CITY OF LAGUNA NIGUEL
INVESTMENT, BANKING & AUDIT COMMITTEE
AGENDA ITEM
To: Honorable Mayor and Council Members
FROM: Trevor Agrelius, Finance Director
DATE: February 20, 2024
SUBJECT: Fiscal Year 2022-2023 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, 2023.
BACKGROUND
The City's independent accounting firm Davis Farr, LLP has completed its audit work of the City of Laguna Niguel for the year ended June 30, 2023. Attached are the following reports in relation to the external audit:
• Annual Comprehensive Financial Report for fiscal year ended June 30, 2023 (Attachment A)
Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit for Fiscal Year 2022-2023 (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 Cash Receipts of the City of Laguna Niguel (Attachment D) Independent Accountants' Report on Agreed-Upon Procedures Applied to Check Sequences and Cancelled Checks of the City of Laguna Niguel (Attachment E)
The City's ACR for Fiscal Year 2021-2022 received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada (GOA). This was the 23° Consecutive award that the City received for its ACFR. We believe the Fiscal Year 2022-2023 report continues to meet the Certificate of Achievement Program requirements. Staff has submitted the Fiscal Year 2022-2023 report to the GOA for award consideration.
The City received an unmodified audit opinion on the financial statements, and the report indicated there were no instances of material weaknesses nor significant deficiencies in the City's internal controls.
These reports were presented to the Investment Banking and Audit Committee in January. The Committee unanimously voted to receive and file these reports.
FISCAL IMPACT
The General Fund ended the fiscal year with a $1.8 million surplus, increasing total General Fund reserves to $50.3 million at June 30, 2023. That equates to approximately
91.5% of tund balance compared to Fiscal Year 2022-2023 operating expenditures.
This is a healthy ratio and indicates the City has maintained almost one year of operating expenditures in reserves. Furthermore, that ratio exceeds the minimum amount set by the reserve policy of 50% of operating costs for emergencies.
Jamasa Setousneau
Tamara S. Letourneau Trevor Agrelius
City Manager Finance Director
Attachments:
A. Annual Comprehensive Financial Report for fiscal year ended June 30, 2023 B. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit for Fiscal Year 2022-2023
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 Cash Receipts of the City of Laguna Niguel
E. Independent Accountants' Report on Agreed-Upon Procedures Applied to Check Sequences and Cancelled Checks of the City of Laguna Niguel
ATTACHMENT A
Annual Comprehensive Financial Report (ACFR) for
Fiscal Year ended June 30, 2023
CITY OF LAGUNA NIGUEL
CALIFORNIA
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
Fiscal Year Ended June 30, 2023
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CITY OF LAGUNA NIGUEL,
CALIFORNIA
STAGUNA
GUE
SIA COUNTRY
1989
ANNUAL COMPREHENSIVE FINANCIAL REPORT
NITH REPORTS ON AUDIT BY
NDEPENDENT PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2023
Prepared by the Finance Department
of the City of Laguna Niguel
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CITY OF LAGUNA NIGUEL
Annual Comprehensive Financial Report
Year ended June 30, 2023
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION (Unaudited):
Letter of Transmittal i
GOA Certificate of Achievement for Excellence in Financial Reporting vi Organizational Chart vii
Elected Officials and Management Staff viii
FINANCIAL SECTION:
Independent Auditor's Report 1
Management's Discussion and Analysis (Unaudited) 5
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position 19
Statement of Activities 21
Fund Financial Statements:
Governmental Fund Financial Statements:
26 Reconciliation of the Balance Sheet of Governmental Funds to the Government-Wide Statement of Net Position 27
Statement of Revenues, Expenditures, and Changes in Fund 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the
Statement of Activities 29
Proprietary Fund Financial Statements:
Statement of Net Position 32
Statement of Revenues, Expenses, and Changes in Net Position 33 Statement of Cash Flows 34
Notes to the Basic Financial Statements 37
CITY OF LAGUNA NIGUEL
Annual Comprehensive Financial Report
Year ended June 30, 2023
TABLE OF CONTENTS. (CONTINUED)
Page
Required Supplementary Information (Unaudited):
Budgetary Comparison Schedules:
General Fund 71
Miscellaneous Grants Special Revenue Fund 72
Notes to the Required Supplementary Information 73
Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios 75
Schedule of Contributions - Pension 76
Schedule of the Changes in Total OPEB Liability and Related Ratios 77 Supplementary Information:
Nonmajor Governmental Funds:
Combining Balance Sheet 80
Schedule of Revenues, Expenditures, and
Changes in Fund Balances 82
Schedule of Revenues, Expenditures, and Change in Fund
Balance - Budget and Actual:
Gas Tax Special Revenue Fund 84
Measure "M" Special Revenue Fund 85
Air Quality Improvement Special Revenue Fund 86
Law Enforcement Special Revenue Fund 87
Community Development Block Grant Special Revenue Fund 88 Senior Transportation Special Revenue Fund 89
CITY OF LAGUNA NIGUEL
Annual Comprehensive Financial Report
Year ended June 30, 2023
TABLE OF CONTENTS, (CONTINUED)
STATISTICAL SECTION (Unaudited): Page
Statistical Section Overview 93
Net Position by Component 94
Changes in Net Position 96
Fund Balances of Governmental Funds 98
Changes in Fund Balances of Governmental Funds 100
Tax Revenues by Source - Governmental Funds 102
Assessed Value of Taxable Property 103
Direct and Overlapping Property Tax Rates 104
Principal Property Tax Payers 106
Property Tax Levies and Collections 107
Ratio of Outstanding Debt by Type 108
Direct and Overlapping Governmental Activities Debt 109 Legal Debt Margin Information 110
Demographic and Economic Statistics 111
Principal Employers 112
Full-Time Equivalent City Government Employees by Function / Program 114 Capital Asset Statistics by Function / Program 116
Operating Indicators by Function 117
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CITY of LAGUNA NIGUEL CITY COUNCIL
30111 Crown Valley Parkway Mayor Kelly Jennings
Laguna Niguel, California, 92677 Mayor Pro Tem Stephanie Oddo Phone: (949) 362-4300
Fax: (949) 362-4340 Council Member Ray Gennawey
Council Member Foster "Gene" Johns
Council Member Stephanie Winstead
December 22, 2023
Honorable Mayor, Council Members, and Residents of the City of Laguna Niguel
LETTER OF TRANSMITTAL
2022-23 ANNUAL COMPREHENSIVE FINANCIAL REPORT
It is a pleasure to submit the City's Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. This report has been compiled and prepared by the City's Finance Department in accordance with generally accepted accounting principles.
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, 2023, 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
The City of Laguna Niguel was incorporated on December 1, 1989. The City is a master- planned community encompassing 14.72 square miles in the coastal area of South Orange County, California. As of January 2023, the State of California Department of Finance projected the City's population as 65,010. The City is primarily a residential community 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 fiscal year 2020-2021 and has continued to benefit in the fiscal years since.
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. The City has utilized these funds for infrastructure and capital improvements. The funds are required to be fully spent by December 31, 2026. As of June 30, 2023, the City had $3.3 million of unspent American Rescue Plan Act funds. However, the City has a plan to spend the remaining funds on infrastructure and capital improvements prior to the December 31, 2026, deadline.
Local Economy. The City's largest revenue source is property tax. Actual property tax receipts in fiscal year 2022-2023 totaled $27.1 million and represented more than 50% of total General Fund revenues. As a point of comparison, the prior year property tax receipts totaled $25.3 million, representing an over 7% increase in the current year. 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 fiscal year 2022-2023 totaled $14.8 million. As a point of comparison, the prior year sales tax receipts totaled $14.5 million, a 2% increase. The City actively monitors trends that affect both property taxes and sales taxes both locally and at the State, as these two revenue sources historically make up more than 80% of annual General Fund revenues.
The City adopted a balanced budget for fiscal year 2023-2024 that maintains all service levels and programs. The adopted General Fund budget includes approximately $52.6 million in revenues and $52.1 million in expenditures. It also provides $6.9 million in funding for the annual Capital Improvement Program that funds projects for the City's streets, parks and other improvements.
Major Initiatives. The City is actively working on two of the largest capital projects in its history: the La Paz Road Earth Movement Evaluation, Mitigation, and Remediation project, and the Crown Valley Parkway Westbound Widening project. The estimated combined costs to complete these projects is $31.0. The City continues to engage with Federal and State agencies to provide grant funding for those projects. Other significant projects being planned, designed, or constructed over the next several years include the Residential Annual Resurfacing Program, street improvements along Marina Hills Drive, Residential Overlay Program, completion of playground replacements at various City parks, and capital improvements at the various parks and facilities throughout the City.
The City has a dedicated page to the Capital Improvement Program that discusses each of these projects in more detail at: https://cityoflagunaniquel.org/810/Capital-Improvement- Program
Reserve Policy. The City's Financial Reserves Policy is reviewed on an annual basis for the purpose of providing fiscal stability and to ensure the long-term financial health of the City. It is the goal of both the City Council and management to maintain adequate reserve funds for known and unknown contingencies. The policy calls for maintaining a reserve for financial and economic uncertainty in an amount equal to no less than 50% of annual General Fund operating expenditures and a reserve for compensable accrued unused vacation and sick leave and other post-employment benefits. The total reserves at the end of the fiscal year were $50.3 million. The Policy allows the City Council to 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. Total reserves applicable to those categories at the end of the fiscal year was $46.6 million, which represented 90.4% of actual General Fund expenditures for the year, far exceeding the 50% threshold. All fund balance classifications comply with the 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 fiscal year 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. The City updates the Strategic Plan annually and continues to monitor the progress of the Strategic Plan regularly to 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. In fiscal year 2022-2023, the City made $4.8 of additional discretionary payments to CaPERS and contributed another $1 million to the Section 115 Trust to address the City's unfunded pension liability.
SUMMARY OF FISCAL YEAR 22-23 ACCOMPLISHMENTS
The City was able to complete many projects and experienced many accomplishments in fiscal year 2022-2023. Some of these include:
• Public Safety:
• Expanded neighborhood watch programs city-wide; 13 new neighborhood watch programs were created last year;
Increased public safety social media followers and implemented the use of Nixle as a community communication tool during emergencies; and, Implemented pilot program to put cameras on trails.
• Fiscal:
• Secured over $1.4 million in grants for various Citywide projects; • Presented a balanced operating and capital improvement budget for FY 23-24, including a budget surplus of $0.5 million;
• Received a clean fiscal year audit and ACR award, resulting in a year-end surplus of $2.1 million; and,
• Updated Field Use and Aquatic fees, Development Services Fees, and Credit Card processing convenience fees.
• Open Space & Environmental:
Completed inventory of trails;
• Completed RFP process for the 10-year trail and open space maintenance plan;
Won the Outstanding Project Award from the American Society of Civil Engineers for the Salt Creek Wetland Mitigation Project. • Infrastructure & Technology:
Completed the City Council Chamber Technology Upgrades project; • Upgraded the fiber connection from Crown Valley Community Center to City • Implemented public outdoor wireless system at the Crown Valley Amphitheater and park; and,
• Enhanced roadway infrastructure at Niguel Hills Middle School to increase student safety. The City received the Outstanding Project Award from the American Society of Civil Engineers in relation to this project. • Economic & Community Development:
Completed Phase I of the General Plan Update and started Phase Il; • The City became a member of California Association for Local Economic Development; and,
• Assisted all residents impacted by the Coastal Fire with rebuilding efforts. • Communication & Community Outreach:
Enhanced the City's social media presence on all social media platforms. As of December 31, 2022, the City's Facebook page ranks #3 out of 20 cities with a population under 70,000.
Continued to hold HOA Outreach Educations meetings, welcoming over 300 attendees in Fiscal Year 2022-23
Implemented monthly Chief's Brief and featured business videos; and, Nixel used to alert the public during emergency situations. Nixel subscribers increased to 1,139.
OTHER INFORMATION
Awards. The Government Finance Officers Association (GFOA) 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, 2022. This was the 23rd 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 ACFR 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:
iv
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.
Respectfully submitted:
Jamara SRetonseau Twin
Tamara S. Letourneau Trevor Agrelius
City Manager 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, 2022
Chistopher P. Movill
Executive Director/CEO
vi
CITY OF LAGUNA NIGUEL
ORGANIZATIONAL CHART
JUNE 30, 2023
LAGUNA NIGUEL
RESIDENTS
CITY COUNCIL
CITY ATTORNEY CITY MANAGER
- Legal Counsel
ADMINISTRATION PUBLIC COMMUNITY DEVELOPMENT
FINANCE SAFETY
. Budget Personnel - Law Enforcemet Planning
- Accounting • Risk Management Emergency Pre Building & Safet Investments Code Enforcement
L Purchasing • Records Mgmt. Service Request System
Elections
PARKS & PUBLIC WORKS
RECREATION
Recreation Programs - Engineering
Senior & Community Center Street Lighting
Skateboard Park Street Sweeping
Animal Control Street Maintenance
Parks Maintenance
Slopes & Median Maintenance
Facilities Maintenance
Capital Improvements
vii
CITY COUNCIL
Kelly Jennings, Mayor
Stephanie Oddo, Mayor Pro Tem
Ray Gennawey, Council Member
Foster "Gene" Johns, Council Member
Stephanie Winstead, Council Member
MANAGEMENT STAFF
City Manager. Tamara S. Letourneau
Assistant City Manager. Justin Martin
City Attorney.. ..Scott C. Smith
City Clerk. Marissa Asistin
Chief of Fire Services (Division 5).. Baryic Hunter
Chief of Police Services (O.C. Sheriff Department).. . Isaac Flores Community Development Director. . Jonathan Orduna
Finance Director. Trevor Agrelius
Parks and Recreation Director. Ron Rivera
Public Works Director. . Jacki Scott
vili
§ 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 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 ("the City") as of and for the year June 30, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. hang fund intormation of the Cry as of sune 30, 2023, and the respecte 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 the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements The City's management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for one year after the date that the financial statements 1 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 traud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
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 statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual nonmajor fund financial statements and budget to actual schedules are presented for purposes of additional analysis and are not a required part of 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 Financial Report. The other information comprises the introductory section and statistical apes an onion or any form or sane ren a creato ea
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.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2023 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.
Da's Far LLP
Irvine, California
December 22, 2023
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4 CITY OF LAGUNA NIGUEL
MANAGEMENT'S DISCUSSION AND ANALYSIS
intent is to assist the reader of these financial statements in better understanding the impact of financial decisions lade by the City. This analysis will focus on the significant changes from the prior year and in relation to th arrent budget in an effort to explain the City's overall financial condition. We encourage readers to consider th information presented here in conjunction with the additional information furnished in our letter of transmittal.
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 Financial 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
ferred inflows of resources is reported as net position. Over time, increases or decreases in net positi ay serve as a usetul indicator of whether the financial position of the City is improving or deterioratir Statement of Activities
The Statement of Activities presents information about the City's revenues and expenses on a full accrua basis, with an emphasis on measuring net revenues or expenses for each of the City's programs. This 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 significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, community development, and parks and recreation. The City has no business-type activities.
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 5 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 n the government-wide financial statements. However, unlike the government-wide financial statements 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 governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. A reconciliation of both 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
The sole proprietary fund used by the City is an internal service fund. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses an internal service fund to account for its fleet of vehicles.
Proprietary fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. Like the government-wide financial statements, proprietary fund financial statements use the accrual basis of accounting. A separate financial statement is provided for the Vehicle Replacement Fund.
The fund financial statements can be found behind the tab section titled Fund Financial Statements.
Notes to the Basic Financial Statements
The notes provide additional information that is essential to obtain a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found behind the tab section titled Notes to the Basic Financial Statements.
Required Supplementary Information
6 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 Statement of Revenues, Statement of Revenues, • Statement of Expenditures and Expenses and Changes in Changes in Fund Net Position
Balances • Statement of Cash Flows
Accounting basis Accrual accounting and Modified accrual accounting Accrual accounting and and measurement economic resources 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, 2023 by $624.6 million. The amount is referred to as the net position of the City. Of this citizens and creditors.
• The City's overall net position increased by $5.9 million in the current year. Current fiscal year total revenues increased by $5.9 million, or 10.3%, primarily due to increases in property taxes and investment gains, as well as capital grants. Including the use of money and property loss from the prior year, expenses decreased by $3.1 million, or 5.1% as compared to fiscal year 2021-2022 levels primarily due to the use of money and property loss of $1.9 million from the prior year due to the fair market valuation. The total use of money and property was a gain of $1.3 million in fiscal year 2022-2023, resulting in a $1.9 million decrease in expenses.
At the close of fiscal year 2022-2023, the City's governmental funds reported combined ending fund balances of $57.2 million, an increase of $2.1 million compared to the prior year. Of the total $57.2 million fund balances at year-end, $47.8 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). 7 OVERVIEW OF FINANCIAL STATEMENTS (Continued)
Financial Highlights (Continued)
• As of June 30, 2023, the total fund balance of the General Fund, the City's chief operating fund, totaled $50.3 million, representing an increase of $1.8 million, or 3.8% over the prior year.
Of the total fund balance of the General Fund at June 30, 2023, the City Council has committed $20.2 millior for capital asset replacement, $25.8 million for economic contingencies, $0.4 million for compensatec
FINANCIAL PERFORMANCE
Government-Wide Financial Analysis
Junet 30, 202sfered outlows of resources exceed liabilities and deferred infows of resources by $824,6 million at The following is a summary of the Government-Wide Statement of Net Position:
Governmental Activities
Net Position at June 30
(in millions)
Increase/
(Decrease)
2023 2022 from 2022
Cash and investments $ 65.7 67.1 (1.4)
Other current assets 5.7 6.3 (0.6)
Noncurrent assets 574.4 575.8 (1.4)
Total assets 645.8 649.2 (3.4)
Deferred pension related items 10.1 2.2 7.9
Deferred OPEB related items 0.4 0.5 (0.1)
Total deferred outflows
of resources 10.5 2.7 7.8
Long-term liabilities 13.8 7.2 6.6
Other liabilities 13.5 17.2 (3.7)
Total liabilities 27.3 24.4 2.9
Deferred pension related items 0.8 4.8 (4.0)
Deferred OPEB related items 1.0 1.1 (0.1)
Lease related items 2.6 3.0 (0.4)
Total deferred inflows
of resources 4.4 8.9 (4.5)
Net position:
Net Investment in capital assets 571.6 572.8 (1.2)
Restricted 7.2 6.8 0.4
Unrestricted 45.8 39.0 6.8
Total net position 624.6 618.6 6.0
8 FINANCIAL PERFORMANCE (Continued)
Government-Wide Financial Analysis (Continued)
defined benefit pension plan provider. Payments made during the fiscal year are recorded as deferred outflows of resources in accordance with GASB 68.
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)
2023 2022 from 2022
Revenues:
Program revenues:
Charges for services $ 5.5
Operating contributions and grants 2.9
Capital contributions and grants 7.8 2.7
Total program revenues 16.2 13.1 3.1
General revenues:
Property taxes 27.1 25.3 1.8
Sales taxes 14.5 0.3
Other taxes (0.3)
Investment earnings 1.3
Other revenues 1.1 (0.3)
Total general revenues 47.1 44.3 2.8
Total revenues 63.3 57.4 5.9
Program expenses:
General government 10.9 6.6 4.3
Public safety 17.5 16.9 0.6
Community development 3.6 5.1 (1.5)
Parks and recreation 7.9 12.8 (4.9)
Public works 17.4 17.1 0.3
Use of money and property (loss) 1.9 (1.9)
Total expenses 57.3 60.4 (3.1)
Increase/(decrease) in net position 6.0 (3.0) 9.0
618.6 621.6 (3.0)
Beginine poposion $ 624.6 618.6 6.0
9 FINANCIAL PERFORMANCE (Continued)
Government-Wide Financial Analysis (Continued)
The City's total revenues were $63.3 million in fiscal year 2022-2023, while the total cost of all programs was $57.3 million. Total revenues increased by $5.9 million, or 10.3%, from prior year levels and total expenses decreased by The cost of all govemmental activities this year was $57.3 million. However, as shown in the Statement of Activities, the amount that Laguna Niguel taxpayers ultimately financed for these activities through City taxes was 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 -
(2.0)
General Public Safety Community Parks and Public Works
Government Development Recreation
Approximately 71.1% of all revenues this past year came from some form of tax, which is slightly lower than the
75.3% taxes represented of total revenues in fiscal year 2021-2022. Property tax revenue, the City's largest revenue source, accounted for 42.8% of total City revenue, compared to 44.1% last year. Sales tax revenue was the second largest revenue source at 23.4% of total revenues, down from 25.3% last vear. While the tax revenues continued to increase ($1.8 million), the capital grants and contributions increased ($2.7 million) representing
2.3% of total revenues, up from 8.9% in the prior year. The following chart graphically depicts the City's governmental revenue sources.
10 FINANCIAL PERFORMANCE (Continued)
Government-Wide Financial Analysis (Continued)
Governmental Activities - Revenues by Source
Property taxes
42.8%
Sales taxes
23.4%
Capital
contributions and
Other taxes
grants
12.3% 4.9%
Operating nvestmen
contributions and J Charges for
services earnings and othe
grants
3.9% 9.3% evenues
The Public Safety function represents the largest activity in the City, accounting for 30.5% of total expenses in the Governmental Activities - Expenses by Function
Community
Development arks ar
6.3% ecreatic
13.8%
Public Safety
30.5%
L Public Works
30.4%
General_
Government
19.0%
Fund Financial Analysis
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
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 govemmental funds reported a total combined ending fund balance of $57.2 million, an increase of $2.1 million, or 3.8%, in comparison to the prior year. Of the total combined ending fund balance, $47.8 million, or 83.6%, is available for spending at the government's discretion. Of the The City's three major tunds 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. The general fund is responsible for most of the City's general governmental operations and basic services, including operating costs for public safety, community development, parks and recreation, public works, and general government. At the end of the current fiscal year, the total fund balance was $50.3 million. General Fund revenues exceeded expenditures this year by $1.8 million, or 3.7%.
• 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 2022-2023, 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 $3.2 million and total liabilities were $3.3 million. The City received a total of $8.8 million in ARPA funds. Through June 30, 2023, the City spent $5.6 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 transters into the tund generally equal actual expenditures on capital projects; therefore, this fund typical! eflects a minimal fund balance at the end of the vear. Total expenditures were $7.7 million and subsequen transfers into the fund were also $7.7 million for the current fiscal year, an increase of $3.2 million from the previous fiscal year.
GENERAL FUND BUDGETARY HIGHLIGHTS
The original adopted General Fund revenue budget for FY 2022-2023 was $49.0 million. Actual revenues for the General Fund totaled $53.4 million, a positive variance of $4.4 million, or 9.0%.
The City intentionally budgets conservatively.
The original adopted General Fund expenditure budget for fiscal year 2022-2023 was $47.9 million. During the Actual General Fund expenditures for the year were $51.6 million, a positive variance of $2.1 million. The variance was due to 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 $1.8 million (actual revenues vs. actual non-capital expenditures).
12 CAPITAL ASSETS
Capital Assets at June 30
(net of depreciation)
(in millions)
Increase/
(Decrease)
2023 2022 from 2022
-
Land $ 271.1 271.1
Construction in progress 6.9 4.0
Buildings and improvements 62.0 63.3 (1.3)
Park & other improvements 21.2 21.7 (0.5)
Swimming pool 1.7 0.1 1.6
Furniture, equipment, and software 0.9 0.9 -
Vehicles 0.4 0.3 0.1
Right to Use Assets - Vehicles 0.2 0.3 (0.1)
Infrastructure 207.5 211.4 (3.9)
Total $ 571.9 573.1 (1.2)
The City's investment in capital assets, net of accumulated depreciation, decreased by $1.2 million, or 0.2%, during FY 2022-2023 primarily due to depreciation. The most significant capital asset event during the fiscal year was investing in the City's parks and infrastructure as reflected in the increases in the construction in progress category.
The City spent $1.9 million on improving its parks and $3.4 million on improving its infrastructure during the year.
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, 2023, 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)
2023 2022 from 2022
-
Capital Leases $ 0.3 0.3 -
Compensated Absences 0.8 0.7 0.1
Total $ 1.1 1.0 0.1
For more information on the City's long-term liabilities, refer to Note 7 of the Notes to the Basic Financial Statements.
13 NEXT YEAR'S BUDGET
The FY 2023-2024 adopted General Fund budget includes revenues of $52.6 million, operating expenditures of $51.9 million, and Transfers Out of $0.2 million. The budget includes approximately $6.9 million from a variety of funding sources for the Capital Improvement Program (CIP). The CIP for FY 2023-2024 includes improvements to 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.cityoflagunaniquel.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 government's finances. If you have questions about this report, or need additional financial information, please contact the Finance Department, City of Laguna Niguel, 30111 Crown Valley Parkway, Laguna Niguel, California 14 BASIC FINANCIAL STATEMENTS
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16 GOVERNMENT-WIDE
FINANCIAL STATEMENTS
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18 City of Laguna Niguel
Statement of Net Position
June 30, 2023
Total
Governmental
Activities
ASSETS
urrent asset
sh and investments (note $ 65,670,458
Receivables:
Accounts 514,184
Taxes 2,637,863
Interest 335,817
Prepaid items 189,872
Deposits 78,996
1,667,909
Desere ate neements 283,703
Total current assets 71,378,802
Noncurrent assets:
Lease receivable (note 4) 2,449,24
277,960,79
Capital assets, not being depreciated (note 5)
Capital assets, being depreciated, net (note 5) 293,956,367 Total noncurrent assets 574,366,412
Total assets 645,745,214
DEFERRED OUTFLOWS OF RESOURCES
Pension related deferred outflows of resources (note 11) 10,094,756 OPEB related deferred outflows of resources (note 12) 405,277 Total deferred outflows of resources 10,500,033
LIABILITIES
Current liabilities:
Accounts payable 5,472,632
Accrued liabilities 467,236
Deposits payable 3,671,275
Unearned revenue 3,282,711
Retention payable 114,290
Lease, due within one year (note 7) 86,222
Compensated absences, due within one year (note 7) 421,083 Total current liabilities 13,515,449
Noncurrent liabilities:
Lease, due in more than one year (note 7) 184,299
Compensated absences, due in more than one year (note 7) 374,478 Net pension liabilities (note 11) 11,371,523
Other postemployment benefits liabilities (note 12) 1,856,547 Total noncurrent liabilities 13,786,847
Total liabilities 27,302,296
2,611,649
746,542
1,014,942
Total deferred inflows of resources 4,373,133
NET POSITION
et investment in capital asse 571,646,645
stricted fo
48,977
Community development 475,183
Streets 6,567,634
Unrestricted 45,831,379
Total net position $ 624,569,818
See accompanying notes to financial statements.
19 This page intentionally left blank.
20 City of Laguna Niguel
Statement of Activities
Year ended June 30, 2023
Net
(Expenses)
in Net
Position
Governmental
Expenses and Grants And Grants Activities
$ 10,894,992 895 127,714 10,766,383
17,480,349 400,866 527,435 558,835 16,552,048
3,629,822 3,656,316 383,327 968,656
7,951,880 1,205,036 114,863 6,631,981
17,368,965 234,857 1,735,071 7,201,698 8,197,339
"total governmental activities 18,38 2,888.410 7.760,533 (18,383) $ 57.344,391 5.497.970 (41,197,478)
General Revenues:
Taxes:
Property taxes, levied for general purpose $ 27,072,457 Sales taxes 14,818,183
anchise tax 2,546,264
603,923
Total taxes 45,040,827
Mose or vene inter unrestricted 66,153
1,318,001
Other 720,487
Total general revenues 47,145,468
Changes in net position 5,947,990
Net position at beginning of year 618,621,828
Net position at end of year $ 624,569,818
See accompanying notes to financial statements.
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22 FUND FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
23 This page intentionally left blank.
24 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.
25 =
City of Laguna Niguel
Balance Sheet
Governmental Funds
June 30, 2023
iscellaneou
rants Specia City Capital Governemal
General Revenue Projects
ASSETS
Cash and investments $ 53,465,143 3,008,234 2,531,968 6,371,508 65,376,853 Receivables:
Accounts 514,085 514,184
Taxes 2,365,064 : 272,739 2,637,863
Lease receivable (note 4) 335,817 335,817
2,732,949 2,732,949
Prepaid items 189,872 189,872
Deposits 1,960 77,036 78,996
ue from other government 644,11 231,320 792,477 1,667,909 Due from other funds (note 6) 56,132 56,132
Total assets $ 60,305,134 3,239,554 2,509,004 7,436,883 73,590,575
IABILITIES, DEFERRED INFLOWS O
RESOURCES AND FUND BALANCE
Liabilities:
Accounts payable $ 3,112,554 29,797 2,098,752 231,529 5,472,632 Accrued salaries 467,236 467,236
Deposit payable 3,671,275 3205, 10) 3,671,275
56,132
17,563 3,266.132
114,290 114,290
Total liabilities 7,268,628 3,294,945 2,213,042 287,661 13,064,276 eferred Inflows of Resources
Jnavailable revenue 105,199 231,320 378,836 715,355
Lease related 2,611,64 231,320 ,611,64g
Total deferred inflows of resources 2,716,848 378,836 3.327,004 Fund Balances:
Nonspendable 191,832
Restricted 2,004,471 217,026 6,772,868 2750,00
47,494,533
628,821 628,821
Unassigned (deficit) (286,711) (2,482) (289,193)
Total fund balances 50,319,658 (286,711) 395,962 6,770,386 57,199,295 otal liabilities, deferred inflows c
sources, and fund balance 2,609,004 7,436,883
$ 60,305,134 3,239,554 73,590,575
See accompanying notes to financial statements.
26 City of Laguna Niguel
Reconciliation of the Balance Sheet of Governmental Funds to the Government-Wide Statement of Net Position
June 30, 2023
Fund balances of governmental funds $ 57,199,295
Amounts reported for governmental activities in the statement of net position are different because:
in governes at of de recity avenge intereo once rea
service fund):
Acual asted depreciation $ 764,712,599
(193,409,597) 571,303,002
Compensated absences (795,561)
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 not available for expenditures and are not reported in the 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 ol not available for current expenditures and are not reported in the governmental fund financial statements:
Pension related deferred outflows of resources 10,094,756 Net pension liabilities (11,371,523)
Pension related deferred inflows of resources (746,542) (2,023,309) et other postemployment benefits liability and the related deferred inflows of 'esources are not due and payable in the current period or not available fol current expenditures and are not reported in the governmental fund financial statements:
OPEB related deferred outflows of resources 405,277
Other postemployment benefits liabilities (1,856,547)
OPEB related deferred inflows of resources (1,014,942) (2,466,212) These are included in the
715,355
637,248
Net position of governmental activities $ 624,569,818
See accompanying notes to financial statements.
27 City of Laguna Niguel
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
Year ended June 30, 2023
Miscellaneous Governmental Total
Grants Special City Capital Governmenta
General Revenue Projects Funds Funds
REVENUES:
Taxes $ 45,040,827 45,040,827
Licenses and permits 3,882,045 5,797,018 3,882,045
Intergovernmental 789,968 128057 10,954,663
Charges for services 1,205,931 1,205,931
Fines and forfeitures 409,994 409,994
Use of money and property (loss) 1,340,982 : (97,103) 1,243,879 Leases 471,266 471,266
Miscellaneous 296,312 296,312
Total revenues 53,437,325 4,367,677 5,699,915 63,504,917 EXPENDITURES:
Current:
General government 11,451,201 - 11,451,201
17,365,403 32,250 150,000 17,515,40
4,061,569 289,847 4,675,676
4,231,644 4,249,042
13,868,405 : 1,287,398 15,155,681
626,661 7,721,192 8,347,853
Total expenditures 51,604,883 324,260 7,721,192 1,744,521 61,394,856 cess (Deficiency) of Revenue
ver (Under) Expenditure 1,832,442 4,043,417 (7,721,192) 3,955,394 2,110,061 OTHER FINANCING SOURCES (USES):
Transfers in (note 6) 7,668,675 7,668,675
Transfers out (note 6) (3,341) (4,058,313) (3,607,021) (7,668,675) Total other financing sources (uses) (3,341) (4,058,313) 7,668,675 (3,607,021) NET CHANGES IN FUND BALANCES 1,829,101 (14,896) (52,517) 348,373 2,110,061 Fund Balances:
Fund balance (deficit) at beginning of year 48,490,557 (271,815) 448,479 6,422,013 55,089,234 Fund balance (deficit) at end of year - 286,71 6,770,386 $ 50,319,658 395,962 57,199,295
See accompanying notes to financial statements.
28 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, 2023
Net change in fund balances - total governmental funds: $ 2,110,061 mounts reported for governmental activities in the statement of activitie re 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 whick reported image excenal seiceciation in the current period excluding amount 6,899,868
epreciation expens (8,047,409) (1,147,541)
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. (71,991)
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. 5,529,210
OPE 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. (84,662)
Revenues reported s tement of revenues These are metal dun are activities.
intergovernmental revenues in the governmental fund activity. (246,666) 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 (140,421)
Changes in net position of governmental activities $ 5,947,990 See accompanying notes to financial statements.
29 This page intentionally left blank.
30 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. 31 =
city ernie signed
June 30, 2023
Governmental
Activities -
Internal
Service Fund
Vehicle
Replacement Fund
ASSETS
Current:
Cash and investments $ 293,605
Total current assets 293,605
Noncurrent:
Vehicles - net of accumulated depreciation 614,164
Total noncurrent assets 614,164
Total assets 907,769
LIABILITIES
Current:
Lease payable, due within one year 86,222
Total current liabilities 86,222
Noncurrent:
Lease payable, due in more than one year 184,299
Total noncurrent liabilities 184,299
Total liabilities 270,521
NET POSITION
Net investment in capital assets 343,643
Unrestricted 293,605
Total net position $ 637,248
See accompanying notes to financial statements.
32 City of Laguna Niguel
Statement of Revenues, Expenses, and Change in Net Positior Proprietary Fund
Year ended June 30, 2023
Governmental
Activities -
Internal
Service Fund
Vehicle
Replacement Fund
OPERATING EXPENSES:
Depreciation expense $ 184,588
Total Operating Expenses 184,588
Operating Income (Loss) (184,588)
NONOPERATING REVENUES (EXPENSES):
Gain on sale of capital assets 28,421
Interest revenue (loss) 26,629
Interest expense related to lease payable (18,383)
Miscellaneous 7,500
Total Nonoperating Revenues (Expenses) 44,167
CHANGE IN NET POSITION (140,421)
Net Position:
Beginning of Year 777,669
End of Year 637,248
See accompanying notes to financial statements.
33 City of Laguna Niguel
Statement of Cash Flow:
Proprietary Fund
Year ended June 30, 2023
Governmental
Activities -
Internal
Service Fund
Vehicle
Replacement Fund
CASH FLOWS FROM NONCAPITAL
AND RELATED FINANCING ACTIVITIES:
Insurance recoveries $ 7,500
Net cash provided by noncapital and related financing activities 7,500
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES:
Acquisition of assets (151,072)
Repayment of leases (84,172)
Interest paid for leases (18,383)
Proceeds from sale of assets 34,871
Net cash (used in) capital and related financing activities (218,756) CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 26,629
Net cash provided by investing activities 26,629
Net (decrease) in cash and cash equivalents (184,627)
CASH AND CASH EQUIVALENTS:
Beginning of year 478,232
End of year $ 293,605
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating (loss) $ (184,588)
Adjustments to reconcile operating loss to
net cash provided by (used in) operating activities:
Depreciation 184,588
Total adjustments 184,588
Net cash provided by (used in) operating activities $
There were no significant noncash capital, financing and investing activities during the year ended June 30, 2023.
See accompanying notes to financial statements.
34 NOTES TO THE BASIC
FINANCIAL STATEMENTS
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36 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements
Year ended June 30, 2023
(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, 2023. 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 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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.
Revenues are recognized as soon as they are both "measurable" and "available". Revenues are 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.
38 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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.
An 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 in 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. 39 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(1) Summary of Significant Accounting Policies (Continued) C. Cash and Cash Equivalents
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 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, except 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:
Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in markets that are inactive;
• Inputs other than quoted prices that are observable for the asset or liability; • Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
40 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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 the purchase method. Deposits are payments made as 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
The City accounts for leases in accordance with GASB Statement No. 87 based on the principle that leases are financings of the right to use an underlying asset. 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 non-cancellable 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. 41 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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 is 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.
infrastructure assets (street systems, storm drains, bridges, etc.), are reported in the governmental 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)
Curbs, gutters, sidewalks, catch basins, and manholes 100 Streets, street lights, storm drains, tunnels, and bridges 75 Buildings and building improvements 15-45
Swimming pool and improvements 15-25
Park improvements 10-25
Furniture and equipment 3-15
Vehicles 3-10
Software 10
Right-to-use lease assets The estimated life of
the lease asset or the
contract term,
whichever is shorter
J. Deferred Outflows and Inflows of Resources
The statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred outflows of resources. This financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expenditure) until that time. The City has two items that qualify for reporting in this category. The items are deferred outflows related to pensions and deferred outflows related to OPEB.
42 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
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. 43 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(1) Summary of Significant Accounting Policies (Continued) L. Other Postemployment Benefits Plan (Continued)
The following timeframes are reported OPEB reporting:
Valuation Date June 30, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 to June 30, 2023
Gains and losses related to changes in total OPEB liability are recognized in OPEB expense he san or as cure am systematically over time. The first amortized amounts are recognized in OPEB 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 OPEB 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.
A liability is recorded for unused vacation and similar compensatory leave balances since the employees' entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.
44 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(1) Summary of Significant Accounting Policies (Continued) N. Compensated Absences (Continued)
unused balances of employees currently entitled to receive termination payments, as well as those 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.
Unrestricted - This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination 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.
Committed - Committed fund balances include amounts that can be used only for the specific purposes determined by formal action of the government's highest level of decision making 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. 45 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(1) Summary of Significant Accounting Policies (Continued) O. Net Position and Fund Balances (Continued)
Assigned - Assigned fund balances comprise amounts intended to be used by the government for specific purposes. Intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. The City Council is the body authorized to 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 specifi 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. 46 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(2) Stewardship, Compliance and Accountability
Deficit Fund Balance
The following funds had a deficit fund balance at June 30, 2023:
Special Revenue Funds:
CDBG (2,482)
Miscellaneous Grants (286,711)
The fund deficit in the CDBG Special Revenue Fund is the result of unavailable revenue at June 30, 2023 and will be eliminated upon receipt of the reimbursements in the following fiscal year. The 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, 2023:
Governmental
Activities
Cash and investments $ 65,670,458
The City's cash and investments at June 30, 2023 in more detail:
Cash and cash equivalents:
$ 2,400
Desh and deposits 3,395,000
Total cash and cash equivalents 3,397,400
Investments
Federal Government Agency Securities 29,810,631
U.S Treasury Note 23,831,240
Money Market Mutual Fund 6,061,212
State Local Agency Investment Fund 300,606
Orange County Investment Pool 264,897
PARS Pooled 115 Trust 2,004,472
Total investments 62,273,058
Total cash and investments $ 65,670,458
47 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(3) Cash and Investments (Continued)
A. Demand Deposits
The carrying amounts of the City's deposits were $3,395,000 at June 30, 2023. Bank balances at that date were $48,404, the total amount of which was collateralized or insured with accounts held by the pledging financial institutions in the City's name as 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 trustees 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
U.S. Treasury Obligations 5 Years None None
Federal Agency Securities or U.S. Government
Sponsored Enterprise Securities 5 Years 60% 25%
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
Money Market Mutual Funds N/A 20% 10%
Orange County Investment Pool (OCIP) N/A 55% $40 million Section 115 Pension Trust N/A 20% None
48 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(3) Cash and Investments (Continued)
C. Fair Value Measurement Disclosure
At June 30, 2023, 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, 2023:
Measurement Inputs
Investment Type Level 1 Level 2 Level 3 _ Uncategorized. Total Federal Government Agency Securities $ - 29,810,631 - 29,810,631 Money Market Mutual Func - 6,061,212 : 6,061,212
U.S Treasury Note 23,831,240 23,831,240
Orange County Investment Pool (OCIP) 264,897 264,897
PARS Pooled 115 Trust 2,004,472 2,004,472
State Local Agency Investment Fund (LAIF) 300,606 300,606 $ 23,831,240 35,871,843 2,569,975 62,273,058
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 $ 3,970,400 15,915,116 9,925,115 29,810,631 U.S Treasury Note 21,747,420 2,083,820 23,831,240
Money Market Mutual Fund 6,061,212 6,061,212
Orange County Investment Pool (OCIP) 264,897 - 264,897
PARS Pooled 115 Trust 2,004,472 - 2,004,472
State Local Agency Investment Fund (LAIF) 300,606 300,606 $ 34,349,007 17,998,936 9,925,115 62,273,058
Total
49 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(3) Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Credit Risk
Generally, credit risk is the risk that the issuer of an investment will not fulfill its obligation to the year end for each investment type:
Legal Not Total as of
Investment Type Rating AAA Rated June 30, 2023
Federal Government Agency Securities AAA $ 29,810,631 29,810,631 U.S Treasury Note* N/A 23,831,240 23,831,240
Money Market Mutual Fund AAA 6,061, 212 6,061,212
Orange County Investment Pool (OCIP) N/A 264,897 264,897 PARS Pooled 115 Trust N/A h... 2,004,472 2,004,472
State Local Agency Investment Fund (LAIF) N/A 300,606 300,606 Total $ 35,871,843 26,401,215 62,273,058
*Exempt from rating disclosure
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, 2023, 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:
Issuer Investment Type Amount
Federal Home Loan Mortgage Corporation Federal Government Agency Securities $ 4,726,090 Federal National Mortgage Association Federal Government Agency Securities 7,916,565 Federal Home Loans Banks Federal Government Agency Securities 13,383,336 Federal Farm Credit Banks Federal Government Agency Securities 3,784,640 50 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(3) Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial 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.
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, 2023, 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, 2023 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, 2023, the City had $300,606 invested in LAIF, which had invested 2.78% of the pool investment funds in Structured Notes and Asset-Backed Securities. 51 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(3) Cash and Investments (Continued)
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, 2023, is stated at fair value. The OCIP values participant shares on ar amortized cost basis during the year and adjusts to fair value at year-end. For further informatior regarding the OCIP, refer to the County of Orange Annual Comprehensive Financial Report.
G. Investment in Public Agency Retirement Services
The City established an Internal Revenue Service Section 115 irrevocable trust with the Public Agency Retirement Services (PARS) for the purposes of funding pension obligations. PARS is an external investment pool, is not rated and is not registered with the Securities Exchange Commission. The City selects the investment strategy and the pool is managed by the PARS Board.
The fair value of the City's investments in the pool is reported in the accompanying financial 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
As of June 30, 2023, 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 five 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 $400,603 and the total amount of interest received related to the lease was $47,493. The balance of the lease receivable at June 30, 2023 is $2,732,949. 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, 2023 is $ 2,611,649.
52 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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, 2022 Additions Deletions Reclassification June 30, 2023 Capital assets, not being depreciated: $ 271,068,667 271,068,667 Construction in progress 3,960,405 6,595,920. (3,664,193) 6,892,132 Total capital assets, not being depreciated 275,029,072 6,595,920 (3,664,193) 277,960,799 Infrastructure, being depreciated 351,245,927
350,486,795 759,132
Buildings/building improvements 80,310,808 461,603 80,772,411 Improvements other than buildings 1,904,458 1,904,458
Park improvements 47,207,182 2,623,886 (1,643,266) 48,187,802 swimming Pool 765,292 1,643,266 2,408,558
urniture and equipment 1,684,855 123,520 1,808,375
Software 424,269 424,269
710,259 124,842 (167,769) 667,332
Vehicle:
Right to use assets - vehicles 318,898 35,796 354,694
Total capital assets, being depreciated 483,812,816 4,128,779 (167,769) 487,773,826 Less accumulated depreciation:
Infrastructure (139,119,431) (4,566,068) (143,685,499)
uildings/building improvement (16,984,142) (1,821,314) (18,805,456) morovements other than building (282,356) (120,285) : (402,641) Park improvements (27,163,989) (1,279,225) (28,443,214) Swimming Pool (636,936) (99,923) (736,859)
Furniture and equipment (883,684) (118,167) (1,001,851) Software (291,650) (42,427) (334,077)
Vehicles (278,559) (100,418) 161,320 (217,657)
Right to use assets - vehicles (106,033) (190,205
Total accumulated depreciation (185,746,780) 161,320 (193,817,459 Total capital assets, being depreciated, net 298,066,036 (4,103,220) (6,449) 293,956,367 Governmental activities capital assets, net 573,095,108 2,492,700 (3,670,642), 571,917,166 Depreciation expense was charged to the City's programs as follows:
Governmental Activities
General government $ 578,547
Public Safety 73,524
Community development 72,635
Public works 5,334,821
Parks and recreation 2,172,472
Total depreciation expense - governmental activities $ 8,231,999 53 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(5) Capital Assets (Continued)
In Fiscal Year 2022-2023, 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, 2022 Additions Deletions June 30, 2023
Infrastructure assets:
Streets $ 306,019,176 759,132 - 306,778,308
Storm drains 21,301,683 - 21,301,683
Traffic signals 10,340,486 10,340,486
Bridges 5,625,168 5,625,168
Trails 7,200,282 7,200,282
Total Infrastructure assets 350,486,795 759,132 351,245,927 Less accumulated depreciation for:
Streets (120,069,955) (3,932,140) (124,002,095)
Storm drains (10,641,759) (282,536) (10,924,295)
Traffic signals (4,165,665) (137,291) (4,302,956)
Bridges (2,151,221) (93,796) (2,245,017)
(2,090,831) (120,305) (2,211,136)
Total accumulated depreciation (139,119,431) (4,566,068) (143,685,499) Total Infrastructure assets, net $ 211,367,364 (3,806,936) 207,560,428 (6) Interfund Activity
A. Due From and To Other Funds
The composition of interfund balances as of June 30, 2023, is as follows:
Due to Other Funds
Governmental Funds
CDBG
Special
Due From Other Funds] Revenue Fund Total
Governmental Funds:
General Fund $ 56,132 $ 56,132
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, 2023. This amount has been reclassified as interfund receivables/payables for financial statement purposes.
54 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(6) Interfund Activity (Continued)
Transfers In
Governmental
Funds
City Capital
Transfers Out Projects Total
Governmental Funds:
General Fund $ 3,341 3,341
Miscellaneous Grants Fund 4,058,313 4,058,313
Nonmajor Governmental Funds 3,607,021 3,607,021
$ 7,668,675 7,668,675
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 $7,668,675 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.
(7) Long-Term Liabilities
Summary of changes in long-term liabilities for the year ended June 30, 2023 is as follows:
Balance Balance Due within Due in More
July 1, 2022 Additions Deletions _ June 30, 2023 One Year Than One Year Governmental Activities
Lease payable $ 318,897 35,796 (84,172) 270,521 86,222 184,299 Compensated absences 723,570 490,661 (418,670) 795,561 421,083 Total governmental activities $ 1,042,467 526,457 (502,842) 1,066,082 507,305 558,777 The annual debt service requirements outstanding at June 30, 2023 were as follows:
Fiscal Year Ending June 30, Activities
2024 $ 99,977
2025 103,739
2026 101,662
17,770
3,155
Subtotal
Less amount representing interest (55,782)
Present Value of Future
Minimum Lease Payment $ 270,521
Compensated Absences
The City uses General Fund to liquidate the compensated absences liabilities. 55 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(8) Liability, Workers' Compensation Plan, and Purchased Insurance A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 126 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage.
The 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 (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 information concerning the coverage structure is available on the Authority's website:
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.
56 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(8) Liability, Workers' Compensation Plan, and Purchased Insurance (Continued) Primary Workers' Compensation Program (continued)
(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 2022-23 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 poolec 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.
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 2022-23.
57 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(9) Classification of Fund Balance
Details of the fund balance classifications at June 30, 2023 are as follows:
Miscellaneous City Capital Nonmajor
General Fund Grants Projects Governmental Totals
Nonspendable
Prepaid items 189,872 189,872
Deposits 1,960 77,036 78,996
Total nonspendable 191,832 77,036 268,868
Restricted
General govemment 2,004,472 2,004,472
Public safety : 48,977 48,977
immunity developmer - 475,183 475,183
blic wor 318,926 6,248,708 6,567,634
Total restricted 2,004,472 318,926 6,772,868 9,096,266
Committed
Compensated absences 374,478 374,478
-
Capital asset replacement 20,202,016 20,202,016
OPEB 1,113,928 ....
1,113,928
Economic uncertainty* 25,804,111 25,804,111
Total restricted 47,494,533 47,494,533
Assigned
Continuing appropriations
Public safety operations 6,490 6,490
Community development 522,672 522,672
Public works operations 88,616 88,616
Capital projects 11,043 11,043
Total assigned 628,821 628,821
Unassigned (deficit) (286,711) (2,482) (289,193)
Total fund balance $ 50,319,658 (286,711) 395,962 6,770,386 57,199,295 *The City Council adopted the Financial Reserves Policy through resolution during the budget adoption process. The City will maintain a committed fund balance for Financial and Economic Uncertainty equal to no less than 50% of annual General Fund operating expenditures. City Council approval shall be required before expending any portion of the committed fund balance for Financial and Economic Uncertainty. Unforeseen circumstances that may require an expenditure of such amounts include, but are not limited to natural disasters, unforeseen deficiencies of a major revenue source, or unexpected operating or capital expenditures.
58 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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 Ana. The County pays all structural fire fees it collects to the OCFA. The cities of Stanton, Tustin, San Clemente, Buena Park, Garden Grove, Seal Beach, Westminster and Santa Ana are considered "cash 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, 2023. 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. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS 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 CalPERS' annual financial report may be obtained from its website under Forms and Publications.
59 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(11) Defined Benefit Pension Plans (Continued)
A. General Information about the Pension Plan (Continued) Employees Covered by Benefit Terms
At June 30, 2021, valuation date, the following employees were covered by the benefit terms:
Plans
Miscellaneous
Classic Tier 1 Classic Tier 2 PEPRA
Active employees 21 44
Transferred and terminated employees 100 11 51
Retired employees and beneficiaries 59 5
Total 180 22 100
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 CalPERS 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 current service, up to a maximum of six months' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months preceding death. Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated survivors) or to the retiree's estate. 60 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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 llowances 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 CalPERS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contributions for the fiscal year ended June 30, 2023 were $6,181,424.
Actuarial Methods and Assumption Used to Determine Total Pension Liability For the measurement period ended June 30, 2022, the total pension liability was determined by rolling forward the June 30, 2021 total pension liability. The June 30, 2022 total pension liabilities were based on the following actuarial methods and assumptions:
Actuarial Cost Method Entry Age Actuarial Cost Method
Discount Rate 6.90%
Inflation 2.30%
Salary Increases Varies by entry age and service
Mortality Rate Table* Derived using CalPERS' membership data for all funds Post Retirement Benefit Increase The lessor of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing
power applies, 2.30% thereafter
'The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CaPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CaPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CaPERS website.
61 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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
The discount rate used to measure the total pension liability was 6.90 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CaPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds' asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:
Assumed Asset
Asset Class (1) Allocation Real Return (1,2)
Global Equity - Cap-weighted 30.00% 4.54%
Global Equity - Non-Cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study. 62 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 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 allocation along with 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 6.90%, 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 (5.90%) or one percentage-point higher (7.90%) than the current Plan's Net Pension Liability/ (Asset)
Discount Rate - 1% Current Discount Discount Rate + 1%
(5.90%) Rate (6.90%) (7.90%)
$ 17,565,741 11,371,523 6,275,218
Pension Plan Fiduciary Net Position
Detailed information about the plan's fiduciary net position is available in the separately issued CalPERS' financial report and can be obtained from CalPERS' website under Forms and Publications. 63 =
CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(11) Defined Benefit Pension Plans (Continued)
B. Pesour espites, oPenson Cose and Deferred Outflows of Resources and Defered Inflows of 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)
Balance at June 30, 2021 (MD) 42,486,653 37,511,810 4,974,843 Balance at June 30, 2022 (MD) 45,439,465 34,067,942 11,371,523 Net changes from 2021-2022 2,952,812 (3,443,868) 6,396,680 Deferred outflows of resources, deferred inflows of resources, and pension expenses are allocated 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, 2021 (MD) 0.26200%
Proportion - June 30, 2022 (MD) 0.24302%
Change - Increase (Decrease) (0.01898%)
For the year ended June 30, 2023, the City recognized pension expense in the amount of $652,213.
The Expected Average Remaining Service Lifetime ("EARSL") 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, 2022 measurement period is 3.7 years, which was obtained by dividing the total service years of 574,665 (the sum of remaining service lifetimes of the active employees) by 153,587 (the total number of participants: active, inactive, and retired). 64 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(11) Defined Benefit Pension Plans (Continued)
. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows o esources Related to Pension continued
Proportionate Share of Net Pension Liability and Pension Expense (Continued) At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Changes in Assumptions $ 1,165,250 152,947
Differences between Expected and Actual Experience 228,362 Differences between Expected and Actual
Investment Earnings 2,082,961
Differences between Employer's Contributions and
Proportionate Share of Contributions 593,595
436,759
Change in Employer's Proportion
Pension Contributions Made Subsequent to
Measurement Date 6,181,424
$ 10,094,756 746,542
Total
Deferred outflows of resources related to pensions resulting from the City's contributions made subsequent to the measurement date in the amount of $6,181,424 will be recognized as a reduction of the collective net pension liability in the fiscal year ending June 30, 2024. 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
2024 $ 800,480
2025 696,789
2026 395,512
2027 1,274,009
2028
3,166,790
65 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(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 under CaPERS under a single employer defined benefit postemployment benefits plan. Eligible retirees can continue participation in the City's medical plans ("PEMHCA"). For miscellaneous retirees, the City contributes up to a capped dollar amount which varies by bargaining unit, medical coverage, and years of service.
The City has not established a trust for the purpose of holding assets accumulated for plan benefits.
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, 2023, the measurement date, the following numbers of participants were covered by the benefit terms:
Active employees 79
Inactive currently receiving benefits 20
Inactive entitled to but not yet receiving benefits 30
Total 129
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, 2023 the City made contributions on a pay-as-you-go basis.
B. Total OPEB Liability
The City's total OPEB liability was measured as of June 30, 2023, 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:
66 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(12) Other Postemployment Benefits (Continued)
B. Total OPEB Liability (Continued)
Actuarial Assumption:
Contribution Policy No pre-funding
Discount Rate 3.65% at June 30, 2023
(Bond Buyer 20-Bond Index)
Inflation 2.50% annually
Mortality, Retirement, Disability, Termination CaIPERS 2000-2019 Experience Study Mortality Improvement Mortality projected fully generational with Scale MP-2021 Salary Increases Aggregate - 2.75% annually
Merit - CaPERS 1997-2015 Experience Study
Medical Trend Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076
Medicare - 5.65% for 2023, decreasing to
in ultimate rate of 3.75% in 207
PEMCA Minimum Increase .00% annuall
Healthcare Participation at Retirement Actives - 50%
Retirees - current election
Spouse Coverage Actives: current election if covered, 80% if waived Retirees: current election
Medicare Eligible 100%
Change of Assumptions
During the measurement period June 30, 2023, the accounting discount rate was updated based on municipal bond rate.
Discount Rate
The discount rate used to measure the total OPE liability was 3.65%. 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 OPE Liability
Total
OPEB
Liability
Balance at July 1, 2022 $ 1,746,412
Changes Recognized for the Measurement Period:
Service Cost 139,830
Interest on the total OPEB Liability 65,606
(29,346)
(65,955)
110,135
$ 1,856,547
67 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(12) Other Postemployment Benefits (Continued)
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 one percentage-point lower (2.65 percent) or one percentage- point higher (4.65 percent) than the current discount rate:
Plan's Total OPEB Liability/ (Asset)
Discount Rate - 1% Current Discount Discount Rate + 1%
(2.65%) Rate (3.65%) (4.65%)
$ 2,151,289 1,856,547 1,618,970
Sensitivity of the Total OPEB 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 OPE liability would be if it were calculated using healthcare cost trend rates that are one percentage-point lower (Non-Medicare - 5.50% to 2.75% and Medicare - 4.65% to 2.75%) or one 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 Total OPEB Liability/ (Asset)
Current Trend - 1% Current Trend Current Trend + 1%
$ 1,565,104 1,856,547 2,232,739
C. PEB. Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to For the measurement period ended June 30, 2023, the City recognized OPEB expense of $151,160.
At June 30, 2023, the City reported deferred outflows and inflows of resources related to OPEB from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual experience $ 100,665 480,568 Changes in Assumptions 304,612 534,374
Total $ 405,277 1,014,942
The gains and losses are amortized over the expected average remaining service life. The expected valuation date.
68 CITY OF LAGUNA NIGUEL
Notes to the Basic Financial Statements (Continued)
Year ended June 30, 2023
(12) Other Postemployment Benefits (Continued)
. OPEB 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
2024 $ (54,819)
2025 (54,819)
2026 (54,819)
2027 (50,851)
2028 (53,949)
Thereafter (340,408)
$ (609,665)
(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.
The City has received State and Federal funds for specific purposes that are subject to review by the grantor agencies. Although such audits could generate expenditures disallowances under the terms of 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, 2023, the unspent balance of the significant contracts is as follows:
Projects with Outstanding Contracts Balance
Residental Resurfacing Program (Zones 3-4) Onxy Paving $ 679,203 Residental Resurfacing Program (Zones 3-4) Pavement Coatings 1,947,849 $ 2,627,052
69 REQUIRED SUPPLEMENTARY
INFORMATION (UNAUDITED)
70 City of Laguna Niguel
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule
General Fund
Year ended June 30, 2023
/ariance witl
inal Budge
Actual Positive
Original nadet Amountinal Amounts (Negative)
REVENUES:
Taxes $ 43,450,827 43,450,827 45,040,827 1,590,000
Licenses and permits 2,694,200 2,717,417 3,882,045 1,164,628 Intergovernmental 263,549 263,549 789,968 526,419
Charges for services 979,306 979,306 1,205,931 226,625
Fines and forfeitures 557,600 557,600 409,994 (147,606) Use of money and property (loss) 350,000 350,000 1,340,982 990,982 Leases 422,960 422,960 471,266 48,306
Miscellaneous 261,804 261,804 296,312 34,508
Total revenues 48,980,246 49,003,463 53,437,325 4,433,862 EXPENDITURES:
General government 6,657,968 11,715,382 11,451,201 264,181 17,953,630 17,365,403 66,789
Community development 4,246,451 4,675,295 4,061,569 613,726 Parks and recreation 4,625,765 4,590,573 4,231,644 358,929 Public works 13,998,718 14,270,739 13,868,405 402,334
Capital outlay 205,800 742,465 626,661 115,804
Total expenditures 47,688,332 53,426,646 51,604,883 1,821,763
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES 1,291,914 (4,423,183) 1,832,442 6,255,625
OTHER FINANCING SOURCES (USES):
Transfers out (180,000) (299,591) (3,341) 296,250
Total other financing sources (uses) (180,000) (299,591) (3,341) 296,250.
NET CHANGE IN FUND BALANCE 1,111,914 (4,722,774) 1,829,101 6,551,875 FUND BALANCE:
Fund balance at beginning of year 48,490,557 48,490,557 48,490,557 Fund balance at end of year $ 49,602,471 43,767,783 50,319,658 6,551,875 See accompanying notes to required supplementary information. =
City of Laguna Niguel
Required Supplemental Information (Unaudited)
Budgetary Comparison Schedule
Miscellaneous Grants Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Budget Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Intergovernmental $ 3,351,868 3,521,868 4,367,677 845,809 Total revenues 3,351,868 3,521,868 4,367,677 845,809
EXPENDITURES:
Community Development 1,001,868 1,001,868
324,260 677,608
Total expenditures 1,001,868 1,001,868 324,260 677,608
EXCESS OF REVENUES OVER
EXPENDITURES 2,350,000 2,520,000 4,043,417 (1,523,417)
OTHER FINANCING SOURCES (USES):
Transfers out (2,350,000) (6,338,316) (4,058,313) 2,280,003 Total other financing sources (uses) (2,350,000) (6,338,316) (4,058,313) 2,280,003 NET CHANGE IN FUND BALANCE (3,818,316) (14,896) 3,803,420 FUND BALANCE:
Fund balance (deficit) at beginning of year (271,815) (271,815) (271,815) Fund balance (deficit) at end of year $ (271,815) (4,090,131) (286,711) 3,803,420 See accompanying notes to required supplementary information.
City of Laguna Niguel
Required Supplementary Information (Unaudited)
Notes to the Required Supplementary Information
Year ended June 30, 2023
Note 1 - Budget Policy and Control
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of and are used as a management control device. Annual budgets are adopted for the General Fund, all Special Revenue Funds, and the Capital Projects Fund. The City Manager and Director of Finance prepare and submit a proposed budget to the City Council. The City Council conducts a noticed public hearing to invite public 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 can only be made with City Council's approval. Unexpended appropriations for authorized, but uncompleted, projects in the Capital Improvement Program budget and some unexpended operating appropriations can be carried forward to the next succeeding budget year upon recommendation of the City Manager. All other appropriations lapse at the end of the fiscal year. Total appropriations approved for the fiscal year ended June 30, 2023, less prior year carryovers, were $49,003,463.
73 SUPPLEMENTARY INFORMATION
74 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, 2023
Measurement period June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 City's Proportion of the Net Pension Liability 0.07294% 0.06905% 0.07545% 0.07849% 0.07924% City's Proportionate Share of the Net Pension Liability $ 4,538,778 4,739,802 6,528,796 7,784,390 7,635,951 City's Covered Payroll $ 5,358,655 5,256,476 5,508,425 5,759,712 6,079,244 Cly Propertine Share or the vet Person liability 84.70% 90.17% 118.52% 135.15% 125.61% Pars priage of the stal person luciary net position as a 83.03% 83.02% 78.49% 77.30% 78.97% Measurement period June 30, 2019 June 30, 2020 • June 30, 2021 June 30, 2022 City's Proportion of the Net Pension Liability 0.08299% 0.08621% 0.09199% 0.09845% City's Proportionate Share of the Net Pension Liability $ 8,504,317 9,380,067 4,974,843 11,371,523 City's Covered Payroll $ 6,140,757 6,447,797 6,234,178 6,854,621 City's Proportionate Share of the Net Pension Liability as a percentage of Covered Payroll 138.49% 145.48% 79.80% 165.90% Plan's proportionate share of the fiduciary net position as a percentage of the total pension liability 77.49% 77.71% 90.49% 78.19% " 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:
Change in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2017 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Changes of Assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from
7.15% to 6.90%. In determining the long-term expected rate of return, CaPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project return. nd (geometric) returns over unlons am. he discon rate use to disert liabile accordane y the 202 Cal repertel. ompound (geometric) returns over the long term.
Study and Review of Actuarial 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.
75 City of Laguna Niguel
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pension
Year ended June 30, 2023
Fiscal year 2013-144 2014-15 2015-16 2016-17 2017-18
Actuarially determined contribution:
Miscellaneous Tier 1 Plan $ 520,739 496,258 342,524 322,907 260,533 Miscellaneous Tier 2 Plan 40,763 52,805 58,843 81,272 88,913 Miscellaneous PEPRA 10,164 27,511 52,055 73,523 122,796 Total actuarially determined contribution 571,666 576,574 453,422 477,702 472,242 Contribution in relation to the actuarially determined contribution 571,666 576,574 453,422 710,160 768,939 Contribution Deficiency (Excess) $ (232,458) (296,697)
Covered payroll $ 5,358,655 5,256,476 5,508,425 5,759,712 6,079,244 Contributions as a percentage of covered payroll 10.67% 10.97% 8.23% 12.33% 12.65% Fiscal year 2018-19 2019-20 2020-21 2021-22 2022-23
Actuarially determined contribution:
Miscellaneous Tier 1 Plan $ 777,461 862,885 790,976 1,025,893 1,067,671 Miscellaneous Tier 2 Plan 82,534 118,559 119,672 88,169 119,663 Miscellaneous PEPRA 82,944 116,294 210,519 199,567 241,197 Total actuarially determined contribution 942,939 1,097,738 1,121,167 1,313,629 1,428,531 Contribution in relation to the actuarially determined contribution 920,585 1,035,270 1,120,667 1,275,264 6,181,424 Contribution Deficiency (Excess) $ 22,354 62,468 500 38,365 (4,752,893) Covered payroll $ 6,140,757 6,447,797 6,234,178 6,854,621 6,969,135 Contributions as a percentage ol
covered payroll 14.99% 16.06% 17.98% 18.60% 88.70%
* it becomes avatable is presented only for measurement periods for which GAS8 68 Is aplicable. Aditional years information will be displayed Notes to Schedule of Plan Contributions
Valuation date 6/30/2020
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percent of payroll
Asset valuation method Fair Value
Inflation 2.50%
Salary increases Varies by Entry Age and Service
Payroll growth 2.75%
Investment rate of return 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. 76 City of Laguna Niguel
Required Supplementary Information (Unaudited)
Schedule of the Changes in Total OPEB Liability and Related Ratios Year ended June 30, 2023
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 June 30, 2023 Total OPE liability
Service cost $ 164,308 159,580 177,199 238,974 249,137 139,830 Interest 52,069 60,500 64,566 59,282 63,322 65,606
Changes of assumptions (62,212) 90,002 423,242 22,375 (605,217, (29,346) Differences between expected and actual experience 172,56g 599,226; emptoye cents unioning refunds of (36,705) (44,487) (48,040) (75,178) (88,151) (65,955) Net change in total OPEB liability 117,460 265,595 789,536 245,453 (980,135) 110,135 Total one habilly ein 1,308,503 1,425,963 1,691,558 2,481,094 2,726,547 1.746,412 $ 1,425,963 1.691,558 2,481.094 2.726.547 1,746,412 1,856.547
0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Covered employee-payroll $ 5,927,346 6,140,757 6,392,532 6,476,418 7,098,959 7,430,446 an net OPEB liability as a percentage
vered employee-payro 24.06% 27.55% 38.81% 42.10% 24,60% 24.99% Lestes a valarmation is presented only for measurement periods for which GASB 75 is applicable. Additional years of information will be displayed as lt Notes to Schedules:
Change in Benefit Terms: There were no changes in the benefit terms.
Changes of Assumptions: In 2022, the discount rate changed from 3.54% to 3.65%.
The City has not established a trust for the purpose of holding assets accumulated for plan benefits. 77 This page intentionally left blank
78 City of Laguna Niguel
Nonmajor Governmental Funds
Year ended June 30, 2023
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 Fund - Accounts for revenues received and expenditures made for Community Development Block Grant eligible grants and capital projects. Funding is provided by the U.S.
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.
79 City of Laguna Niguel
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023
Special Revenue Funds
Air Quality Law
Gas Tax Measure "M" Improvement Enforcement
ASSETS
Cash and investments $2,915,648 2,587,752 344,926 61,477 Receivables:
Accounts
Taxes 272,199
Due from other governments 630,477 21,450
Total assets 3,188,546 3.218,229 366,376 61,477
LIABILITIES, DEFERRED INFLOW:
OF RESOURCES, AND FUND BALANCE
Liabilities:
Accounts payable 23,040 64,923 57,644 12,500
Due to other funds
Total liabilities 23,040 64,923 57,644 12,500
Deferred Inflows of Resources:
Unavailable revenues 99 378,737
Total deferred inflows of resources 99 378,737
Fund balances:
Restricted for:
Pullic safety 48,977
ommunity developmer
ır qualitv imorovemen 308,732
Public works 3,165,407 2,774,569
Unassigned (deficit)
Total fund balances 3,165,407 2,774,569 308,732 48,977
Total liabilities, deferred inflows of
resources and fund balances $ 3,188,546 3,218,229 366,376 61,477 80 City of Laguna Niguel
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2023
Special Revenue Funds
Community
Development Senior
Block Grant Transportatior
ASSETS
Cash and investments $ 461,705 6,371,508
Receivables:
Accounts : 99
Taxes : 272,799
Due from other governments 123,139 17,411 792,477
Total assets 123,139 479,116 7,436,883
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable 69,489 3,933 231,529
Due to other funds 56,132 56,132
Total liabilities 125,621 3,933 287,661
Deferred Inflows of Resources:
Unavailable revenues 378,836
Total deferred inflows of resources 378,836
Fund balances:
Restricted for:
Public safety 48,977
475,183 475,183
ommunity developmen :
ir quality improvemen 308,732
Public works 5,939,976
Unassigned (deficit) (2,482) (2,482)
Total fund balances (2,482) 475,183 6,770,386
Total liabilities, deferred inflows of
resources and fund balances $ 123,139 479,116 7,436,883 81 =
City of Laguna Niguel
Schedule of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds
Year ended June 30, 2023
Special Revenue Funds
Air Quality Law
Gas Tax Measure "M" Improvement Enforcement
REVENUES:
ntergovernmenta 2,954,062 1,535,200 181,434 165,271
se of money and propert (37,154) (43,872) (6,290) (621) Total revenues 2,916,908 1,491,328 175,144 164,650
EXPENDITURES:
Current:
- : 150,000
:
Public works 1,017,049 183267 84,960
Total expenditures 1,017,049 84,960 150,000
Excess (Deficiency) of Revenues
Over (Under) Expenditures 1,899,859 1,306,061 90,184 14,650 OTHER FINANCING SOURCES (USES):
Transfers out (2,284,811) (685,226) (75,667)
Total other financing sources (uses) (2,284,811) (685,226) (75,667) NET CHANGES IN FUND BALANCES (384,952) 620,835 14,517 14,650 FUND BALANCES:
Fund balance (deficit) at beginning of year 3,550,359 2,153,734 294,215 34,327 Fund balance (deficit) at end of year $ 3,165,407 2,774,569 308,732 48,977 82 City of Laguna Niguel
Schedule of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds (Continued)
Year ended June 30, 2023
Special Revenue Funds
Community Total Nonmajo
Development Senior Governmenta
Block Grant Transportation Funds
REVENUES:
ntergovernmenta $ 853,288 07,76 5,797,018
se of money and propert 9,166 (97,103)
Total revenues 853,288 98,597 5,699,915
EXPENDITURES:
Public safety - 150,000
Community developmen 289,847 17,398 289,84.
Parks and recreatior - 17,398
Public works 1,287,276
Total expenditures 289,847 17,398 1,744,521
Excess (Deficiency) of Revenues
Over (Under) Expenditures 563,441 81,199 3,955,394
OTHER FINANCING SOURCES (USES):
Transfers out (561,317) (3,607,021)
Total other financing sources (uses) (561,317) (3,607,021) NET CHANGES IN FUND BALANCES 2,124 81,199 348,373
FUND BALANCES:
Fund balance (deficit) at beginning of year (4,606) 393,984 6,422,013 Fund balance (deficit) at end of year $ (2,482) 475,183 6,770,386 83 =
City of Laguna Niguel
Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Gas Tax Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Budget Amounts Actual Positive
Original Amounts (Negative)
REVENUES
Intergovernmental 3,200,676 2,954,062 (246,614)
Use of money and property 9 3. 20,076 10,000 10,000 (37,154) (47,154) Total revenues 3,210,676 3,210,676 2,916,908 (293,768)
EXPENDITURES
Current:
Public works 1,195,650 1,188,966 1,017,049 171,917
Total expenditures 1,195,650 1,188,966 1,017,049 171,917
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES 2,015,026 2,021,710 1,899,859 (121,851)
-
OTHER FINANCING SOURCES (USES):
Transfers out (3,503,562) (5,274,280) (2,284,811) 2,989,469 Total other financing sources (uses) (3,503,562) (5,274,280) (2,284,811) 2,989,469 NET CHANGE IN FUND BALANCE (1,488,536) (3,252,570) (384,952) 2,867,618 FUND BALANCE:
Fund balance (deficit) at beginning of year 3 2,50,359 3,550,359 3,550,359 Fund balance (deficit) at end of year 297,789 3,165,407 2,867,618 84 City of Laguna Niguel
Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Measure "M" Special Revenue Fund
Year ended June 30, 2023
/ariance witt
inal Budget
Budget Amounts Actual Positive
= Original Final Amounts (Negative)
REVENUES
Intergovernmental $ 1,526,292 1,722,292 1,535,200 (187,092) Use of money and property 7,000 7,000 (43,872) (50,872) Total revenues 1,533,292 1,729,292 1,491,328 (237,964)
EXPENDITURES
Public Works 176,292 185,267 185,261
Total expenditures = 176,292 185,267 185,267
EXCESS OF REVENUES OVER
EXPENDITURES - 1,357,000 1,544,025 1,306,061 (237,964)
OTHER FINANCING USES:
Transfers out (3,000,000) (3,187,025) (685,226) 2,501,799 Total other financing uses = (3,000,000) (3,187,025) (685,226) 2,501,799 NET CHANGE IN FUND BALANCE (1,643,000) (1,643,000) 620,835 2,263,835 FUND BALANCE:
Fund balance (deficit) at beginning of year 2,153,734 2,153,734 2,153,734 Fund balance (deficit) at end of year 510,734 510,734 2,774,569 2,263,835 85 City of Laguna Niguel
Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Air Quality Improvement Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Budget Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES
Intergovernmental 85,000 85,000 181,434 96,434
Use of money and property 3,000 3,000 (6,290) (9,290)
Total revenues 88,000 88,000 175,144 87,144
EXPENDITURES
Current
Public works 84,790 84,960 84,960
Total expenditures 84,790 84,960 84,960
EXCESS OF REVENUES OVER
EXPENDITURES 3,210 3,040 90,184 87,144
OTHER FINANCING USES:
Transfers out - (223,302) (75,667) 147,635
Total other financing uses - (223,302) (75,667) 147,635 NET CHANGE IN FUND BALANCE 3,210 (220,262) 14,517 234,779 FUND BALANCE:
Fund balance (deficit) at beginning of year 294,215 294,215 294,215 Fund balance (deficit) at end of year $ 297,425 73,953 308,732 234,779 =
86 City of Laguna Niguel
Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Law Enforcement Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Budget Amounts Actual Positive
= Original Final Amounts (Negative)
REVENUES
Intergovernmental $ 150,000 150,000 165,271 15,271
Use of money and property 500 500 (621) (1,121)
Total revenues = 150,500 150,500 164,650 14,150
EXPENDITURES
Current:
Public safety 150,000 150,000 150,000
Total expenditures 150,000 150,000 150,000
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES 500 500 14,650 14,150
-
NET CHANGE IN FUND BALANCE 500 500 14,650 14,150
FUND BALANCE:
Fund balance (deficit) at beginning of year 34,327 34,327 34,327 -
Fund balance (deficit) at end of year 34,827 34,827 48,977 14,150 87 City of Laguna Niguel
Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Community Development Block Grant Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Budget Amounts Actual Positive
Original Amounts (Negative)
REVENUES
Intergovernmental 653,444 653,444 853,288 199,844
Total revenues 653,444 653,444 853,288 199,844
EXPENDITURES
Community development 92,690 290,471 289,847 624
Total expenditures 92,690 290,471 289,847 624
EXCESS OF REVENUES OVER
EXPENDITURES 560,754 362,973 563,441 200,468
OTHER FINANCING USES:
Transfers out (560,754) (657,244) (561,317) 95,927
Total other financing uses (560,754) (657,244) (561,317) 95,927 NET CHANGE IN FUND BALANCE (294,271) 2,124 296,395
FUND BALANCE:
Fund balance (deficit) at beginning of year (4,606) (4,606) (4,606) Fund balance (deficit) at end of year (4,606) (298,877) (2,482) 296,395 88 City of Laguna Niguel
Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Senior Transportation Special Revenue Fund
Year ended June 30, 2023
Variance with
Final Budget
Budget Amounts Actual Positive
= Original Final Amounts (Negative)
REVENUES
Intergovernmental $ 80,000 30,000 107,763 27,763
Use of money and property 1,000 1,000 (9,166) (10,166
Total revenues = 81,000 81,000 98,597 17,597
EXPENDITURES
Current:
Parks and recreation 75,000 17,398 57,602
Total expenditures = 73000- 75,000 17,398 57,602
EXCESS OF REVENUES OVER
EXPENDITURES 6,000 6,000 81,199 75,199
-
NET CHANGE IN FUND BALANCE 6,000 6,000 81,199 75,199
FUND BALANCE:
Fund balance (deficit) at beginning of year 393,984 393,984 393,984 Fund balance (deficit) at end of year 399,984 399,984 475,183 75,199 89 This page intentionally left blank
90 STATISTICAL SECTION
(UNAUDITED)
91 This page intentionally left blank
92 City of Laguna Niguel
Statistical Section Overview
(Unaudited)
he marmation in mania venes, and reporters and eid i spin as a ne frun sending at govemment's overall financial health.
Contents Page
Financial Trends Information - These schedules contain trend information to help the reader understand how 93 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 City's 102 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 debt in the future. 108 Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. 111 Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it 116 performs.
93 -
=
City of Laguna Niguel
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2014 2015 2016 2017 2018
Governmental activities:
Net investment in capital assets $ 555,099,763 563,204,034 564,600,741 566,781,948 565,916,027 Restricted:
Public safety $ 290,147 66,898 85,186 71,752 49,739
Streets 821,234 403,095 290,728 142,399 587,123
Community development 303,007 143,890 590,853 440,446 483,737 Air quality improvement 275,453 328,041 400,601 469,297 513,707 Total restricted 1,689,841 941,924 1,367,368 1,123,894 1,634,306 Unrestricted 75,927,923 67,284,805 76,932,061 67,674,106 67,449,901 Total governmental activities net position $ 632,717,527 631,430,763 642,900,170 635,579,948 635,000,234 The City does not have any Business-Type activities.
Therefore, all governmental activities comprise the primary government of the City of Laguna Niguel. 94 City of Laguna Niguel
Net Position by Component (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2019 2020 2021 2022 2023
Govermental activities:
Net investment in capital assets 579,093,630 588,977,831 579,071,088 572,776,211 571,646,645 Restricted:
Public safety 62,619 72,830 84,285 34,327 48,977
Streets 4,107,797 5,614,824 5,718,205 6,382,693 6,567,634 Community development 158,702 216,803 304,171 393,984 475,183 Air quality improvement 565,153
Total restricted 4,894,271 5,904,457 6,106,661 6,811.004 7,091,794 Unrestricted 50,029,493 32,748,312 36,434,282 39,034,613 45,831,379 Total governmental activities net position 634,017,394 627,630,600 621,612,031 618,621,828 624,569,818 The City does not have any Business-Type activities.
Therefore, all governmental activities comprise the primary government of the City of Laguna Niguel. 95 =
City of Laguna Niguel
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2014 2015 2016 2017 2018
Expenses:
General government $ 4,260.378 4,778,543 5.049.643 4,721,188 5,105,212 Public safety 10,281,721 10,901,896 11,778,228 13,034,018 14,741,788 Community development 3,427,420 3,125,023 3,903,064 3,125,278 3,370,376 Public works 15,547,420 11,462,151 15,402,736 23,735,075 22.324,184 Parks and recreation 4,140,610 8,928,487 5,022,013 6,655,833 6,707,133 Interest expense
Total expenses $ 37,657,549 39,196,100 41,155,684 51,271,392 52,248,693 Program Revenues:
Charges for services:
General government 10,553 223,747
266.612 334,175 353,257
Public safety 294,535 297,386
Community development 3,948,178 2,090,366 6,931,625 2,058,550 6,150,591 Parks and recreation 1,095,355 1,051,430 1,087,258 1,162,176 1,204,757 Public works 305 16,997 18,389 33,407 16,776
Operating grants and contributions 3,242,021 2,287,448 2,917,219 2,660,052 3,376,124 Capital grants and contributions 948,880 2,895,963 3,903.895 1,387,051 2,126,133 Total program revenues 9,529,274 8,619,369 15,379,519 7,635,711 13,227,638 Net (expenses)/revenues $ (28,128,275) (30,576,731) (25,776,165) (43.635,681) (39,021,055) General Revenues:
Taxes:
Property taxes 17,733,088 18,840,320 19,965,053 20,786,789 21,968,448 Sales taxes 11,027,919 11,453,345 12,244,172 11,448,371 11,223,516 Franchise fees 2,368,527 2,518,177 2,519,116 2,270,993 2,362,138 Other taxes 526,490 578,597 642,043 625,562 701,611
Motor vehicle license fee 28.707 27,730 26,160 29,631 35,104 Use of money and property (loss) 751,894 1,078,795 1,372,860 618,864 1,094,790 Other 627,067 424,658 476,168 535,249 589,613
Total general revenues 33.063,692 34,921,622 37,245,572 36,315,459 37.975,220 Changes in net position $ 4,935,417 4,344,891 11,469,407 (7,320,222) (1,045,835) The City does not have any Business-Type activities.
Therefore, all govemmental activities comprise the primary government of the City of Laguna Niguel. 96 City of Laguna Niguel
Changes in Net Position (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
- 2021 2022 2023
2019 2020
Expenses:
General government 5,087,668 6,128,946 6,163,102 6,588.919 10,894,992 Public safety 15,714,696 16,199,542 16,499,129 16,899,038 17,480,349 Community development 3,225,177 3,652,984 3,812,834 5,081,656 3,629,822 Public works 19,227,179 22,205,098 24,756,891 17,077,691 17,368,965 Parks and recreation 6,049,242 7,079,349 5,400,764 12,841,310 7,951,880 Interest expense 27,437 26,770 22,892 23,753 18,383
49,331,399 55,292,689 56,655,612 58,512,367 57,344,391
Total expenses
Program Revenues:
Charges for services:
General govemment 1,850 1,675 - 1,500 895
Public safety 456,443 336.530 295.071 601,684 400,866
Community development 2,131,215 2,288,391 1,845,081 3,740,831 3,656,316 Parks and recreation 987,371 660,087 508,182 970,591 1,205,036 Public works 241,672 209,672 200,655 227,387 234,857
Operating grants and contributions 4,037,554 4,401,389 5,776,718 2,539,129 2,888,410 Capital grants and contributions 453,036 273,159 463,305 5,070,885 7,760,533 -
Total program revenues 8,309,141 8,170,903 9,089,012 13,152,007 16,146,913 Net (expenses)/revenues (41.022,258) (47,121,786) (47,566,600) (45,360,360) (41.197,478) General Revenues:
Taxes:
Property taxes 22,749,160 23,584,278 24,630,701 25,292,654 27,072,457 Sales taxes 11,831,049 12,229,918 13,135,671 14,518,028 14,818,183 Franchise fees 2,400,540 2,359,348 2,352,241 2,348,798 2,546,264 Other taxes 542,175 589,705 851,034 1,085,753 603,923
Motor vehicle license fee 31,381 52,828 47,905 75,286 66,153 Use of money and property (loss) 1,873,121 1,036,458 12,375 (1,917,952) 1,318,001 Other 611,992 882,457 518,104 967,590 720,487
Total general revenues 40,039,418 40,734,992 41,548,031 42,370,157 47,145,468 Changes in net position (982,840) (6,386,794) (6,018,569) (2,990,203) 5,947,990 The City does not have any Business-Type activities.
Therefore, all govermental activities comprise the primary goverment of the City of Laguna Niguel. 97 =
City of Laguna Niguel
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2014 2015 2016 2017 2018
General Fund
Nonspendable $ 1,279,616 570,062 250,345 514,590 141,903 Restricted
Committed 31.383.297 53,147,941 57,492.610 51.733,497 49,216,920 Assigned 26.859,999 19,787,730 25,158.015 21,555,152 24,965,800 Unassigned 17.581,919
Total General Fund $ 77,104,831 73505,733 82,900,970 73803,239 74,324,623 All other governmental funds
Nonspendable $ 137,000 153,207 157.740
1.689.841 91.924
Restricted 1,238,087 964,646 1,465,968
Unassigned (3.121,116) (2.651,602) (3,825,510) (1,558,827) (367,234) Total all other governmental funds (1.431,275) (1,709,678) (2,450,423) (440,974) 1,256,474 98 City of Laguna Niguel
Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2019 2020 2021 2022 2023
General Fund
Nonspendable 909,697 698,381 75,745 111,990 191,832
Restricted 153,013 692,039 916,958 2,004,472
Committed 31.822.082 40,818,817 45,229,355 46.679,510 47,494,533 Assigned 24.714,780 - 349,954 782,099 628,821
Unassigned 48.490,557 50.319,658
Total General Fund 57.446,559 41,670,211 46.347,093
All other governmental funds
Nonspendable 145,462 64,900 64,094 77,036
5.668.141 5,594,900 6,811,004 7,091,794
Restricted 4,834,624
Unassigned (10.816) (153,879) (58.477) (276,421) (289,193) Total all other governmental funds 4.969,270 5,514,262 5.601,323 6.598,677 6.879,637 99 =
City of Laguna Niguel
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2014 2015 2016 2017 2018
Revenues:
Taxes $ 31,813,371 33,213,255 35,446,201 35,577,102 36,255,713 Licenses and permits 3,856,232 1,894,529 3,548,393 2,052,662 2,841,459 Intergovernmental 4,478,944 5,314,331 5,590,258 6,259,760 6,672,937 Charges for services 1,095,474 1,128,334 4,105,706 1,214,619 4,543,201 Fines and forfeitures 294,321 266,558 297,239 334,394 353,041 Use of money and property (loss) 747,079 1,068,984 1,372,862 618,870 1,087,116 Leases
Developer participation 80,727 185,891 366,129 :
Contribution: 9,345 33,960 6,440 9,820 41,153
Miscellaneou: 597,024 424,658 476,168 535,249 589,613
Total revenues 42,972,517 43,530,500 51,209,396 46,602,476 52,384,233 Expenditures:
Current:
General government 3,370,414 3,840,177 4,134,758 3,948,320 4,393,163 Public safety 10,264,183 10,869,382 11,727,774 12,665,551 14,595,731 Community development 3,402,203 3,104,828 3.909,385 3.019,055 3,199.919 Parks and recreation 3,378,029 3,385,205 3,386,718 3,873,182 4,065,192 Public works 8,984,960 9,142,623 8,644,212 9,710,338 9,483,108 Capital outlay 9,597,265 16,808,664 10,752,057 20,474,312 14,406,858 Total expenditures 38,997,054 47,150,879 42,554,904 53,690,758 50,143,971 Excess (deficiency) of revenues
over (under) expenditures 3,975,463 (3,620,379) 8,654,492 (7,088,282) 2,240,262 Other Financing Sources (Uses):
Transfers in 9,785,587 17,179,568 10,802,763 20,246,160 14,477,949 Transfers out (9.785,587) (17,179,568) (10,802,763) (20,246,160) (14,499,379) Total other financing sources (uses) (21,430)
Net change in fund balances $ 3,975,463 (3,620,379) 8,654,492 (7,088,282) 2,218,832 Debt service as a percentage of noncapital 0.00% -
expenditures
100
City of Laguna Niguel
Changes in Fund Balances of Governmental Funds (Continued) Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2019 2020 2021 2022 2023
Revenues:
Taxes 37,522,924 38,763,249 40,969,647 43,245,233 45,040,827 Licenses and permits 2,346,727 2,426,416 2,037,023 3,957,690 3,882,045 Intergovernmental 4,985,890 4,518,791 6,030,006 7,351,559 10,954,663 Charges for services 989,221 661,762 465,020 1,014,777 1,205,931 Fines and forfeitures 460,296 352,064 302,213 612,212 409,994 Use of money and property (loss) 2,239,707 1,413,887 437,998 (1,946,386) 1,243,879 Leases - 451,984 471,266
:
Developer participation
'ontribution 33,747 19,340
Miscellaneous 193,546 492,781 122,880 550,772 296,312
Total revenues 48,772,058 48,648,290 50,364,787 55,237,841 63.504,917 Expenditures:
Current:
General government 4,334,859 4,470,422 4,637,532 5,905,024 11,451,201 Public safety 15,627,937 16,118,936 16,431,019 16,812,695 17,515,403 Community development 3,159,263 3,397,810 3,555,966 4.952,180 4,675,676 Parks and recreation 11,085,148 4,619,532 3,488,633 3,722,525 4,249,042 Public works 4,481,142 12,828,535 12,407,056 14,997,087 15,155,681 Capital outlay 23,223,090 22,419,678 5,069,588 5,587,512 8,347,853 Total expenditures 61,911,439 63,854,913 45,589,794 51,977,023 61,394,856 Excess (deficiency) of revenues
over (under) expenditures (13,139,381) (15,206,623) 4.774.993 3,260,818 2,110,061 Other Financing Sources (Uses):
Transfers in 22,769,659 22,095,320 4,872,673 4,792,500 7,668,675 Transfers out (22,795,546) (22,120,053) (4,883,723) (4,912,500) (7,668,675) Total other financing sources (uses) (25,887) (24,733) (11,050) (120,000) Net change in fund balances (13,165,268) (15,231,356) 4,763,943 3,140,818 2,110,06l Debt service as a percentage of noncapital -
expenditures
101
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City of Laguna Niguel
Tax Revenues by Source - Governmental Funds
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Property Taxes Sales Taxes Franchise Fees Other Taxes " Total Year Actual % Change Actual % Change Actual % Change Actual % Change Actual % Change 2014 17,733,088 3.5% 11,027,919 1.7% 2,368,527 2.9% 526,490 5.3% 31,656,023 2.8% 2015 18,840,320 6.2% 11,453,345 3.9% 2,518,177 6.3% 578,597 9.9% 33,390,439 5.5% 2016 19,965,053 6.0% 12,244,172 6.9% 2,519,116 0.0% 642,043 11.0% 35,370,384 5.9% 2017 20,786,789 4.1% 11,448,371 -6.5% 2,270,993 - 9.8% 625,562 - 2.6% 35,131,715 -0.7% 2018 21,968,448 5.7% 11,223,516 -2.0% 2,362,138 4.0% 701,611 12.2% 36,255,713 3.2% 2019 22,749,160 3.6% 11,831,049 5.4% 2,400,540 1.6% 542,175 -22.7% 37,522,924 3.5% 2020 23.584,278 3.7% 12,229,918 3.4% 2,359,348 -1.7% 589,705 8.8% 38,763.249 3.3% 2021 24,630,701 4.4% 13,135,671 7.4% 2,352,241 -0.3% 851,034 44.3% 40,969.647 5.7% 2022 25,292,654 2.7% 14,518,028 10.5% 2,348,798 - 0.1% 1,085,753 27.6% 43,245,233 5.6% 2023 27,072,457 7.0% 14,818,183 2.1% 2,546,264 8.4% 603,923 -44.4% 45,040,827 4.2% Change
2013-2022 52.7% 34.4% 7.5% 14.7% 42.3%
'Other Taxes includes Real Property Transfer Taxes and Transient Occupancy Taxes. 102
City of Laguna Niguel
Assessed Value of Taxable Property
Last Ten Fiscal Years
Taxable Total
Fiscal Assessed Direct
Year Residential Commercial Industrial Other Unsecured Value Tax Rate 2014 11,445,351,932 641,714,733 89,523,605 89,399,329 135,097,159 12,401,086,758 0.13463% 2015 12,227,948,146 709,563,753 104,299,283 84,698,416 144,285,367 13,270,794,965 0.13463% 2016 12,908,323,391 748,131,051 133,378,348 92,189,497 136,727,885 14,018,750,172 0.13463% 2017 13,476,324,468 810,527,445 106,755,978 89,220,631 143,473,801 14,626,302,323 0.13463% 2018 14,170,189,583 828,023,757 130,240,687 80,636,282 153,767,064 15,362,857,373 0.13463% 2019 14.772,757.911 848,077,767 111,794,126 108,077,098 149,085,955 15,989,792,857 0.13463% 2020 15,400,702,974 871,787,891 115,436,254 335,849,810 209,118,079 16,932,895,008 0.13463% 2021 16,007,464,645 897,926,358 125,099,940 351,139,057 172,712,600 17,554,342,600 0.13463% 2022 16,460,566,082 903,240,811 122,824,193 373,231,982 163,547,376 18,023,410,444 0.13463% 2023 17,395,760,387 929,649,358 113,043,157 376,558,228 170,068,561 18,985,079,691 0.13463% Notes:
Exempt values are not included in totals.
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 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 2%. With few exceptions, property is only reassessed as a result of new construction activity or at the time it is sold to a new owner. At that point the property is reassessed based upon the added value of the construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above.
Source: Orange County Assessor 2013/14 - 2022/23 combined tax rolls, through HdL, Coren & Cone. 103
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
Year Rate Unified Unified Water District Unified Water District 2014 0.00972% 0.01567% 0.10972% 0.03207% 0.00787%
2015 0.00900% 0.01461% 0.06975% 0.02806% 0.00722%
2016 0.00845% 0.01396% 0.06270% 0.03008% 0.00665%
2017 0.00843% 0.01371% 0009377% 0.02688% 0.00207%
2018 0.00800% 0.01287% 0.05179% 0.02365% 0.00000%
2019 0.00786% 0.01285% 0.06644% 0.02392% 0.00000%
2020 0.00745% 0.01266% 0.03072% 0.02295% 0.00000%
2021 0.00756% 0.01012% 0.00000% 0.02336% 0.00000%
2022 0000727% 0.01018% 0.00000% 0.02200% 0.00000%
2023 0.00691% 0.00971% 0.00000% 0.02227% 0.00000%
(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 2013/14 - 2022/23 Tax Rate Tables, through HdL, Coren & Cone 104
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
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% 0009997%
2021 0.00350% 1.04454% 0.13463% 0.10064%
2022 0.00350% 1.04295% 0.13466% 0. 10062%
2023 0.00350% 1.04239% 0.13463% 0.10097%
(Concluded)
Notes:
)verlapping rates are those that apply to property owners within the City lot all overlapping rates apply to all city property owner 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 2013/14 - 2022/23 Tax Rate Tables, through HdL, Coren & Cone 105
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City of Laguna Niguel
Principal Property Tax Payers
Current Year and Nine Years Ago
2023 2014
% of % of
Total City Total City
Taxable Taxable
Assessed Estimated Assessed Assessed Estimated Assessed Taxpayer Value Revenue Rank Value Value Revenue _Rank Value Vilara Evergreen SPE LLC $ 163,000,000 219,447 0.88% 74,593,111 100,425 2 0.61% 124.330,746 167,386 ~- 0.67%
Broadstone Laguna Niguel LLC 104,243,104 140,342 3 0.56% Sequoia Equities Inc. 94,949,877 127,831 4 0.51% 81,630,638 109,899 1 0.67% Cal 1 Crown Valley LLC 73,495,610 98,947 5 0.40%
Crestavilla Propco LLC 60,506,112 81,459 6 0.33%
Laguna Design Dunhill 58,957,337 79,374 7 0.32%
Shapell SoCal Rental Properties LLC 58,422,550 78,654 8 0.32% 45,449,798 61,189 4 0.37% Rancho Niguel Office Partners 56,419,763 75,958 9 0.31% CostCo Wholesale Corporation 47,893,337 64,479 10 0.26% 44,396,214 59,771 5 0.36% Seaside Meadows LLC 45,455,747 61,197 3 0.37%
Laguna Niguel Investors No 1 LLC 40,362,860 54,341 6 0.33% Ocean Ranch II 38,806,050 52,245 0.32%
FG Laguna Niguel Senior Apartment LP 38,419,809 51,725 8 0.31% EQR Bond Partnership 37,959,343 51,105 0.31%
David A Colton Trust 36,095,738 48.596 10 0.29%
Total $ 842,218,436 11.133,879 4.56% S 483,169,308 $ 650,491 3.94% Source: Orange County Assessor 2013/2014 and 2022/2023 Combined Tax Rolls and the SBE Non Unitary Tax Roll through HdL, Coren & Cone 106
City of Laguna Niguel J
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 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% 2023 27,339,653 26.659,907 97.51% 159,864 26,819,771 98.10% 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
107
City of Laguna Niguel
Ratio of Outstanding Debt by Type
Governmental Activities
Last Ten Fiscal Years
Percentage
Fiscal Capital of Assessed Per
Year Leases Property Value Capita
2014 0.00000%
2015 353262 0.00000%
2016 0.00242% 5
2017 276,999 0.00180% 4.15
2018 515,684 0.00323% 7.89
2019 364,963 0.00216% 5.47
2020 157,984 0.00090% 2.42
2021 181,490 0.00101% 2.78
2022 318,897 0.00168% 4.96
2023 270,521 0.00142% 4.18
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. " or "Asendar Value of Taxable Propery" schedule for assessed property value data. This ratio is calculated using assessed property value for the " 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.
108
City of Laguna Niguel
Direct and Overlapping Governmental Activities Debt
June 30, 2023
2022-2023 Assessed Valuation: $18.623.845,641
% City's Share of
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Total Debt 6/30/23 Applicable(1) Debt 6/30/23 (2) Metropolitan Water District 19,215,000 0.512% $ 98,381
Capistrano Unified School District School Facilities Improvement District No. 1 10.033.567 24.384%] 2.446.585 Laguna Beach Unified School District 12,050,000 0.017% 2,049 Saddleback Valley Unified School District 83.545,000 0.052% 43.443 City of Laguna Niguel 270.521 100.000%L 270,521
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT 2.860,978 OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations 451,165,000 2569%S 11,590,429 Orange County Board of Education General Fund Obligations 10,860,000 2.569% 278,993 Capistrano Unified School District Certificates of Participation 21,360,000 17.117% 3,656,191 Moulton Niguel Water District Certificates of Participation 50.905.000 42.531%| 21,650,406 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT 37,176.019
GROSS COMBINED TOTAL DEBT 3) S 40.036.997
(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 2022-2023 Assessed Valuation:
Direct Debt .... 0.00%
Total Direct and Overlapping Tax and Assessment Debt 0.01% Gross Combined Total Debt 0.21%
Source: Avenu Insights & Analytics
109
=
City of Laguna Niguel
Legal Debt Margin Information
Last Ten Fiscal Years
(dollars in thousands)
Legal Debt Margin Calculation for Fiscal Year 2023
Assessed value $ 18,895,080
Debt limit (3.75% of assessed value) 708,565
Debt applicable to limit
Legal debt margin S 708,565
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Debt limit $ 465,041 497,655 525,703 546,443 573,609 597,132 634,984 658,288 675,878 708,565 Debt applicable
to limit - - - - - - - -
Legal debt
margin 465,041 497,655 525,703 546,443 573,609 597,132 634,984 658,288 675,878 708,565 Total debt
applicable to the
limit as a
percentage of
debt limit
Note:
The general laws of the State of California 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.
Source: HdL. Coren & Cone
110
City of Laguna Niguel
Demographic and Economic Statistics
Last Ten Fiscal Years
Median
Fiscal Personal Income Per Capita Taxable Sales Registered Housing Home Unemployment Value d
Year Population " (in thousands) Income Per Capita Voters Rate 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% 2017 66.689 3,337,813 50,050 17,167 37,397 25,884 745.500 3.70% 2018 65,377 3,380,822 51,713 17,167 40,188 25,888 799,250 3.30% 2019 66,748 3,496,077 52,377 17,725 41,080 26,235 795,000 2.80% 2020 65,316 3,654,152 55,946 18,724 45,119 26,236 811,500 2.70% 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% 2023 64.702 4,358,404 67,361 22,902 45,100 27,827 1,200.000 3.10% 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 obtained from HDL. " Data obtained from OC Registrar of Voters.
Data obtained from Hdl, Coren & Cone.
* Data 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
111
City of Laguna Niguel
Principal Employers
Current Year and Nine Years Ago
2023 2014
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment United States Government 3,000 8.72%
Costco Wholesale Corporation (2 locations) 542 1.58% 484 1 1.28% Capistrano Unified School District* 362 3 1.05% 378 2 1.00% Wal-Mart Stores, Inc. 240 4 0.70% 296 3 0.78%
Whole Foods Market 240 0.70% 211 6 0.56%
Mercedes-Benz of Laguna Niguel 210 6 0.61% 240 4 0.63%
The Home Depot 172 0.50% 186 7 0.49%
Albertsons, Inc. (2 locations) 157 8 0.46% 168 8 0.44%
Vons • 150 9 0.44%
Confluent Medical (previously Interface Associates, Inc.) 133 10 0.39% 130 0.34% YMCA 220 5 0.58%
Kohl's Department Stores, Inc. 132 9 0.35%
Total 5,206 15.13% 2,445 6.45%
=
Note
Source: Avenu Insights & Analytics
112
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113
City of Laguna Niguel
Full-Time Equivalent City Government Employees by Function / Program Last Ten Fiscal Years
Fiscal Year
2014 2015 2016 2017 2018
General Government
City Council 1.0 0.5 0.5
City Manager 4.0 3.8 1.8
City Clerk 2.5 3.0 2.0 2.0 2.5
Finance 5.0 5.5 7.0 6.0 6.5
Management Services 2.4 2.4
Public Safety
Police Services 1.0 2.0 2.0 2.0
Emergency Preparedness 0.5 io 1.0 1.0 1.0
Community Development
Administration 4.0 4.0 4.0
Planning 8.2 8.0 9.0
Building and Safety 1.0 1.0 1.0
Community Preservation - -
Public Works
Administration 3.0 2.0 3.3 2.3
Engineering / Water Quality 8.0 6.0 9.0 10.5
Street Maintenance
Median Maintenance
Park Maintenance 3.0 3.0
Slope Maintenance 0.8 0.8
City Hall 1.5 1.5
Parks and Recreation
Administration 2.5 4.0 4.0 3.5
Recreational Programs 11.5 14.0 14.0 13.5
Aquatics 10.0 10. 9 12.0
Skateboard Park 5.0 5.0
Sports -
Sea Country Senior & Community Center 12.0 14.0 11.9 13.0 Totals 86.3 84.8 93.1 96.0 97.5
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
114
City of Laguna Niguel
Full-Time Equivalent City Government Employees by Function / Program (Continued) Last Ten Fiscal Years
Fiscal Year
2019 2020 2021 2022 2023
General Government
City Council 0.5 0.5
City Manager 6.1 6.0
City Clerk 2.0 2.0 2.1 2.6
Finance 6.3 6.0 6.0
Management Services
Public Safety
Police Services 1.5 1.0 1.0 1.0 1.0
Emergency Preparedness 1.0 1.0 10 1.0 1.0
Community Development
Administration 4.1 3.2 3.2 4.1
Planning 9.0 5.1 5.0 5.0
Building and Safety 1.0 -
Community Preservation 2.0 2.8
Public Works
Administration 3.6 5.0 10.6 13.4 11.5
Engineering / Water Quality 11.4 6 -
•9
Street Maintenance 1.0 1.0 1.0
Median Maintenance
Park Maintenance 6.5 4.0
Slope Maintenance -
City Hall 1.5 3.0 3.1 3.4
Parks and Recreation
Administration 4.0 3.7 2.6 2.2
Recreational Programs 16.2 13.2 11.1 12.7
5.4 9.1 7.2 7.6 7 .2
Aquatics
Skateboard Park 5.3 4.7 3:3 4.6 4
Sports 4.3 3.9 4.3 3.9
Sea Country Senior & Community Center 13.2 12.5 4.6 7.6 9.5 Totals 97.3 93.4 76.7 87.6 89.4
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
115
City of Laguna Niguel
Capital Asset Statistics by Function / Program
Last Ten Fiscal Years
2014 2016 2017 2018 2020 2022
Public Safety: '
Patrol motorcycles 4 4 4 4 5
PACT units 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 21 21 21 21 21 21 21 21
Swimming pool 1 1
Skateboard park -- -- --
1 1 1
Baseball/softball diamonds 16 16 16 16 16 16 16 16 16 16 Soccer fields 16 16 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 govemment or community development functions.
The City contracts with the Orange County Sheriff's Department for its police services. The City does not own the patrol cars 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
116
City of Laguna Niguel
Operating Indicators by Function
Last Ten Fiscal Years
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Public Safety:
Police priority one response time (minutes) 5.95 5.95 5.30 5.21 4.51 4.53 4.36 4.40 4.45 5.08 Fire response time (minutes) 6.12 6.24 6.03 6.00 6.09 7.15 7.03 6.53 7.03 6.49 Traffic citations 3,936 3,936 2,719 3,729 4,397 7,029 4,540 4,998 6,778 6,906 Parking citations 2,213 2,449 2,975 3,405 3,747 3,099 2,203 2,836 3,922 4,016 C Premily Development: 2,914 3,406 3,755 4,139 3,735 4,106 3,105 3,258 3,665 3,798 Public Works:
Streets - miles resurfaced 5.5 12.7 2.7 10.4 37.2 0.6 2.1 7.2 0.8 10.5 Sources:
Orange County Fire Authority
Orange County Sheriff's Department
Data Ticket
Public Works Department
Community Development Department
117
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118
ATTACHMENT B
Independent Accountants' Report on Agreed-Upon
Procedures Applied to Appropriations Limit for
Fiscal Year 2022-2023
DavisFarr Davis Farr LLP
8201 Von Karman Avenue | Suite 1100 | Irvine, CA 926
lain: 949.474.2020 | Fax: 949.263.552
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT ACCOUNTANT'S REPORT
The Honorable Mayor and City Council
City of Laguna Niguel, California
We have performed the procedures enumerated below on the City of Laguna Niguel, california (City) appropriations limit worksheets for compliance with the requirements o Section 1.5 of Article XIIIB of the California Constitution for the year ended June 30, 2023 The City is responsible for compliance with Section 1.5 of Article XIIIB of the California Constitution.
The City has agreed to and acknowledged that these procedures are appropriate to meet the intended purpose of evaluating compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution and the League of California Cities publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines for the year ended June 30, 2023. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not . uh, Use are response a 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 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.
Dan's fare . LLP
Irvine, California
December 22, 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 Team, and eve other city employe reported to sae cly for the crease a eure June 30, 2023. 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, 2022 through June 30, 2023. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their 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, Memorandm or understandines and alare amendments engineerin of July 1, 2022 to June 30, 2023.
As of June 30, 2023, 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 Human Resources Manager
Public Works Director Engineering Services Manager
Development Services Manager
Maintenance Services Manager
City of Laguna Niguel
Laguna Niguel, California
The additional five employees selected for review are noted below:
Management Analyst Landscape Maintenance Inspector
Code Compliance Inspector Building Facilities Supervisor Engineer Technician
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 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.
Davis Far LLP
Irvine, California
December 22, 2023
ATTACHMENT D
Independent Accountants' Report on Agreed-Upon
Procedures Applied to Selected Cash Receipts of the City of Laguna Niguel
§ DavisFarr Davis Farr LLP
3201 Von Karman Avenue | Suite 1100 | Irvine, CA 926'
lain: 949.474.2020 | Fax: 949.263.552
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT ACCOUNTANT'S REPORT ON AGREED UPON PROCEDURES
APPLIED TO SELECTED CASH RECEIPTS 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 City") responsibility for cash receipts and ensuring they are processed in accordance with he City's internal control policies and procedures for the fiscal year ending June 30, 2023.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of evaluating compliance with the City's internal control policies and procedures for the year ended June 30, 2023. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures performed, and the results of those procedures, are as follows:
1. We obtained an understanding of the City locations that accept revenue. Using the general ledger, we selected 30 revenue transactions that covered all locations and pertained to a variety of fees that are charged by the City. For the revenue transactions selected, we also obtained the City's appropriate fee schedules related to those transactions.
Results: No exceptions were noted as a result of our procedures.
2. For the 30 revenue transactions selected, we obtained the supporting documentation for each of the selected revenue transactions and evaluated the selected transactions for the following:
a. Documentation supports the fees charged.
b. Fees charged agrees to the approved fee schedule.
c. Fees charged are appropriate and reasonable.
Results: No exceptions were noted as a result of our procedures.
3. We selected a sample of daily cash receipt reconciliations for each of the locations that accept revenues. These daily reconciliations were reviewed for any variances between the revenues per that day's revenue summary and the amount deposited. For those selected daily reconciliations, we also compared the amount deposited per the daily reconciliation to the amount recorded in the bank statement.
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 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 to you.
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 management of the City and is not intended to be and should not be used by another other than the specified party.
Davis Far LLP
Irvine, California
December 22, 2023
ATTACHMENT E
Independent Accountants' Report on Agreed-Upon
Procedures Applied to Check Sequences and Cancelled
Checks of the City of Laguna Niguel
§ DavisFarr Davis Farr LLP
8201 Von Karman Avenue | Suite 1100 | Irvine, CA 9261
CERTIFIED PUBLIC ACCOUNTANTS lain: 949.474.2020 | Fax: 949.263.552
INDEPENDENT ACCOUNTANT'S REPORT ON AGREED-UPON PROCEDURES
APPLIED TO CHECK SEQUENCES AND CANCELLED CHECKS
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 ("City") responsibility for check sequencing and cancelled checks and the procedures impacting these areas comply with the City's internal control policies and procedures for the fiscal year ending June 30, 2023.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of evaluating compliance with the City's internal control policies and procedures as it relates to check sequencing and cancelled checks for the year ended June 30, 2023. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures performed, and the results of those procedures, are as follows:
1. We obtained the City's check registers for the fiscal year ended June 30, 2023. Using data mining software, we tested the check numbers on these check registers for any breaks in sequencing. We also used data mining software to identify any duplicate check numbers reflected in the check registers.
Results: As a result of our procedures, we identified gaps in check sequencing within the provided check register for the fiscal year ended June 30, 2023. Extending our testing, we noted that the break in sequencing is due to the check register containing checks that were issued in the fiscal year ended June 30, 2022 but that were voided in the normal course of business in the fiscal year ended June 30, 2023. We obtained the check register for the fiscal year ended June 30, 2022, and verified existence of these checks in the check register. Therefore, we did not note a break in sequencing for checks issued within fiscal year 2023. There were no duplicate check numbers reflected in the check register. No exceptions noted as a result of our procedures.
2. We obtained the bank statements for the City's main checking account for the period under review. Using data mining software, we compared the checks (check number and check amount) that cleared the bank per the bank statements to the checks (check number and check amount) that were in the check registers.
Results: No exceptions were noted as a result of our procedures.
City of Laguna Niguel
Laguna Niguel, California
3. We reviewed the City's unused check stock on hand for any gaps in sequencing. For any gaps noted we inquired as to cause for each of the noted gaps and assessed each of the causes for appropriateness.
Results: No exceptions were noted as a result of our procedures.
4. We selected a sample of 25 cash disbursements from the check registers using a random number generator. For those 25 transactions, we performed the following:
a. Obtained the cancelled check and matched the entry to the bank statement.
D. Compared the payee, the check number, check date, and amount on the cancelled check to the corresponding information in the check register.
Results: From our sample selection, we noted one check that has not yet been cashed.
As such, no testing was performed on this check. 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 AICPA. 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 to you.
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 management of the City and is not intended to be and should not be used by another other than the specified party.
Davie Far LLP
Irvine, California
December 22, 2023