2022. As such, the City received an unmodified audit opinion. The auditors found no instances of material weaknesses nor significant deficiencies in the City's internal controls. The auditors noted no instances of non- compliance with certain provisions of laws, regulations, or grants, which could have a material effect on the determination of financial statement amounts.
The ACR for FY 2020-21 received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada (GOA). Our current ACR continues to meet the Certificate of Achievement Program requirements. As such, staff will be submitting this ACR to the GOA for award consideration.
FISCAL IMPACT
As detailed in the ACFR, the General Fund ended the fiscal year on a positive note.
General Fund revenues totaled $48.0 million and operating expenses totaled $46.0 million. This resulted in an operational surplus of $2.0 million. Factoring in General Fund capital related activity of $0.1 million, the General Fund increased in fund balance by $2.1 million. The General Fund balance at June 30, 2022 is $48.5 million.
CONCLUSION
The City of Laguna Niguel is in excellent financial condition. The City's strong financial policies and fiscally conservative leadership since incorporation have served the City well. The City has a strong tax base and plans it's spending very conservatively. The City is prospering today and is well positioned to thrive in the future.
Jamara SEetonneau Kieste Fores
Tamara S. Letourneau Kristin Forier
City Manager Interim Finance Director
Attachments:
A. Annual Comprehensive Financial Report for fiscal year ended June 30, 2022 B. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit for Fiscal Year 2021-2022
C. Independent Accountants' Report on Agreed-Upon Procedures Applied to Compensation of City Manager, Executive Team, and Employees D. Independent Accountants' Report on Agreed-Upon Procedures Applied to Selected Bank Reconciliations of the City of Laguna Niguel E. Independent Accountants' Report on Agreed-Upon Procedures Applied to Journal Entries of the City of Laguna Niguel
ATTACHMENT A
Annual Comprehensive Financial Report for
Fiscal Year Ended June 30, 2022
CITY OF LAGUNA NIGUEL,
CALIFORNIA
SEA COUNTR
1989
ANNUAL COMPREHENSIVE FINANCIAL REPORT
WITH REPORTS ON AUDIT BY
INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2022
Prepared by the Finance Department
of the City of Laguna Niguel
CITY OF LAGUNA NIGUEL
CALIFORNIA
SEA COUNTRI
1989
Annual Comprehensive Financial Report
Fiscal Year Ended June 30, 2022
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CITY OF LAGUNA NIGUEL, CALIFORNIA
Annual Comprehensive Financial Report
Year ended June 30, 2022
CITY OF LAGUNA NIGUEL
Annual Comprehensive Financial Report
Year ended June 30, 2022
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION (Unaudited):
CrOA Ce Tracate of Achievement for Excellence in Financial Reporting vii
Erected oficials and Management Staff vili
FINANCIAL SECTION:
1 Independent Auditor's Report
6 Management's Discussion and Analysis (Unaudited)
Basic Financial Statements:
Government-Wide Financial Statements: 20
Statement of Net Position 22
Statement of Activities
und Financia Statements:
Governmental Fund Financial Statements 27
Balance Sheet
Reconciliation of the Balance Sheet of Governmental Funds to the Government-Wide Statement of Net Position 28
Statement of Revenues, Expenditures, and Changes in Fund 29 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the 30 Statement of Activities
Proprietary Fund Financial Statements: 33
Statement of Net Position 34
Statement of Revenues, Expenses, and Changes in Net Position 35 Statement of Cash Flows
38 Notes to the Basic Financial Statements
CITY OF LAGUNA NIGUEL
Annual Comprehensive Financial Report
Year ended June 30, 2022
TABLE OF CONTENTS, (CONTINUED)
Page
Required Supplementary Information (Unaudited):
Budgetary Comparison Schedules: 72
73 Miscellaneous Grants Special Revenue Fund 74
City Capital Projects Fund
75 Notes to the Required Supplementary Information
Schedule of the City's Proportionate Share of the Net Pension Liability 76 and Related Ratios
77 Schedule of Contributions - Pension
Schedule of the Changes in Total OPEB Liability and Related Ratios 78 Supplementary Information:
Nonmajor Governmental Funds: 81
Combining Balance Sheet
Combining Statement of Revenues, Expenditures, and
83 Changes in Fund Balances
Statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual: 85
Gas Tax Special Revenue Fund 86
Measure "M" Special Revenue Fund
Air Quality Improvement Special Revenue Fund 87
88 Community Development Block Grant Special Revenue Fund Law Enforcement Special Revenue Fund 89 90 Senior Transportation Special Revenue Fund
CITY OF LAGUNA NIGUEL
Annual Comprehensive Financial Report
Year ended June 30, 2022
TABLE OF CONTENTS, (CONTINUED)
Page
STATISTICAL SECTION (Unaudited):
94 Statistical Section Overview
95 Net Position by Component
97 Changes in Net Position
99 Fund Balances of Governmental Funds
101
Changes in Fund Balances of Governmental Funds
103
Tax Revenues by Source - Governmental Funds
104
Assessed Value of Taxable Property
105
Direct and Overlapping Property Tax Rates
107
Principal Property Tax Payers
108
Property Tax Levies and Collections
109
Ratio of Outstanding Debt by Type
110
Direct and Overlapping Governmental Activities Debt
Legal Debt Margin Information 111
Demographic and Economic Statistics 112
113
Principal Employers
115
Full-Time Equivalent City Government Employees by Function / Program 117
Capital Asset Statistics by Function / Program
118
Operating Indicators by Function
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CITY of LAGUNA NIGUEL CITY COUNCIL
30111 Crown Valley Parkway
Laguna Niguel, California, 92677 Mayor Pro Tem Rischi Paul Sharma Phone: (949) 362-4300 Council Member Ray Gennawey
Fax: (949) 362-4340 Council Member Kelly Jennings
Council Member Stephanie Oddo
February 7, 2023
Honorable Mayor, Council Members, and Residents of the City of Laguna Niguel
LETTER OF TRANSMITTAL
2021-22 ANNUAL COMPREHENSIVE FINANCIAL REPORT
It is a pleasure to submit the City's Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022. This report has been compiled and prepared by the City's generally accepted accounting principles
Finance Department in accordance with
Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.
The City's financial statements have been audited by Davis Farr, LLP, a firm of licensed certified public accountants. The independent auditor rendered an unmodified (clean) opinion that the City's financial statements for the fiscal year ended June 30, 2022 are fairly presented in conformity with Generally Accepted Accounting Principles (GAAP). The independent auditors' report is presented as the first component of the financial section of this report.
Management's Discussion and Analysis (MD&A) immediately follows the independent auditors' report and provides a comprehensive and detailed narrative introduction, overview, and analysis of the basic financial statements. The MD&A is designed to complement this letter of transmittal and should be read in conjunction with it.
GENERAL INFORMATION ABOUT LAGUNA NIGUEL
planned community encompassing 14.72 square miles in the coastal area of South Orange The City of Laguna Niguel was incorporated on December 1, 1989. The City is a master- projected the City's population as 64,316. The City is primarily a residential community County, California. As of January 2022, the State of California Department of Finance supported by a strong retail and commercial base. Over one-third of Laguna Niguel's geographic area is permanently designated as open space. This is one of the key features that define the character and urban form of the City.
Laguna Niguel is a General Law City and operates under the Council-Manager form of government. The City is governed by a five-member City Council, which is elected at large and serves staggered four-year terms. City Council elections are held in November of even numbered years. Annually, the City Council appoints a Mayor and Mayor Pro Tem from its own membership to serve a one-year term.
The City operates primarily as a contract city, utilizing agreements with other governmental entities, private firms and individuals to provide numerous municipal services to the community, including fire services which is provided through the Orange County Fire Authority, and police services which is provided by the Orange County Sheriff's Department.
FACTORS AFFECTING FINANCIAL CONDITION
Federal Stimulus Funds. As a result of the COVID-19 health crisis, the Federal Government enacted several different pieces of legislation to stimulate the national economy. The City of Laguna Niguel has benefited from these stimulus funds starting in FY 2020-2021 and has continued to benefit in the following fiscal years.
The American Rescue Plan Act was a federal stimulus bill signed into law in March of 2021.
The City of Laguna Niguel received approximately $8.8 million from this legislation. To the extent of lost revenue due to the health crisis, the City started in FY 2021-2022 to use these funds on infrastructure and capital improvements.
Local Economy. The City's largest revenue source is property tax. Actual property tax receipts in FY 2021-2022 totaled $25.3 million. As a point of comparison, the prior year property tax receipts totaled $24.6 million. Property values and sales have remained strong in South Orange County.
Sales tax is the second largest revenue source in the City. Actual sales tax receipts in FY 2021-2022 totaled $14.5 million. As a point of comparison, the prior year sales tax receipts totaled $13.1 million. The City is continuing to actively monitor sales tax trends throughout the County and State.
The City adopted a balanced budget for FY 2022-2023 that maintains all service levels and programs. The adopted General Fund budget includes approximately $49.0 million in revenues and $47.7 million in expenditures. It also provides for $9.4 million in funding for the annual Capital Improvement Program.
Major Initiatives. Significant projects are being planned, designed, or constructed over the next several years. These include, but are not limited to, the Residential Annual Resurfacing Program, street improvements along Marina Hills Drive, Residential Overlay Program, completion of playground replacements at various City parks, the replacement of the synthetic turf at the Chapparosa Park Soccer Field, and capital improvements at the various parks throughout the City.
for financial and economic uncertainty in an amount equal to no less than 50% of annual unknown contingencies. As in prior years, this year's policy calls for maintaining a reserve General Fund operating expenditures and a reserve for compensable accrued unused vacation and sick leave and other post-employment benefits. The percentage of expenditures in reserves at the end of the fiscal year was 97.9% of the following year's adopted General Fund expenditure budget, far exceeding the 50% threshold. The City Council may designate portions of the fund balance of the General Fund for future capital projects, continuing or carry-over appropriations, or any other municipal purpose that the City Council deems prudent or necessary. All fund balance classifications comply with the ii
requirements of Governmental Accounting Standards Board (GASB) Statement No. 54 and are identified in Note 9 of the Notes to Financial Statements.
Long-term Financial Planning. In FY 2019-2020, the City adopted its first ever Strategic Plan. The City initiated its strategic planning process to set goals and priorities for its future.
Through the strategic planning process, the City was able to create a blueprint for the future and develop a plan to accomplish its determined direction. The Strategic Plan defines current and future needs and establishes goals and strategies that enable the City to meet those needs. The Strategic Plan serves as a guide for future funding needs. The core goals identified are Public Safety, Fiscal Sustainability, Open Space and Environmental Preservation, Infrastructure and Technology, Economic and Community Development, and Community Outreach. In FY 2020-2021, the City conducted its first Strategic Plan Update Workshop. The City continues to monitor the progress of the Strategic Plan on an annual basis and address the changing needs of the City.
The City has also taken other tangible actions to ensure long-term fiscal sustainability. These include, but are not limited to, establishing a Section 115 trust to prepare for future pension costs, evaluating service levels on a constant basis, and adhering to the financial principle of not issuing bonded debt. At the November 1, 2022, City Council Meeting, the City Council authorized a budget appropriation to reduce the City's unfunded pension liability by $4.8 million during FY 22-23. This determination was based on the unfunded pension liability of $6.9 million as of the CaPERS June 30, 2021 valuation date presented to the City Council.
SUMMARY OF FY 21-22 ACCOMPLISHMENTS
The City was able to complete many projects and accomplishments in FY 2021-2022. Some of these include:
Administration
• Communications and Community Outreach: Continued enhancement and increased usage of City's social media platforms, website and mobile app, while implementing new technologies and practices for improved efficiencies.
Prepared and adopted Personnel Rules and Regulations.
: Effectively administered safe workplace requirements to remain compliant with all federal, state and local guidelines in response to the pandemic. • Continued to partner with Mercy House to provide grant-funded outreach and diversion services to individuals experiencing homelessness. • Award winner of the California JPIA Risk Reduction Award. • Implemented State Mandated Trash & Recycling Compliance Program. • Completed labor negotiations with OCEA Bargaining Unit. • Coordinated the Emergency Operations Center Coastal Fire Response.
Public Safety
• Participated and provided security for numerous special events throughout the City. • Met with school officials for increased communication and openness. • Established a contract for automated license plate readers. • Added an unmanned aerial vehicle.
ill
• Conducted presentations, including Junior Civic Workshop, Youth Committee, and E- Bike Safety Workshops.
• Added additional Behavioral Health Liaisons.
Community and Economic Development
• Adoption of the 2021 Housing Element Update.
• Adoption of the Comprehensive Zoning Code Clean-Up.
• Approved and Certified City Center Entitlement Applications/Project EIR. • Administered the Community Development Block Grant (CDBG) program, which includes over 2,600 Laguna Niguel residents.
Public Works and Infrastructure
• Installed electric vehicle charging infrastructure at City Hall and the Metrolink Station. • Completed improvements at the Sea Country Senior & Community Center. • Completed the first phase of the multi-year Total Cost of Ownership (TCO) program. • Completed Citywide VolP Phone System Upgrade Project
• Launched the Laguna Niguel Summer Trolley Program.
Parks and Recreation
• Created a user-friendly trail guide.
• Hosted multiple in-person special events, resulting in more than 20,000 attendees. • Commenced facility rentals of the Crown Valley Community Center. • Completed the Citywide Park Needs Assessment.
• Successfully reopened the Sea Country Senior & Community Center.
OTHER INFORMATION
Awards. The Government Finance Officers Association (GOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Laguna Niguel for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2021. This was the 22n° consecutive year that the City has received this prestigious award. To be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized ACR that satisfies both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current ACR continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GOA for award consideration.
Conclusion and Acknowledgments. The City of Laguna Niguel is in excellent financial condition. The City's strong financial policies and keen leadership since incorporation have served the City well. The City has a strong tax base and plans it's spending very conservatively. The City is prospering today and is well positioned to thrive in the future.
The preparation and development of this report would not have been possible without the continued support and encouragement of the Laguna Niguel City Council. We thank you for your support, vision, and leadership.
iv
Respectfully submitted:
Jamasa SEetonseau Kisted Fores
Tamara S. Letourneau Kristin Forier
City Manager Interim Finance Director
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Laguna Niguel
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Chustophe P. Movill
Executive Director/CEO
vi
CITY OF LAGUNA NIGUEL
ORGANIZATIONAL CHART
JUNE 30, 2022
LAGUNA NIGUEL
RESIDENTS
CITY COUNCIL
CITY ATTORNEY CITY MANAGER
• Legal Counsel
PUBLIC
CITY CLERK FINANCE ADMINISTRATION SAFETY
Records Mgmt. - Budge - Law Enforcement
• Risk Management Emergency Prep
Elections - Accounting
- Investments
• Purchasing
COMMUNITY PUBLIC WORKS PARKS & RECREATION
DEVELOPMENT
Planning Engineering Recreation Programs
- Building & Safet Street Lighting Senior & Community Center - Code Enforcement Street Sweeping - Skateboard Park
Service Request System Street Maintenance Animal Control Parks Maintenance
Slopes & Median Maintenance
Environmental Services
Facilities Maintenance
Capital Improvement
vii
CITY OF LAGUNA NIGUEL
ELECTED OFFICIALS AND MANAGEMENT STAFF
JUNE 30, 2022
CITY COUNCIL
Elaine Gennawey, Mayor
Sandy Rains, Mayor Pro Tem
Kelly Jennings, Council Member
Fred Minagar, Council Member
Rischi Paul Sharma, Council Member
MANAGEMENT STAFF
City Manager.. ..Tamara S. Letourneau
Justin Martin
Deputy City Manager.
Kevin G. Ennis
City Attorney.
• Marissa Asistin
City Clerk.
Michael Contreras
Chief of Fire Services (Division 5)...
Chief of Police Services (O.C. Sheriff Department). ..Capt. Virgil Asuncion Jonathan Orduna
Community Development Director.
Eric Hendrickson
Finance Director.
.Ron Rivera
Parks and Recreation Director.
Jacki Scott
Public Works Director.
vili
Davis Farr LLP
| DavisFarr 18201 Von Karman Avenue | Suite 1100 | Irvine, CA 92612 Main: 949,474.2020 | Fax: 949.263.5520
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditor's Report
City Council
City of Laguna Niguel
Laguna Niguel, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Laguna Niguel, California as of and for the year June 30, 2022, and the related notes to the financial statements, which collectively comprise the City of Laguna Niguel'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, each major fund, and the aggregate remaining fund information of the City of Laguna Niguel, California, as of June 30, 2022, and the respective changes in financial position and, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
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 City of Laguna Niguel, California, 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 15 to the financial statements, during the year ended June 30, 2022, the City implemented Governmental Accounting Standards Board (GASB) Statement No.87, Lease Accounting. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements City of Laguna Niguel'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. 1 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 City of Laguna Niguel's ability to continue as a going concern for one year after the date that the financial statements are issued.
Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not. a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of City of Laguna Niguel'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 City of Laguna Niguel's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Budgetary Comparison Schedule for the General Fund, Miscellaneous Grants Special Revenue Fund and City Capital Projects Fund, Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios, Schedule of Contribution - Pension, Schedule of the Changes in Total OPEB Liability and Related Ratios be presented to supplement the basic financial statements.
Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial We do not express an opinion or provide any assurance on the information statements.
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Laguna Niguel's basic financial statements. The combining and individual nonmajor fund financial statements and budget to actual schedules are presented for purposes of additional analysis and are not a required part of the basic financial The combining and individual nonmajor fund financial statements and budget to actual schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and budget to actual schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the Annual Comprehensive section but does not include the financial statements and our auditor's report thereon. Our Financial Report. The other information comprises the introductory section and statistical 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 Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 7, 2023 on our consideration of City of Laguna Niguel'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 City of Laguna Niguel's internal control over financial reporting and compliance.
Irvine, California
February 7, 2023
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CITY OF LAGUNA NIGUEL
MANAGEMENT'S DISCUSSION AND ANALYSIS
management of the City of Laguna Niguel ("City"), we offer readers of the City's financial statements th arrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2022. C
OVERVIEW OF FINANCIAL STATEMENTS
The City's basic financial statements consist of three components: 1) government-wide financial statements, 2, fund financial statements, and 3) notes to the basic financial statements. This report also consists of supplementary information in addition to the basic financial statements.
Government-Wide Financia/ Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to private-sector business. They are comprised of the following:
• Statement of Net Position
The Statement of Net Position presents information on all of the City's assets, deferred outflows of resources, liabilities, and deferred inflows of resources on a full accrual basis of accounting similar to that used by private sector companies. The difference between assets and deferred outflows of resources, and liabilities anc deferred inflows of resources is reported as net position. Over time, increases or decreases in net positior nay serve as a useful indicator of whether the financial position of the City is improving or deteriorating • Statement of Activities
The Statement of Activities presents information about the City's rever ees and exe Cies or gaulia this basis, with an emphasis on measuring net revenues or expenses for each of the City's programs. statement also reflects the change in net position for the year.
Government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a ignificant portion of their costs through user fees and charges (business-type activities). The governmenta civities of the City include general government, public safety, public works, community development, and park The government-wide financial statements can be found behind the tab section titled Government-Wide Financial Statements.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City are divided into two categories: governmental funds and one proprietary fund.
The fund financial statements provide detail information about each of the City's most significant funds, called Major Funds. The concept of Major Funds, and the determination of which are Major Funds, was established by Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments (GASB 34) and replaces the concept of combining like funds and presenting them in total. Instead, each Major Fund is presented individually, while all Nonmajor Funds are summarized and presented in a single column. 6 OVERVIEW OF FINANCIAL STATEMENTS (Continued)
Fund Financial Statements (Continued)
• Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements. governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for inderstand the long-term impact of the government's near-term financing decisions. A reconciliation of bott overnmental activities in the government-wide financial statements. By doing so, readers may better the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances with the government-wide financial statements can be found on pages behind the tab section titled Government-Wide Financial Statements.
The City has nine governmental funds for financial reporting purposes, of which three are considered major funds for presentation purposes. Each major fund is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances. The City's three major funds are its General Fund, City Capital Projects Fund, and Miscellaneous Grants Special Revenue Fund. Data from the nonmajor governmental funds (e.g., Gas Tax Fund, Air Quality Improvement Fund, Law Enforcement Fund, Community Development Block Grant Fund, etc.) are combined into a single, aggregated presentation. The governmental funds financial statements can be found on pages behind the tab section titled Fund Financial Statements. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements on pages behind the tab section titled Supplementary Schedules.
The City adopts an annual appropriated budget for all governmental funds. A budgetary comparison schedule has been provided for each of the funds to demonstrate compliance with this budget. • Proprietary Funds
bas meal among and real ence une the clydes an
statements, only in more detail. Like the government-wide financial statements, proprietary fund financial Proprietary fund financial statements provide the same type of information as the government-wide financial statements use the accrual basis of accounting. A separate financial statement is provided for the Vehicle The fund financial statements can be found behind the tab section titled Fund Financial Statements.
Notes to the Basic Financial Statements
government-wide and fund financial statements. The notes to the basic financial statements can be found behind The notes provide additional information that is essential to obtain a full understanding of the data provided in the the tab section titled Notes to the Basic Financial Statements.
Required Supplementary Information
Required supplementary information includes budgetary information on the General Fund, the budget process, the City's share of net pension liability and related ratios, the schedule of pension contributions and schedule of changes in net OPE liability and related ratios. Required supplementary information can be found behind the tab section titled Required Supplementary Information.
7 OVERVIEW OF FINANCIAL STATEMENTS (Continued)
Supplementary Schedules
The following table summarizes the major features of the City's financial statements, including the portion of the City government they cover and the types of information they contain Major Features of the City's Government-Wide and Fund Financial Statements Fund Financial Statements
Government-Wide
Financial Statements Governmental Funds Proprietary Funds Scope Entire City government The activities of the City that Activities the City operates are not proprietary similar to a private business
Required financial • Statement of Net Balance Sheet • Statement of Net Position statements Position : Statement of Revenues, Statement of Revenues, • Statement of Expenditures and Expenses and Changes in Activities Changes in Fund Net Position
Balances • Statement of Cash Flows
Accounting basis Accrual accounting an Modified accrual accounting Accrual accounting and and measurement conomic resource and current financial economic resources focus focus focus resources focus
Type of asset/ All assets and liabilities, Only assets expected to be All assets and liabilities, both liability information both financial and used up and liabilities that financial and capital, and capital, and short-term come due during the year or short-term and long-term debt and long-term debt soon thereafter; no capital
assets or long-term debt
included
Type of inflow/ All revenues and Revenues for which cash is All revenues and expenses outflow expenses during year, received during or soon after during the year, regardless of information regardless of when the end of the year; when cash is received or paid cash is received or paid expenditures when goods or
services have been received
and payment is due during
the year or soon thereafter
Financial Highlights
• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at June 30, 2022 by $618.6 million. The amount is referred to as the net position of the City. Of this amount, $39.0 million is unrestricted net position and may be used to meet the City's ongoing obligations to citizens and creditors.
• The City's overall net position decreased in FY 2021-22 by $3.0 million from FY 2020-21. FY 2021-22 materials across all areas and industries.
• 551 milose, of increase of 2, 1 miCin compared ental urd year. ed comoral ending untu balances of at year-end, $47.2 million is available for spending at the government's discretion (the sum of the committed, assigned and unassigned fund balance categories reported on the accompanying financial statements). 8 OVERVIEW OF FINANCIAL STATEMENTS (Continued)
Financial Highlights (Continued)
• As of June 30, 2022, the total fund balance of the General Fund, the City's chief operating fund, totaled $48.5 million.
assigned and consists of previously obligated items.
FINANCIAL PERFORMANCE
Government-Wide Financial Analysis
The following analysis focuses on the net position and changes in net position of the City's governmental activities The following is a summary of the Government-Wide Statement of Net Position:
Governmental Activities
Net Position at June 30
(in millions) Increase/
(Decrease)
2022 2021 from 2021
67.1 $ 59.3 $ 7.8
Cash and investments $ 1.4
6.3 4.9
ther current asset: 575.8 579.3 (3.5)
loncurrent asset
649.2 643.5 5.7
Total assets
2.2 2.4 (0.2)
Deferred pension related items 0.5
Deferred OPEB related items 0.5
Total deferred outflows 2.9 (0.2)
of resources 2.7
7.2 12.5 (5.3)
Long-term liabilities 17.2 11.8 5.4
Other liabilities
24.4 24.3 0.1
Total liabilities
0.5 4.3
Deferred pension related items 0.1 1.0
Deferred OPEB related items 3.0 3.0
Lease related items
Total deferred inflows 0.6 8.3
of resources 8.9
Net position: 572.8 579.1 (6.3)
Net Investment in capital assets 6.8 6.1 0.7
Restricted 36.4 2.6
Unrestricted 39.0
618.6 621.6 (3.0)
Total net position
9 FINANCIAL PERFORMANCE (Continued)
Government-Wide Financial Analysis (Continued)
The City's net position decreased by $3.0 million, or 0.5%, during FY 2021-2022, primarily due to increased expenses in the governmental activities.
& Analysis for additional information on capital project asset additions.
The following is a summary of the Government-Wide Statement of Activities:
Governmental Activities
Changes in Net Position for the Year Ended June 30
(in millions) Increase/
(Decrease)
2022 2021 from 2021
Revenues:
Program revenues: $ 2.8 $ 2.7
Charges for services $ 5.5
2.5 5.8 (3.3)
Operating contributions and grants 0.5 4.6
Capital contributions and grants 5.1
13.1 9.1 4.0
Total program revenues
General revenues: 25.3 24.6
Property taxes 14.5 13.1
Sales taxes 3.4 3.2 0.2
Other taxes 0.0 0.1 (0.1)
Investment earnings 0.6 0.5
Other revenues 1.1
44.3 41.6 2.7
Total general revenues
57.4 50.7 6.7
Total revenues
Program expenses: 6.6 6.2 0.4
General government 16.9 16.5 0.4
Public safety 3.8 1.3
Community development 24.7 (7.6)
ublic works 5.4 7.4
Parks and recreation 12.8
0.0 0.1 (0.1)
Interest expense 0.0 1.9
Use of money and property (loss) 1.9
60.4 56.7 3.7
Total expenses
(3.0) (6.0) 3.0
Increase/(decrease) in net position
621.6 627.6 (6.0)
$ 618.6 621.6 $ (3.0)
10 FINANCIAL PERFORMANCE (Continued)
Government-Wide Financial Analysis (Continued)
The City's total revenues were $57.4 million in FY 2021-2022, while the total cost of all programs was $60.4 million. increased $2.7 million from the prior year.
The cost of all governmental activities this year was $60.4 million. However, as shown in the Statement of Activities, the amount that our taxpayers ultimately financed for these activities through City taxes was $47.3 millior since some of the cost was paid by those who directly benefited from the programs ($5.5 million) or by other governments and organizations that subsidized certain programs with contributions and grants ($7.6 million). The following chart graphically depicts the amount of general revenue used in relation to program revenue in funding governmental activities.
Funding of Governmental Activities
• Program Revenue • General Revenue
18.0 16.0
14.0 12.0
10.0 (in millions)
8.0 6.0
4.0 2.0
General Public Safety Community Public Works Parks and Interest Use of Government Development Recreation expense money and
property
(loss)
Approximately 75.3% of all revenues this past year came from some form of tax, which is slightly lower than the revenues, up from 1.0% in the prior year. The following chart graphically depicts the City's governmental revenue 11 FINANCIAL PERFORMANCE (Continued)
Government-Wide Financial Analysis (Continued)
Governmental Activities - Revenues by Source
Property taxes
44.1% Sales taxes
25.3%
Capital
contributions and _ Other taxes
grants 5.9%
8.9% Operating
contributions and - Charges for Other revenues
grants services
4.4% 9.6%
Governmental Activities - Expenses by Function
Public Works
28.3%
Community
Development.
8.4%
Parks and
Recreation
Public Safety 21.2%
28.0%
_ Interest expense
General _ Use of money and
Governmen property (loss)
10.9% 3.1%
Fund Financial Analysis
frequiremenasier, the City uses tund accounting to ensure and demonstate compliance with finance related legal 12 FINANCIAL PERFORMANCE (Continued)
Fund Financial Analysis (Continued)
The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. Under GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the sum of committed, assigned, and unassigned fund balance serves as a useful measure of a government's net resources available at its discretion for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported a total combined ending fund balance of $55.1 million, an increase of $3.1 million, or 6.0%, in comparison to the prior year. Of the total combined ending fund balance, $47.2 million, or 85.7%, is available for spending at the government's discretion.
Of the remaining $7.9 million, $0.2 million is classified as non-spendable, indicating that it is not in spendable form and previously obligated, and $7.7 million is restricted, indicating that its use is constrained by externally imposed limitations to be spent for public safety, public works, community development, and air quality improvement purposes.
The City's three major funds are the General Fund, the Miscellaneous Grants Special Revenue Fund, and the City Capital Projects Fund. A description and analysis of each fund is presented as follows:
• General Fund - This fund is the chief operating fund of the City. At the end of the current fiscal year, total fund balance was $48.5 million. General Fund revenues exceeded expenditures this year by $2.0 million; while the fund balance of the City's General Fund ultimately increased by $2.1 million, or 4.6%, during the current fiscal year due to $0.1 million in net transfers in/out of funds, primarily from the Miscellaneous Grants Special Revenue Fund to reimburse the General Fund for costs that were ultimately funded by grants.
Miscellaneous Grants Special Revenue Fund - This fund accounts for revenues and expenditures made for various City projects with funding provided by Federal and State grants. For FY 2021-2022, this fund has been classified as major due to the funds received from the Federal government's American Rescue Plan Act (ARPA). At the end of the current fiscal year, total assets were $7.3 million and total liabilities were $7.3 million. The second tranche of ARPA funds was received in June 2022. Through June 30, 2022, the City spent $1.5 million of the funding on various capital improvement projects with the balance of unspent funds classified as unearned revenue.
• City Capital Projects Fund - This fund accounts for all expenditures relating to City capital projects. Revenues and transfers into the fund generally equal actual expenditures on capital projects; therefore, this fund usually reflects minimal fund balance at the end of the year. Total expenditures were $4.5 million and subsequent activity levels as the prior year.
GENERAL FUND BUDGETARY HIGHLIGHTS
The original adopted General Fund revenue budget for FY 2021-2022 was $45.4 million. Actual revenues for the General Fund totaled $48.0 million, a positive variance of $2.6 million.
The most significant increase to this positive variance is attributable to sales tax, which was approximately $1.8 million higher based on stronger than anticipated sales and recovery from the COVID-19 pandemic.
The original adopted General Fund expenditure budget for FY 2021-22 was $44.2 million. During the course of the fiscal year, total General Fund appropriations were increased to $47.2 million, an increase of $3.0 million. The increase was primarily due to increases in professional services required in the Public Works and Community Development Departments based on various projects and planning activities, as well as a few large capital outlay purchases for mobile electric vehicle charging stations and a generator for the Senior Center.
Actual General Fund expenditures for the year were $46.0 million, a positive variance of $1.2 million. The variance was due to the actions the City took to continuously monitor and evaluate many operational budget items for effectiveness and efficiency. The General Fund ended with a positive, operational surplus of $2.0 million (actual revenues vs. actual non-capital expenditures).
13 CAPITAL ASSETS
The table below presents all City capital assets, net of accumulated depreciation, including infrastructure.
Infrastructure includes roads, sidewalks, traffic signals, bridges, storm drains, and similar assets used by the entire population.
Capital Assets at June 30
(net of depreciation)
(in millions)
Increase/
(Decrease)
2022 2021 from 2021
Land $ 271.1 $ 271.1 $
Construction in progress 4.0 3.1 0.9
Buildings and improvements 63.3 64.9 (1.6)
Park & other improvements 21.7 23.1 (1.4)
Swimming pool 0.1 0.2 (0.1)
Furniture, equipment and software 0.9 0.6 0.3
Vehicles 0.3 0.2 0.1
Right to Use Assets - Vehicles 0.3 0.2 0.1
Infrastructure 211.4 215.9 (4.5)
Total $ 573.1 $ 579.3 $ (6.2)
The City's investment in capital assets, net of accumulated depreciation, decreased by $6.2 million, or 1.1%, during FY 2021-2022 primarily due to depreciation. The most significant capital asset event during the fiscal year was investing in the City's parks as reflected in the increases in the construction in progress category totaling $0.9 million for the three park playground replacements due to be completed in FY 2022-2023 The change in capital assets was partially offset by total annual depreciation for the current fiscal year in the amount of $8.2 million. For more information on the City's capital assets, refer to Note 5 of the Notes to the Basic Financial Statements.
DEBT ADMINISTRATION
As of June 30, 2022, the City had the following outstanding liabilities related to its vehicle leases, as well as compensated absences
Long-Term Liabilities at June 30
(in millions)
Increase/
(Decrease)
2022 2021 from 2020
-
Capital Leases $ 0.3 $ 0.2 $ 0.1
Compensated Absences 0.7 0.7
Total $ 1.0 $ 0.9 $ 0.1
For more information on the City's long-term liabilities, refer to Note 7 of the Notes to the Basic Financial Statements.
14 NEXT YEAR'S BUDGET
The FY 2022-2023 adopted General Fund budget includes revenues of $49.0 million, operating expenditures of funding sources for the Capital Improvement Program (CIP). The CIP for FY 2022-2023 includes improvements to $47.7 million, and Transfers Out of $0.2 million. The budget includes approximately $9.4 million from a variety of the City streets, playgrounds, parks, senior center, city hall, and technology infrastructure. The adopted budget can be found on the City's website at www.cityoflagunaniguel.org.
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide a general overview of the City's finances for all those interested in the if you have questions about this report, or need additional financial information, please government's finances.
contact the Finance Department, City of Laguna Niguel, 30111 Crown Valley Parkway, Laguna Niguel, California 15 BASIC FINANCIAL STATEMENTS
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17 GOVERNMENT-WIDE
FINANCIAL STATEMENTS
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19 City of Laguna Niguel
Statement of Net Position
June 30, 2022
Total
Governmental
Activities
ASSETS
as nements note 3 $ 67,125,443
eceivables
Accounts 714,30
Taxes 3,349,408
148,058
Interest
110,030
Prepaid items 66,054
Deposits 1,618,442
ue from other government 269,655
ease receivable (note 4
Total current assets 73,401,398
Noncurrent assets: 2,732,951
Lease receivable (note 4) 275,029,072
Capital assets, not being depreciated (note 5) 298,066,036 Capital assets, being depreciated, net (note 5)
Total noncurrent assets 575,828,059
649,229,457
Total assets
DEFERRED OUTFLOWS OF RESOURCES
ension related deferred outflows of resources (note 11 2,246,745 PEB related deferred outflows of resources (note 12) 479,176 Total deferred outflows of resources 2,725,921
LIABILITIES
Current liabilities: 5,248,635
Accounts payable 292,591
Accrued liabilities
Deposits payable 3,381,826
Unearned revenue
Retention payable 64,104
Lease, due within one year (note 7) 78,396
Compensated absences, due within one year (note 7) 434,292 Total current liabilities 17,208,615
Voncurrent liabilities: 240,501
_ease, due in more than one year (note 7.
289,278
Net pension labies node 1) more than one year (note 7) 4,974,843 1,746,412
7,251,034
Total liabilities 24,459,649
DEFERRED INFLOWS OF RESOURCES
Lease related deferred inflows of resources (note 4) 2,935, 16€ Pension related deferred inflows of resources (note 11) 1,824,421 PEB related deferred inflows of resources (note 12) 1,114,314 Total deferred inflows of resources 8,873,901
NET POSITION
Net investment in capital asset 572,776,211
Restricted for
Public safety 34,327
Community development 393,984
Streets 6,382,693
Unrestricted 39,034,613
Total net position $ 618,621,828
See accompanying notes to financial statements.
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21 City of Laguna Niguel
Statement of Activities
Year ended June 30, 2022
Program Revenues
Operating Capital
Charges for Contributions Contributions overnmenti
Expenses Services and Grants And Grants
Functions/Programs
Primary Government:
Governmental Activities: 279,233 (6,308,186)
General government $ 6,588,919 1,500
16,899,038 501,684 206,995 409,367 (16,090,359)
sake and Yerestoment 5,081,656 3,740,831 (588,902)
12,841,310 970,591 (11,764,560)
227,387 4,661,518 (10,584,600)
ublic works 17,077,691 (23,753)
Interest expense 23,753 : :
(1,917,952) 1,917,95
Use of money and property (loss) 5,541,993 2,539,129 5,070,885 47,278,312 Total governmental activities $ 56,594,415
Taxesral Revenues:
roperty taxes, levied for general purpos 25,292,654
ales taxe 14,518,028
Other ta eares 2,048.738
43,245,233
Motor vehicle in lieu - unrestricted 75,286
Other 967,590
Total general revenues 44,288,109
Changes in net position (2,990,203)
621,612,031
Net poston at ed of veg of year $ 618,621,828
See accompanying notes to financial statements.
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23 FUND FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
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25 GOVERNMENTAL FUND
FINANCIAL STATEMENTS
General Fund - The City's primary operating fund that accounts for all financial resources of the general government except those required to be accounted for in another fund.
Miscellaneous Grants Special Revenue Fund - To account for revenues received and expenditures made for various City projects with funding provided by Federal and State grants.
City Capital Projects Fund - To account for the activity relating to the City's individual capital projects.
Nonmajor Governmental Funds - To account for the aggregate of all the nonmajor governmental funds.
26 City of Laguna Niguel
Balance Sheet
Governmental Funds
June 30, 2022
liscellaneou: Total
City Capital oVernmental Governmental
rants Specia
Projects Funds Funds
General Revenue
ASSETS 954,229 5,974,078 66,647,211
Cash and investments $ 52,694,910 7,023,994
Receivables: 99 714,308
Accounts 714,209 347,356 3,349,408
3,002,052 : 148,058
Taxes U... 3,03g
Interest 145,019 3,002,606
_ease receivable (note 4, 3,002,60 110,030
repaid items 110,03 64,094 66,054
Deposits 1,960 271,814 1,037,621 1,618,442
ue from other governments 309,007 19,204
lue from other funds (note 6 19,204 7,362,193 75,675,321 $ 59,998,997 7,295,808 1,018,323
Total assets
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities: 515,784 385,729 5,222,404
Accounts payable $ 4,320,891 292,591
Accrued salaries 292,591 3,708,771
Deposit payable 3,708,771 19,204 19,204
Due to other funds (note 6 7,295,809 7,381,826
Unearned revenue 86,017 54,060 64,104
Retentions payable 10,044 16,688,900
8,418,314 7,295,809 569,844 404,933
Total liabilities
ferred Inflows of Resource 271,814 535,247 962,021
available revent 154,960 2,935,166
Lease related 2,935,166 271,814 535,247 3,897,187
Total deferred inflows of resources 3,090,126
Fund Balances: 64,094 176,084
Nonspendable 111,990 6,426,619 7,727,962
916,958 384,385
Restricted 46,679,510
Committed 46,679,510 782,099
782,099 (4,606) (276,421)
ssigned (271,815)
Total renderines 48,490,557 (271,815) 448,479 6,422,013 55,089,234 Pestures, as deed balancers of 7,295,808 1,018,323 7,362,193 75,675,321 $ 59,998,997
See accompanying notes to financial statements.
City of Laguna Niguel
Reconciliation of the Balance Sheet of Governmental Funds to the Government-Wide Statement of Net Position
June 30, 2022
$ 55,089,234
Fund balances of governmental funds
Amounts reported for governmental activities in the statement of net position are different because:
capital assets net of depreciation have not been included as financial resource re governmental fund activity (excluding amount reported in the internal $ 757,812,731
capital assets (185,362,188) 572,450,543
Accumulated depreciatio
Long-term liabilities were not due and payable in the current period an herefore were not reported in the governmental funds. All liabilities, bott current and long-term, are reported in the Government-Wide Statement of Net (723,570)
Compensated absences
Net pension liabilities and the related deferred outflows of resources and not available for current expenditures and are not reported in the deferred inflows of resources are not due and payable in the current period or governmental fund financial statements:
Net pension liabilities and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or expenditures and are not reported in the governmental fund financial statements: 2,246,745
Pension related deferred outflows of resources
(4,974,843)
Net pension liabilities (4,824,421) (7,552,519)
Pension related deferred inflows of resources
Net other postemployment benefits liability and the related deferred inflows of are not due and payable in the current period or not available for resources
current expenditures and are not reported in the governmental fund financial statements:
479,176
OPEB related deferred outflows of resources (1,746,412) Other postemployment benefits liabilities (1,114,314) (2,381,550) OPEB related deferred inflows of resources
962,021
Interies, such as us are rep bye ment to eat id cat fund. The as is and liabilities of the internal service fund are reported in the statement of net 777,669 Net position of governmental activities $ 618,621,828
See accompanying notes to financial statements.
City of Laguna Niguel
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
Year ended June 30, 2022
Miscellaneous Nonmajor Total
Grants Special City Capital Governmental Governmental
General Revenue Projects Funds
REVENUES:
Taxes $ 43,245,233 43,245,233
Licenses and permits 3,957,690 3,957,690
Intergovernmental 1,800,646 5,394,246
156,667
harges for services 1,014,777 2054552
ines and forfeiture 612,212
Use of money and property (loss) (1,949,185) 1,996 803 (1,946,386) Leases 451,984 451,984
Miscellaneous 550,772 550,772
Total revenues 48,040,150 1,802,642 5,395,049 55,237,841 EXPENDITURES:
Current:
General government 5,905,024 5,905,024
Public safety 16,662,695 150,000 16,812,695
Community development 4,612,029 - 340,151 4,952,180
Parks and recreation 3,719,256 - 3,269 3,722,525
Public works 14,022,026 - 975,061 14,997,087
Capital outlay 1,072,532 4,514,980 5,587,512
Total expenditures 45,993,562 4,514,980 1,468,481 51,977,023 Excess (Deficiency) of Revenues
Over (Under) Expenditures 2,046,588 1,802,642 (4,514,980) 3,926,568 3,260,818 OTHER FINANCING SOURCES (USES):
Transfers in (note 6) 278,326 4,514,174 4,792,500
Transfers out (note 6) (181,450) (2,022,720) (2,708,330) (4,912,500) Total other financing sources (uses) 96,876 (2,022,720) 4,514,174 (2,708,330) (120,000) NET CHANGES IN FUND BALANCES 2,143,464 (220,078) (806) 1,218,238 3,140,818 Fund Balances:
Fund balance deficit at beginning of year 46,347,093 (51,737) 449,285 5,203,775 51,948,416 Fund balance deficit at end of year $ 48,490,557 (271,815) 448,479 6,422,013 55,089,234 See accompanying notes to financial statements.
29 City of Laguna Niguel
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year ended June 30, 2022
Net change in fund balances - total governmental funds: $ 3,140,818 Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlay as expenditures. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period (excluding amount reported in the internal service fund):
Capital assets $ 1,595,671
Depreciation expense (7,988,725) (6,393,054)
The net effect of various miscellaneous transaction involving capital assets (i.e. sales, disposals, trade-ins)
Loss on disposal of capital assets (30,147)
Compensated absences 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. 16,684
Pension 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. (29,532)
OPEB 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. (172,338)
Revenues reported as unavailable revenue in the governmental funds are the statement of activities. These are included in the
intergovernmental revenues in the governmental fund activity. 284,554 Internal service funds are used by management to charge the costs of certain activities, such as vehicle replacement, to individual funds. The net revenues (expenses) of the internal service funds are reported with governmental activities. 192,812
Changes in net position of governmental activities $ (2,990,203) See accompanying notes to financial statements.
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31 PROPRIETARY FUND
FINANCIAL STATEMENTS
Internal Service Funds account for financing of goods and services provided by one department to other departments of the City on a cost-reimbursement basis.
Vehicle Replacement Internal Service Fund - Accounts for interdepartmental operations where it is the stated intent that costs of replacing vehicles to the departments of the City on a continuing basis be financed or recovered primarily by charges to the user departments. 32 City of Laguna Niguel
Statement of Net Positior
Proprietary Func
June 30, 2022
Governmental
Activities -
Internal
Service Fund
Vehicle
Replacement Fund
ASSETS
Current: $ 478,232
Cash and investments
478,232
Total current assets
Noncurrent: 644,565
Vehicles - net of accumulated depreciation 644,565
Total noncurrent assets 1,122,797
Total assets
LIABILITIES
Current: 26,23
Accounts payable 8,39
Lease payable, due within one year
104,627
Total current liabilities
Noncurrent: 240,501
Lease payable, due in more than one year 240,501
Total noncurrent liabilities 345,128
Total liabilities
NET POSITION
325,668
Net investment in capital assets 452,001
Unrestricted $ 777,669
Total net position
See accompanying notes to financial statements.
City of Laguna Niguel
Statement of Revenues, Expenses, and Change in Net Position Proprietary Fund
Year ended June 30, 2022
Governmental
Activities -
Internal
Service Fund
Vehicle
Replacement Fund
OPERATING EXPENSES: 141,906
$
Depreciation expense 141,906
Total Operating Expenses
(141,906)
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES): 238,702
Gain on sale of capital assets (231)
Interest revenue (loss) (23,753)
Interest expense related to lease payable 214,718
Total Nonoperating Revenues (Expenses)
72,812
LOSS BEFORE TRANSFERS
TRANSFERS: 120,000
Transfers in (note 6)
192,812
CHANGE IN NET POSITION
Net Position:
584,857
Beginning of Year $ 777,669
End of Year
See accompanying notes to financial statements.
34 City of Laguna Niguel
Statement of Cash Flows
Proprietary Fund
Year ended June 30, 2022
Governmental
Activities -
Internal
Service Fund
Vehicle
Replacement Fund
CASH FLOWS FROM NONCAPITAL
AND RELATED FINANCING ACTIVITIES:
Transfers in from other funds $ 120,000
Net cash provided by noncapital and related financing activities 120,000
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES:
Acquisition of assets (37,226)
Repayment of leases (106,033)
Interest paid for leases (23,753)
Proceeds from sale of assets 266,882
Net cash (used in) capital and related financing activities 99,870 CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received (231)
Net cash provided by investing activities (231)
Net (decrease) in cash and cash equivalents 219,639
CASH AND CASH EQUIVALENTS:
Beginning of year 258,593
End of year $ 478,232
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating (loss) $ (141,906)
djustments to reconcile operating loss t
let cash provided by (used in) operating activities
Depreciation 141,906
Total adjustments 141,906
Net cash provided by (used in) operating activities $
There were no significant noncash capital, financing and investing activities during the year ended June 30, 2022.
See accompanying notes to financial statements.
35 NOTES TO THE BASIC
FINANCIAL STATEMENTS
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37 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements
Year ended June 30, 2021
(1) Summary of Significant Accounting Policies
The basic financial statements of the City of Laguna Niguel, California (the "City") are prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") as applied to governmental agencies. The Governmental Accounting Standards Board ("GASB") is the accepted standard setting body for establishing accounting and financial reporting principles. The more significant of the City's accounting policies are described below.
A. Financial Reporting Entity
The City was incorporated on December 1, 1989 under the general laws of the State of California and enjoys all the rights and privileges pertaining to such "General Law" cities. The City operates under a council-manager form of government and currently provides public safety, animal control, planning, building, code enforcement, engineering, street and park maintenance, street lighting, parks and recreation programs and general administrative services.
This report includes all fund types of the City (the "primary government"). The City does not include any component units for the fiscal year ended June 30, 2022. Component units are entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization's governing body and the City is able to impose its will on that organization, or there is a potential for that organization to provide specific financial benefits to, or impose specific financial burdens on, the City.
The City is also considered to be financially accountable if that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City's financial statements to be misleading or incomplete.
B. Basis of Accounting, Measurement Focus, and Financial Statement Presentation The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained in accordance with legal and managerial requirements.
Government-Wide Financial Statements
The City's Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of governmental activities for the City.
These financial statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure 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. 37 38
CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) B. Basis of Accounting, Measurement Focus, and Financial Statement Presentation (Continued) Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated. In the Statement of Activities, direct expenses (charges based on actual use) are not eliminated, whereas indirect expense allocations made in the funds are reversed. The following interfund activities have been eliminated:
• Due to/from other funds
• Transfers in/out
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and nonmajor governmental funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in Net Position as presented in these statements to the Net Position presented in the Government-Wide Financial Statements. The City has presented all major funds that met the applicable criteria.
All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. as soon as they are both "measurable" and "available". Revenues are Revenues are recognized
considered to be available when they are collectible within the current period as soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property taxes, sales tax, intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred.
The reconciliations of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences.
39 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) B. Basis of Accounting, Measurement Focus, and Financial Statement Presentation (Continued) The City reports the following major governmental funds:
> General Fund - The City's primary operating fund that accounts for all financial resources of the general government except those required to be accounted for in another fund. > Miscellaneous Grants Special Revenue Fund - Accounts for revenues received and expenditures made for various City projects with funding provided by federal and state grants.
• City Capital Projects Fund - Accounts for the expenditures relating to the City's individual capital projects.
Additionally, the City reports nonmajor governmental funds. These nonmajor governmental funds are Special Revenue Funds which account for the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service and capital projects.
Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows.
Internal Service Fund is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the Government-Wide Financial Statements. The City's Internal Service Fund includes one individual fund which provides services directly to other City funds.
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in 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. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts.
Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as nonoperating 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 City reports the following proprietary fund:
• Vehicle Replacement Internal Service Fund - Accounts for interdepartmental operations where it is the stated intent that costs of replacing vehicles to the departments of the City on a continuing basis be financed or recovered primarily by charges to the user departments. 40 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) C. Cash and Cash Equivalents (Continued)
The City pools its available cash for investment purposes. The City considers pooled cash and investment amounts, with original maturities of three months or less, to be cash equivalents.
For purposes of the Statement of Cash Flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in fair value because of changes in interest rates. Cash equivalents generally have an original maturity date of three months or less from the date of purchase. Cash equivalents generally have an original maturity date of three months or less from the date of purchase. Cash equivalents also represent the proprietary fund's share in the cash and investments pool of the City.
D. Investments
Investments are reported in the accompanying financial statements at fair value. Changes in fair value that occur during the fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments.
The City pools cash and investments of all funds. Each fund's share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds based on each fund's average cash and investment balance, expect for investment income associated with funds not legally required to receive pooled investment income, which has been assigned to and recorded as revenue of the General Fund, as provided by California Government Code 53647.
E. Fair Value Measurements
U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair value in the financial statements, are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Levels of inputs are as follows:
The three levels of the fair value measurement hierarchy are described below:
• Level 1 - Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
• Level 2 - Inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities, either directly or indirectly and fair value is determined through the use of the models and other valuation methodologies including:
or ented or similar sace silen masket that are
inactive;
• Inputs other than quoted prices that are observable for the asset or liability;
• Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
41 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) E. Fair Value Measurements (Continued)
• Level 3 - Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the assets or liabilities at the measurement date.
F. Receivables
Receivables include such items as taxes, intergovernmental revenues, charges for services, miscellaneous accounts receivable, and interest receivable. No allowance for doubtful accounts has been established, as the City believes all amounts are considered to be collectible in the normal course of business.
G. Prepaid Items and Deposits
Prepaid items are payments made to vendors for services that will benefit periods beyond the fiscal year ended using purchase method. Deposits are payments made as a security or in part payment.
A nonspendable fund balance has been reported in the governmental funds to show that prepaid items and deposits do not constitute "available spendable resources", even though they are a component of net current assets.
H. Leases
For the year ended June 30, 2022, the financial statements include the adoption of GASB Statement No. 87, Leases. The primary objective of this statement is to enhance the relevance and consistency of information about governments' leasing activities. This statement establishes a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. For additional information, refer to the disclosures in Note 4 Leases Receivable and Note 7 Long-Term Obligations.
At the commencement of the lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term.
Key estimates and judgments include how the City determines the discount rate it uses to discount the expected lease receipts to present value, lease term and lease receipts.
The City used the estimated incremental borrowing rate as the discount rate for leases. The lease term includes the noncancellable period of the lease. Lease receipts included 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 leases, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. 42 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) I. Capital Assets
All capital assets are valued at historical cost or estimated historical cost if actual historical cost not available. Contributed capital assets are valued at their acquisition value on the date of acquisition.
The City's policy is to capitalize all assets with an initial, individual cost equal to or more than $5,000 with a useful life of more than one year.
Capital assets, which include land, buildings and building improvements, park improvements, infrastructure assets (street systems, storm drains, bridges, etc.), are reported in the governmental swimming pool, furniture and equipment, software, vehicles, constructions in progress and activities column of the government-wide financial statements.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.
Depreciation has been provided on capital assets in the government-wide financial statements.
Depreciation of all capital assets is charged as an expense against operations each year and the total amount of depreciation taken over the years, called accumulated depreciation, is reported on the Statement of Net Position as a reduction in the book value of capital assets. Depreciation is reported using the straight-line method, which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated.
The City has assigned the useful lives listed below to capital assets:
Useful Lives
Asset Type (Years)
100
Curbs, gutters, sidewalks, catch basins, and manholes 75 Streets, street lights, storm drains, tunnels, and bridges 15-45 Buildings and building improvements 15-25
Swimming pool and improvements 10-25
Park improvements 3-15
Furniture and equipment 3-10
Vehicles 10
Software
J. Deferred Outflows and Inflows of Resources
The statement of net position and the governmental funds balance sheet will sometimes report a items that qualify for reporting in this category. The items are deferred outflows related to pensions and deferred outflows related to OPEB.
43 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) J. Deferred Outflows and Inflows of Resources (Continued) The statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This 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 has three types of items which qualify for reporting in this category. Three of the items are deferred inflows related to pensions and deferred inflows related to OPEB, and leases, which are presented on the government-wide statement of net position. The fourth item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from accounts, taxes and grant receivables. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.
K. Pension Plans
For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by the California Public Employees' Retirement System ("CalPERS"). For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
The following timeframes are used for pension reporting:
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Measurement Period July 1, 2020 to June 30, 2021
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and inflows of resources related to pensions and are to be recognized in further pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized over five years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period. The net pension liability is generally liquidated by the General Fund.
L. Other Postemployment Benefits Plan
For the purpose of measuring the Total OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. 44 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) L. Other Postemployment Benefits Plan (Continued)
The following timeframes are reported OPE reporting:
Valuation Date June 30, 2022
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
Gains and losses related to changes in total OPEB liability are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPE expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPE expense. Gain and loss are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period. Other postemployment benefits are generally liquidated by the General Fund.
M. Property Taxes
Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing they become available. Available means due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities in the current period.
Under California law, property taxes are assessed and collected by the counties at up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. The County of Orange collects property taxes for the City. Tax liens attach annually as of 12:01 a.m. on the first day of January preceding the fiscal year for which the taxes are levied. Taxes are levied on July 1 and cover the fiscal period July 1 to June 30. All secured personal property taxes and one-half of the taxes on real property are due November 1; the second installment is due February 1. All taxes are delinquent, if unpaid, on December 10 and April 10, respectively. Unsecured personal property taxes become due on March 1 each year, and are delinquent, if unpaid, on August 31.
N. Compensated Absences
Upon termination or retirement, permanent employees are entitled to receive compensation at their current base salary for all unused vacation leave, and 0%-50% of the value of unused sick leave depending on length of service and date of hire.
for unused vacation and similar compensatory leave balances since the A liability is recorded
employees entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upor termination or retirement.
45 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) N. Compensated Absences (Continued)
A liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receive termination payments, as well as those who are expected to become eligible to receive termination benefits as a result of continuing their employment with the City. Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely upon the occurrence of a future event (illness), which is outside the control of the City and the employee.
O. Net Position and Fund Balances
In the government-wide financial statements and proprietary fund financial statements, net position is classified as follows:
Net Investment in Capital Assets - This component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of those assets and retention payable.
Restricted - This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.
resources, liabilities, and deferred inflows of resources that are not included in the determination Unrestricted - This component of net position is the amount of the assets, deferred outflows of of net investment in capital assets or the restricted component of the net position.
In the Governmental Fund Financial Statements, fund balances are classified in the following categories:
Nonspendable - Nonspendable fund balances are items that are not expected to be converted to cash, such as prepaid items and deposits, or items that are required to be maintained intact, such as principal of an endowment or revolving loan funds.
Restricted - Restricted fund balances include amounts that can be spent only for the specific purposes stipulated by external resources providers, such as grant providers, constitutionally, or through enabling legislation. Effectively, restrictions may be changed or lifted only with the consent of resource providers.
authority, i.e. adoption of the annual City Financial Reserves Policy and resolutions.
Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. The City Council is considered the highest authority for the City. Commitments of fund balance are specified in the City's Financial Reserves Policy, which is reviewed and amended as appropriate on an annual basis by the City Council. 46 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) O. Net Position and Fund Balances (Continued)
assign amounts to a specific purpose. In governmental funds, other than the General Fund, assigned fund balance represents all amounts that are not classified as restricted or committed.
Resources in governmental funds other than the General Fund are to be used for the specific purpose of that fund.
Unassigned - Unassigned fund balance is a residual (surplus) classification used for the General Fund only and includes amounts not contained in the other classifications. Unassigned amounts in the General Fund are available for any purpose. If a governmental fund, other than the General Fund, has a fund balance deficit, it will be reported as a negative amount in the unassigned classification in that fund.
Spending Policy
Government-Wide Financial Statements and the Proprietary Fund Financial Statements When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the City's policy is to apply the restricted component of net position first, then the unrestricted component of net position as needed.
Governmental Fund Financial Statements
When expenditures are incurred for purposes for which all restricted, committed, assigned, and unassigned fund balances are available, the City's policy is to apply in the following order, except for instances wherein an ordinance specifies the fund balance:
• Restricted
• Committed
Assigned
Unassigned
P. Use of Estimates
The preparation of basic financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates and assumptions. 47 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(2) Stewardship, Compliance and Accountability
Deficit Fund Balance
The following funds had a deficit fund balance at June 30, 2022Error! Unknown switch argument.:
Special Revenue Funds:
CDBG $ (4,606)
Miscellaneous Grants (271,815)
Fund deficit in the CDBG Special Revenue Fund is the result of unavailable revenue at June 30, 2022 and will be eliminated upon receipt of the reimbursements in the following fiscal year. Fund deficit in the Miscellaneous Grants Special Revenue Fund is the result of expenditures incurred during the fiscal year that have not been reimbursed since the grant is on-going. (3) Cash and Investments
The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds.
The City had the following cash and investments at June 30, 2022Error! Unknown switch argument.:
Governmental
Activities
Cash and investments $67,125,443
The City's cash and investments at June 30, 2022Error! Unknown switch argument. in more detail:
Cash and cash equivalents:
Cash on hand $ 2,500
Demand deposits 2,258,958
Total cash and cash equivalents 2,261,458
Investments
Federal Government Agency Securities 24,341,619
Money Market Mutual Fund 31,993
State Local Agency Investment Fund 30,613,823
Orange County Investment Pool 8,959,592
PARS Pooled 115 Trust 916,958
Total investments 64,863,985
Total cash and investments $67,125,443
48 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(3) Cash and Investments (Continued)
A. Demand Deposits
The carrying amounts of the City's deposits were $2,258,958 at June 30, 2022Error! Unknown solater alized or intured nk acous at eha bate pledging nandia netal am the coy shah was discussed below.
The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110% of the City's cash deposits.
California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements.
The City follows the practice of pooling cash and investments of all funds, except for funds deposited in escrow which were required by construction projects. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances.
B. Investments Authorized by California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee 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.
Maximum Maximum
Maximum Percentage Investments in
Authorized Investment Type Maturity Allowed One Issuer
5 Years None None
U.S. Treasury Obligations
Federal Agency Securities or U.S. Government 25%
Sponsored Enterprise Securities 5 Years 60%
State Local Agency Investment Fund (LAIF) N/A 55% $40 million Insured Certificates of Deposits 5 Years 30% $250,000
Insured Money Market Accounts N/A None None
N/A 20% 10%
Money Market Mutual Funds $40 million
Orange County Investment Pool (OCIP) N/A 55%
N/A 20% None
Section 115 Pension Trust
49 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(3) Cash and Investments (Continued)
C. Fair Value Measurement Disclosure
At June 30, 2022, investments are reported at fair value. The following table presents the fair value measurements of investments on a recurring basis and the levels with GASB 72 fair value hierarchy in which the fair value measurements fall at June 30, 2022:
Measurement Inputs
Investment Type Level 1 Level 2 —Level 3 _ Uncategorized. Total Federal Government Agency Securities $ 24,341,619 24,341,619 Money Market Mutual Fund 31,993 31,993
Orange County Investment Pool (OCIP) 8,959,592 8,959,592 PARS Pooled 115 Trust 916,958 916,958
State Local Agency Investment Fund (LAIF) 30,613,823 30,613,823 $ 24,341,619 40,522,366 64,863,985
D. Risk Disclosures
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value 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 to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity:
Measurement Inputs
12 Months 13-24 25-60
Investment Type or Less Months Months Total
Federal Government Agency Securities $ 24,341,619 24,341,619 Money Market Mutual Fund 31,993 31,993
Orange County Investment Pool (OCIP) 8,959,592 h.... - 8,959,592 PARS Pooled 115 Trust 916,958 916,958
State Local Agency Investment Fund (LAIF) 30,613,823 30,613,823 Total $40,522,366 24,341,619 64,863,985
50 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(3) Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code or the City's investment policy, and the actual rating as of the fiscal year end for each investment type:
Legal Not Total as of
Rating AAA Rated June 30, 2022
Investment Type
AAA $ 24,341,619 24,341,619
Federal Government Agency Securities
AAA 31,993 - 31,993
Money Market Mutual Fund 8,959,592 8,959,592
Orange County Investment Pool (OCIP) N/A
N/A 916,958 916,958
PARS Pooled 115 Trust
State Local Agency Investment Fund (LAIF) N/A 30,613,823 30,613,823 $24,373,612 40,490,373 64,863,985
Total
Concentration of Credit RisK
The investment policy of the City contains a limitation on the amount that can be invested in any one issuer of Federal Agency securities to a maximum of 25% of total investments. The City was in compliance with this limitation at June 30, 2022, and throughout the fiscal year.
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer (other than mutual funds and external investment pools) that represent 5% or more of total City investments are as follows:
Investment Type Amount
Issuer
Federal Home Loan Mortgage Corporation Federal Government Agency Securities $4,796,040 Federal National Mortgage Association Federal Government Agency Securities 7,990,254 Federal Government Agency Securities 11,555,325
Federal Home Loans Banks
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than as follows. 51 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(3) Cash and Investments (Continued)
D. Risk Disclosures (Continued)
The California Government Code requires that a financial institution secure deposit 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 market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the City. California law also allows financial institutions to secure city deposits by pledging first trust deed mortgage notes having a value of 150% of the secured City deposits. The City's investment policy requires delivery versus payment procedures and that all securities be held in third-party safekeeping by a custodial financial institution.
As of June 30, 2022, all of the City's deposits with financial institutions in excess of Federal depository insurance limits were collateralized by an interest in an undivided collateral pool as required by State law. In addition, all investments were held by the third-party safekeeping institution.
E. Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. The City investments in LAIF at June 30, 2022 included a portion of pool funds invested in Structured Notes and Asset-Backed Securities.
Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.
Asset-Backed Securities: generally, mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.
As of June 30, 2022, the City had $30,613,823 invested in LAIF, which had invested 1.88% of the pool investment funds in Structured Notes and Asset-Backed Securities.
F. Investment in Orange County Investment Pool
The City is a participant in the County Treasurer's Orange County Investment Pool (OCIP). The OCIP is an external investment pool, is not rated and is not registered with the Securities Exchange Commission (SEC). The County Treasury Oversight Committee conducts OCIP oversight. Cash on deposit in the OCIP at June 30, 2022, is stated at fair value. The OCIP values participant shares on an amortized cost basis during the year and adjusts to fair value at year-end. For further information regarding the OCIP, refer to the County of Orange Annual Comprehensive Financial Report. 52 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(3) Cash and Investments (Continued)
G. Investment in Public Agency Retirement Services
The City established an Internal Revenue Services Section 115 irrevocable trust with the Public Agency Retirement Services (PARS) for the purposes of funding pension obligations. PARS is an statements at amounts based upon the City's pro-rata share of the fair value provided by PARS for the entire PARS portfolio.
(4) Lease Receivable
For the year ended June 30, 2022, the financial statements include the adoption of GASB Statement No. 87, Leases. The primary objective of this statement is to enhance the relevance and consistency of information about governments' leasing activities. This statement establishes a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources.
As of July 1, 2021, the City has sixteen cell tower leases for easements located throughout Laguna Niguel. The interest rate for each lease is 1.65%. The Initial lease agreement term is 5 years with the option to extend for three additional terms of five years. The total amount of lease revenue recognized in the current reporting period from leases is $400,148 and the total amount of interest received related to the lease was $ 51,836. The balance of the lease receivable at June 30, 2022 is $3,002,606. The City has a deferred inflow of resources associated with these leases that will be recognized as revenue over the lease term. The balance of the deferred inflow of resources at June 30, 2022 is $ 2,935,166.
53 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(5) Capital Assets
The following is a summary of changes in the capital assets for governmental activities during the fiscal year:
Balance Balance
July 1, 2021* Additions Deletions Reclassification June 30, 2022 Capital assets, not being depreciated:
Land $ 271,068,667 $ $ $ $ 271,068,667
Construction in progress 3,066,617 1,426,664 (217,431) (315,445) 3,960,405 Total capital assets, not being depreciated 274,135,284 1,426,664 (217,431) (315,445) 275,029,072 apital assets, being depreciate
nfrastructur 350,486,795 : 350,486,795
80,113,906 100.549 196,902 80,310,808
1,853,001 (49,092) 1,904,458
47,207,182 47,207,182
765,292 765,292
1,231,331 361,850 (26,869) 118,543 1,684,855
424,269 424,269
Vehicles 942,811 192,375 (530,960) 604,226
181,490 243,441 424,931
Total capist assets, vehing depreciated 898,215 (606,921) 315,445 483,812,816 483,206,077
Less accumulated depreciation:
Infrastructure (134,563,485) (4,555,946) (139,119,431)
(15,178,116) (1,806,026) (16,984,142)
(168,130) (117,499) (282,356)
(25,814,082) (1,349,907) (27,163,989)
(537,013) (99,923) 26,859 (636,936)
(833,267) (77,286) (883,684)
Software (249,223) (42,427) (291,650)
Vehicles (745,467) (35,873) 502,781 (278,559)
ight to use assets - vehicle (106,033) (106,033)
otal accumulated depreciatio (178,088,783) (8,190,920) 532,923 (185,746,780) 305,117,294 (7,292,705) (73,998) 315,445 298,066,036
government see caper set, not 3 579,252,578 (5,866,041) (291,429) 573,095,108 * Beginning balance restated due to implementation of GASB Statement No. 87, Leases. See note 15.
Depreciation expense was charged to the City's programs as follows:
Governmental Activities
General government $ 578,547
Public Safety 41,249
Community development 69,588
Public works 5,334,931
Parks and recreation 2,166,605
Total depreciation expense - governmental activities $ 8,190,920 54 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(5) Capital Assets (Continued)
In Fiscal Year 2021-2022, the City expensed certain capitalized items from Construction in Progress upon completion of a major project. Infrastructure assets comprise a significant portion of capital assets.
Infrastructure assets are further identified by type as follows:
Balance Balance
June 30, 2021 Additions Deletions June 30, 2022
Infrastructure assets: 306,019,176
Streets $ 306,019,176 : :
Storm drains 21,301,683 21,301,683
Traffic signals 10,340,486 10,340,486
Bridges 5,625,168 5,625,168
7,200,282 7,200,282
- Trails 350,486,795
Total Infrastructure assets 350,486,795
Less accumulated depreciation for: (120,069,955)
Streets (116,147,937) (3,922,018)
(10,359,223) (282,536) (10,641,759)
Storm drains
Traffic signals (4,028,374) (137,291) (4,165,665)
Bridges (2,057,425) (93,796) (2,151,221)
Trails (1,970,527) (120,304) (2,090,831)
Total accumulated depreciation (134,563,486) (4,555,945) (139,119,431) Total Infrastructure assets, net 215,923,309 (4,555,945) 211,367,364 (6) Interfund Activity
A. Due From and To Other Funds
The composition of interfund balances as of June 30, 2022, is as follows:
[Due to Other Funds
Governmental Funds
CDBG
Special
Due From Other Funds Revenue Fund Total
Governmental Funds $ 19,204
General Func $ 19,204
All interfund balances are short-term in nature and are expected to be repaid within one year. The Community Development Block Grant Special Revenue Fund had a negative cash balance at June 30, 2022. This amount has been reclassified as interfund receivables/payables for financial statement purposes.
55 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(6) Interfund Activity (Continued)
Transfers In
Proprietary
Governmental Funds Fund
Vehicle
General City Capital Replacement
Transfers Out Fund Projects Fund Total
Governmental Funds:
General Fund $ 61,450 120,000 181,450
Miscellaneous Grants Fund 278,326 1,744,394 2,022,720
Nonmajor Governmental Fund 2,708,330 2,708,330
$278,326 4,514,174 120,000
B. Transfers In and Out
Transfers from General Fund, Miscellaneous Grant Funds and Nonmajor Governmental Funds to City Capital Projects Fund in the amount of $4,514,174 were to cover capital project expenditures during the fiscal year. These projects are approved through the annual budget process and each project is approved with identified funding sources.
Transfers from General Fund to Vehicle Replacement Fund Proprietary Fund in the amount of $120,000 was to allocate funds towards vehicle replacement as adopted by the City Council during the budget process.
Transfers from Miscellaneous Grants Special Revenue Fund to General Fund in the amount of $278,326 were for expenditures incurred by the General Fund that were funded by grants. (7) Long-Term Liabilities
Summary of changes in long-term liabilities for the year ended June 30, 2022 is as follows:
Balance Balance Due within Due in More
July 1, 2021 Additions Deletions June 30, 2022 One Year Than One Year Governmental Activities 318,897 78,396 240,501
Lease payable $ 181,490 243,440 (106,033)
Compensated absences 740,254 452,996 (469,680) 723,570 434,292 289,278 Total governmental activities $ 921,744 696,436 (575,713) 1,042,467 512,688 529,779 56 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(7) Long-Term Liabilities (Continued)
The annual debt service requirements outstanding at June 30, 2022 were as follows:
Fiscal Year Ending June 30, Activities
2023 $ 93,617
2024 93,617
2025 93,617
2026 91,540
2027 7,650
Subtotal 380,041
Less amount representing interest (61,144)
Present Value of Future
Minimum Lease Payment $318,897
Compensated Absences
The City uses General Fund to liquidate the compensated absences liabilities. (8) Liability, Workers' Compensation Plan, and Purchased Insurance A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee.
B. Primary Self-Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for primary self-insurance programs is based on an actuarial analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk-sharing pool.
Primary Liability Program
Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $100,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer.
57 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(8) Liability, Workers' Compensation Plan, and Purchased Insurance (Continued) (3) The second layer of losses includes incurred costs from $100,000 to $500,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from $500,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers.
The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses also have a $50 million per occurrence limit. The coverage structure is composed of a combination of pooled self-insurance, reinsurance, and excess insurance. Additional is available on the Authority's website:
information concerning the coverage structure
https://cjpia.org/coverage/risk-sharing-pools/.
Primary Workers' Compensation Program
Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $75,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $75,000 to $200,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from $200,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers.
For 2021-22 the Authority's pooled retention is $1 million per occurrence, with reinsurance to statutory limits under California Workers' Compensation Law. Employer's Liability losses are pooled among members to $1 million. Coverage from $1 million to $5 million is purchased through reinsurance policies, and Employer's Liability losses from $5 million to $10 million are pooled among members.
B. Purchased Insurance
Pollution Legal Liability Insurance
The City participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City. Coverage is on a claims-made basis. There is a $250,000 deductible. The Authority has an aggregate limit of $20 million.
Property Insurance
The City participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. The City property is currently insured according to a schedule of covered property submitted by the City to the Authority. The City property currently has all-risk property insurance protection in the amount of $125,166,606. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500 deductible.
58 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(8) Liability, Workers' Compensation Plan, and Purchased Insurance (Continued) Earthquake and Flood Insurance
The City purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. The City property currently has earthquake protection in the amount of "Non-Participant". There is a deductible of 5% per unit of value with a minimum deductible of $100,000.
Crime Insurance
The City purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible.
The fidelity coverage is provided through the Authority.
C. Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2021-22.
59 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(9) Classification of Fund Balance
Details of the fund balance classifications at June 30, 2022 are as follows:
Miscellaneous City Capital Nonmajor
General Fund Grants Projects Governmental Totals
Nonspendable 110,030
Prepaid items $ 110,030
Deposits 1,960 64,094 66,054
Total nonspendable 111,990 64,094 176,084
Restricted
General government 916,958 916,958
34,327 34,327
Public safety
Community development - 393,984 393,984
Public works 384,385 5,998,308 6,382,693
Total restricted 916,958 384,385 6,426,619 7,727,962
Committed
Compensated absences 289,278 289,278
Capital asset replacement 22,345,608 22,345,608
1,047,847 1,047,847
Economic uncertainty* 22,996,777 22,996,777
Total restricted 46,679,510 46,679,510
Assigned
Continuing appropriations
Nondepartmental operations 66,558 66,558
Public safety operations 63,970 63,970
Community development 176,060 176,060
Public works operations 355,920 355,920
Capital projects 119,591 119,591
Total assigned 782,099 782,099
Unassigned (deficit) (271,815) (4,606) (276,421)
Total fund balance $ 48,490,557 (271,815) 448,479 6,422,013 55,089,234 operating or capital expenditures.
60 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(10) Jointly Governed Organization
Orange County Fire Authority
In January 1995, the City entered into a joint powers agreement with the cities of Buena Park, Cypress, Dana Point, Irvine, Laguna Hills, Lake Forest, La Palma, Los Alamitos, Mission Viejo, Garden Grove, San Clemente, San Juan Capistrano, Seal Beach, Stanton, Tustin, Villa Park, and Yorba Linda, and the County of Orange to create the Orange County Fire Authority ("OCFA"). Since the creation of the OCFA, the cities of Laguna Woods, Rancho Santa Margarita, Westminster, Aliso Viejo and Santa Ana joined the OCFA as members eligible for fire protection services. The purpose of the OCFA is to provide for mutual fire protection, prevention and suppression services, and related and incidental services including, but not limited to, emergency medical and transport services, as well as providing facilities and personnel for such services. The effective date of formation was March 1, 1995. The OCFA's governing board consists of one representative from each City and two from the County. The operations of the OCFA are funded with structural fire fees collected by the County through the property tax roll for the unincorporated area and on behalf of all member cities except for the cities of Stanton, Tustin, San Clemente, Buena Park, Garden Grove, Seal Beach, Westminster and Santa contract cities" and accordingly, make cash contributions based on the OCA's annual budget. No determination has been made as to each participant's proportionate share of fund equity as of June 30, 2022. Upon dissolution of the OCFA, all surplus money and property of the OCFA will be conveyed or distributed to each member in proportion to all funds provided to the OCFA by that member or by the County on behalf of that member during its membership. The OCFA financial statements can be obtained from the OCFA at 1 Fire Authority Road, Irvine, CA 92602. (11) Defined Benefit Pension Plans
A. General Information about the Pension Plan
Plan Description
The City contributes to CaPERS, a cost-sharing multiple-employer defined pension plan, for its' miscellaneous employees. CaPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CaPERS acts as a common investment and administrative agent for participating public entities within the State of California.
Benefit provisions and all other requirements are established by State statute and City ordinance.
Copies of CaPERS' annual financial report may be obtained from its website under Forms and Publications.
61 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(11) Defined Benefit Pension Plans (Continued)
A. General Information about the Pension Plan (Continued) Employees Covered by Benefit Terms
At June 30, 2020, valuation date, the following employees were covered by the benefit terms:
Plans
Miscellaneous
Classic Tier 1 Classic Tier 2 PEPRA
24 12 54
Active employees 40
Transferred and terminated employees 101 10
55 4 0
Retired employees and beneficiaries 94
180 26
Benefits Provided
CaPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. A first tier classic CaPERS member becomes eligible for service retirement upon attainment of age 55 with at least five years of credited service. A second tier classic CaPERS member becomes eligible for service retirement upon attainment of age 60 with at least five years of credited service. A PEPRA miscellaneous member becomes eligible for service retirement upon attainment of age 62 with at least five years of service. The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final compensation. The final compensation is the monthly average of the member's highest 12 - 36 months of full-time equivalent monthly pay.
The following are the benefit provisions for each plan:
• Classic Tier 1: 2.0% (at age 55) of the average final 12 months compensation. • Classic Tier 2: 2.0% (at age 60) of the average final 36 months compensation. • PEPRA: 2.0% (at age 62) of the average final 36 months compensation.
Participants are eligible for non-industrial disability retirement if they become disabled and have at least five 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.
An employee's beneficiary may receive the basic death benefit if the employee dies while actively employed. The employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions, where interest is currently credited at 7.5 percent per year, plus a lump sum in the amount of one month's salary for each completed year of salary is defined as the member's average monthly full-time rate of compensation during the 12 current service, up to a maximum of six months' salary. For purposes of this benefit, one month's 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 survivors) or to the retiree's estate. 62 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(11) Defined Benefit Pension Plans (Continued)
A. General Information about the Pension Plan (Continued) Benefit terms provide for annual cost-of-living adjustments to each employee's retirement allowance. Beginning the second calendar year after the year of retirement, retirement and survivo allowances will be annually adjusted on a compound basis by 2.0 percent Contributions
Section 20814(c) of the California Public Employees' Retirement Law ("PERL") requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following the notice of a change in the rate. The total plan contributions are determined through CaPERS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contributions for the fiscal year ended June 30, 2022 were $1,275,264.
Actuarial Methods and Assumption Used to Determine Total Pension Liability For the measurement period ended June 30, 2021, the total pension liability was determined by rolling forward the June 30, 2020 total pension liability. The June 30, 2021 total pension liabilities were based on the following actuarial methods and assumptions:
Entry Age Normal in accordance with the requirements of Actuarial Cost Method
GASB Statement No. 68
Discount Rate 7.15%
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Derived using CaPERS' membership data for all funds (1) Mortality Rate Table
Post Retirement Benefit Increase Contract COLA up to 2.50% until Purchasing Power Protection Allowance Floor on Purchasing Power applies
(1) The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP2016. For more details on this table, please refer to the December 2017 experience study report (based on CaPERS demographic data from 1997 to 2015) that can be found on the CaPERS website. 63 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(11) Defined Benefit Pension Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension
Discount Rate
made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. ent expense and ited fury are rates foreach expected peturns, sing a In determining the long-term expected rate of return, CaPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using he si e tunes set dises) 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+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The expected real rates of return by asset class are as followed:
Assumed Asset Real Return Real Return
Asset Class (1) Allocation Years 1 - 10(2) Years 11+ (3)(4) Public Equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation Assets 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
13.00% 3.75% 4.93%
Real Assets
1.00% 0.00% (0.92%)
Liquidity
* In the CalPERS ACFR, liquidity is included in short-term investments; inflation assets are included in both public equity and fixed income. 2 An expected inflation of 2.00 percent was used for this period. 3 An expected inflation of 2.92 percent was used for this period. 4 Figures are based on previous ALM of 2017.
CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(11) Defined Benefit Pension Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)
Subsequent Events
On July 12, 2021, CaPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CaPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CaPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.
On November 17, 2021, the board adopted a new strategic asset allocation. The new asset the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CaPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modification to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.
Sensitivity of the City's Proportionate Share of the Net Pension Liability to Changes in the Discount The following presents the City's proportionate share of the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 7.15%, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage-point lower (6.15%) or one percentage-point higher (8.15%) than the current rate:
Plan's Net Pension Liability/ (Asset)
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
10,584,394 4,974,843 337,507
$
Pension Plan Fiduciary Net Position
Detailed information about the plan's fiduciary net position is available in the separately issued CaPERS' financial report and can be obtained from CaPERS' website under Forms and Publications. 65 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(11) Defined Benefit Pension Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)
Proportionate Share of Net Pension Liability and Pension Expense The following table shows the plan's proportionate share of the risk pool collective net pension liability over the measurement period:
Increase (Decrease)
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/ (Asset)
(a) (b) (c) = (a) - (b)
$ 40,149,168 30,769,101 9,380,067
Balance at June 30, 2020 (MD) 4,974,843
Balance at June 30, 2021 (MD) 42,486,653 37,511,810
$ 2,337,485 6,742,709 (4,405,224)
Net changes from 2020-2021
Deferred outflows of resources, deferred inflows of resources, and pension expense is allocate based on the City's share of contribution.
The City's proportionate share of the net pension liability was as follows:
Miscellaneous
Proportion - June 30, 2020 (MD) 0.22238%
Proportion - June 30, 2021 (MD) 0.26200%
Change - Increase (Decrease) 0.03962%
For the year ended June 30, 2022, the City recognized pension expense in the amount of $1,304,796.
The Expected Average Remaining Service Lifetime ("EARS") is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the risk pool.
The EARSL for risk pool for the June 30, 2021 measurement period is 3.7 years, which was obtained by dividing the total service years of 561,622 (the sum of remaining service lifetimes of the active employees) by 150,648 (the total number of participants: active, inactive, and retired). 66 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(11) Defined Benefit Pension Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)
Proportionate Share of Net Pension Liability and Pension Expense (Continued) the City reported deferred outflows of resources and deferred inflows of resource! At ted 30, 20222s from the following sources:
Deferred Outflows • of Resourcess
of Resources
Differences between Expected and Actual Experience $ 557,875 Differences between Expected and Actual
4,342,775
Investment Earnings
Differences between Employer's Contributions and
Proportionate Share of Contributions - 481,646
413,606
Change in Employer's Proportion
Pension Contributions Made Subsequent to
Measurement Date 1,275,264
$ 2,246,745 4,824,421
Total
Deferred outflows of resources related to pensions resulting from the City's contributions made subsequent to the measurement date in the amount of $1,275,264 will be recognized as a reduction of the collective net pension liability in the fiscal year ending June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Fiscal Year
June 30 Miscellaneous Plan
2023 $ 800,992
2024 869,880
2025 981,949
2026 1,200,119
2027 -
Thereafter
$ 3,852,940
67 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(12) Other Postemployment Benefits
A. General Information About the Other Postemployment Benefits ("OPEB") Plan Plan Description
The City provides postretirement medical benefits to employees who retire directly from the City retirees can continue participation in the City's medical plans ("PEMHCA"). For miscellaneous under CaPERS under a single employer defined benefit postemployment benefits plan. Eligible retirees, the City contributes up to a capped dollar amount which varies by bargaining unit, medical coverage, and years of service.
Eligibility
Participants directly retire from the City under CaPERS plan at age 50 and 52 for classic members and PEPRA members, respectively or retire due to disability retirement.
Covered Participants
At June 30, 2022, the measurement date, the following numbers of participants were covered by the benefit terms:
81 Active employees 19
Inactive currently receiving benefits
Inactive entitled to but not yet receiving benefits 29
129
Total
Contributions
The obligation of the City to contribute to the plan is established and may be amended by the City Council. For the year ended June 30, 2022 the City made contributions on a pay-as-you-go basis.
B. Iotal OPEB Liability
The City's total OPEB liability was measured as of June 30, 2022, and the total OPEB liability was determined by an actuarial valuation as of June 30, 2022.
Actuarial Methods and Assumption Used to Determined Total OPEB Liability The total OPEB liability in the June 30, 2022 actuarial valuation was determined using the following actuarial methods and assumptions, applied to all periods included in the measurement period, unless otherwise specified:
68 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(12) Other Postemployment Benefits
B. Total OPE Liability (Continued)
Actuarial Assumption:
Contribution Policy
Discount Rate
Inflation CaPERS 2000-2019 Experience Study
Mortality, Retirement, Disability, Termination Mortality projected fully generational with Scale MP-2021 Mortality Improvement Aggregate - 2.75% annually
Salary Increases Merit - CaPERS 1997-2015 Experience Study Non-Medicare - 6.50% for 2023, decreasing to
Medical Trend an ultimate rate of 3.75% in 2076
Medicare - 5.65% for 2023, decreasing to
an ultimate rate of 3.75% in 2076
PEMHCA Minimum Increase 4.00% annually
Healthcare Participation at Retirement Actives - 50%
Retirees - current election
Actives: current election if covered, 80% if waived
Spouse Coverage Retirees: current election
100%
Medicare Eligible
Change of Assumptions
During the measurement period June 30, 2022, the accounting discount rate increased from 2.16 percent to 3.54 percent (Bond Buyer 20-Bond Index).
Discount Rate
The discount rate used to measure the total OPEB liability was 3.54%. The discount rate is based or the yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale).
Change in OPEB Liability OPEB
Liability
Balance at July 1, 2021 $2,726,547
Changes Recognized for the Measurement Period:
249,137
Service Cost 63,322
Interest on the total OPEB Liability
(605,217)
Changes of assumptions (599,226)
Difference between expected and actual experience (88,151) Benefit payments, including refunds of employee
Net changes during July 1, 2021 to June 30, 2022 (980,135) Balance at June 30, 2022 (Measurement Date) $1,746,412
69 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(12) Other Postemployment Benefits
B. Total OPEB Liability (Continued)
Sensitivity of the Total OPEB Liability to Change in the Discount Rate The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.54 percent) or 1-percentage- point higher (4.54 percent) than the current discount rate:
Plan's Net Pension Liability/ (Asset)
Discount Rate - 1% Current Discount Discount Rate + 1%
Rate (3.54%) (4.54%)
(2.54%) 2,022,878 1,746,412 1,523,508
Sensitivity of the Total OPE Liability to Changes in the Health Care Cost Trend Rates The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (Non-Medicare - 5.50% to 2.75% and Medicare - 4.65% to 2.75%) or 1-percentage-point higher (Non-Medicare - 7.50% to 4.75% and Medicare - 6.65% to 4.75%) than the current healthcare cost trend rates:
Plan's Net Pension Liability/ (Asset)
Current Trend - 1% Current Trend Current Trend + 1%
1,489,430 1,746,412 2,075,457
C. OPE Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to At June 30, 2022, the City reported deferred outflows and inflows of resources related to OPEB from For the measurement period ended June 30, 2022, the City recognized OPEB expense of $260,924. the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual experience $ 118,641 539,897 360,535 574,417
Changes in Assumptions 1,114,314
$ 479,176
Total
The gains and losses are amortized over the expected average remaining service life. The expected of the measurement period, for employees covered by the OPE plan benefit terms as of the average remaining service life is 10.1 years, which was determined as of July 1, 2021, the beginning valuation date.
CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2022
(12) Other Postemployment Benefits
D. OPE Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
The amount reported as deferred inflows of resources related to OPEB will be recognized in the future OPEB expense as follows:
Deferred
Fiscal Outflows/ (Inflows)
Year Ended of Resources
June 30 OPE Plan
2023 $ (51,970)
2024 (51,970)
2025 (51,970)
2026 (51,970)
2027 (48,002)
Thereafter (379,256)
(635,138)
(13) Contingencies
The City is involved as a defendant in various legal proceedings. While it is not feasible to predict or determine the outcome in these cases, it is the opinion of the City that the outcome of the majority of these cases will have no material adverse effect on the financial position of the City. grantor agencies. Although such audits could generate expenditures disallowances under the terms of The City has received State and Federal funds for specific purposes that are subject to review by the the grants, it is believed that any required reimbursements, if any, will not be material. (14) Outstanding Commitments
Prior to the end of the fiscal year, the City awarded several consulting and capital project contracts. At June 30, 2022, the unspent balance of the significant contracts is as follows:
Balance
Projects with Outstanding Contracts 321,364
Park Playground Replacements - Chapparosa, Marina Hills, and La Plata Parks $ Niguel Road - Highlands to Alta Terra Resurfacing 668,425 $ 989,789
(15) Prior Period Adjustment
and debt were increased and restated. There was no impact on net position as can be seen in the table With the implementation of GASB Statement No. 87, Leases, the beginning balances of capital assets Beginning
Beginning Adjustment Restated
$ 181,490 181,490
Right to use assets (181,490) (181,490)
Leased assets liability
Net position, beginning of year, as restated =
71 REQUIRED SUPPLEMENTARY
INFORMATION (UNAUDITED)
72 City of Laguna Niguel
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule
General Fund
Year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Badget Amountinal Amounts (Negative)
REVENUES: 2,287,615
$ 40,597,512 40,957,618 43,245,233
Taxes 2,992,765 3,957,690 964,925
Licenses and permits 2,544,200 (3,827)
Intergovernmental 74,000 160,494 156,667
Charges for services 815,537 815,537 1,014,777 199,240
458,000 458,000 (1,949,285, 154,212
Fines and forfeitures (2,322,355)
Use of money and property (loss) 373,170 373,170
386,628 451,984 65,356
Leases 386,628
147,300 147,300 550,772 403,472
Miscellaneous 48,040,150 1,748,638
Total revenues 45,396,347 46,291,512
EXPENDITURES:
Current: 5,905,024 112,549
General government 6,368,954 6,017,573
17,241,162 17,232,998 16,662,695 570,303
Public safety 4,612,029 (168,530)
ommunity developmen 3,920,870 4,443,499
4,003,750 3,719,256 284,494
arks and recreation 3,880,015 353,218
Public works 12,593,590 14,375,244 14,022,026
171,300 1,094,437 1,072,532 21,905
Capital outlay 1,173,939
Total expenditures 44,175,891 47,167,501 45,993,562
EXCESS OF REVENUES OVER (UNDER) 2,046,588 2,922,577
EXPENDITURES 1,220,456 (875,989)
OTHER FINANCING SOURCES (USES): 346,950 278,326 (68,624) Transfer in (120,000) (181,450) 134,891
Transfers out (316,341)
(120,000) 30,609 96,876 66,267
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE 1,100,456 (845,381) 2,143,464 2,988,845 FUND BALANCE: 46,347,093
Fund balance at beginning of year 46,347,093 46,347,093 45,501,712 48,490,557 2,988,845
Fund balance at end of year $ 47,447,549
See accompanying notes to required supplementary information.
City of Laguna Niguel
Required Supplemental Information (Unaudited)
Budgetary Comparison Schedule
Miscellaneous Grants Special Revenue Fund
Variance with
Final Budget
Budget Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES: $ 5,602,291 $ 1,800,646 (3,801,645)
Intergovernmental $ 4,863,473 1,996 1,996
Jse of money and property 1,802,642 (3,799,649)
Total revenues 4,863,473 5,602,291
EXPENDITURES:
Current: 234,000 625,868 625,868
Community Development 625,868
Total expenditures 234,000 625,868
EXCESS OF REVENUES OVER 4,629,473 4,976,423 1,802,642 3,173,781
EXPENDITURES
OTHER FINANCING SOURCES (USES): (4,611,950) (2,022,720) 2,589,230 Transfers out (2,765,000)
(2,765,000) (4,611,950) (2,022,720) 2,589,230
Total other financing sources (uses)
1,864,473 364,473 (220,078) (584,551)
NET CHANGE IN FUND BALANCE
FUND BALANCE: (51,737) (51,737)
Fund balance (deficit) at beginning of year (51,737) (584,551) $ 1,812,736 312,736 (271,815)
Fund balance (deficit) at end of year
See accompanying notes to required supplementary information.
City of Laguna Niguel
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule
City Capital Projects Fund
Year ended June 30, 2022
Variance with
Final Budget
Budget Amounts Positive
= Original Final Amounts (Negative)
EXPENDITURES: 4,745,539
Capital outlay $ $ 9,260,519 $ 4,514,980
5,072,597 9,260,519 4,514,980 4,745,539
Total expenditures -
OTHER FINANCING SOURCES: 4,514,174 (4,746,345)
Transfers in 5,072,597 9,260,519
Total other financing sources = 9,260,519 4,514,174 (4,746,345) NET CHANGE IN FUND BALANCE - - (806) (806)
FUND BALANCE:
449,285 449,285 449,285
Beginning of year 448,479 (806)
End of year $ 449,285 449,285
75 City of Laguna Niguel
Required Supplementary Information (Unaudited)
Notes to the Required Supplementary Information
Year ended June 30, 2022
Note 1 - Budget Policy and Control
America and are used as a management control device. Annual budgets are adopted for the General Fund, all Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of submit a proposed budget to the City Council. The City Council conducts a noticed public hearing to invite public Special Revenue Funds, and the Capital Projects Fund. The City Manager and Director of Finance prepare and input before the City Council conducts its detailed review of the proposed budget at a special meeting where additional public input is invited. After reviewing the proposed budget and making such revisions that it deems advisable, the City Council approves each year's budget by resolution before the first meeting of the new fiscal year. The City Council has the legal authority to amend the budget at any time during the fiscal year.
The City Manager is authorized to adjust appropriations within or between functions or programs as long as the transfer does not increase the adopted annual budget appropriations. Adjustments to appropriations between funds require City Council approval. Transfers of each or unappropriated fund balance from one fund to another appropriations lapse at the end of the fiscal year. Total appropriations approved for the fiscal year ended June 30, 2022, less prior year carryovers, were $49,717,544.
Note 2 - Excess of Expenditures Over Appropriations
For the year ended June 30, 2022, expenditures exceeded appropriations in the community development department (the legal level of budgetary control) of the General Fund by $168,530. 76 City of Laguna Niguel
Required Supplementary Information (Unaudited)
Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios Year ended June 30, 2022
June 30, 20141 June 30, 2015 June 30, 2016 June 30, 2017 Measurement period
0.07294% 0.06905% 0.07545% 0.07849%
City's Proportion of the Net Pension Liability
City's Proportionate Share of the Net Pension Liability $ 4,538,778 $ 4,739,802 $ 6,528,796 $ 7,784,390 $ 5,358,655 $ 5,256,476 $ 5,508,425 $ 5,759,712
City's Covered Payroll
City's Proportionate Share of the Net Pension Liability 84.70% 90.17% 118.52% 135.15% as a percentage of Covered Payroll
Plan's proportionate share of the fiduciary net position as a 83.03% 83.02% 78.49% 77.30% percentage of the total pension liability
June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 Measurement period
0.07924% 0.08299% 0.08621% 0.09199%
City's Proportion of the Net Pension Liability
City's Proportionate Share of the Net Pension Liability $ 7,635,951 $ 8,504,317 $ 9,380,067 $ 4,974,843 $ 6,079,244 $ 6,140,757 $ 6,447,797 $ 6,234,178
City's Covered Payroll
City's Proportionate Share of the Net Pension Liability 125.61% 138.49% 145.48% 79.80% as a percentage of Covered Payroll
lan's proportionate share of the fiduciary net position as a 78.97% 77.49% 77.71% 90.49% percentage of the total pension liability
* Historical information is presented only for measurement periods for which GASB 68 is applicable. Additional years' information will be displayed as it becomes available.
Notes to Schedules:
individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Change in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, this information as a separate liability in their financial statements as CaPERS considers such amounts to be separate financed employer- Credit to members retiring during a specified time period (a.k.a Golden Handshakes). Employers that have done so may need to report Changes of Assumptions: None in 2021, 2020 and 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to CaPERS Experience Study and Review of Actuarial Assumptions December 2017. In 2017, the accounting discount rate was reduced from 7.65 percent to 7.15 percent.
77 City of Laguna Niguel
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pension
Year ended June 30, 2022
2013-141 2014-15 2015-16 2016-17 2017-18
Fiscal year
Actuarially determined contribution: $ 322,907 $ 260,533 Miscellaneous Tier 1 Plan $ 520,739 $496,258 $ 342,524
40,763 52,805 58,843 81,272 88,913
Miscellaneous Tier 2 Plan 52,055_ 73,523 122,796
Miscellaneous PEPRA 10,164 27,511
571,666 576,574 453,422 477,702 472,242
Total actuarially determined contribution 576,574 710,160 768,939 Contribution in relation to the actuarially determined contribution 571,666 453,422 $ $ $ (232,458), $ (296,697)
Contribution Deficiency (Excess)
$ 5,358,655 $ 5,256,476 $ 5,508,425 $ 5,759,712 $ 6,079,244 Covered payroll
10.67% 10.97% 8.23% 12.33% 12.65%
Contributions as a percentage of covered payroll
2018-19 2019-20 2020-21 2021-22
Fiscal year
Actuarially determined contribution:
$ 777,461 $ 862,885 $ 790,976 $1,025,893
Miscellaneous Tier 1 Plan
82,534 118,559 119,672 88,169
Miscellaneous Tier 2 Plan
Miscellaneous PEPRA 82,944 116,294 210,519 199,567
Total actuarially determined contribution 942,939 1,097,738 1,121,167 1,313,629 Contribution in relation to the actuarially determined contribution 920,585 1,035,270 1,120,667 1,275,264 Contribution Deficiency (Excess) $ 22,354 62,468 500 38,365 $ 6,140,757 $ 6,447,797 $ 6,234,178 $ 6,854,621
Covered payroll
Covered pays a percentage of 14.99% 16.06% 17.98% 18.60% * Historical information is presented only for measurement periods for which GASB 68 is applicable. Additional years' information will be displayed as it becomes available.
Notes to Schedule of Plan Contributions 6/30/2019
Valuation date
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Level percent of payroll
Market Value of Assets. For details, see June 30, 2019 Funding Valuation Report.
2.5%
Salary increases Varies by Entry Age and Service
yet gent rate of return 2.75%
7.00%, net of pension plan investment and administrative expense; including inflation.
Other information:
For changes to previous year's information, refer to past GASB 68 reports 78 City of Laguna Niguel
Required Supplementary Information (Unaudited)
Schedule of the Changes in Total OPEB Liability and Related Ratios Year ended June 30, 2022
Last Ten Fiscal Years
OTHER POSTEMPLOYMENT BENEFITS PLAN
Measurement period June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 Total OPEB liability
$ 164,308 159,580 $ 177,199 $ 238,974 § 249,137
52,069 60,500 64,566 59,282 63,322
(62,212) 90,002 423,242 22,375 (605,217)
172,569 (599,226)
(36,705) (44,487) (48,040) (75,178) (88,151)
Net change in total OPEB liability 117,460 265,595 789,536 245,453 (980,135) Total opes lability ending (a) 3 1208503 2 123,953 - 3 2601,5086 - 32180042 3 2,20,512 $ 1,746,412 Plan fiduciary net position as a percentage 0.00% 0.00% 0.00% of the total OPE liability 0.00% 0.00%
$ 5,927,346 $ 6,140,757 $ 6,392,532 $ 6,476,418 $ 7,098,959 Covered employee-payroll
Plan net OPEB liability as a percentage of 27.55% 38.81% 42.10% 24.60% covered employee-payroll 24.06%
* Historical information is presented only for measurement periods for which GASB 75 is applicable. Additional years of information will be displayed as it becomes available.
Notes to Schedules:
Change in Benefit Terms: There were no changes in the benefit terms.
Changes of Assumptions: In 2021, the discount rate changed from 2.16% to 3.54%. 79 SUPPLEMENTARY INFORMATION
80 City of Laguna Niguel
Nonmajor Governmental Funds
Year ended June 30, 2022
Special Revenue Funds
State Gasoline Tax Fund ("Gas Tax") - Accounts for revenues received and expenditures made for general street maintenance. Financing is provided by the City's share of state gasoline taxes collected under the Street and Highway Code, Sections 2103, 2105, 2106, 2107 and 2107.5, as well as the Road Maintenance and Rehabilitation Account funding (SB1).
Measure "M" - Accounts for revenues received and expenditures made for various City transportation projects fully or partially funded by Orange County Transportation Authority grants and County 1/2 cent local fair share sales tax apportionments.
Air Quality Improvement Fund - Accounts for revenues received under AB2766 and expenditures made for air quality improvements. AB2766 was enacted to authorize air pollution control districts to impose fees on motor vehicles. The California Department of Motor Vehicles collects the fees by assessing an amount on each registered vehicle in the South Coast District. This fee is distributed by the South Coast Air Quality Management District to local governments on a prorated basis based on population in the area.
Law Enforcement Fund - Accounts for various law enforcement revenues received and expenditures made for certain law enforcement and crime prevention expenditures for Police Services. Funding is provided by the State of California's Citizens' Option for Public Safety ("COPS") program.
Community Development Block Grant eligible gra As aunt capital projess funed is prendures made for Department of Housing and Urban Development.
Senior Transportation Fund - Accounts for the proceeds and outlays as designated in the Senior Mobility Program (SMP), which is funded through the Orange County Transportation Authority from the County's local ½- cent transportation sales tax measure.
81 City of Laguna Niguel
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022
Special Revenue Funds
Air Quality Law
Gas Tax Measure "M" Improvement Enforcement
ASSETS
$ 3,282,271 1,960,306 307,145 46,827
ash and investment
Leceivables
Accounts 99
347,356 :
Taxes
Interest 1,902
Due from other governments 86,534
Total assets 3,631,628 2,595,577 393,679 112,098
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
Liabilities: 63,106 12,930 12,500
ccounts payabl 81,170
ue to other fund
81,170 63,106 12,930 12,500
Total liabilities
Deferred Inflows of Resources: 65,271
Unavailable revenues 99 378,737 86,534
Total deferred inflows of resources 99 378,737 86,534 65,271 Fund balances:
Restricted for: 34,327
Public safety
ommunity developmer
224,215
ir quality improvemen
3,550,359 2,153,734 -
Public works
Unassigned (deficit) 34,327
Total fund balances 3,550,359 2,153,734 294,215
Total liabilities, deferred inflows of 393,679 112,098
resources and fund balances $ 3,631,628 2,595,577
82 City of Laguna Niguel
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
Special Revenue Funds
Total
Community Nonmajor
Development Governmental
Transpoltation Funds
Block Grant
ASSETS
- 377,529 5,974,078
Cash and investments
Receivables:
99 Accounts 347,356
Taxes :
Interest 3,039
Due from other governments 234,286 17,396 1,037,621
Total assets 234,286 394,925 7,362,193
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
Liabilities: 385,729
Accounts payable 215,082 941
Due to other funds 19,204 19,204
Total liabilities 234,286 941 404,933
Deferred Inflows of Resources:
Unavailable revenues 4,606 535,247
Total deferred inflows of resources 4,606 535,247
34,327
: 393,984 393,984
294,215
5,704,093
(4,606) (4,606)
(4,606) 393,984 6,422,013
resources and dund balancers of 234,286 394,925 7,362,193 83 City of Laguna Niguel
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds
Year ended June 30, 2022
Special Revenue Funds
Measure "M" Improvatent Enforcement
Gas Tax
REVENUES: 62,486 161,285
Intergovernmental 2,855,986 1,463,178
Use of money and property 533
Total revenues 2,855,986 1,463,711 62,551 161,327
EXPENDITURES:
Current: 150,000
-
Public safety : : -
Community development
Parks and recreation 75,087 84,960 :
815,014
815,014 75,087 84,960 150,000
Total expenditures
Excess (Deficiency) of Revenues (22,409) 11,327
Over (Under) Expenditures 2,040,972 1,388,624
OTHER FINANCING SOURCES (USES):
(424,766) (1,767,460) (106,737)
Transfers out
Total other financing sources (uses) (424,766) (1,767,460) (106,737) 1,616,206 (378,836) (129,146) 11,327
NET CHANGES IN FUND BALANCES
FUND BALANCES: 23,000
1,934,153 2,532,570 423,361
Fund balance (deficit) at beginning of year
3,550,359 2,153,734 294,215 34,327
Fund balance (deficit) at end of year
84 City of Laguna Niguel
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
Year ended June 30, 2022
Special Revenue Funds
Community - Total Nonmajor
Development Senior Governmental
Block Grant Transportation Funds
REVENUES: 5,394,246
Intergovernmental 751,652 99,659
163 803
Use of money and property
Total revenues 751,652 99,822 5,395,049
EXPENDITURES:
Current: 150,000
-
ublic safet 340,151 340,151
ommunity developmer 3,269 3,269
Parks and recreation 975,061
Public works 3,269 1,468,481
Total expenditures 340,151
Excess (Deficiency) of Revenues 96,553 3,926,568
Over (Under) Expenditures 411,501
OTHER FINANCING SOURCES (USES): (2,708,330)
(409,367) :
Transfers out
Total other financing sources (uses) (409,367) (2,708,330) NET CHANGES IN FUND BALANCES 2,134 96,553 1,218,238
FUND BALANCES: 5,203,775
Fund balance (deficit) at beginning of year (6,740) 297,431 (4,606) 393,984 6,422,013
Fund balance (deficit) at end of year
85 City of Laguna Niguel
tatement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actu:
as Tax Special Revenue Fun
Year ended June 30, 2022
Variance with
Final Budget
Budget Amounts Actual Positive
Original Amounts (Negative)
REVENUES 2,775,000 2,855,986 80,986
Intergovernmental $ 2,775,000 (15,000)
Jse of money and property 15,000 15,000
= 2,790,000 2,790,000 2,855,986 65,986
Total revenues
EXPENDITURES
Current: ,053,00 1,053,000 815,014 237,986
Public works 815,014 237,986
Total expenditures ,053,00 1,053,000
-
EXCESS OF REVENUES OVER (UNDER) 1,737,000 1,737,000 2,040,972 (172,000)
EXPENDITURES -
OTHER FINANCING SOURCES (USES): (1,800,000) (424,766) 1,375,234 Transfers out (1,800,000)
Total other financing sources (uses) (1,800,000) (1,800,000) (424,766) 1,375,234 (63,000) (63,000) 1,616,206 1,679,206
NET CHANGE IN FUND BALANCE
FUND BALANCE: 1,934,153
Fund balance (deficit) at beginning of year 1,934,153 1.071.153 1,679,206 3 1,871,153 3,550,359
Fund balance (deficit) at end of year
86 City of Laguna Niguel
statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actua Measure "M" Special Revenue Funs
Year ended June 30, 2022
Variance with
Final Budget
Actual Positive
origindget Amountal Amounts (Negative)
REVENUES 303,362
$ 1,100,000 1,159,816 1,463,178
Intergovernmental 533 (7,467)
Use of money and property 8,000 8,000
Total revenues = 1,108,000 1,167,816 1,463,711 295,895
EXPENDITURES 59,816 75,087 15,271
Public Works
= 59,816 75,087 15,271
Total expenditures
EXCESS OF REVENUES OVER 1,388,624 280,624
EXPENDITURES 1,108,000 1,108,000
-
OTHER FINANCING USES: 410,146
Transfers out (2,177,606) (1,767,460)
Total other financing uses = (2,177,606) (1,767,460) 410,146 NET CHANGE IN FUND BALANCE 1,108,000 (1,069,606) (378,836) 690,770 FUND BALANCE:
und balance (deficit) at beginning of year 2582560- 2,532,570 -und balance (deficit) at end of yea 3 350,570 2,153,734 690,770 87 City of Laguna Niguel
Statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Air Quality Improvement Special Revenue Fund
Year ended June 30, 2022
Variance with
Final Budget
Budget Amounts Actual Positive
= Original Final Amounts (Negative)
REVENUES (102,614)
$ 165,100 165,100 62,486
ntergovernmenta 5,000 65 (4,935)
se of money and propert 5,000
170,100 170,100 62,551 (107,549)
Total revenues
EXPENDITURES
urrent 53,000 80,750 84,960 (4,210)
ublic work 84,960 (4,210)
Total expenditures 53,000 80,750
EXCESS OF REVENUES OVER 89,350 (22,409) (111,759)
EXPENDITURES 117,100
-
OTHER FINANCING USES: 235,278
(226,800) (342,015) (106,737)
Transfers out (106,737) 235,278
Total other financing uses (226,800) (342,015)
(109,700) (252,665) (129,146) 123,519
NET CHANGE IN FUND BALANCE
FUND BALANCE: 423,361
Fund balance (deficit) at beginning of year 423,361 423,361 123,519 313,661 170,696 294,215
Fund balance (deficit) at end of year
88 City of Laguna Niguel
Statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Law Enforcement Special Revenue Fund
Year ended June 30, 2022
Variance with
Final Budget
Budget Amounts Actual Positive
= Original Final Amounts (Negative)
REVENUES 161,285 11,285
Intergovernmental $ 150,000 150,000
500 500 42 (458)
Use of money and property
Total revenues = 150,500 150,500 161,327 10,827
EXPENDITURES
Curble safety 150,000 150,000 150,000
Total expenditures 150,000 150,000 150,000
EXCESS OF REVENUES OVER (UNDER) 500 11,327 10,827
EXPENDITURES - 500
NET CHANGE IN FUND BALANCE 500 500 11,327 10,827
FUND BALANCE:
Fund balance (deficit) at beginning of year 23,000 23,000 23,000 10,827 Fund balance (deficit) at end of year 23,500 23,500 34,327 89 City of Laguna Niguel
Statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Community Development Block Grant Special Revenue Fund
Year ended June 30, 2022
Variance with
Final Budget
Budget Amounts Actual Positive
= Original Amounts (Negative)
REVENUES 379,716
Intergovernmental $ 371,936 371,936 751,652
Total revenues 371,936 371,936 751,652 379,716
-
EXPENDITURES
Community development 91,039 537,954 340,151 197,803
Total expenditures = 91,039 537,954 340,151 197,803
EXCESS OF REVENUES OVER (166,018) 411,501 577,519
EXPENDITURES 280,897
-
OTHER FINANCING USES: 96,490
Transfers out (280,897) (505,857) (409,367)
= (280,897) (505,857) (409,367) 96,490
Total other financing uses
- (671,875) 2,134 674,009
NET CHANGE IN FUND BALANCE
FUND BALANCE:
Fund balance (deficit) at beginning of year (6740) (6,740) (6,740) Fund balance (deficit) at end of year (678,615) (4,606) 674,009 90 City of Laguna Niguel
Statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Senior Transportation Special Revenue Fund
Year ended June 30, 2022
Variance with
Final Budget
Budget Amounts Actual Positive
= Original Final Amounts (Negative)
REVENUES 76,000 99,659 23,659
Intergovernmental $ 2,800 163 (2,637)
Use of money and property 2,800
78,800 99,822 21,022
Total revenues = 78,800
EXPENDITURES
Current: 78,800 3,269 75,531
Parks and recreation 78,800 75,531
= 78,800 78,800 3,269
Total expenditures
EXCESS OF REVENUES OVER = 96,553 96,553
EXPENDITURES -
- 96,553 96,553
NET CHANGE IN FUND BALANCE
FUND BALANCE: 297,431
Fund balance (deficit) at beginning of year 297,431 297,431 96,553 297,431 297,431 393,984
Fund balance (deficit) at end of year
91 This page intentionally left blank
92 STATISTICAL SECTION
(UNAUDITED)
93 This page intentionally left blank
94 City of Laguna Niguel
Statistical Section Overview
(Unaudited)
This part of the City's annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health.
Contents Page
Financial Trends Information - These schedules contain trend information to help the reader 96 understand how the City's financial performance and well-being have changed over time.
Revenue Capacity Information - These schedules contain information to help the reader assess the 104 City's most significant local revenue source, property taxes.
Debt Capacity Information -These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional 110 debt in the future.
Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take 113 place.
Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides 119 and the activities it performs.
95 City of Laguna Niguel
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2013 2014 2015 2016 2017
Govermental activities: $ 564,600,741 $ 566,781,948
Net investment in capital assets $ 553,534,310 $ 555,099,763 $ 563,204,034 Restricted: 71,752
$ 280,129 290,147 $ 66,898$ 85,186 $
Public safety
Public works 142,399
782,342 821,234 403,095 290,728
Streets 440,446
303,007 143,890 590,853
Community development
Parks and recreation -
300,312 275,453 328,041 400,601 469,297
Air quality improvement
1,362,783 1,689,841 $ 941,924 $ 1,367,368 $ 1,123,894
Total restricted $
72,885,016 75,927,923 67,284,805 76,932,061 67,674,106
Unrestricted
S 627,782,109 $ 632,717,527 $ 631,430,763 $ 642,900,170 $ 635,579,948 Total governmental activities net position
The City does not have any Business-Type activities.
Therefore, all governmental activities comprise the primary goverment of the City of Laguna Niguel. 96 City of Laguna Niguel
Net Position by Component (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2018 2019 2020 2021 2022
Governmental activities:
Net investment in capital assets $ 565,916,027 $ 579,093,630 $ 588,977,831 $ 579,071,088 $ 572,776,211 Restricted:
$ 49,739 62,619 $ 72,830 84,285 34,327
Public safety
Public works
Streets 587,123 4,107,797 5,614,824 5,718,205 6,382,693 Community development 483,737 158,702 216,803 304,171 393,984 -
Parks and recreation
Air quality improvement 513,707 565,153
Total restricted 1,634,306 4,894,271 $ 5,904,457 6,106,661 6,811,004 Unrestricted 67,449,901 50,029,493 32,748,312 36,434,282 39,034,613 Total governmental activities net position $ 635,000,234 $ 634,017,394 $ 627,630,600 $ 621,612,031 $ 618,621,828 The City does not have any Business-Type activities.
Therefore, all govemmental activities comprise the primary government of the City of Laguna Niguel. 97 City of Laguna Niguel
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2013 2014 2015 2016 2017
Expenses:
3,883,888 $ 4,260,378 $ 4,778,543 $ 5,049,643 $ 4,721,188 General government
9,966,910 10,281,721 10,901,896 11,778,228 13,034,018
Public safety
3,034,523 3,427,420 3,125,023 3,903,064 3,125,278
Community development
Public works 15,665,527 15,547,420 11,462,151 15,402,736 23,735,075 Parks and recreation 4,001,047 4,140,610 8,928,487 5,022,013 6,655,833 Interest expense 51,271,392
Total expenses $ 36,551,895 $ 37,657,549 39,196,100 41,155,684 Program Revenues:
Charges for services:
General government - $ 10,553 223,747
334,175
Public safety 232,009 294,535 266,612 297,386
2,221,118 3,948,178 2,090,366 6,931,625 2,058,550
Community development
1,098,177 1,095,355 1,051,430 1,087,258 1,162,176
Parks and recreation 33,407
17,304 305 16,997 18,389
Public works
Operating grants and contributions 5,962,399 3,242,021 2,287,448 2,917,219 2,660,052 1,308,028 948,880 2,895,963 3,903,895 1,387,051
Capital grants and contributions 115,379,519 7,635,711
10,839,035 9,529,274 $ 8,619,369 $
Total program revenues $
$ (25,712,860) $ (28,128,275) $ (30,576,731) $ (25,776,165) $ (43,635,681) Net (expenses)/revenues
General Revenues:
Taxes:
$ 17,139,167 $ 17,733,088 $ 18,840,320 $ 19,965,053 $ 20,786,789 Property taxes
10,845,297 11,027,919 11,453,345 12,244,172 11,448,371
Sales taxes
2,301,967 2,368,527 2,518,177 2,519,116 2,270,993
Franchise fees
499,787 526,490 578,597 642,043 625,562
Other taxes
34,687 28,707 27,730 26,160 29,631
Motor vehicle license fee
542,103 751,894 1,078,795 1,372,860 618,864
Use of money and property (loss)
2,800,505 627,067 424,658 476,168 535,249
Other 36,315,459
$ 34,163,513 33,063,692 $ 34,921,622 $ 37,245,572 $
Total general revenues
8,450,653 4,935,417 $ 4,344,891 $ 11,469,407 (7,320,222) Changes in net position $
The City does not have any Business-Type activities.
Therefore, all governmental activities comprise the primary government of the City of Laguna Niguel. 1 98
City of Laguna Niguel
Changes in Net Position (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2019 2020 2021 2022
2018
Expenses: 6,163,102 6,588,919
5,105,212 $ 5,087,668 6,128,946 $
General government $
15,714,696 16,199,542 16,499,129 16,899,038
Public safety 14,741,788
3,225,177 3,652,984 3,812,834 5,081,656
Community development 3,370,376
19,227,179 22,205,098 24,756,891 17,077,691
Public works 22,324,184
6,707,133 6,049,242 7,079,349 5,400,764 12,841,310
Parks and recreation
27,437 26,770 22,892
Interest expense 56,655,612 58,512,367
$ 52,248,693 49,331,399 $ 55,292,689
Total expenses
Program Revenues:
Charges for services: 1,500
- 1,850 $ 1,675 $ -
General government $
353,257 456,443 336,530 295,071 601,684
Public safety 3,740,831
Community development 6,150,591 2,131,215 2,288,391 1,845,081 987,371 660,087 508,182 970,591
Parks and recreation 1,204,757
241,672 209,672 200,655 227,387
Public works 16,776
4,037,554 4,401,389 5,776,718 2,539,129
Operating grants and contributions 3,376,124
453,036 273,159 463,305 5,070,885
Capital grants and contributions 2,126,133
8,309,141 8,170,903 9,089,012 13,152,007
Total program revenues $ 13,227,638 $
(47,121,786) $ (47,566,600) $ (45,360,360)
Net (expenses)/revenues $ (39,021,055) (41,022,258)
General Revenues:
Taxes: $ 25,292,654
21,968,448 $ 22,749,160 $ 23,584,278 $ 24,630,701
Property taxes $
11,223,516 11,831,049 12,229,918 13,135,671 14,518,028
Sales taxes 2,352,241 2,348,798
Franchise fees 2,362,138 2,400,540 2,359,348
701,611 542,175 589,705 851,034 1,085,753
Other taxes 47,905 75,286
Motor vehicle license fee 35,104 31,381 52,828
1,873,121 1,036,458 12,375 (1,917,952)
Use of money and property (loss) 1,094,790
611,992 882,457 518,104 967,590
Other 589,613 42,370,157
40,039,418 40,734,992 41,548,031 $
Total general revenues 37,975,220
(6.386,794) $ (6,018,569) $ (2,990,203)
(1,045,835) $ (982,840) $
Changes in net position
The City does not have any Business-Type activities.
Therefore, all governmental activities comprise the primary government of the City of Laguna Niguel. 2 99
City of Laguna Niguel
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2015 2016 2017
2013 2014
General Fund 514,590
1,149,113 1,279,616 570,062 250,345
Nonspendable
Restricted 53,147.941 51,733,497
31,335,413 31,383,297 57,492,610
Committed 21,555,152
Assigned 26,625,862 26,859,999 19,787,730 25,158,015
Unassigned 13,734,282 17,581,919
72,844,670 77,104.831 73.505,733 82.900.970 73,803,239
Total General Fund
All other govermental funds $ 153,207
$ - $ 137,000
Nonspendable 941,924 1,238,087 964,646
1,362,783 1,689,841
Restricted (1,558,827)
(2,766.483) (3,121,116) (2,651,602) (3,825,510)
Unassigned (1,709,678) (2,450,423) (440,974)
Total all other governmental funds (1,403,700) (1,431,275) 100
City of Laguna Niguel
Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2018 2019 2020 2021 2022
General Fund
Nonspendable 141,903 909,697 $ 698,381 $ 75,745 $ 111,990 153,013 692,039 916,958
Restricted 49.216920 46,679,510
Committed 31,822,082 40,818,817 45,229,355
24,965,800 24,714,780 349,954 782,099
Assigned
-
Unassigned 46,347.093 48,490,557
$ 57,446,559 $ 41,670,211 $
Total General Fund 74.324,623
All other governmental funds
157,740 $ 145,462 $ $ 64,900 $ 64,094
Nonspendable 5,594,900 6,811,004
Restricted 1,465,968 4,834,624 5,668,141
(367,234) (10,816) (153,879) (58,477) (276,421)
Unassigned 5,601,323 6,598,677
Total all other governmental funds 1,256,474 4,969,270 5,514,262 101
City of Laguna Niguel
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2013 2014 2015 2016 2017
Revenues: $ 35,446,201 $ 35,577,102
$ 30,729,950 $ 31,813,371 $ 33,213,255
Taxes 3,548,393 2,052,662
2,058,568 3,856,232 1,894,529
Licenses and permits 6,259,760
Intergovernmental 4,519,055 4,478,944 5,314,331 5,590,258 Charges for services 1,098,177 1,095,474 1,128,334 4,105,706 1,214,619 294,321 266,558 297,239 334,394
Fines and forfeitures 231,309 618,870
539,450 747,079 1,068,984 1,372,862
Use of money and property (loss)
Leases 163,250 80,727 185,891 366,129 :
Developer participatior 13,188 9,345 33,960 6,440 9,820 Contributions 535,249
2,800,505 597,024 424,658 476,168
Miscellaneous 46,602,476
42,153,452 42,972,517 43,530,500 51,209,396
Total revenues
Expenditures:
Current: 4,134,758 3,948,320
General government 3,641,524 3,370,414 3,840,177
9,962,786 10,264,183 10,869,382 11,727,774 12,665,551
Public safety 3,019,055
Community development 3,022,599 3,402,203 3,104,828 3,909,385 3,250,443 3,378,029 3,385,205 3,386,718 3,873,182
Parks and recreation
8,775,276 8,984,960 9,142,623 8,644,212 9,710,338
Public works 20,474,312
11,134,475 9,597,265 16,808,664 10,752,057
Capital outlay
Debt service: -
-
Principal
Interest 42,554,904 53,690,758
Total expenditures 39,787,103 38,997,054
Excess (deficiency) of revenues (7,088,282)
2,366,349 3,975.463 (3,620,379) 8,654,492
over (under) expenditures
Other Financing Sources (Uses): 20,246,160
Transfers in 11,009,755 9,785,587 17,179,568 10,802,763 (11,009,755) (9,785,587) (17,179,568) (10,802,763) (20,246,160) Transfers out
Total other financing sources (uses)
2,366,349 3,975,463 (3.620,379) 8,654,492 $ (7,088,282) Net change in fund balances
0.00% 0.00% 0.00% 0.00% 0.00%
Debt service as a percentage of noncapital
expenditures
102
City of Laguna Niguel
Changes in Fund Balances of Governmental Funds (Continued) Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2020 2021 2022
2018 2019
Revenues: 37,522,924 $ 38,763,249 $ 40,969,647 43,245,233 Taxes $ 36,255,713
2,841,459 2,346,727 2,426,416 2,037,023 3,957,690
Licenses and permits 6,030,006 7,351,559
6,672,937 4,985,890 4,518,791
Intergovemmental 465,020 1,014,777
Charges for services 4,543,201 989,221 661,762
460,296 352,064 302,213 612,212
Fines and forfeitures 353,041
2,239,707 1,413,887 437,998 (1,946,386)
Use of money and property (loss) 1,087,116 451,984
Leases
Conster prietion 33,747 19,340
193,546 492,781 122,880 550,772
Miscellaneous 589,613 55,237,841
52,384,233 48,772,058 48,648,290 50,364,787
Total revenues
Expenditures:
Current: 4,470,422 4,637,532 5,905,024
General government 4,393,163 4,334,859
15,627,937 16,118,936 16,431,019 16,812,695
Public safety 14,595,731
3,159,263 3,397,810 3,555,966 4,952,180
Community development 3,199,919 3,722,525
4,065,192 11,085,148 4,619,532 3,488,633
Parks and recreation 12,407,056 14,997,087
9,483,108 4,481,142 12,828,535
Public works 22,419,678 5,069,588 5,587,512
Capital outlay 14,406,858 23,223,090
Debt service:
- -
Principal
Interest 45,589,794 51,977,023
Total expenditures 50,143.971 61,911,439 63,854,913
Excess (deficiency) of revenues 4,774,993 3,260,818
2,240,262 (13,139,381) (15.206.623)
over (under) expenditures
Other Financing Sources (Uses): 22,095,320 4,872,673 4,792,500 Transfers in 14,477,949 22,769,659
(22,795,546) (22,120.053) (4,883,723) (4,912,500)
Transfers out (14,499,379) (24,733) (11,050) (120,000)
Total other financing sources (uses) (21,430) (25,887)
$ 2,218,832 S (13,165,268) $ (15,231,356) 4,763.943 $ 3,140,818 Net change in fund balances
0.00% 0.00% 0.00% 0.00% 0.00%
Debt service as a percentage of noncapital
expenditures
103
City of Laguna Niguel
Tax Revenues by Source - Governmental Funds
Last Ten Fiscal Years
(accrual basis of accounting)
Franchise Fees Other Taxes' Total
Property Taxes Sales Taxes % Change
% Change Actual % Change % Change % Change
2,301,967 -0.8% 499,787 25.6% 30,786,218 0.7%
2013 17,139,167 1.9% 10,845,297 -1.8%
2.9% 526,490 5.3% 31,656,023 2.8%
2014 17,733,088 3.5% 11,027,919 1.7% 2,368,527
3.9% 2,518,177 6.3% 578,597 9.9% 33,390,439 5.5%
2015 18,840,320 6.2% 11,453,345
0.0% 642,043 11.0% 35,370,384 5.9%
2016 19,965,053 6.0% 12,244,172 6.9% 2,519,116
2,270,993 -9.8% 625,562 - 2.6% 35,131,715 -0.7%
2017 20,786,789 4.1% 11,448,371 -6.5%
-2.0% 2,362,138 4.0% 701,611 12.2% 36,255,713 3.2%
2018 21,968,448 5.7% 11,223,516
2,400,540 1.6% 542,175 -22.7% 37,522,924 3.5%
2019 22,749,160 3.6% 11,831,049 5.4%
2,359,348 - 1.7% 589,705 8.8% 38,763,249 3.3%
2020 23,584,278 3.7% 12,229,918 3.4%
13,135,671 7.4% 2,352,241 -0.3% 851,034 44.3% 40,969,647 5.7% 2021 24,630,701 4.4%
10.5% 2,348,798 -0.1% 1,085,753 27.6% 43,245,233 5.6%
2022 25,292,654 2.7% 14,518,028
Change 117.2% 40.5%
2013-2022 47.6% 33.9% 2.0%
Other Taxes includes Real Property Transfer Taxes and Transient Occupancy Taxes. 104
City of Laguna Niguel
Assessed Value of Taxable Property
Last Ten Fiscal Years
Taxable Total
Assessed Direct
Fiscal Unsecured Value Tax Rate
Residential Commercial Industrial Other
Year
12,725,531 130,417,989 12,116,818,057 0.13463%
2013 11,229,883,033 646,458,647 97,332,857 0.13463%
641,714,733 89,523,605 89,399,329 135,097,159 12,401,086,758 2014 11,445,351,932 144,285,367 13,270,794,965 0.13463% 2015 12,227,948,146 709,563,753 104,299,283 84,698,416
92,189,497 136,727,885 14,018,750,172 0.13463%
2016 12,908,323,391 748,131,051 133,378,348 0.13463%
810,527,445 106,755,978 89,220,631 143,473,801 14,626,302,323 2017 13,476,324,468 153,767,064 15,362,857,373 0.13463% 2018 14,170,189,583 828,023,757 130,240,687 80,636,282
108,077,098 149,085,955 15,989,792,857 0.13463%
2019 14,772,757,911 848,077,767 111,794,126 16,932,895,008 0.13463% 871,787,891 115,436,254 335,849,810 209,118,079
2020 15,400,702,974 17,554,342,600 0.13463%
897,926,358 125,099,940 351,139,057 172,712,600
2021 16,007,464,645 163,547,376 18,023,410,444 0.13463% 2022 16,460,566,082 903,240,811 122,824,193 373,231,982 Notes:
Exempt values are not included in totals.
value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum of In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1%, based upon the assessed Source: Orange County Assessor 2012/13 - 2021/22 combined tax rolls, through HdL, Coren & Cone. 105
City of Laguna Niguel
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
Overlapping Rates
County Laguna Moulton Saddleback
Direct Capistrano Beach Niguel Valley South Coast
Unified Unified Water District Unified Water District
Year Rate
0.01171% 0.01694% 0.12280% 0.03265% 0.00819%
2013 1.00000% 0.00787%
2014 1.00000% 0.00972% 0.01567% 0.10972% 0.03207%
0.00900% 0.01461% 0.06975% 0.02806% 0.00722%
2015 1.00000% 0.00665%
2016 1.00000% 0.00845% 0.01396% 0.06270% 0.03008%
1.00000% 0.00843% 0.01371% 0.09377% 0.02688% 0.00207%
2017 0.00000%
2018 1.00000% 0.00800% 0.01287% 0.05179% 0.02365%
1.00000% 0.00786% 0.01285% 0.02392% 0.00000%
2019 0.02295% 0.00000%
2020 1.00000% 0.00745% 0.01266% Till
0.00756% 0.01012% 0.00000% 0.02336% 0.00000%
2021 1.00000%
0.00727% 0.01018% 0.02200% 0.00000%
2022 1.00000%
(Continued)
Notes:
Overlapping rates are those that apply to property owners within the City.
Not all overlapping rates apply to all city property owners.
Total direct rate is the weighted average of all individual direct rates applied by the City.
In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds.
Source: Orange County Assessor 2012/13 - 2021/22 Tax Rate Tables, through HdL, Coren & Cone 106
City of Laguna Niguel
Direct and Overlapping Property Tax Rates (Continued)
Last Ten Fiscal Years
Overlapping Rates
Total City
Direct and Share of Total
Metropolitan Overlapping Direct Direct
Year Water District Rates Rate Rates
2013 0.00350% 1.19579% 0.13463% 0.02413%
2014 0.00350% 1.17855% 0.13463% 0.09992%
2015 0.00350% 1.13214% 0.13463% 0.10005%
2016 0.00350% 1.12534% 0.13463% 0.10015%
2017 0.00350% 1.14836%( 0.13463% 0.10023%
2018 0.00350% 1.09981% 0.13463% 0.10020%
2019 0.00350% 1.11457% 0.13463% 0.10010%
2020 0.00350% 1.07728% 0.13463% 0.09997%
2021 0.00350% 1.04454% 0.13463% 0.10064%
2022 0.00350% 1.04295% 0.13463% 0.10062%
(Concluded)
Notes:
Overlapping rates are those that apply to property owners within the City.
Not all overlapping rates apply to all city property owners.
Total direct rate is the weighted average of all individual direct rates applied by the City. / 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxir gencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage ‹ assessed property values for the payment of any voter approved bonds.
Source: Orange County Assessor 2012/13 - 2021/22 Tax Rate Tables, through HdL, Coren & Cone 107
City of Laguna Niguel
Curren carand tax Paren
2022 2013
% of % of
Total City Total City
Taxable Taxable
Assessed Estimated Assessed Assessed Estimated Assessed Taxpayer Value Revenue Rank Value Value Revenue Rank Value $ 121,748,868 $ 163,911 1 0.69% 73,375,125 98,785 2 0.61%
BRE-FMCA LLC
Broadstone Laguna Niguel LLC 102,211,867 137,608 2 0.58% 125,299 0.53% 80,040,808 107,759 1 0.66%
Sequoia Equities Inc. 93,068,807
Vilara Evergreen SPE LLC 89,507,393 120,504 4 0.51%
Cal I Crown Valley LL 72,773,032 97,974 5 0.41%
restavilla Propco LIC 59,319,718 79,862 6 0.34%
Laguna Design Dunhill 57,752,292 77,752 0.33%
77,118 8 0.32% 45,570,282 61,351 3 0.38%
Shapell SoCal Rental Properties LIC 57,281,505
Rancho Niguel Office Partners 55,313,494 74,469 0.31%
52,406,667 70,555 10 0.30% 44,693,463 60,171 4 0.37%
Seaside Meadows LLC 0.36%
43,733,238 58,878 5
CostCo Wholesale Corporation 0.33%
39,511,126 53,194 6
Laguna Niguel Investors No 1 LLC 50,799 7 0.31%
FG Laguna Niguel Senior Apartment LP 37,732,434
37,375,036 50,318 8 0.31%
EOR Bond Partnership 0.30%
Ocean Ranch II 36,583,513 49,252
36,254,693 48,810 10 0.29%
Rancho Niguel Commercial
Mann Enterprises Inc
4.31% $ 474,869,718 $ 639,317 3.92%
Total $ 761,383.643. $ 1.025.051
Source: Orange County Assessor 2012/2013 and 2021/2022 Combined Tax Rolls and the SBE Non Unitary Tax Roll through HdL., Coren & Cone 108
City of Laguna Niguel
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the
Fiscal Year of the Levy Total Collections to Date
Fiscal Year Taxes Levied Collections in
Ended for the Percentage Subsequent Percentage
June 30, Fiscal Year Amount of Levy Years Amount of Levy 2013 17,483,577 16,903,941 96.68% 186,450 17,090,392 97.75% 2014 17,830,970 17,556,458 98.46% 135,732 17,692,190 99.22% 2015 18,985,609 18,686,825 98.43% 116,427 18,803,252 99.04% 2016 20,253,052 19,817,313 97.85% 116,490 19,933,803 98.42% 2017 21,044,889 20,646,100 98.11% 95,185 20,741,285 98.56% 2018 22,153,447 21,827,913 98.53% 85,105 21,913,019 98.91% 2019 22,966,722 22,606,099 98.43% 86,280 22,692,379 98.81% 2020 23,755,074 23,429,306 98.63% 94,115 23,523,421 99.02% 2021 24,748,265 24,436,951 98.74% 127,181 24,564,133 99.26% 2022 25,596,929 25,109,378 98.10% 120,526 25,229,904 98.57% Tax ledgers do not identify the tax year for which delinquent taxes are paid, therefore, this schedule reflects the cumulative collections from delinquent taxes.
Source: Orange County Auditor Controller Tax Ledgers
109
City of Laguna Niguel
Ratio of Outstanding Debt by Type
Governmental Activities
Last Ten Fiscal Years
Percentage
Capital of Assessed Per
Fiscal Capita
Leases Property Value
Year
2013 000000% :
0.00000%
2014
2015 0.00000%
0.00252%
2016 4.15
276,999 0.00189%
2017 7.89
515,684 0.00336%
2018 5.47
2019 364,963 0.00228%
157,984 0.00093% 2.42
2020 2.78
181,490 0.00103%
2021 4.96
318,897 0.00177%
2022
Notes:
Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.
The City does not have any Business-Type activities. All debt is reported as governmental activities. "See "Assessed Value of Taxable Property" schedule for assessed property value data. This ratio is calculated using assessed property value for the prior calendar year.
" See "Demographic and Economic Statistics" schedule for population data. This ratio is calculated using population as of January of each fiscal year as reported by the State Department of Finance.
110
City of Laguna Niguel
Direct and Overlapping Governmental Activities Debt
June 30, 2022
2021-2022 Assessed Valuation: $17,682,693,788
% City's Share of
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Total Debt 6/30/22 Applicable(1) Debt 6/30/22 (2) S 20,175,000 0.521%$ 105,112
Metropolitan Water District
Capistrano Unified School District School Facilities Improvement District No. 1 13,015,244 24.661% 3.209,689 14,035,000 0.018%
Laguna Beach Unified School District
92,040,000 0.052%
Saddleback Valley Unified School District 318,897
318,897 100.000%
City of Laguna Niguel 3,684,085
$
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND DEBT:
376,780,000 2.594% S 2,773,673
Orange County General Fund Obligations 13,535,077
Orange County Pension Obligation Bonds 521,784,000 2.594% 11,620,000 2.594% 301,423
Orange County Board of Education Certificates of Participation 4,015,592 Capistrano Unified School District Certificates of Participation 23,295,000 17.238% 53,095,000 42.424% 22,525,023
Moulton Niguel Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND DEBT 50,150,788
(3) S 53,834,873
GROSS COMBINED TOTAL DEBT
(1) Percentage of overlapping agency's assessed valuation located within boundaries of the City. (2) Amount of debt applicable to citizens residing in Laguna Niguel. This is not City of Laguna Niguel debt. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non- bonded capital lease obligations.
Ratios to 2021-2022 Assessed Valuation:
0.00%
Direct Debt ..
Total Direct and Overlapping Tax and Assessment Debt 0.02% Gross Combined Total Debt ... 0.30%
Source: Avenu Insights & Analytics
111
City of Laguna Niguel
Legal Debt Margin Information
Last Ten Fiscal Years
(dollars in thousands)
Legal Debt Margin Calculation for Fiscal Year 2022
Assessed value $ 18,023,410
Debt limit (3.75% of assessed value) 675,878
Debt applicable to limit
Legal debt margin 675,878
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Debt limit $ 454,381 $ 465,041 $ 497,655 $ 525,703 $ 546,443 $ 573,609 $597,132 $ 634,984 $658,288 $ 675,878 Debt applicable
to limit - - - -
Legal debt
margin 454,381 465,041 497,655 525,703 546,443 573,609 597,132 634,984 658,288 675,878 Total debt
applicable to the
limit as a
percentage of
debt limit
Note:
The general laws of the State of Califomia for municipalities provide for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was established based on 25% of market value. Effective with FY 1981-82, taxable property is assessed at 100% of market value. Although the debt limit provision has not been amended by the State since this change, the percentage has been proportionately modified to 3.75% for the purpose of this calculation for the consistency with the original intent of the State's debt limit. 112
City of Laguna Niguel
Demographic and Economic Statistics
Last Ten Fiscal Years
Median
Personal Income Taxable Sales Registered Housing Unemployment Population (in thousands) • Income d Per Capita
2013 64,065 3,236,436 50,518 16,989 37,840 25,392 609,000 4.40% 2014 64,460 3,280,305 50,889 17,188 37,431 25,424 652,000 3.90% 2015 64,449 3,215,232 49,888 17,653 37,676 25,456 689,000 5.00% 2016 66,142 3,327,443 50,307 17,724 39,915 25,458 695,000 4.10% 66,689 3,337,813 50,050 17,167 37,397 25,884 745,500
65,377 3,380,822 51,713 17,167 40,188 25,888 799,250
3,496,077 52,377 17,725 41,080 26,235 795,000 10
66,748
2020 65,316 3,654,152 55,946 18,724 45,119 26,236 811,500 2021 65,168 3,920,887 60,165 20,157 45,024 26,774 952,000 7.70% 2022 64,316 4,058,420 63,101 22,573 45,036 27,822 1,200,000 5.50% Notes
"Taxable sales is based upon sales tax revenue reported by the City on the modified accrual basis of accounting. • Median home value includes both single family and condo/townhouse units.
Data for years 2013-2022 were obtained from Hdl.
" Data for years 2013-2022 were obtained from OC Registrar of Voters. " Data for years 2013-2022 were obtained from Hdl, Coren & Cone. • Data for years 2013-2022 were obtained from State Department of Finance/Center for Demographic Research.
Source: State Department of Finance
HdL, Coren & Cone
Center for Demographic Research
O.C. Registrar of Voters
113
City of Laguna Niguel
Principal Employers
Current Year and Nine Years Ago
2022 2013
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment United States Govemment 2,000 1 5.87%
Costco Wholesale Corporation (2 locations) 595 2 1.74% 500 1 1.32% Capistrano Unified School District* 337 3 0.99% 286 3 0.75% 301 4 0.88% 326 2 0.86%
Wal-Mart Stores, Inc.**
Life Time Fitness 282 0.83%
Whole Foods Market 256 6 0.75% 250
210 0.62% 222 0.59%
Me lome ep of Laguna Niguel 186 8 0.55% 183 0.48%
154 9 0.45% 168 0.44%
Albertsons, Inc. (2 locations)
141 10 0.41%
Vons 175 7 0.46%
YMCA 139 9 0.37%
Interface Associates, Inc. 129 10 0.34%
First Team Real Estate, Inc.
13.09% 2,378 5.61%
Total 4,462
Note
Source: Avenu Insights & Analytics
114
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115
City of Laguna Niguel
Full-Time Equivalent City Government Employees by Function / Program Last Ten Fiscal Years
Fiscal Year
2013 2014 2015 2016 2017
General Goverment
City Council 1.0 0.5 0.5
City Manager 4.0 4.5 3.8
City Clerk 2.5 2.5 3.0 2.0 2.0
Finance 5.0 5.0 5.5 7.0 6.0
Management Services - 2.4
Public Safety
Police Services 2.0 2.0
io 1.0 1.0
Emergency Preparedness
Community Development
Administration 4.0
Planning 8.0
Building and Safety 1.0
Community Preservation -
Public Works
Administration 2.0
Engineering / Water Quality 6.0 9.0
Street Maintenance -
Median Maintenance
0)
Park Maintenance
Slope Maintenance
City Hall
Parks and Recreation
Administration 3.0 3.0 2.5
Recreational Programs 11.0 13.0 11.5 14.0
Aquatics 7.0 9.0 10.0
Skateboard Park 5.0 5.0 5.0 5 .0
Sports
Sea Country Senior & Community Center 11.0 12.0 15.0
Totals 81.3 86.3 84.8 93.1 96.0
Note:
For part-time employees, full-time equivalent employment is calculated by dividing part-time labor costs by average hourly wage and total labor hours of 2,080. The City is a full contract City and contracts out the following services: Police and Fire Services; Street Maintenance, including Street Sweeping; Park, Slope and Median Landscape Maintenance; Metrolink Station and Park Building Maintenance, and Building and Planning Inspection Services.
Source: Finance Department
116
City of Laguna Niguel
Full-Time Equivalent City Government Employees by Function / Program (Continued) Last Ten Fiscal Years
Fiscal Year
2018 2019 2020 2021 2022
General Goverment 0.5 0.5
City Council 0.5 0.5
1.8 6.1 4.6 5.1 5.3
City Manager 2.1
City Clerk 2.5 2.0 2.0 2.6
Finance 6.5 6.4
Management Services 2.4
Public Safety
2.0 1.5 1.0 1.0
Police Services 1.0
Emergency Preparedness 1.0 1.0 1.0
Community Development
4.0 3.2 4.1
Administration
9.0 5.0
Planning
1.0 1.0
Building and Safety 2.8
Community Preservation -
Public Works
2.3 3.6 5.0 10.6 13.4
Administration
10.5 11.4 6.6
Engineering / Water Quality • 9
1.0 Street Maintenance
Median Maintenance -
4.0 Park Maintenance 5.2
- -
Slope Maintenance
1.5 3.1
City Hall
Parks and Recreation
4.0 3.7 3.5 2.6
Administration 9.5
16.2 13.2 11.1
Recreational Programs
12.0 5.4 7.2 7.6
Aquatics
5.0 5.3 3.3 4.6
Skateboard Park
3.9 4.3
Sports
Sea Country Senior & Community Center 13.0 12.5 4.6 7.6
97.5 97.3 93.4 76.7 87.6
Totals
Note:
For part-time employees, full-time equivalent employment is calculated by dividing part-time labor costs by average hourly wage and total labor hours of 2,080. The City is a full contract City and contracts out the following services: Police and Fire Services; Street Maintenance, including Street Sweeping; Park, Slope and Median Landscape Maintenance; Metrolink Station and Park Building Maintenance, and Building and Planning Inspection Services.
Source: Finance Department
117
City of Laguna Niguel
Capital Asset Statistics by Function / Program
Last Ten Fiscal Years
2013 2014 2015 2016 2019 2020 2021 2022
Public Safety: '
Patrol motorcycles 3 3 3 4 4 4 5
PACT units 2 2 2 2 2 2 2
Public Works:
Street miles 140 140 140 140 140 140 140 140 140 140
Traffic signals 78 78 78 78 78 78 78 78 78 78
Traffic signals - shared 2 2 2 2 2 2 2 2 2 2
Parks and Recreation:
Acreage 135 135 135 135 135 135 135 135 135 135
City parks 29 29 29 29 29 29 29 29 29 29
Playgrounds 20 20 20 21 21 21 21 21 21 21
Swimming pool 1 1 1 -- -- 1
Skateboard park 1 1 1 1 1 1
Baseball/sofiball diamonds 16 16 16 16 16 16 16 16 16
Soccer fields 16 16 16 16 16 16 16 16
Community centers 2 2 2 2 2 2 2 2 2 2
Note
No capital asset indicators are available for the general government or community development functions. 'The City contracts with the Orange County Sherif's Department for its police services. The City does not own the patrol car used by the County.
Therefore, they are not included in this schedule, yet are part of the services provided to achieve the response times and issue the citations included in the "Operating Indicators By Function" schedule.
Sources: Various City departments
118
City of Laguna Niguel
Operating Indicators by Function
Last Ten Fiscal Years
2013 2014 2016 2017 2018 2019 2020 2021 2022
Public Safety:
Police priority one response time (minutes) 6.53 5.95 5.95 5.30 5.21 4.51 4.53 4.36 4.40 4.45 Fire response time (minutes) 6.57 6.12 6.24 6.03 6.00 6.09 7.15 7.03 6.53 7.03 Traffic citations 3,808 3,936 3,936 2,719 3,729 4,397 7,029 4,540 4,998 6,778 Parking citations 1,207 2,213 2,449 2,975 3,405 3,747 3,099 2,203 2,836 3,922 Community Development:
Permits issued 2,242 2,914 3,406 3,755 4,139 3,735 4,106 3,105 3,258 3,665 Public Works:
Streets - miles resurfaced 0.2 5.5 12.7 2.7 10.4 37.2 0.6 2.1 7.2 0.8 Sources:
Orange County Fire Authority
Orange County Sheriff's Department
Data Ticket
Public Works Department
Community Development Department
119
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120
ATTACHMENT B
Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit for Fiscal Year 2021-2022
DavisFarr Davis Farr LLP
18201 Von Karman Avenue | Suite 1100 | Irvine, CA 92612 CERTIFIED PUBLIC ACCOUNTANTS Main: 949.474.2020 | Fax: 949.263.5520
INDEPENDENT ACCOUNTANT'S REPORT
The Honorable Mayor and City Council
City of Laguna Niguel, California
Seton a mile are in alria conster let meyer me due a 202., The City is responsible for compliance with Section 1.5 of Article XIIIB of the California Constitution.
The City has agreed to and acknowledged that these procedures are appropriate to meet the intended purpose of evaluating compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution and the League of California Cities publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines for the year ended June 30, 2022. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures and the associated findings are as follows:
1. We obtained the worksheets referred to above and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote.
Results: No exceptions were noted as a result of our procedures.
2. We recalculated the mathematical computations reflected in the City's worksheets.
Results: No exceptions were noted as a result of our procedures.
3. We compared the current year information used to determine the current year limit and agreed it to worksheets prepared by the City and to information provided by the State Department of Finance.
Results: No exceptions were noted as a result of our procedures.
4. We compared the amount of the prior year appropriations limit presented in the worksheets to the amount adopted by the City Council for the prior year.
Results: No exceptions were noted as a result of our procedures.
The Honorable Mayor and City Council
City of Laguna Niguel, California
Page Two
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively on the worksheets referred to above. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the Management of the City of Laguna Niguel, California and is not intended to be, and should not be, used by anyone other than the specified party.
Irvine, California
February 7, 2023
ATTACHMENT C
Independent Accountants' Report on Agreed-Upon Procedures Applied to Compensation of City Manager, Executive Team, and Employees DavisFarr Davis Farr LLP
18201 Von Karman Avenue | Suite 1100 | Irvine, CA 92612 CERTIFIED PUBLIC ACCOUNTANTS Main: 949.474.2020 | Fax: 949.263.5520
INDEPENDENT ACCOUNTANT'S REPORT ON AGREED UPON PROCEDURES
APPLIED TO COMPENSATION OF CITY MANAGER,
EXECUTIVE TEAM, AND EMPLOYEES
City of Laguna Niguel
Laguna Niguel, California
We have performed the procedures enumerated below, in reviewing the City of Laguna liguel's (the "City") compliance on the compensation for the City Manager, the Executive Team, and five other city employees reported to the City for the period July 1, 2021 through June 30, 2022. The City's management is responsible for the compensation process in accordance with the City's internal control policies and procedures.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of evaluating compliance by the City with the respect to the compensation for the City Manager, the Executive Team, and five other city employees for the period July 1, 2021 through June 30, 2022. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We obtained the policies and memorandums of understanding related to compensation, which included updated salary contracts and salary schedules.
Results: No exceptions were noted as a result of our procedures.
2. We verified the pay rates, changes were authorized and supported by documentation, and reconciled authorized pay with payroll records of the City of Manager, the Executive Team, and five additional employees. When applicable, we agreed compensation to the Memorandum of Understanding ("MOU") and any approved amendments within the period of July 1, 2021 to June 30, 2022.
As of June 30, 2022, the review of the City Manager and the Executive Team included:
City Manager Finance Manager
Deputy City Manager Purchasing Manager
Finance Director City Clerk
Community Development Director Recreation Manager
Parks and Recreation Director
Public Works Director Enginen service Ananager
Development Services Manager
Maintenance Services Manager
*Vacant during period of testing
City of Laguna Niguel
Laguna Niguel, California
The additional five employees selected for review are noted below:
Associate Engineer Aquatics Supervisor
Senior Planner Emergency Preparedness Coordinator
Recreation Supervisor
Results: No exceptions were noted as a result of our procedures.
3. We verified and reconciled benefits elected to benefits provided by the City for the City Manager, the Executive Team, and five additional employees.
Results: No exceptions were noted as a result of our procedures.
We were engaged by the City to perform this agreed-upon procedures engagement and onducted our engagement in accordance with attestation standards established by the merican Institute of Certified Public Accountants. We were not engaged to and did no conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the City's accounting records.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported We are required to be independent of the City and to meet our other ethical responsibilities in accordance with the relevant ethical requirement related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of management of the City and is not intended to be and should not be used by anyone other than those specified parties.
Irvine, California
February 7, 2023
ATTACHMENT D
Independent Accountants' Report on Agreed-Upon Procedures Applied to Selected Bank Reconciliations of the City of Laguna Niguel DavisFarr Davis Farr LLP
18201 Von Karman Avenue | Suite 1100 | Irvine, CA 92612 CERTIFIED PUBLIC ACCOUNTANTS Main: 949.474.2020 | Fax: 949.263.5520
INDEPENDENT ACCOUNTANT'S REPORT ON AGREED UPON PROCEDURES
APPLIED TO SELECTED BANK RECONCILIATIONS OF THE CITY OF LAGUNA NIGUEL City of Laguna Niguel
Laguna Niguel, California
We have performed the procedures enumerated below, in reviewing the City of Laguna liguel's (the "City") bank reconciliations for the period July 1, 2021 through June 30, 2022 he City's management is responsible for the bank reconciliations in accordance with th City's internal control policies and procedures.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of evaluating bank reconciliations of the City for the period July 1, 2021 through June 30, 2022. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report anc may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We obtained four months of bank reconciliations during the fiscal year and ensured that each reconciliation was reviewed by a second individual.
Results: No exceptions were noted as a result of our procedures.
2. We obtained supporting documentation of deposits in transit, outstanding checks, and any reconciling items.
Results: No exceptions were noted as a result of our procedures.
3. We selected a sample of deposits in transit and vouched them to subsequent deposits.
Results: No exceptions were noted as a result of our procedures.
4. We selected a sample of outstanding checks and vouched them to evidence of cleared checks on a subsequent bank statement.
Results: No exceptions were noted as a result of our procedures. We noted as of June 30, 2022, the City had 107 outstanding checks totaling $122,462. We also noted there were some checks older than 10 years, as such, we recommend, a thorough review and escheat old checks.
5. We obtained support and explanation for any other reconciling items.
Results: No exceptions were noted as a result of our procedures.
City of Laguna Niguel
Laguna Niguel, California
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the City's accounting records.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported We are required to be independent of the City and to meet our other ethical responsibilities in accordance with the relevant ethical requirement related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of management of the City and is not intended to be and should not be used by anyone other than those specified parties.
Irvine, California
February 7, 2023
ATTACHMENT E
Independent Accountants' Report on Agreed-Upon Procedures Applied to Journal Entries of the City of Laguna Niguel
DavisFarr Davis Farr LLP
201 Von Karman Avenue | Suite 1100 | Irvine, CA 926
CERTIFIED PUBLIC ACCOUNTANTS lain: 949.474.2020 | Fax: 949.263.55:
INDEPENDENT ACCOUNTANT'S REPORT ON AGREED UPON PROCEDURES APPLIED
TO JOURNAL ENTRIES OF THE CITY OF LAGUNA NIGUEL
City of Laguna Niguel
Laguna Niguel, California
we have performed the procedures enumerated below, in reviewing the City of Laguna Niguel's (the "City") journal entries posted for the period July 1, 2021 through June 30, 2022.
The City's management is responsible for posting of journal entries in accordance with the City's internal control policies and procedures.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of evaluating journal entries posted by the City for the period July 1, 2021 through June 30, 2022. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We obtained the City's journal entry policies and procedures.
Results: No exceptions were noted as a result of our procedures.
2. We obtained a download of all journal entries for the year and used data mining software to identify sample selections. The criteria used included journal entries recorded on the weekend and journal entries with unusual keywords such as "error" and "correct.' Results: Of the 1,404 journal entries posted by the City, 9 journal entries totaling $10,001,392 were identified and selected for testing.
3. We used our data mining software to determine who posted the journal entry to the accounting system. Typically, the same individual (s) will be responsible for posting journal entries. Journal entries identified as being posted by unusual individuals were selected for testing.
Results: No exceptions were noted as a result of our procedures.
4. We used our data mining software to determine of there were any gaps in the journal entry detail provided to us.
Results: No exceptions were noted as a result of our procedures.
5. For the journal entries selected for testing in Procedure #2, we performed the following:
a. Reviewed the underlying journal entry support to determine the purpose of the transaction and completeness of the support,
City of Laguna Niguel
Laguna Niguel, California
b. Determined if the debits and credits are accurate based on the support provided, c. Determined if manual journal entries appeared necessary or if adjustments should have been recorded through another accounting module such as payroll, cash disbursements, or cash receipt system, and
d. Identified who created the journal entries, posted the journal entries, and approved the journal entries to ensure that the individuals involved in the process were consistent with the City's procedures.
Results: No exceptions were noted as a result of our procedures. * * * * *
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the City's accounting records.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported We are required to be independent of the City and to meet our other ethical responsibilities in accordance with the relevant ethical requirement related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of management of the City and is not intended to be and should not be used by anyone other than those specified parties.
Irvine, California
February 7, 2023