050322-C-7sr&att.pdf — Long Beach City Council, May 3, 2022 (part 2 of 3)

Proceeds from the Sale of Investments - - 1,322 - 177 - 1,499 Payments of Interest (387) 46 (1) 13 28 - (301) Net Cash Provided by (Used for) Investing Activities (387) 46 1,321 13 205 - 1,198 Net Increase (Decrease) in Cash and Cash Equivalents (27,789) 1,218 6,017 (1,433) 19,869 - (2,118) Cash and Cash Equivalents - October 1 113,797 5,242 33,246 4,167 14,616 - 171,068 Cash and Cash Equivalents - September 30 86,008$ 6,460$ 39,263$ 2,734$ 34,485$ -$ 168,950$ RECONCILIATION OF OPERATING Aquarium Eliminations
INCOME TO NET CASH PROVIDED BY Tideland Tideland Queen of the Increase (USED FOR) OPERATING ACTIVITIES Operating Parking Marin a Mary Pacific (Decrease) Total Operating Income (Loss) (25,731)$ 3,574$ 2,954$ (2,100)$ 12,705$ -$ (8,598)$ Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities:

Depreciation and Amortization Expense 9,989 1,706 6,508 421 3,222 - 21,846 Other Income 5,962 - 1,704 791 - - 8,457 Other Expense (865) (1,775) (14) (2) (497) - (3,153) (Increase) Decrease in Accounts Receivable, Net S (7,572) (41) 115 (605) - - (8,103) (Increase) Decrease in Amounts Due from Other Funds 2,596 900 1,145 150 4,692 - 9,483 Decrease in Amounts Due from Other Governments (135) (806) (50) - - - (991) Increase (Decrease) in Accounts Payable S (4,734) (208) (98) 346 - - (4,694) Increase (Decrease) in Accrued Wages Payable (7,386) (5) (2,958) - - - (10,349) Increase (Decrease) in Amounts Due to Other Funds (4,545) 9 (37) (1) - - (4,574) Increase in Unearned Revenues (69) - 123 - - - 54 Increase (Decrease) in Collections Held in Trust t 14 - 138 - - - 152 Total Adjustments (6,745) (220) 6,576 1,100 7,417 - 8,128 Net Cash Provided by (Used for) Operating Activities (32,476)$ 3,354$ 9,530$ (1,000)$ 20,122$ -$ (470)$

NON-CASH INVESTING, CAPITAL
AND FINANCING ACTIVITIES:

Amortization of Deferred Outflows on Debt Refunding g 44$ -$ -$ -$ (485)$ -$ (441)$ Amortization of Bond Premium (Discount), Net (575) - 278 - 778 - 481 City of Long Beach
Tidelands Operating Fund
Combining Schedule of Cash Flows
For the Fiscal Year Ended September 30, 2021
(In Thousands)
Cash Flows from Capital and Related Financing Activities:

Fleet Fleet Adjustments Total
Fleet Vehicle Debt Fleet an d Fleet Service
Operations Acquisitions Service Othe r Eliminations Fun d ASSETS
Current Assets:

Pooled Cash and Cash Equivalents 2,509$ 44,723 $ 125$ 5,840 $ -$ 53,197$ Receivables:

Accounts Receivable 31 - - - - 31 Due from Other Governments - - - 30 - 30 Due from Other Funds 549 6,880 - - (6,816) 613 Allowance for Receivables (24) - - - - (24) Inventory 3,119 - - - - 3,119 Total Current Assets 6,184 51,603 125 5,870 (6,816) 56,966 Noncurrent Assets:

Capital Assets:

Capital Assets Net of Accumulated Depreciation 67,251 - - - - 67,251 Other NonCurrent Assets - 1,600 - - - 1,600 Total Noncurrent Assets 67,251 1,600 - - - 68,851 Total Assets 73,435 53,203 125 5,870 (6,816) 125,817

DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows of Resources 1,596 - 793 - - 2,389

LIABILITIES
Current Liabilities Payable from Current Assets:

Accounts Payable 1,566 2,901 - 407 - 4,874 Accrued Wages and Benefits 261 45 - - - 306 Accrued Interest Payable - 5 121 - - 126 Due to Other Funds 7,084 47 - - (6,816) 315 Compensated Absences 824 - - - - 824 Environmental Remediation - Current 175 - - - - 175 Obligations Under Capital Leases - Current - 1,637 - - - 1,637 Bonds Payable Due Within One Year - - 1,612 - - 1,612 Total Current Liabilities 9,910 4,635 1,733 407 (6,816) 9,869 Noncurrent Liabilities:

Environmental Remediation 725 - - - - 725 Obligations Under Capital Lease - 4,423 - - - 4,423 Bonds Payable - - 16,340 - - 16,340 Compensated Absences and Accrued Employee Benefits 2,143 - - - - 2,143 OPEB Liability 126 - - - - 126 Net Pension Liability 6,777 - - - - 6,777 Total Noncurrent Liabilities 9,771 4,423 16,340 - - 30,534 Total Liabilities 19,681 9,058 18,073 407 (6,816) 40,403

DEFERRED INFLOWS OF RESOURCES
Deferred Inflows of Resources 6,534 - - - - 6,534

NET POSITION (DEFICIT)
Net Investment in Capital Assets 67,251 (6,060) (17,952) - - 43,239 Unrestricted (18,435) 50,205 797 5,463 - 38,030 Total Net Position (Deficit) 48,816$ 44,145$ (17,155)$ 5,463$ -$ 81,269$ City of Long Beach
Fleet Services Fund
Combining Schedule of Net Position (Deficit)
September 30, 2021
(In Thousands)
170
See accompanying Independent Auditors’ Report
Fleet Fleet Adjustments Total
Fleet Vehicle Debt Flee t and Fleet Service
Operations Acquisitions Service Othe r Eliminations Fund Operating Revenues:

Billing to Other Departments 24,817$ 16,013$ -$ 709$ -$ 41,539$ Other 337 5 - 30 - 372 Total Operating Revenues 25,154 16,018 - 739 - 41,911 Operating Expenses:

Personnel Services 5,977 1,184 - - - 7,161 Maintenance and Other Operations 2,161 13,527 - 560 - 16,248 Depreciation 12,532 - - - - 12,532 Total Operating Expenses 20,670 14,711 - 560 - 35,941 Operating Income (Loss) 4,484 1,307 - 179 - 5,970 Non-Operating Income (Expenses):

Interest Income - - 201 - - 201 Interest Expense (1,250) (128) - - - (1,378) Gain (Loss) on Disposition of Capital Assets (46) 954 - - - 908 Other Income 1,443 - 1,542 - - 2,985 Other Expense (1,542) (715) - - - (2,257) Total Non-Operating Income (Expenses) (1,395) 111 1,743 - - 459 Income (Loss) Before Contributions
and Transfers 3,089 1,418 1,743 179 - 6,429 Transfers:

Transfers In 1,346 - - - (600) 746 Transfers Out - (600) - - 600 - Change in Net Position 4,435 818 1,743 179 - 7,175 Net Position (Deficit) - October 1 44,381 43,327 (18,898) 5,284 - 74,094 Net Position (Deficit) - September 30 48,816$ 44,145$ (17,155) $ 5,463 $ -$ 81,269$ City of Long Beach
Fleet Service Funds
Combining Schedule of Revenues, Expenses, and Changes in Fund Net Position (Deficit) For the Fiscal Year Ended September 30, 2021
(In Thousands)
170
Fleet Fleet Adjustments Total
Fleet Vehicle Debt Flee t and Fleet Service
Operations Acquisitions Service Othe r Eliminations Fund Operating Revenues:

Billing to Other Departments 24,817$ 16,013$ -$ 709$ -$ 41,539$ Other 337 5 - 30 - 372 Total Operating Revenues 25,154 16,018 - 739 - 41,911 Operating Expenses:

STATISTICAL

SECTION
171
Contents Page
Financial Trends
Net Position by Component - Last Ten Fiscal Years 173
Change in Net Position - Last Ten Fiscal Years 174
Fund Balances of Governmental Funds - Last Ten Fiscal Years 176 Change in Fund Balances of Governmental Funds - Last Ten Fiscal Years 177 Governmental Funds Tax Revenues by Source - Last Ten Fiscal Years 178 Revenue Capacity
These schedules contain information to help the reader assess the City's most significant local revenue sources.

Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 179 Property Tax Rates - All Overlapping Governments Per $100 of Assessed Value - Last Ten Fiscal Years 180 Principal Property Taxpayers - Current Year and Nine Fiscal Years ago 181 Property Tax Levies and Collections - Last Ten Fiscal Years 182 Debt Capacity
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 183 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years 184 Schedule of Direct and Overlapping Debt - As of September 30, 2021 185 Legal Debt Margin Information - Last Ten Fiscal Years 186 Pledged Revenue Coverage - Gas Fund Revenue Bond - Last Ten Fiscal Years 187 Pledged Revenue Coverage - Water Fund Revenue Bond - Last Ten Fiscal Years 187 Pledged Revenue Coverage - Airport Fund Revenue Bond - Last Ten Fiscal Years 188 Pledged Revenue Coverage - Temple Willow Revenue Bond - Last Ten Fiscal Years 188 Pledged Revenue Coverage - Marina Revenue Bond - Last Ten Fiscal Years 188 Pledged Revenue Coverage - Tidelands Operating Segment Revenue Bond - Last Ten Fiscal Years 189 Pledged Revenue Coverage - Harbor Fund Revenue Bond - Last Ten Fiscal Years 189 Demographic Statistics - Last Ten Fiscal Years 190
Principal Employers - Current Year and Nine Years ago 191 Operating Information
Full time Equivalent City Government Employees by Function - Last Ten Fiscal Years 193 Operating Indicators by Function - Last Ten Fiscal Years 194 Capital Asset Statistics by Function - Last Ten Fiscal Years 196 Sources: Unless otherwise noted, the informatio n in these schedules is derive d from the annual comprehensive financial reports for the relevant fiscal year.

STATISTICAL SECTION
The Statistical Section is included to provide financial statement users with additional historical perspective, context, and detail for use in evaluating the information contained with the financial statements, notes to the financial statements, and required supplementary information with the goal of providing the user a better understanding of the City's economic condition.

These schedules contain information to help the reader understand how the City's financial performance and well-being have changed over time.

These schedules contain informatio n to help the reader assess the affordabilit y of the City' s current levels of outstanding debt and the City's ability to issue additional debt in the future.

These schedules offer demographic and economic indicators to help the reader understand the environmen t within which the City's financial activities take place.

These schedules contain service and infrastructure data to help the reader understand how the informatio n in the City's financial statements relates to the services that the City provides and the activities that it performs.

Demographics and Economic Information
172

Intentionally Left Blank

172 173
See accompanying Independent Auditors’ Report
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Governmental activities:

Net Investment in Capital Assets 237,998$ 242,105$ 245,780$ 344,839$ 346,224$ 361,370$ 377,098$ 418,191$ 432,090$ 452,155$ Restricted 470,723 458,167 473,181 351,055 393,588 397,204 403,557 428,903 442,908 475,699 Unrestricted (100,337) (61,528) (53,167) (595,857) (610,409) (716,979) (761,817) (844,483) (833,911) (655,868) Total governmental
activities net position 608,384 638,744 665,794 100,037 129,403 41,595 18,838 2,611 41,087 271,986 Business-type activities:

Net Investment in Capital Assets 2,769,461 3,547,110 3,698,447 3,829,779 4,229,484 4,229,484 4,477,724 4,604,194 4,707,630 4,727,066 Restricted 289,864 297,694 439,163 494,526 323,827 323,827 298,613 297,552 312,076 326,665 Unrestricted 787,926 399,890 418,151 237,808 160,569 160,569 272,494 338,972 320,382 487,398 Total business-type
activities net position 3,847,251 4,244,694 4,555,761 4,562,113 4,713,880 4,713,880 5,048,831 5,240,718 5,340,088 5,541,129 Primary government:

Net Investment in Capital Assets 3,007,459 3,789,215 3,944,227 4,174,618 4,575,708 4,590,854 4,854,822 5,022,385 5,139,720 5,179,221 Restricted 760,587 755,861 912,344 845,581 717,415 721,031 702,170 726,455 754,984 802,364 Unrestricted 687,589 338,362 364,984 (358,049) (449,840) (556,410) (489,323) (505,511) (513,529) (168,470) Total primary government
net position 4,455,635$ 4,883,438 $ 5,221,555 $ 4,662,150 $ 4,843,283 $ 4,755,475 $ 5,067,669 $ 5,243,329$ 5,381,175$ 5,813,115$ 5,813,115$
-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ prior year change to ck input amts 4,455,635$ 4,883,438$ 5,221,555$ 4,662,150$ 4,843,283$ 4,755,475$ 5,067,669$ 5,243,329$ 5,381,175$ 5,813,115$ -$ -$ -$ 0 (3,547,110) (3,698,447)
0 (3,547,110) (3,698,447)
Check digit s/b zero for current year.
also check to net asset statement
City of Long Beach
Net Position by Component
Last Ten Fiscal Years
(Accrual basis of accounting)
(In Thousands)
-
1,000
2,000
3,000
4,000
5,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
$ in Thousands
Fiscal Year
Net Assets
General Fund and All Other Governmental Funds
2012-2021
Total governmental activities net position Total business-type activities net position Total primary government net position 174
See accompanying Independent Auditors’ Report
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Expenses:

Governmental Activities:

Legislative and Legal 10,998$ 10,957$ 12,001$ 10,632$ 11,814$ 13,343$ 13,025$ 15,245$ 13,155$ 13,058$ General Government 22,128 23,342 21,378 22,400 23,869 29,718 29,189 43,637 40,408 36,564 Public Safety 290,542 303,872 296,817 307,116 344,358 402,361 409,632 430,512 389,489 311,933 Public Health 42,712 41,966 41,877 43,710 46,150 49,688 53,045 57,729 71,880 60,016 Community and Cultural 331,170 173,239 153,206 165,501 155,792 173,637 167,624 183,825 190,370 217,381 Public Works 92,058 102,979 114,303 104,744 103,772 123,268 139,209 171,927 136,067 163,203 Oil Operations 9,256 7,101 4,869 3,961 6,466 9,694 3,755 3,777 1,775 3,679 Interest on Long-Term Debt 28,492 26,941 24,945 22,738 19,104 19,120 17,916 17,473 19,055 19,781 Total Governmental Activities
Expenses 827,356 690,397 669,396 680,802 711,325 820,829 833,395 924,125 862,199 825,615 Business-type Activities:

Gas Utility 77,157 82,693 80,651 68,414 66,896 80,680 83,276 110,991 94,835 83,900 Water Utility 81,377 89,767 93,297 102,501 93,959 96,082 98,204 95,970 111,219 93,075 Tidelands Operating 100,602 96,881 111,074 121,547 107,313 126,123 130,796 124,283 143,249 110,419 Harbor 193,773 195,335 233,410 236,186 307,546 298,756 298,441 309,722 327,081 336,106 Tideland Oil Revenue 390,602 362,144 327,087 81,565 70,949 93,200 101,495 101,872 30,436 84,298 Sewer 15,042 15,542 15,681 16,244 16,151 16,766 15,476 15,375 18,819 14,973 Airport 41,764 41,616 44,067 44,844 47,686 51,917 56,540 55,739 58,627 51,655 Development Services 11,617 15,404 15,753 17,621 20,281 25,907 28,700 27,223 28,928 22,505 Solid Waste Management 69,506 71,708 76,027 73,525 72,745 76,332 88,831 88,967 90,197 76,048 Towing 6,743 5,915 4,938 5,134 5,815 5,524 6,518 6,402 5,421 4,557 Subsidence 5 3 - - - - - - - 287 Total Business-Type Activities
Expenses 988,188 977,008 1,001,985 767,581 809,341 871,287 883,484 936,544 908,812 877,823 Total Primary Government
Expenses 1,815,544 1,667,405 1,671,381 1,448,383 1,520,666 1,692,116 1,716,879 1,860,669 1,771,011 1,703,438 Program Revenues:

Governmental Activities:

Charges for services:

Legislative and Legal 714 61 163 224 1,804 52 481 34 558 18 General Government 17,521 16,093 16,459 16,545 17,955 17,981 17,727 16,473 16,182 15,729 Public Safety 34,617 32,371 34,659 38,961 38,050 34,995 43,536 50,961 50,198 49,116 Public Health 9,538 11,856 8,498 8,178 7,284 8,052 8,550 10,232 9,826 7,471 Community and Cultural 13,978 14,656 12,168 15,084 17,051 25,801 21,980 35,649 32,599 34,452 Public Works 26,876 25,011 25,963 25,246 27,949 29,875 32,208 43,283 38,123 32,872 Oil Operations 39,156 39,869 36,942 19,414 10,900 12,176 16,060 14,926 9,743 11,190 Operating Grants and Contributions 175,647 171,937 183,789 164,621 170,614 176,643 187,038 167,793 200,489 352,336 Capital Grants and Contributions 6,147 10,778 8,530 3,780 2,085 12,286 10,739 67,976 65,232 76,033 Total Governmental Activities
Program Revenues 324,194$ 322,632$ 327,171$ 292,053$ 293,692$ 317,861$ 338,319$ 407,327$ 422,950$ 579,217$ (continued)
City of Long Beach
Change in Net Position
Last Ten Fiscal Years
(Accrual basis of accounting)
(In Thousands)
174 175
See accompanying Independent Auditors’ Report
City of Long Beach
Change in Net Position
Last Ten Fiscal Years
(Accrual basis of accounting)
(In Thousands)
(continued)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Business-Type activities:

Charges for Services:

Gas Utility 83,633$ 87,141$ 82,293$ 77,398$ 79,826$ 97,033$ 92,109$ 120,562$ 103,869$ 112,277$ Water Utility 87,073 93,036 101,345 101,158 98,677 100,761 104,701 102,474 116,071 122,089 Tidelands Operating 56,726 59,929 64,318 67,894 67,205 76,352 77,734 80,594 72,467 99,458 Harbor 333,887 346,244 362,752 363,309 363,343 388,834 406,420 415,321 399,841 440,340 Tideland Oil Revenue 452,863 397,301 362,783 99,401 53,630 81,989 124,721 117,528 59,385 99,144 Sewer 17,325 17,311 17,954 17,904 17,904 19,964 19,964 19,750 19,200 19,613 Airport 43,893 43,817 44,811 36,537 36,537 49,607 49,607 46,997 31,034 30,899 Development Services 13,812 17,546 17,573 20,783 20,783 31,039 31,039 30,803 24,293 18,670 Solid Waste Management 78,613 79,542 81,051 80,322 80,322 82,848 82,848 79,627 86,034 82,722 Towing 6,583 6,445 5,440 5,253 5,253 5,310 5,310 5,885 4,583 6,140 Subsidence - - - - - - - 499 499 500 Operating Grants and Contributions 1,413 1,105 921 753 758 976 2,768 932 3,394 160 Capital Grants and Contributions 26,552 259,188 182,021 140,618 150,510 83,681 99,586 96,660 80,020 40,099 Total Business-Type Activities
Program Revenues 1,202,373 1,408,605 1,323,262 1,011,330 976,247 1,018,394 1,088,141 1,117,632 1,000,690 1,072,111 Total Primary Government
Program Revenues 1,526,567 1,731,237 1,650,433 1,303,383 1,269,939 1,336,255 1,426,460 1,524,959 1,423,640 1,651,328 Net Revenues (expenses):

Governmental Activities (503,162) (367,765) (342,225) (388,749) (417,633) (502,968) (495,076) (516,798) (439,249) (246,398) Business-Type Activities 214,185 431,597 321,277 243,749 166,906 147,107 204,657 181,088 91,878 194,288 Total Net Expenses (288,977) 63,832 (20,948) (145,000) (250,727) (355,861) (290,419) (335,710) (347,371) (52,110) General Revenues and Other Changes in Net Position:

Governmental Activities:

Taxes:

Property 179,746 203,770 183,719 180,989 200,766 191,514 199,576 211,007 220,665 225,820 Sales 60,414 63,443 59,097 64,177 67,658 99,528 133,523 138,598 129,095 150,887 Utility Users 37,097 38,026 38,691 38,419 37,079 35,858 36,639 34,898 33,767 38,546 Other 43,360 46,446 41,504 45,517 47,746 46,837 51,558 51,066 39,449 40,098 Franchise Taxes 23,143 25,243 26,175 25,915 24,911 25,912 20,308 18,126 16,481 23,734 Grants and Contributions not
Restricted to Specific Programs - 150 - - - - - - - - Unrestricted Investment Earnings 4,349 3,417 3,688 6,061 13,182 3,581 4,761 14,172 11,426 3,496 Gain (Loss) on Sales of Capital Assets - - - - - - - - (2) - Capital Asset Transfers 5,090 4,786 2,365 - - - - - (37) - Transfers 15,628 21,490 14,210 21,661 16,855 11,930 25,954 32,704 26,881 (5,284) Total Governmental Activities 368,827 406,771 369,449 382,739 408,197 415,160 472,319 500,571 477,725 477,297 Business-type Activities:

Unrestricted Investment Earnings 6,903 5,557 6,365 8,887 10,802 7,714 13,357 43,503 34,336 1,469 Loss on Sales of Capital Assets - - - - - - - - - - Capital Asset Transfers (5,090) (4,786) (2,365) - - - - - 37 - Transfers (15,628) (21,490) (14,210) (21,661) (16,855) (11,930) (25,954) (32,704) (26,881) 5,284 Total Business-type Activities (13,815) (20,719) (10,210) (12,774) (6,053) (4,216) (12,597) 10,799 7,492 6,753 Total Primary Government 355,012 386,052 359,239 369,965 402,144 410,944 459,722 511,370 485,217 484,050 Change in Net Position
Government activities (134,335) 39,006 27,224 (6,010) (9,436) (87,808) (22,757) (16,227) 38,476 230,899 Business-type Activities 200,370 410,878 311,067 230,975 160,853 142,891 192,060 191,887 99,370 201,041 Total Primary Government 66,035$ 449,884$ 338,291$ 224,965$ 151,417$ 55,083$ 169,303$ 175,660$ 137,846$ 431,940$ 176
See accompanying Independent Auditors’ Report

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General Fund:

Nonspendable 2,008$ 2,043$ 6$ 2$ 102$ 500$ 1,375$ 1,424$ 1,503$ 2,127$ Restricted 2,929 2,311 4,266 4,308 4,498 4,469 4,807 5,009 5,864 2,836 Committed 5,394 5,711 61,079 62,598 63,568 64,539 67,640 69,440 50,708 76,543 Assigned 61,935 119,542 49,531 42,953 38,482 31,947 59,463 50,495 75,789 107,658 Unassigned 4,857 8,130 3,397 2,170 3,934 1,926 3,072 138 2,066 (16,483) Total General Fund 77,123 137,737 118,279 112,031 110,584 103,381 136,357 126,506 135,930 172,681 Other Governmental Funds:

Nonspendable 45 8,009 8,012 2,846 2,577 2,613 1,324 2,406 2,377 2,416 Restricted 320,310 293,567 289,497 173,096 173,562 180,084 174,541 199,781 201,777 219,947 Committed 1,362 1,362 1,362 1,422 1,422 1,414 1,414 1,414 1,414 1,414 Assigned 10,791 24,433 36,476 39,197 26,710 36,582 37,067 57,443 65,823 94,482 Unassigned (32,643) (30,112) (17,646) (11,819) - - - - - - Total Other Governmental Funds 299,865 297,259 317,701 204,742 204,271 220,693 214,346 261,044 271,391 318,259 Total All Governmental Funds 376,988$ 434,996$ 435,980$ 316,773$ 314,855$ 324,074$ 350,703$ 387,550$ 407,321$ 490,940$ (In Thousands)
City of Long Beach
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified accrual basis of accounting)
-
100,000
200,000
300,000
400,000
500,000
600,000
2012 2013 2014 2015 2008 2017 2018 2019 2020 2021
$ in Thousands
Fiscal Year
Governmental Fund Balance
General Fund and All Other Governmental Funds
2012-2021
Total Fund Balance General Fund Other Governmental Funds 176 177
See accompanying Independent Auditors’ Report
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Revenues:

Taxes:

Property 181,041$ 214,816$ 183,885$ 179,999$ 201,207$ 191,808$ 199,336$ 210,656$ 220,665$ 226,143$ Sales 60,414 63,443 59,097 64,177 67,658 99,528 133,523 138,598 129,095 150,887 Utility Users 37,097 38,026 38,691 38,419 37,079 35,858 36,639 34,898 33,767 38,546 Other Taxes 43,360 46,446 41,504 45,517 47,746 46,837 51,558 51,066 39,449 40,098 Franchise Fees 23,143 25,243 26,175 25,915 24,911 25,912 20,308 18,126 16,481 23,734 Licenses and Permits 24,278 19,941 22,341 23,329 25,456 24,926 26,076 42,728 48,803 47,010 Fines and Forfeitures 17,762 16,394 16,166 15,988 16,292 16,184 15,946 17,674 16,354 14,395 Use of Money and Property 58,398 58,441 56,687 41,816 40,991 33,815 39,419 48,033 39,543 33,846 From Other Agencies 184,470 181,039 191,423 166,988 170,780 187,872 197,570 235,841 290,748 428,457 Charges for Services 28,586 28,292 29,042 28,428 29,482 33,533 41,034 46,987 44,621 41,676 Other Contributions - 1,385 341 556 249 194 137 - - - Other 19,544 18,577 10,693 17,615 13,167 19,907 17,599 19,944 10,236 11,444 Total Revenues 678,093 712,043 676,045 648,747 675,018 716,374 779,145 864,551 889,762 1,056,236 Expenditures:

Legislative and Legal 10,316 9,673 11,373 9,604 11,420 11,522 13,378 13,458 13,108 16,537 General Government 17,441 17,785 17,951 18,116 21,793 23,285 25,426 39,002 40,577 41,833 Public Safety 285,807 288,979 300,519 297,901 307,065 353,456 360,879 383,222 369,052 423,769 Public Health 41,449 39,297 41,273 42,108 42,819 44,530 47,658 52,487 69,773 94,751 Community and Cultural 289,597 185,378 158,122 237,433 152,005 160,985 173,542 180,390 188,806 222,778 Public Works 60,368 65,484 66,498 70,921 74,580 73,103 82,450 71,989 61,459 67,115 Oil Operations 9,146 4,722 4,309 3,512 2,352 2,563 2,945 2,774 2,572 2,446 Total Current Expenditures 714,124 611,318 600,045 679,595 612,034 669,444 706,278 743,322 745,347 869,229 Capital Improvements 17,183 26,199 36,427 27,139 38,629 45,693 47,935 90,370 73,355 102,712 Loss on Disposition of Land
79,111 - - - - - - - - - Debt Service:

Principal 14,379 16,358 18,836 18,601 18,717 20,564 28,439 23,356 20,072 22,159 Interest 23,298 23,776 21,044 22,499 16,763 16,156 15,361 14,155 13,679 11,970 Debt Administration Fees 494 542 57 178 434 90 29 27 24 26 Total Expenditures 848,589 678,193 676,409 748,012 686,577 751,947 798,042 871,230 852,477 1,006,096 (Deficiency) of Revenues
over (under) Expenditures (170,496) 33,850 (364) (99,265) (11,559) (35,573) (18,897) (6,679) 37,285 50,140 Other Financing Sources (Uses):

Proceeds from Sale of Capital Asset - - - - - - - - 11,062 1,539 Debt Issuance 753 54,186 1,012 155,820 13,150 - 2,306 26,458 - 19,765 Premium (Discount) on Debt Issuance - - - 6,700 1,045 - - - - 4,170 Payment to Refunded Bond
- (57,611) - (179,330) - - - (15,020) - (26,300) Reconveyance of Land - - - - - - - - - - Cost of Issuance - - - (1,505) - - - (411) - (410) Land Transfers - - - - - - - - - - Transfers In 409,802 114,615 106,128 91,363 60,641 104,983 125,473 130,312 126,196 228,486 Transfers Out (392,317) (87,032) (105,577) (92,990) (65,195) (60,191) (82,253) (97,813) (154,772) (193,771) Total Other Financing Sources 18,238 24,158 1,563 (19,942) 9,641 44,792 45,526 43,526 (17,514) 33,479 Net Change in Fund Balances (152,258)$ 58,008$ 1,199$ (119,207)$ (1,918)$ 9,219$ 26,629 $ 36,847$ 19,771$ 83,619$ Debt Service as a Percentage of

4.5% 6.1% 6.0% 5.6% 5.4% 5.0% 5.6% 4.4% 4.0% 3.5%
City of Long Beach
Change in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified accrual basis of accounting)
(In Thousands)
(Principle + Interest )
(Total Expenditures - Capital Outlay)Debt Service as a Percentage of Noncapital Expenditures calculated as follows:

Held for Resale
Escrow Agent
Noncapital Expenditures
178
See accompanying Independent Auditors’ Report
Fiscal Sales Oil Utilit y Business Transien t
Year-end Propert y and Use Productio n Users License Lodging Other (1) (1) Taxes Taxes Taxes Taxes Taxes Taxes Taxes Totals
2012 179,746$ 60,414$ 5,259$ 37,097$ 11,537$ 17,759$ 8,805$ 320,617$ 2013 203,770 63,443 5,301 38,026 11,981 19,451 9,713 351,685 2014 183,719 59,097 5,653 38,691 11,862 21,265 2,724 323,011 2015 180,989 64,177 5,787 38,419 12,934 23,999 2,798 329,103 2016 200,766 67,658 5,582 37,079 12,512 26,382 3,271 353,250 2017 191,514 99,528 5,129 35,858 12,501 25,935 3,272 373,737 2018 199,336 133,523 5,026 36,639 12,940 30,612 2,980 421,056 2019 210,656 138,598 4,841 34,898 13,855 28,758 3,612 435,218 2020 220,665 129,095 4,473 33,767 12,351 20,914 1,711 422,976 2021 226,143 150,887 4,327 38,546 12,756 20,324 2,691 455,674 Notes:
(1)
Source: City of Long Beach, Department of Financial Management.

City of Long Beach
Governmental Funds Tax Revenues by Source
Last Ten Fiscal Years
(Modified accrual basis of accounting)
(In Thousands)
Includes Real Property Transfer, Special Parking, Miscellaneous Taxes, and transfers from funds in lieu of taxes. Tax revenues by source include all Governmental Fund Types (General, Special Revenue, Debt Service Funds, Capital Projects Funds, and Successor Agency Funds), including property tax for the former Long Beach Redevelopment Agency in accordance with generally accepted accounting principles.
$0
$60,000
$120,000
$180,000
$240,000
$300,000
$360,000
$420,000
$480,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Tax Revenues by Source
Property Taxes Sales and Use Oil Production Utility Users Business License Transient Lodging Other 178 179
See accompanying Independent Auditors’ Report
Taxable Total
Fiscal Less: Assesse d Direct Tax
Year-end Secured Unsecured Exem ptions Value Rate
2012 42,641,685$ 2,780,087$ (1,318,100)$ 44,103,672$ 1.00% 2013 45,184,614 2,767,496 (1,025,398) 46,926,712 1.00% 2014 47,768,304 2,730,192 (1,630,080) 48,868,416 1.00% 2015 48,648,554 3,029,600 (1,572,403) 50,105,751 1.00% 2016 49,939,578 2,959,078 (1,424,373) 51,474,283 1.00% 2017 52,481,371 3,180,877 (1,618,510) 54,043,738 1.00% 2018 55,394,865 3,239,627 (1,580,969) 57,053,523 1.00% 2019 58,432,448 3,456,685 (1,690,820) 60,198,313 1.00% 2020 61,781,691 3,663,861 (1,967,621) 63,477,931 1.00% 2021 64,097,021 3,476,338 (1,852,455) 65,720,904 1.00% Source: Los Angeles County Office of Assessor
In 1978, California voters passed Proposition 13 which set the property tax rate at a 1% fixed amount. Valuations of real property are frozen at the value of the property in 1975, with an allowable adjustment up to 2% per year for inflation. However, property is reassessed to its current value when a change of ownership occurs. New construction, including tenant improvements, is assessed at its current value. This 1% is shared by all taxing agencies for which the subject property resides. In 1986, the State Constitution was amended to allow rates over the 1% base rate for voter approved general obligation debt. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and are subject to the limitations described above.

City of Long Beach
Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
(In Thousands)
180
See accompanying Independent Auditors’ Report
Overlapping Rates
Fiscal City Direct Los Angeles Unified Community Special Year-end Rate Count y Schools College Districts Total
2012 1.000000 - 0.168187 0.035296 0.003700 1.207183 2013 1.000000 - 0.175606 0.048750 0.003500 1.227856 2014 1.000000 - 0.146439 0.044541 0.003500 1.194480 2015 1.000000 - 0.146881 0.040174 0.003500 1.190555 2016 1.000000 - 0.129709 0.035755 0.003500 1.168964 2017 1.000000 - 0.122192 0.045990 0.003500 1.171682 2018 1.000000 - 0.123226 0.046213 0.003500 1.172939 2019 1.000000 - 0.125520 0.027175 0.003500 1.156195 2020 1.000000 - 0.139929 0.040162 0.003500 1.183591 2021 1.000000 - 0.113228 0.043759 0.003500 1.160487 Note:

Source: County of Los Angeles
Per $100 of Assessed Value -
All Overlapping Governments
Property Tax Rates -
City of Long Beach
Last Ten Fiscal Years
In 1978, California voters passed Proposition 13 which set the property tax rate at a 1% fixed amount.

Valuations of real property are frozen at the value of the property in 1975, with an allowable adjustment up to 2% per year for inflation. However, property is reassessed to its current value when a change of ownership occurs. New construction, including tenant improvements, is assessed at its current value. This 1% is shared by all taxing agencies for which the subject property resides. In 1986, the State Constitution was amended to allow rates over the 1% base rate for voter approved general obligation debt.
180 181
See accompanying Independent Auditors’ Report
Fiscal Year 2021 Fiscal Year 2012
Assessed Assessed
Taxpayer Valuation Valuation
CF Alpha and Golf Prop Co LLC 252,452$ 0.42 % GCC Long Beach LLC 211,272 0.35
TABC Inc. 172,940 0.29
2009 CUSA Community Owner LLC 162,025 0.27 137,783$ 0.34 % John Hancock Life Insurance 151,881 0.25
Studio Management Services Inc. 134,004 0.22
Equity One LLC 127,982 0.21
IMT Capital IV Gallery LLC 127,732 0.21
LB Oceanaire Development LLC 126,166 0.21
W GL Ocean Avenue LB Holdings 114,575 0.19
Terra Funding Shoreline Square 113,995 0.19
DP3 Sub 1 & 2 LLC 109,891 0.18
The Boeing Company 108,188 0.18 429,070 1.05 LBX Douglas Retail Fee Owner LLC 104,227 0.17 Tesoro Logistics Operations LLC 92,099 0.15 GS Long Beach LLC 89,078 0.15
Long Beach Center LLC 89,062 0.15
HCI 333 East Ocean Owner LP 87,810 0.15
404 Pine LP 82,156 0.14
Omninet Freeway LP 79,247 0.13
AES Alamitos LLC 226,400 0.56
Legacy Partners II LB World Trade LLC 154,840 0.38 Trizechahn Centers, Inc. 114,828 0.28
GRE Shoreline Square LP 95,091 0.23
Noble Utah Long Beach LLC 91,418 0.22
200 Oceangate LLC 83,050 0.20
Linwood Avenue LP 82,693 0.20
Arco Terminal Services Corp. 62,682 0.15
HEI Long Beach LLC 62,087 0.15
City Place Long Beach LLC 60,870 0.15
Alamitos Bay Partnership 56,778 0.14
Sunstone Ocean LLC 54,805 0.13
Pacific Pipeline System LLC 52,085 0.13
Lyon West Gateway LLC 51,187 0.13
EQR Fresca 2009 LP 50,447 0.12
Plain West Coast Terminals LLC 48,267 0.12 Los Altos Gateway LLC 48,261 0.12
Pacific Castle 47,165 0.12
2,536,782$ 4.21 % 2,009,807$ 4.92 %
Source: California Municipal Statistics, Inc.

Valuation Valuation
Assessed
of Total Net of Total Net
Assessed
City of Long Beach
Principal Property Taxpayers
Current Year and Nine Fiscal Years Ago
(In Thousands)
Percentage Percentage
182
See accompanying Independent Auditors’ Report
Delinquent
Total Current Percentage Delinquen t Total Collections Outstanding Tax as Fiscal Ta x Tax of Levy Tax Tax as Percentage Delinquen t Percentage of Year-end Levy Collections Collected Collections Collections2 of Levy Taxes Current Levy
2012 75,613$ 73,073$ 96.6% 3,285 $ 76,358$ 101.0% 10,698 $ 14.1% 2013 77,436 71,429 92.2% 3,049 74,478 96.2% 10,147 13.1% 2014 77,740 79,255 101.9% 3,975 83,230 107.1% 4,458 5.7% 2015 84,726 81,798 96.5% 4,061 85,859 101.3% 5,449 6.4% 2016 1 85,609 83,582 97.6% 2,821 86,403 100.9% 5,605 6.5% 2017 87,315 85,962 98.5% 7,581 93,543 107.1% 5,430 6.2% 2018 92,661 90,551 97.7% 3,068 93,619 101.0% 5,472 5.9% 2019 97,494 95,437 97.9% 5,019 100,456 103.0% 5,902 6.1% 2020 102,555 98,949 96.5% 5,763 104,712 102.1% 6,761 6.6% 2021 106,411 103,379 97.2% 3,335 106,714 100.3% 7,077 6.7% 2012 98,891$ 59,989$ 60.7% 884 $ 60,873$ 61.6% -$ 0.0% 2013 102,702 65,387 63.7% - 65,387 63.7% - 0.0% 2014 106,760 53,226 49.9% - 53,226 49.9% - 0.0% 2015 122,477 44,903 36.7% - 44,903 36.7% - 0.0% 2016 137,809 63,963 46.4% - 63,963 46.4% - 0.0% 2017 108,194 46,189 42.7% - 46,189 42.7% - 0.0% 2018 146,784 51,370 35.0% - 51,370 35.0% - 0.0% 2019 146,551 53,256 36.3% - 53,256 36.3% - 0.0% 2020 145,610 54,872 37.7% - 54,872 37.7% - 0.0% 2021 174,978 56,460 32.3% - 56,460 32.3% - 0.0% 2012 174,504$ 133,062$ 76.3% 4,169 $ 137,231$ 78.6% 10,698$ 6.1% 2013 180,138 136,816 76.0% 3,049 139,865 77.6% 10,147 5.6% 2014 184,500 132,481 71.8% 3,975 136,456 74.0% 4,458 2.4% 2015 207,203 126,701 61.1% 4,061 130,762 63.1% 5,449 2.6% 2016 223,418 147,545 66.0% 2,821 150,366 67.3% 5,605 2.5% 2017 195,509 132,151 67.6% 7,581 139,732 71.5% 5,430 2.8% 2018 239,445 141,921 59.3% 3,068 144,989 60.6% 5,472 2.3% 2019 244,045 148,693 60.9% 5,019 153,712 63.0% 5,902 2.4% 2020 248,165 153,821 62.0% 5,763 159,584 64.3% 6,761 2.7% 2021 281,389 159,839 56.8% 3,335 163,174 58.0% 7,077 2.5% Notes: 1
2 Excludes motor vehicle and vehicle license fees in-lieu taxes, interests, penalties and Los Angeles County administrative cost.

General Fund1
Redevelopment/Successor Agency
Total City Tax Levy
City of Long Beach
Property Tax Levies and Collections
Last Ten Fiscal Years
(In Thousands)
In FY 2014, a reduction to Prior Years Levies were due to write off of receivables more than 30 years old per County of Los Angeles Auditor- Controller.
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General Fund Levies and Collections
Total Tax Levy
Current Tax
Collections
182 183
See accompanying Independent Auditors’ Report
Pension Ta x Other LT Total
Revenue Obligation Allocation Notes Capital Obligations - Governmenta l Bonds Bonds Bonds Payable Leases Civic Cente r Activities 111,415$ 50,205$ 326,852$ 8,118$ 46,064$ -$ 542,654$ 93,410 45,675 315,399 7,102 41,869 - 503,455 99,084 40,822 309,160 6,137 38,150 - 493,353 95,189 35,837 276,934 5,117 33,978 - 447,055 105,349 30,597 262,871 5,258 30,682 - 434,757 100,107 25,083 248,167 5,400 27,263 - 406,020 86,754 19,283 233,113 7,751 67,670 - 414,571 90,393 13,183 217,290 8,241 49,020 299,875 678,002 83,985 6,765 200,820 7,905 44,676 294,864 639,015 75,899 - 182,304 7,569 38,943 289,765 594,480 Total
Revenue Notes Capital Business-type
Bonds Payable Leases Activities
1,640,665$ 54,488$ 3,109$ 1,698,262$
1,564,045 147,020 2,667 1,713,732
1,534,901 515,995 2,215 2,053,111
1,696,772 499,248 19,752 2,215,772
1,620,885 379,893 18,167 2,018,945
1,736,215 343,821 16,688 2,096,724
1,673,774 348,471 15,143 2,037,388
1,781,199 339,056 40,356 2,160,611
1,670,260 477,885 37,747 2,185,892
1,600,382 545,309 32,943 2,178,634

Total
Primary Per
Government Capita
2,240,916$ 3.019% 4,813$
2,217,187 3.156% 4,741
2,546,464 3.307% 5,425
2,662,827 3.430% 5,623
2,453,702 3.573% 5,175
2,502,744 3.720% 5,324
2,451,959 3.879% 5,223
2,838,613 4.042% 6,074
2,824,907 4.208% 6,106
2,773,114 4.384% 5,941
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

Business-type Activities
Governmental Activities
2021
2020
2019
2012
2013
2014
2015
2017
2018
2016
Fiscal
Year-end
2020
2013
2014
2015
2017
2019
2016
City of Long Beach
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
(In Thousands, Except Per Capita Amount)
Income
2012
2018
2021
2016
of Personal
2017
2012
2013
2019
2018
2020
Percentage
2015
2021
2014
184
See accompanying Independent Auditors’ Report
Ratio of Net
Pension Tax Less: Amounts Net Bonded Debt
Fiscal Obligation Allocation Restricted fo r Bonded to Assessed Per Year-end Bonds Bonds Debt Service (1) Debt (1) Value (2) Capita (3) 2012 50,205$ 326,852$ 32,615$ 344,442$ 77% 739.82$ 2013 45,675 315,399 33,375 327,699 76% 700.74 2014 40,822 309,160 32,471 317,511 68% 676.38 2015 35,837 276,934 20,331 292,440 63% 617.51 2016 30,597 262,870 20,591 272,876 57% 575.52 2017 25,083 248,167 20,894 252,356 52% 536.78 2018 19,283 233,113 16,769 235,627 45% 501.92 2019 13,183 217,290 17,450 213,023 40% 455.81 2020 6,765 200,820 21,504 186,081 28% 402.23 2021 - 182,304 16,962 165,342 24% 354.25 Notes:
(1)
(2)
(3) Population data can be found in the Schedule of Demographic and Economic Statistics.

City of Long Beach
Ratio of General Bonded Debt Outstanding
Last Ten Fiscal Years
(In Thousands, except Per Capita)
Includes Redevelopment bonds issued during fiscal years 2002, 2003, 2005, and 2006.

Assessed value can be found in the Schedule of Assessed Value and Actual Value of Taxable Property. Percentage calculated using the following formula: Net bonded Debt / (Assessed Value - Exemptions)
Outstanding General Bonded Debt
184 185
See accompanying Independent Auditors’ Report
2020-21 Assessed Valuation: $64,588,433 Estimated Outstanding Overlapping
DIRECT DEBT: Debt
City of Long Beach
Lease Revenue Bonds 75,899$ -$ 75,899$ Tax Allocation Bonds 182,304 - 182,304 Notes Payable 7,569 - 7,569 Capital Leases 38,943 - 38,943 Total Direct Debt 304,715$ -$ 304,715$ OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable
Cerritos Community College District 0.367 % 379,877$ 378,423$ 1,454$ Coast Community College District 0.001 867,300 867,291 9 Compton Community College District 2.601 103,571 100,831 2,740 Long Beach Community College District 85.851 481,796 67,403 414,393 Los Angeles Community College District 0.050 4,146,515 4,144,732 1,783 ABC Unified School District 1.138 69,143 68,299 844 Compton Unified School District 0.024 241,804 241,748 56 Long Beach Unified School District 85.852 1,354,375 189,464 1,164,911 Los Angeles Unified School District 0.061 10,335,150 10,329,672 5,478 Paramount Unified School District 9.170 184,609 167,320 17,289 Metropolitan Water District 1.975 26,830 26,299 531 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT (1) 18,190,970$ 16,581,482$ 1,609,488$ OVERLAPPING GENERAL FUND OBLIGATION DEBT:

Los Angeles County General Fund Obligations 3.785 % 2,575,585$ 2,478,254$ 97,331$ Los Angeles County Superintendent of Schools Certificates of Participation 3.785 3,972 3,822 150 Compton Unified School District Certificates of Participation 0.024 29,095 29,088 7 Los Alamitos Unified School District Certificates of Participation 0.009 35,937 35,933 4 Los Angeles Unified School District Certificates of Participation 0.061 130,970 130,901 69 Paramount Unified School District Certificates of Participation 9.170 25,480 23,094 2,386 County Sanitation District No. 1 Certificates of Participation 1.219 1,624 1,605 19 County Sanitation District No. 2 Certificates of Participation 0.188 2,508 2,503 5 County Sanitation District No. 3 Certificates of Participation 85.913 1,906 266 1,640 County Sanitation District No. 8 Certificates of Participation 2.738 992 966 26 County Sanitation District No. 19 Certificates of Participation 29.396 452 314 138 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT 2,808,521$ 2,706,746$ 101,775$ OVERLAPPING TAX INCREMENT DEBT (Successor Agency) : 100.000 % 171,990$ -$ 171,990$ TOTAL GROSS OVERLAPPING COMBINED DEBT 21,171,481$ 19,288,228$ 1,883,253$ Los Angeles Unified School District General Obligation Bonds Election of 2005 Series J (2010) Qualified School Construction Bonds: Amount accumulated in Interest and Sinking Fund and Set Aside Repayment - - - Los Angeles Unified School District (Qualified Zone Academic Bonds supported by period payments to investment accounts) 154,870 154,788 82 TOTAL NET OVERLAPPING COMBINED DEBT 21,016,611$ 19,133,440$ 1,883,171$ TOTAL NET DIRECT AND OVERLAPPING COMBINED DEBT 21,321,326$ 19,133,440$ 2,187,886$ Notes:

Excludes 1915 Act and Mello-Roos Act Bonds
Source: California Municipal Statistics, Inc.

City of Long Beach
Schedule of Direct and Overlapping Debt
September 30, 2021 (In Thousands)
Debt Exclusions
(1)
186
See accompanying Independent Auditors’ Report
Fiscal Year
2012 2013 2014 2015 2016
Assessed valuation 45,421,772$ 47,952,110$ 50,498,496$ 51,678,154$ 52,898,656$ Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 11,355,443 11,988,028 12,624,624 12,919,539 13,224,664 Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 1,703,316 1,798,204 1,893,694 1,937,931 1,983,700 Total net debt applicable to limit:

General obligation bonds - - - - - Legal debt margin 1,703,316$ 1,798,204$ 1,893,694$ 1,937,931$ 1,983,700$ Total debt applicable to the limit
as a percentage of debt limit 0% 0% 0% 0% 0%
Fiscal Year
2017 2018 2019 2020 2021
Assessed valuation 55,662,248$ 58,634,492$ 61,889,133$ 65,445,552$ 67,573,359$ Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 13,915,562 14,658,623 15,472,283 16,361,388 16,893,340 Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 2,087,334 2,198,793 2,320,842 2,454,208 2,534,001 Total net debt applicable to limit:

General obligation bonds - - - - - Legal debt margin 2,087,334$ 2,198,793$ 2,320,842$ 2,454,208$ 2,534,001$ Total debt applicable to the limit
as a percentage of debt limit 0% 0% 0% 0% 0%
Source: City of Long Beach, Department of Financial Management County of Los Angeles, Department of Auditor-Controller The Government Code of the State of California provides for a legal debt limit of 15 percent of gross assessed valuation. This provision was enacted whe n assessed valuation was based on 25 percent of market value. Effective with fiscal year 1982, each parcel is assessed at 100 percent of market value (as o f the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year fr om the current full valuation perspective to the 25 percent level that was in effect at the time that the legal debt margin was enacted by the State of Californi a for local governments located within the state.

City of Long Beach
Legal Debt Margin Information
Last Ten Fiscal Years
(In Thousands)
186 187
See accompanying Independent Auditors’ Report
Non- Net Revenu e
Net Operating or Fund s
Operating O perating O perating Income Available for Times Revenue Expenses (1) Income (Loss) (1) Debt Service Principal Interes t Total Coverage 2012 82 ,671$ 38,902$ 43,769$ (348)$ 43,421$ 10,035$ 32,955$ 42,990$ 1.0 2013 80 ,215 37,274 42,941 (1,067) 41,874 9,040 32 ,492 41,532 1.0 2014 81 ,992 42,503 39,489 (946) 38,543 7,305 32 ,079 39,384 1.0 2015 77 ,098 30,845 46,253 83 46,336 6,840 31 ,725 38,565 1.2 2016 79 ,526 28,135 51,391 (949) 50,442 7,150 31 ,375 38,525 1.3 2017 96 ,723 40,459 56,264 192 56,456 8,120 31 ,024 39,144 1.4 2018 91 ,786 44,279 47,507 59 47,566 8,925 30 ,628 39,553 1.2 2019 120 ,228 71,223 49,005 1,739 50,744 10,290 30,135 40,425 1.3 2020 102 ,486 56,438 46,048 1,138 47,186 11,905 29,552 41,457 1.1 2021 111 ,930 46,343 65,587 422 66,009 13,990 28,873 42,863 1.5 2012 86 ,515$ 69,982$ 16,533$ (702)$ 15,831$ 490$ 1 ,249$ 1,739$ 9.1 2013 91 ,949 76,217 15,732 (1,789) 13,943 2,110 1,484 3,594 3.9 2014 100 ,187 81,767 18,420 371 18,791 2,385 1,502 3,887 4.8 2015 99 ,475 91,395 8,080 1 ,561 9,641 2,510 1,390 3,900 2.5 2016 97 ,650 81,086 16,564 (237) 16,327 2,630 1,264 3,894 4.2 2017 97 ,383 80,127 17,256 887 18,143 2,730 1,165 3,895 4.7 2018 99 ,173 82,733 16,440 2,795 19,235 2,815 1,077 3,892 4.9 2019 99 ,289 81,439 17,850 4,802 22,652 2,930 964 3 ,894 5.8 2020 113 ,090 97,712 15,378 3,376 18,754 3,050 847 3 ,897 4.8 2021 118 ,968 76,726 42,242 2,108 44,350 3,170 725 3 ,895 11.4 Notes:
(1)
(2)
Source: City of Long Beach, Department of Financial Management City of Long Beach
Pledged Revenue Coverage
Gas Fund Revenue Bond Coverage
Last Ten Fiscal Years
(In Thousands)
The Water Revenue Refunding Bonds Series 1997A were refunded by the Water Revenue Refunding Bonds Series 2010A. Current debt service payments for the 1997 Bonds were covered by the 2010 Bonds refunding issue proceeds.

Operating expenses exclude depreciation and amortization; non-operating income excludes interest expense.

Debt Service Requirements
Last Ten Fiscal Years (2)
Fiscal
Water Fund Revenue Bond Coverage
Year-end
(In Thousands)
188
See accompanying Independent Auditors’ Report
Non- Net Revenue
Net Operating or Funds
Fiscal Operating Operating Operating Income Available fo r Times Year-end Revenue Expenses (1)(2) Income (Loss) (1) Debt Service Principal Interest Total Coverage 2012 34,405$ 27,142$ 7,263$ 8,772 $ 16,035 $ 1,330$ 7,046 $ 8,376 $ 1.9 2013 34,760 26,513 8,247 8,060 16,307 2,260 7,004 9,264 1.8 2014 35,802 27,302 8,500 8,661 17,161 2,340 6,927 9,267 1.9 2015 33,811 27,842 5,969 3,134 9,103 2,420 6,844 9,264 1.0 2016 36,951 30,562 6,389 3,200 9,589 2,515 6,750 9,265 1.0 2017 46,678 33,250 13,428 3,199 16,627 2,625 6,640 9,265 1.8 2018 47,497 35,711 11,786 4,007 15,793 2,740 6,522 9,262 1.7 2019 44,780 36,798 7,982 4,938 12,920 2,875 6,388 9,263 1.4 2020 29,778 26,759 3,019 8,741 11,760 3,015 6,252 9,267 1.3 2021 29,585 24,685 4,900 9,225 14,125 3,160 6,109 9,269 1.5 2012 32,620$ 19,547$ 13,073 $ 319$ 13,392 $ 1,035$ 1,410 $ 2,445 $ 5.5 2013 30,015 19,843 10,172 409 10,581 820 1,512 2,332 4.5 2014 31,923 19,201 12,722 351 13,073 - 912 912 14.3 2015 32,660 23,719 8,941 1,592 10,533 - 912 912 11.5 2016 33,502 24,459 9,043 1,968 11,011 - 912 912 12.1 2017 36,539 27,341 9,198 2,036 11,234 - 912 912 12.3 2018 41,177 25,520 15,657 2,055 17,712 773 912 1,685 10.5 2019 45,561 29,937 15,624 2,458 18,082 1,410 884 2,294 7.9 2020 47,481 32,111 15,370 1,785 17,155 1,542 780 2,322 7.4 2021 41,911 23,409 18,502 1,636 20,138 1,542 780 2,322 8.7 2012 -$ -$ - $ - $ -$ -$ - $ - $ - 2013 - - - - - - - - - 2014 - - - - - - - - - 2015 - - - - - - - - - 2016 20,358 14,613 5,745 197 5,942 - 5,352 5,352 1.1 2017 22,050 13,975 8,075 261 8,336 - 5,634 5,634 1.5 2018 23,954 15,764 8,190 307 8,497 1,250 5,634 6,884 1.2 2019 23,698 15,802 7,896 3,033 10,929 1,400 5,571 6,971 1.6 2020 24,165 18,220 5,945 2,967 8,912 1,550 5,501 7,051 1.3 2021 25,181 15,719 9,462 1,761 11,223 1,720 5,424 7,144 1.6 Notes:
(1)
(2)
Source: City of Long Beach, Department of Financial Management City of Long Beach
Pledged Revenue Coverage
Airport Revenue Bond Coverage
Last Ten Fiscal Years
(In Thousands)
FY20-21 Airport Operating Expense adjusted due to Federal Relief Funds from the CARES Act that were used to reimburse Operating Expenses.

Debt Service Requirements
Temple Willow Revenue Bond Coverage
Operating expenses exclude depreciation and amortization; non-operating income excludes interest expense. Prior year adjustments to operating expenses were made to exclude amortization. (In Thousands)
Last Ten Fiscal Years
Fleet Services Fund
Marina Fund
Marina Revenue Bond Coverage
Last Ten Fiscal Years
(In Thousands)
188 189
See accompanying Independent Auditors’ Report
Tideland Operating Segment
Revenue Bond Coverage
Last Ten Fiscal Years (2)
(In Thousands)
Net Non- Net Revenu e
Operating Operating or Fund s
Fiscal Operating Operating Incom e Income Available for Times Year-end Revenue Expenses (1) (Loss) (Loss) (1) Debt Service Principal Interes t Total Coverage 28,075$ 51,697$ (23,622)$ 1,555$ (22,067)$ 3,380$ 5,622$ 9,002$ - 31,481 46,924 (15,443) 753 (14,690) 5,560 4,578 10,138 - 32,306 59,557 (27,251) 1,157 (26,094) 3,670 4,495 8,165 - 38,858 69,007 (30,149) 1,630 (28,519) 3,780 4,374 8,154 - 35,565 55,280 (19,715) 1,924 (17,791) 3,915 4,229 8,144 - 40,965 58,709 (17,744) 2,845 (14,899) 4,070 4,070 8,140 - 40,403 66,164 (25,761) 4,986 (20,775) 4,235 3,904 8,139 - 39,585 71,075 (31,490) 7,815 (23,675) 1,995 656 2,651 - 40,896 84,123 (43,227) 6,971 (36,256) 2,015 617 2,632 - 49,625 60,087 (10,462) 3,385 (7,077) 3,255 564 3,819 - 2012 333,887$ 87,637$ 246,250$ (2,522)$ 243,728$ 44,815$ 35,193$ 80,008$ 3.0 2013 346,244 97,696 248,548 (818) 247,730 46,965 33,026 79,991 3.1 2014 356,880 108,455 248,425 4,020 252,445 125,460 30,623 156,083 1.6 2015 355,450 130,013 225,437 44,386 269,823 145,215 26,558 171,773 1.6 2016 360,660 143,873 216,787 2,712 219,499 45,360 27,666 73,026 3.0 381,010 142,349 238,661 8,445 247,106 44,905 27,171 72,076 3.4 401,678 136,669 265,009 6,761 271,770 47,190 32,378 79,568 3.4 412,273 140,144 272,129 12,277 284,406 45,965 31,059 77,024 3.7 398,629 142,707 255,922 13,335 269,257 37,300 36,834 74,134 3.6 434,644 134,723 299,921 5,696 305,617 24,470 31,889 56,359 5.4 Notes:
(1)
(2)
Source: City of Long Beach, Department of Financial Managemen 2017
Revenue Bond Coverage
Operating expenses exclude depreciation and amortization; non-operating income excludes interest expense. 2019
2021
2020
2017
2018
2019
2020
2021
2012
2013
2016
City of Long Beach
Pledged Revenue Coverage
Debt Service Requirements
Harbor Fund
2018
The Long Beach Aquarium of the Pacific Lease Revenue Refunding Bonds Series 2012 were issued to (1) refund the Long Beach Aquarium of the Pacific Revenue Bonds 2001 Series bonds, (2) to fund a reserve fund for the Series 2012 Bonds, and (3) pay the costs of issuance of the Series 2012 Bonds. (In Thousands)
Last Ten Fiscal Years
2014
2015
190
See accompanying Independent Auditors’ Report
Personal Per Capita
Estimated Income Personal Public School Unemployment
Population (in millions) Income Enrollmen t Rate
(1) (2) (5) (2) (5) (3)
465,576 14,058 30,196 83,691 12.2
467,646 14,757 31,556 82,256 10.3
469,428 15,525 33,072 81,155 8.6
473,577 16,242 34,296 79,709 6.8
474,140 16,939 35,725 77,812 5.7
470,130 17,490 37,203 76,428 5.3
469,450 18,209 38,789 74,681 4.7
467,354 18,892 40,423 73,221 4.7
462,628 19,467 42,079 72,002 15.9
466,742 (6) 20,460 43,836 69,708 8.9 Sources:
(1)
(2)
(3)
(4)
(5)
(6) Data is an estimated value from previous year.

City of Long Beach
Demographic Statistics
Last Ten Fiscal Years
Year-end (4)
Fiscal
Average annual rate reported by California Employment Development Department (EDD).

Data from 2011 - 2014 restated due to annual revisions. 2012
2016
2018
2019
2014
2015
2020
2017
2013
2021
California Department of Education Educational Demographic Unit. Annual school census from Long Beach Unified School District for preschool, grades kindergarten through 12.

United States Census Bureau
Personal income and per capita personal income are based on percentage change of per capita personal income for Los Angeles-Long Beach-Anaheim, CA (Metropolitan Statistic Area). The BEA's report does not have personal income and per capita personal income available for 2015, so an average of the last five years was used.

Bureau of Economic Analysis (BEA)
190 191
See accompanying Independent Auditors’ Report
Percentage Percentage
Number of of Total Cit y Number of of Total Cit y
Employees Employmen t Employees Employmen t
Ranking Employe r (1) (2) Ranking (1) (2)
1 Long Beach Unified School District 11,157 4.72% 1 11,334 4.83% 2 City of Long Beac h 5,384 2.28% 2 5,758 2.45%
3 Long Beach Memorial Medical Cente r 5,114 2.16% 3 5,743 2.45% 4 Veteran Affairs Medical Cente r 3,300 1.40% 6 2,200 0.94% 5 California State University Long Beach (CSULB) 3,120 1.32% 5 3,527 1.50% 6 Long Beach City College 2,515 1.06% 7 1,785 0.76%
7 The Boeing Compan y 1,844 0.78% 4 5,186 2.21%
8 St. Mary Medical Cente r 1,558 0.66% 9 1,432 0.61%
9 CSULB Research Foundation 1,227 0.52% 8 1,500 0.64
10 Molina Healthcare Inc 1,119 0.47%
United States Postal Service 10 1,306 0.56%
Sources:
(1) Department of Financial Management Accounting and Business License (2) State of California Employment Development Department Labor Market Info for 2012 and 2021 This data was compiled from various sources by the City of Long Beach Departments of Development Services and Financial Management. Employment data is intended for use as a general guide only. The City of Long Beach does not warrant the accuracy of this data. Inquiries should be directed to the respective employer.

Fiscal Year 2012
City of Long Beach
Principal Employers
Current Year and Nine Years Ago
Fiscal Year 2021
192

Intentionally Left Blank

192 193
See accompanying Independent Auditors’ Report

Function 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Legislative and Legal 130 129 130 130 122 140 136 141 141 148 General Government (1) 424 382 398 415 513 534 556 607 718 609 Public Safety 1,796 1,765 1,757 1,843 1,698 1,738 1,729 1,862 1,862 1,638 Public Health 262 263 249 257 252 259 287 272 272 484 Community and Cultural (1) 1,038 1,020 1,046 1,121 1,006 1,040 855 1,008 1,008 874 Public Works 287 273 275 258 263 310 305 297 213 329 Gas Utilty 194 202 201 198 201 209 199 183 183 191 Water Utility 225 223 217 220 224 224 248 266 266 245 Airport 96 88 88 91 97 98 103 89 89 92 Solid Waste Management 189 177 181 183 177 187 183 198 198 198 Towing 29 22 26 26 26 26 27 27 27 30 Tideland Oil Revenue 19 15 15 15 16 17 15 17 17 13 Harbor 466 469 491 529 527 536 514 509 509 533 Total 5,155 5,028 5,074 5,286 5,122 5,318 5,157 5,476 5,503 5,384 Source: City of Long Beach, Department of Financial Management as of September 30, 2021 City of Long Beach
Last Ten Fiscal Years
Full-Time Equivalent City Government Employees by Function (1) Restated 2013 and 2014 as Library Services was included as part of General Government and should have been classified as Community and Cultural.

Fiscal Year

Intentionally Left Blank
194
See accompanying Independent Auditors’ Report
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Function 2012 2013 2014 2015 2016
Public Safety:

Police priority one calls response time in minutes 4.35 4.35 4.69 4.90 4.60 Violent crime rate - per 1,000 residents 6.18 5.85 4.37 4.28 5.79 Fire on-scene arrival for emergency calls within six minute 60.8% 55.1% 50.0% 46.3% 43.4% Public Health:

Percentage of beach days that are safe for swimming in summer 91% 94% 97% 95% 94% Homeless population ratio vs. total population (1) 0.93% 0.93% 0.75% 0.51% 0.51% Community and Cultural
Public library computer session log-ons 331,028 N/A N/A 222,360 218,717 Parks, recreation programs - youth and teen attendance 745,052 636,796 760,641 779,641 835,358 Public Works:

Number of trees trimmed 28,021 24,668 23,500 23,839 19,500 Curbs and alleys swept in miles 156,537 150,804 156,302 153,527 154,300 Sidewalk repaired in square feet 481,497 382,536 551,597 363,476 333,039 Storm drain catch basins cleaned 3,800 3,004 5,771 5,800 5,800 Gas Utility:

Gas consumption in sales dollars-total 70,193,000$ 68,229,000$ 72,544,000$ 62,281,000$ 64,382,000$ Gas consumption in cubic feet ( In 000's) 9,135,000 9,092,000 8,183,000 7,689,000 8,542,000 Average daily gas consumption (MCF) 24,959 24,910 22,421 21,065 23,404 Gas mains installed/replaced/relocated in feet (2) 84,594 108,646 110,900 40,589 22,556 Gas meters installed/removed/replaced 8,664 6,093 3,529 4,440 29,873 Water Utility:

Water daily demand in thousand gallons 52,260 53,079 52,389 47,441 46,417 Water annual demand in thousand gallons 19,074,861 19,373,993 19,122,012 17,315,820 16,942,297 Available supply total in thousand gallons 21,330,532 21,538,947 21,019,736 19,000,372 19,412,932 Sewer Utility:

Sewer mains cleaned in miles 414 535 498 492 405 Sewer mains and laterals repaired in number of jobs 261 241 213 224 215 Airport:

Number of commercial passengers enplaned 1,643,383 1,497,503 1,433,273 1,276,679 1,327,001 Number of commercial passengers deplaned 1,634,345 1,492,430 1,426,830 1,273,232 1,325,537 Number of aircraft landings and take offs 287,699 284,193 325,527 300,184 295,007 Solid Waste Management:

Number of refuse tons collected 187,505 187,146 182,452 173,895 187,432 Number of recycling tons collected 172,143 169,264 169,420 161,997 158,852 SERRF tons of refuse received 474,689 470,510 459,160 447,535 417,169 SERRF energy sold to So Cal Edison megawatt-hours 220,867 226,592 223,658 200,994 158,400 Harbor:

Number of container movements in twenty-foot equivalent unit 5,857,218 6,647,975 6,817,590 7,087,699 6,946,255 Cargo in thousands of metric revenue tons 145,144 162,257 165,526 164,274 161,322 Number of ship calls 3,993 3,425 2,752 2,676 2,227 Source: City Departments
(1) The homeless population count is biannual.
(2) Restated prior years (2011-2013), due to updated reports from Gas Department.

City of Long Beach
Operating Indicators by Function
Last Ten Fiscal Years
194 195
See accompanying Independent Auditors’ Report
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2017 2018 2019 2020 2021 Functio n
Public Safety:

4.80 4.50 4.30 4.40 4.60 Police priority one calls response time in minute s

6.40 7.00 5.75 4.96 5.60 Violent crime rate - per 1,000 resident s

41.7% 41.1% 38.6% 37.0% 34.0% Fire on-scene arrival for emergency calls within six minute Public Health:
90% 88% 89% 86% 92% Percentage of beach days that are safe for swimming in summer

0.51% 0.39% 0.40% 0.44% 0.26% Homeless population ratio vs. total population (1 ) Community and Cultural
254,974 225,983 186,873 79,862 12,249 Public library computer session log-on s 892,556 793,226 820,748 4,062 215,621 Parks, recreation programs - youth and teen attendance Public Works:
23,112 21,857 22,055 25,000 19,500 Number of trees trimme d 141,132 142,851 147,316 125,254 128,042 Curbs and alleys swept in miles 296,865 603,504 537,666 306,044 416,167 Sidewalk repaired in square feet 5,800 5,800 5,800 5,800 5,800 Storm drain catch basins cleane d Gas Utility:
78,467,000$ 77,999,000$ 98,355,000$ 79,886,282$ 87,908,917$ Gas consumption in sales dollars-total 9,237,000 8,802,000 9,116,009 9,113,067 8,941,456 Gas consumption in cubic feet ( In 000's) 25,307 24,114 24,975 24,967 24,497 Average daily gas consumption (MCF ) 40,737 17,327 32,032 22,279 24,500 Gas mains installed/replaced/relocated in fee t 34,465 2,944 1,279 1,983 1,459 Gas meters installed/removed/replace d Water Utility:
45,869 47,620 44,478 50,503 45,647 Water daily demand in thousand gallon s 16,742,192 17,381,120 16,234,549 18,433,521 16,661,155 Water annual demand in thousand gallons 19,045,926 19,172,030 17,439,187 20,238,997 1,983,812 Available supply total in thousand gallons Sewer Utility:
113 439 477 360 380 Sewer mains cleaned in mile s 169 157 164 162 263 Sewer mains and laterals repaired in number of job s Airport:
1,793,753 2,006,292 1,757,499 904,815 767,207 Number of commercial passengers enplaned 1,794,245 2,007,872 1,752,650 914,487 766,260 Number of commercial passengers deplaned 294,303 266,892 293,587 294,509 320,601 Number of aircraft landings and take offs Solid Waste Management:
193,622 185,403 192,483 202,620 201,510 Number of refuse tons collected 160,037 133,932 40,955 39,481 42,719 Number of recycling tons collecte d 426,430 359,752 385,541 378,016 386,047 SERRF tons of refuse received 201,438 165,702 182,342 181,000 191,160 SERRF energy sold to So Cal Edison / CAISO megawatt-hours Harbor:
7,230,758 8,000,929 7,747,251 7,660,975 9,500,860 Number of container movements in twenty-foot equivalent unit 168,100 180,593 172,961 168,574 198,118 Cargo in thousands of metric revenue tons 2,149 2,278 2,095 2,237 2,561 Number of ship call s 196
See accompanying Independent Auditors’ Report
Fiscal Year Fiscal Year Fiscal Year Fiscal Year
Function 2012 2013 2014 2015
Public Safety:

Number of police stations 1 1 1 1 Number of police substations (full facility) 3 3 3 3 Number of police storefront stations - - - - Number of fire stations 23 23 23 23 Community and Cultural:

Number of parks 162 161 162 164 Parks and golf courses in acres 3,124 3,121 3,123 3,122 Number of libraries 12 12 12 12 Number of library holdings (books, videos, tapes) 818,390 782,571 798,809 808,957 Number of library circulations 1,551,997 1,391,825 1,391,617 1,205,523

Public Works:

Street in miles 823 823 823 823 Storm drain lines in miles 180 180 180 180 Number of street lights (1) 31,000 31,550 31,550 31,337 Gas Utility:

Gas mains in miles (2) 929 930 928 929 Water Utility:

Water mains in miles 911 912 912 912 Number of fire hydrants 6,594 6,589 6,604 6,631 Number of water services 95,643 95,607 95,999 95,775 Sewer Utility:

Sanitary sewers in miles 712 714 714 714 Number of manholes 16,148 16,158 16,170 15,129 Sanitary sewer pump stations 28 28 28 28 Storm drain pump stations 23 23 23 23 Harbor:

Sanitary sewer pump stations 34 37 37 37 Storm drain pump stations 23 21 23 23 Solid Waste Management:

Number of waste-to-energy facilities 1 1 1 1 (1) In 2008, the number of streetlights changed from 34,000 to 31,000 due to updated reports. (2) Restated prior years (2011-2013), due to updated reports from Gas Department.

Source: City Departments
City of Long Beach
Capital Asset Statistics by Function
Last Ten Fiscal Years
196 197
See accompanying Independent Auditors’ Report
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2016 2017 2018 2019 2020 2021 Function
Public Safety:
1 1 1 1 1 1 Number of police stations 3 3 3 3 3 3 Number of police substations (full facility) - - - - - - Number of police storefront stations 23 23 23 23 23 23 Number of fire stations Community and Cultural:
168 169 169 169 167 167 Number of parks 3,124 3,125 3,125 3,126 3,125 3,125 Parks and golf courses in acres 12 12 12 12 12 12 Number of libraries 851,614 795,629 798,760 740,442 728,829 707,151 Number of library holdings (books, videos, tapes) 1,233,309 1,335,819 1,302,021 1,273,997 966,790 756,037 Number of library circulations

Public Works:
823 823 823 823 823 823 Street in miles 180 180 180 180 180 180 Storm drain lines in miles 32,283 27,439 32,481 32,502 32,480 35,254 Number of street lights (1) Gas Utility:
929 931 916 917 917 917 Gas mains in miles (2) Water Utility:
912 912 912 916 917 917 Water mains in miles 6,894 6,910 6,953 7,036 7,049 7,054 Number of fire hydrants 95,749 95,667 95,586 95,690 95,731 95,891 Number of water services Sewer Utility:
714 715 714 714 715 715 Sanitary sewers in miles 15,127 15,112 15,122 15,125 15,126 15,132 Number of manholes 28 28 28 28 28 28 Sanitary sewer pump stations 22 23 23 23 23 23 Storm drain pump stations Harbor:
39 39 39 39 39 39 Sanitary sewer pump stations 22 22 22 22 22 22 Storm drain pump stations Solid Waste Management:
1 1 1 1 1 1 Number of waste-to-energy facilities The Harbor Department, an Enterprise Fund of the City of Long Beach, California Annual
Comprehensive
Financial Report
For the fiscal year ended September 30, 2021
Attachment B

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Table of Contents
Page(s)
Introductory Section
Letter of Transmittal 1–6
GFOA Certificate of Achievement 7
Organizational Chart 8
Board of Harbor Commissioners and Senior Management 9
Financial Section
Independent Auditors’ Report 10–11
Management’s Discussion and Analysis 12–20
Basic Financial Statements:

Statement of Net Position 21–22
Statement of Revenues, Expenses, and Changes in Net Position 23 Statement of Cash Flows 24–25
Notes to Financial Statements 26–56
Required Supplementary Information 57–59
Statistical Section (Unaudited)
Financial Trends Information:

Statements of Net Position – Last 10 Fiscal Years – Exhibit 1 60 Changes in Fund Net Position – Last 10 Fiscal Years – Exhibit 2 61 Revenue Capacity Information:

Operating Revenue by Type – Last 10 Fiscal Years – Exhibit 3 62 Debt Capacity Information:

Revenue Bonds Debt Service Coverage – Last 10 Fiscal Years – Exhibit 4 63

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Table of Contents
Page(s)
Operating Information:

Tonnage Summary – Last 10 Fiscal Years – Exhibit 5 64
Tonnage by Commodity Group and Vessel Calls – Last 10 Fiscal Years – Exhibit 6 65 Metric Revenue Tons and Container Counts – Last 10 Fiscal Years – Exhibit 7 68 Other Information:

Principal Customers – Exhibit 8 67
Employee Headcount by Division – Last 10 Fiscal Years – Exhibit 9 68 Introduction
Letter of Transmittal
March 29, 2022
The Board of Harbor Commissioners
The Harbor Department of the City of Long Beach
Long Beach, California
Members of the Board of Harbor Commissioners:

State law requires that all general-purpose local governments publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with U.S. generally acc
epted accounting principles (GAAP) and audited in accordance with U.S. generally accepted auditing standards (GAAS) by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the annual comprehensive financial report (ACFR) of the Harbor Department of the City of Long Beach (the Department), an enterprise fund of the City of Long Beach (the City), California, for the fiscal year ended September 30, 2021. The Department’s operations are included in the City’s reporting entity as an enterprise fund.

Th
is report consists of management’s repr esentations concerning the finances of the Department.

Management is responsible for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed to protect assets from loss, theft, or misuse, and to compile sufficient reliable information for the preparation of the financial statements in conformity with GAAP. The costs of internal controls should not exceed their benefits; therefore, the comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. Management asserts that, to the best of its knowledge and belief, this financial report is complete and reliable in all material aspects.

The Department’s basic financial statements have been audited by KPMG LLP, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the Department’s financial statements for the fiscal year ended September 30, 2021 are free of material misstatement. The independent audit entails examining, on a test basi s, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit performed, that there was a reasonable basis for rendering an unmodified opinion, and that the Department’s financial statements for the fiscal year ended September 30, 2021 are fairly presented, in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report. 1 Port of

LONG BEACH

THE PORT OF CHOICE
415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLS.COM

2 GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is intended to complement the MD&A, and should be read in conjunction with it. The Department’s MD&A immediately follows the report of the independent auditors.

Profile of the Department
In 1911, the State of California conveyed, in trust, to the City certain tidal and submerged lands for the establishment and maintenance of the Harbor District (which includes the Port of Long Beach).

Consistent with this grant, the City Charter confers on the Board of Harbor Commissioners (the Board) exclusive control and management of the Department (the Port). The Board has authority, on behalf of the City, to provide for the needs of commerce, navigation, recreation, and fishery; to develop and maintain all waterfront properties; to dredge and reclaim land; and to construct and operate terminals, railroad tracks, and other facilities both inside and outside the Port’s jurisdiction. The Port is a landlord port providing the region, state, and nation with state-of-the-art seaport facilities and serving as an international gateway for trade. The Port of Long Beach is the second busiest container seaport in North America.

The Port generates revenues through leases, tariffs, and other charges assessed to tenants and other customers. No local, state, or federal taxes support Port operations. The Port does not contribute to the City of Long Beach general fund or governmental activities, but compensates the City of Long Beach for services such as public safety, human resources, civil service, and centralized financial, legal, and audit services.

The Port maintains a financial and cost accounting system independent of other City departments. The focus of the statement of revenues and expenses is on inflows and outflows of economic resources using the accrual basis of accounting. Changes in net position are recognized as soon as the cause of the change occurs, regardless of the timing of related cash flows; that is, revenues are recognized as soon as they are earned, and expenses are recognized as soon as a liability is incurred. All of the assets and liabilities associated with the Port’s operations are included in the statement of net position. Net position is segregated into net investment in capital assets, restricted for related debt service, and unrestricted.

Commercial and Economic Outlook
The Port of Long Beach provides best in class customer service to attract more commercial activity and maximize revenue opportunities. By aligning its product with customer demands, the Port employs a strategic and customized approach with all customer segments. Focused outreach ensures the Port has a full understanding of the customers’ needs and successfully promotes the benefits of its services.

Continuing the trend of the cargo surge spurred by the COVID-19 pandemic, the Port experienced record cargo volumes in fiscal year 2021, with 9.5 million twenty-foot-equivalent units (TEUs) moved, or a 24.0% increase from the prior fiscal year

Aside from the pandemic, on-going geopolitical developments, and the challenges in the global supply chain, the following trends continue to shape the future of the maritime industry: capacity management by ocean carriers, rationalization of alliance deployments, vessel upsizing and fuel prices .

Port of

LONG BEACH

THE PORT OF CHOICE
415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLS.COM

3 The expansion or contraction of foreign trade directly affects local, regional, and national economies.

Increasingly, the Port has been the concentric focus relating to the mismatch of supply chain capacity and capability. The Port, therefore, as a crucial economic engine for the region and beyond, must continually strengthen its competitiveness by anticipating and responding to economic challenges, and seizing opportunities to facilitate cargo conveyance to remain the Port of Choice for the trans-Pacific trade.

Fiscal year 2021 marked the fifth year of having three-vessel sharing alliances (2M, OCEAN and THE Alliance) operating within the Port. During this fiscal year, the third and final phase of Long Beach Container Terminal’s (LBCT) Middle Harbor Redevelopment Program was mostly completed. This approximate $1.5 billion and ten year program combined and modernized two aging shipping terminals.

The project more than quintupled on-dock rail capacity and adds shore power connections and advanced technology that allows the new terminal to significantly increase cargo capacity.

As container ships capable of transporting up to 24,000 TEUs continue to call at the Port of Long Beach, the Port’s ability to accommodate these vessels and handle the additional cargo volume has become a key objective to retain its competitive advantage over other gateways. In preparation for th e next generation of even larger vessels, the Port of Long Beach continues its progress on a multi-billion dollar capital program to upgrade its infrastructure and modernize its facilities to improve efficiency in its cargo operations and enhance reliability. When completed, the capital program will make the Port one of the most efficient ports in the world.

Capital infrastructure projects currently underway that will position the Port for increased volume and revenue include the following:
● Pier B Rail Support Facility: The Pier B Rail Support Facility will provide for more efficient transfer of cargo between marine terminals and the Class 1 railroads, resulting in increased on- dock rail capacity and operating efficiency.
● Other Rail Projects: The Pier G Double Track, 4th Track at CP Ocean, and Terminal Island Rail Projects will support the more efficient transfer of cargo between marine terminals and the Class 1 railroads, resulting in increased on-dock rail capacity and operating efficiency. ● Gerald Desmond Bridge Replacement: The new bridge is taller, to allow additional clearance for ships, and is also wider, to ease the flow of cars and trucks that use the bridge. Construction began in early 2013 and was open to traffic in October 2020. The demolition of the old bridge is anticipated to be completed by the end of 2023. As of March 9, 2022, ownership of the bridge was legally transferred to Caltrans as a component of the state highway system. The asset transfer of the Gerald Desmond Bridge Replacement Project will be effected in two transactions that will result in an expense and a reduction of the Department’s assets totaling approximately $1.6 billion, the majority of which will be posted in fiscal year 2022 and the balance after the demolition is completed.

To accommodate the expected increase in business activities during the next 20 years, the Port will continue to explore innovative solutions to mitigate the environmental impact s to the surrounding communities.

4 The Port is also taking a leadership role by working with its partners to formulate solutions to continuously improve operating efficiencies through a combination of infrastructure enhancements, operational improvements, and investments in innovative environmental programs.

The COVID-19 outbreak impact on the Port continues into 2022. The initial closure of factories in China at the beginning of the outbreak resulted in a higher-than-normal cancellation of vessel calls originating from China, significantly impacting U.S. retail inventories. Ocean carriers continued to add unscheduled vessel services to make up for this increase in demand, creating a backlog of vessels into the San Pedro Bay Ports. This volume surge started in 2021 and is expected to continue throughout 2022.

Environmental Protection
The Port continues to make substantial investments to improve the environment through sustainable practices that reduce the environmental impacts from Port operations and development.

In 2005, the Long Beach Board of Harbor Commissioners adopted the Green Port Policy, which committed to reducing the Port’s impact on the environment and the community. In 2006, at a historic joint board session of Long Beach and Los Angeles Boards of Harbor Commissioners (the Ports), the San Pedro Bay Clean Air Action Plan (CAAP) was approved. The CAAP was updated in 2010, and most recently in 2017, to identify new strategies to achieve significant emission reductions into the future. The 2017 update includes zero emission mandates for cargo handling equipment by 2030 and drayage trucks by 2035.

Similarly, at a joint board session in 2009, the Ports adopted the Water Resources Action Plan (WRAP) which outlines the Ports’ water quality programs and strategies for maintaining and improving harbor water resources. The Port continues its significant efforts related to complying with regulatory programs, such as the Total Maximum Daily Load (TMDL), the statewide Industrial General Permit, Construction Storm Water Permit, and the Long Beach Municipal Permit. The Port continues to invest in opportunities for the sustainable management of contaminated and non-contaminated sediments within the Harbor District. And finally, the Port continues to evaluate the water quality and sediment in the harbor, the levels of pollution in fish, and the health of the harbor ecosystem.

The Harbor Department administers a number of hazardous materials and waste management programs designed to ensure compliance with applicable federal, state, and local regulations. These programs include surveys to identify the presence of hazardous materials, including asbestos and lead- based paint; assessment and remediation of soil and groundwater contaminated by historical industrial development within the Harbor District; and hazardous material spill response.

Through its environmental initiatives, the Port has:
● Cut diesel particulates by 90%, sulfur oxides by 97%, smog-forming nitrogen oxides by 63%, and greenhouse gases by 11% from 2005 levels, identified in the 2020 annual air emissions inventory. ● Continued to foster the development of new clean air technologies through the Technology Advancement Program, including zero emission terminal equipment.

Port of

LONG BEACH

THE PORT OF CHOICE
415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLS.COM

5 ● Awarded nearly $80 million in grant-funding to demonstrate zero emission equipment and advanced energy systems in Port operations.
● Established a technical working group with the Port of Los Angeles, the Los Angeles Regional Water Quality Control Board and the State Water Resources Control Board, to conduct the special s tudies and analysis required to make sound environmental management decisions and support modifications to the Total Maximum Daily Load (TMDL) regulation. ● Completed a comprehensive hydrodynamic, sediment transport and bioaccumulation model to link water and sediment management actions with desired outcomes. ● Updated the Green Ship Incentive Program to offer the highest incentive level of any port to attract Tier III vessels to the Port of Long Beach.
● Continued the Green Flag Vessel Speed Reduction Program within 20 nautical miles or 40 nautical miles of the Port (where greater than 90% of ships slow down to 12 knots), to reduce air pollution emissions.

Risk Management
The Port has developed a comprehensive, all-hazard business continuity plan to facilitate the efficient movement of cargo following a business disruption event. The plan focuses on: 1) maintaining a safe and secure port environment; 2) keeping the land and water infrastructure operational to the greatest extent possible; and 3) ensuring that those objectives are performed in a legally and financially responsible manner.

Security
The Port is committed to safety and security and is dedicated to becoming the safest and most secure port in the world. Since 2009, the Port has operated the Joint Command and Control Center (JCCC). This state-of-the-art facility houses not only the Port’s Security Division and Harbor Patrol, but also the Long Beach Police Department’s Port Police Division. The Long Beach Fire Department is also represented in the JCCC by an assistant chief. The Port takes an above the water, on the water, and below the water approach to Maritime Domain Awareness. This is accomplished through the use of the latest integrated, high-tech surveillance systems to maintain vigilance and share data with the many agencies responsible for port security. The JCCC monitors more than 650 cameras throughout the port complex, including long- range and night-vision units, in addition to access control and radar detection systems.

The Port is protected by multiple layers of security, including the U.S. Coast Guard, U.S. Customs and Border Protection, Long Beach Police Department, and other federal, state, and local law enforcement agencies. Additionally, the Port has its own harbor patrol, a cadre of highly trained public officers who are responsible for security operations on the property owned by the Port and any public roadways within its boundaries 24 hours a day, seven days a week. The Long Beach Police Department, Port Police Division also provides a dedicated force of police officers who patrol land side and water side in the port complex 24 hours a day, seven days a week. Within the Harbor District, the Long Beach Fire Department has two Port of

LONG BEACH

THE PORT OF CHOICE
415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLS.COM

6 landside stations, one with a hazardous materials response unit, in addition to two swing stations with landside and waterside response capabilities.

Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Department for its Annual Comprehensive Financial Report for the fiscal year ended September 30, 2020. This was the 38 th
consecutive year that the Department has received this prestigious award. In order to be awarded a Certificate of Achievement, the Department must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy 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 Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility f or the current reporting period.

We would like to acknowledge the dedication of the Finance Division staff in the timely preparation of this report.

Respectfully submitted:

Mario Cordero Sam Joumblat, CPA
Executive Director Chief Financial Officer
Managing Director of
Finance and Administration

7 Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financia l
Reporting
Presented to
The Harbor Department of the City of Long Beach
California
For its Annual Comprehensive
Financial Repon
For the Fiscal Year Ended
September 30. 2020
Execucive Director/CEO

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Organizational Chart
September 30, 2021
8 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Board of Harbor Commissioners and Senior Management
September 30, 2021
9 Board of Harbor Commissioners
Steven Neal, President
Sharon L. Weissman, Vice President
Bobby Olvera Jr., Secretary and Commissioner
Bonnie Lowenthal, Commissioner
Frank Colonna, Commissioner
Executive Offices
Executive Director Mario Cordero
Deputy Executive Director Noel Hacegaba
Deputy Executive Director Richard D. Cameron
Executive Officer to the Board Shana Espinoza
Capital Program Executive Duane Kenagy
Communications Division Director, Kerry Gerot
Government Relations Division Director, Eleanor Torres
Human Resources Division Director, Sandy Witz (Jan. 2022) Finance and Administration Bureau Managing Director, Sam Joumblat Finance Division Director, Wei Chi
Information Management Division Director, Nyariana Maiko Real Estate Division Director, Eamonn Killeen
Risk Management Division Director, Richard S. Baratta
Commercial Operations Bureau Managing Director, Samantha Galltin Business Development Division Director, Roger Wu
Security Division Director, Casey Hehr
Tenant Services and Operations Division (Vacant)
Planning and Environmental Affairs Bureau Managing Director, Heather Tomley Environmental Planning Division Director, Matthew Arms
Transportation Planning Division Director, Theresa Dau-Ngo (Nov. 2021) Master Planning Division (Consolidated with Transportation Planning) Engineering Services Bureau Managing Director, Sean Gamette Program Delivery Group Senior Director, Suzanne Plezia
Program Management Division Director, Tasha Higgins (Mar. 2022) Construction Management Division Director, Darrin Lambrigger Design Division Director, John Chun
Maintenance Division Director, Fred Greco
Project Controls Division Director, Marlene Dupras
Surveys Division Director, Kimberly Holtz

Financials

Independent Auditors’ Report
The Honorable Members of the Board of Harbor Commissioners The Harbor Department of the City of Long Beach
Long Beach, California:

Report on the Financial Statements
We have audited the accompanying financial statements of the Harbor Department of the City of Long Beach (the Department), an enterprise fund of the City of Long Beach, California, as of and for the year ended September 30, 2021, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements for the year then ended as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriaten ess of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Harbor Department of the City of Long Beach, California as of September 30, 2021 and the changes in its net position and its cash flows for the year then ended in accordance with U.S. generally accepted accounting principles.

KPMG LLP
Suite 700
20 Pacifica
Irvine, CA 92618-3391
KPMG LLP , a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

11 Other Matters
Required Supplementary Information
U.S. generally accepted accounting principles require that the management’s discussion and analysis on pages 12–20 and the schedules listed under required supplementary information under the financial section in the table of contents (collectively referred to as required supplementary information) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audits of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Department’s basic financial statements. The accompanying supplementary information identif ied in the table of contents as the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2022 on our consideration of the Department’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the Department ’s 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 Department’s internal control over financial reporting and compliance.

Irvine, California
March 29, 2022

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
12 (Continued)
The following discussion and analysis of the financial performance of the Harbor Department of the City of Long Beach, California (the Department) provides an overview of the financial activities for the fiscal year s ended September 30, 2021 and 2020. The information presented here should be read in conjunction with the additional information contained in the Department’s financial statements and related notes and our letter of transmittal that precedes this section.

Using this Financial Report
This annual financial report consists of the Department’s financial statements and the required supplementary information, and reflects the self-supporting activities of the Department that are funded primarily through leasing property, tariffs, and other charges to its tenants.

The Department’s financial report consists of this management’s discussion and analysis (MD&A) and the following financial statements:
• The statement of net position – Reports all of the Department’s assets, deferred outflows, liabilities, and deferred inflows using the accrual basis of accounting, as well as an indication about which assets can be used for general purposes, and which assets are restricted as a result of bond c ovenants and other requirements
• The statement of revenue, expenses, and changes in net position – Reports the results of all revenue and expenses of the Department’s operations for the fiscal period presented • The statement of cash flows – Reports the inflows and outflows of cash and cash equivalents resulting from operating, noncapital financing, capital and related financing, and investing activities; a reconciliation is also provided to assist in understanding the difference between operating income and cash flows from operating activities
• Notes to the basic financial statements – Report information that supplements and clarifies significant elements of the financial statements; such information is essential to a full understanding of the Department’s financial activities
Overview of the Department’s Financial Statements
The Department is an enterprise fund, and is a fiscally independent component unit of the City of Long Beach, California (the City). The Department’s financial statements are prepared on an accrual basis in accordance with generally accepted accounting principles supported by the Governmental Accounting Standards Board.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
13 (Continued)
Analysis of Net Position
The following condensed financial information provides an overview of the Department ’s financial position as of September 30, 2021 and 2020:

Condensed Schedule of Assets, Deferred Outflows,
Liabilities, Deferred Inflows, and Net Position
September 30, 2021 and 2020
(Amounts expressed in thousands)
2021 2020
Assets:

Capital assets, net $ 5,197,575 5,030,654
Current and other assets 892,740 851,936
Total assets 6,090,315 5,882,590
Deferred outflows of resources 15,989 8,716
Total assets and deferred outflows of resources $ 6,106,304 5,891,306 Liabilities:

Current liabilities $ 338,178 650,689
Long-term obligations, net of current portion 1,255,761 868,008 Total liabilities 1,593,939 1,518,697
Deferred inflows of resources 53,642 9,779
Total liabilities and deferred inflows of resources $ 1,647,581 1,528,476 Net position:

Net investment in capital assets $ 3,768,983 3,791,206 Restricted: Capital projects 37,743 37,743
Restricted: Debt service 13,717 13,801
Unrestricted 638,280 520,080
Total net position $ 4,458,723 4,362,830

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
14 (Continued)
Net Position Discussion
The changes in net position over time may serve as a useful indicator of the Department ’s financial activities and position. As of September 30, 2021, $3.8 billion, or 84.5%, of the Department’s total net position represents its net investment in capital assets. This component consists of capital assets, net of accumulated depreciation, reduced by the outstanding borrowings attributable to those assets that have been expended at September 30, 2021. These capital assets are used to facilitate the operations of the Port of Long Beach (the Port) and its tenants.

The restricted portion of the Department’s net position of $51.5 million, or 1.2%, is comprised of $37.7 million in environmental mitigation credits for use on landfill capital projects and $13.7 million of a debt service reserve fund required by the bonds’ indenture. The remaining balance of $638.3 million, or 14.3%, reflects the unrestricted resources that may be used for ongoing and future operations of the Department.

Current and other assets of $892.7 million, represents an increase of $40.8 million from the prior fiscal year.

Current assets increased by $41.3 million primarily due to funds from the $50.0 million draw on the line of credit.

Capital assets, net of depreciation, increased by $166.9 million, or 3.3%, from the prior fiscal year mostly in large capital projects such as the Middle Harbor Redevelopment and Gerald Desmond Bridge Replacement project. Refer to page 19 and notes 4 and 5 for additional discussion related to capital assets.

Current liabilities decreased by $312.5 million primarily as a result of the $472.1 million repayment of the 2018A and 2020C Notes, partially offset by a $50 million draw on the existing line of credit, and a $105.0 million increase in accrued liability for a pending contractual settlement on the construction of the Gerald Desmond Bridge Replacement Project. Long-term obligations increased by $377.8 million primarily due to the $495.0 million drawdown of the Transportation Infrastructure Finance and Innovation Act (TIFIA) lo an, and the $61.4 million reduction in the City’s allocated pension liability based on CalPERS actuarial reporting of an increase in valuation for the measurement period. Refer to page 20 and notes 11 to 14 for additional discussion related to long term liabilities and debt service.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
15 (Continued)
Analysis of Changes in Net Position
The following condensed financial information provides an overview of the changes of the Department’s net position during fiscal years 2021 and 2020:

Condensed Schedule of Revenue, Expenses, and Changes in Net Position Years ended September 30, 2021 and 2020
(Amounts expressed in thousands)
2021 2020
Operating revenues:

Berths and special facilities $ 408,312 380,764
Rental properties 23,061 14,855
Miscellaneous 3,271 3,010
Total operating revenues 434,644 398,629
Operating expenses:

Personnel services 37,258 57,116
Maintenance and operations 59,145 46,786
Interdepartmental services 38,320 38,806
Total operating expenses before depreciation 134,723 142,708 Depreciation 172,827 149,652
Income from operations 127,094 106,269
Nonoperating revenue (expenses):

Interest expense, net (27,068) (19,135)
Equity in income from joint venture 2,243 2,461
Discontinued capital projects (839) (2,280)
Other income (expense), net 4,292 (3,248)
Net nonoperating expenses (21,372) (22,202)
Income before capital grants and transfer 105,722 84,067 Transfer to the City (21,598) (21,253)
Grants 11,769 45,044
Change in net position 95,893 107,858
Total net position – beginning of year 4,362,830 4,254,972 Total net position – end of year $ 4,458,723 4,362,830

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
16 (Continued)
Changes in Net Position Discussion
Operating Revenues
Total operating revenues for fiscal year 2021 was at $434.6 million, an increase of $36.0 million, or 9.0%, from the prior fiscal year. This was primarily attributed to a surge in imported containerized cargo that began in the summer of 2020 and lasted throughout fiscal year 2021. Containerized cargo volume alone was 24% higher than prior fiscal year. In addition, rental property revenue was up $8.2 million from the prior year mostly due to an increase in leased land for container storage.

The chart below depicts the revenue categories as a percentage of total operating revenues:

-
100,000
200,000
300,000
400,000
500,000
FY 2020 FY 2021

75.7% 74.9%

4.7%

5.0%9.2%

8.5%5.9%

5.6%3.7%

5.3%0.8%

0.8%
Revenue in Thousands
Operating Revenue by Category

CONTAINER TERMINALS PETROLEUM TERMINALS DRY BULK FACILITIES

BREAKBULK TERMINALS RENTAL PROPERTIES MISCELLANEOUS

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
17 (Continued)
Cargo Volumes
The Port is the second busiest gateway in North America by container volume and services many of the major ocean carriers. Some of these major carriers are COSCO Shipping, OOCL, Ocean Network Express, Mediterranean Shipping Company, Hyundai Merchant Marine, Matson and SM lines.

Cargo volumes, measured in Metric Revenue Tons (MRTs), increased by 17.5% to 198.1 million MRTs versus 168.6 million MRTs in the prior fiscal year, with all cargo categories posting year over year increases.

Containerized cargo increased 18.9% to 155.7 million MRTs, dry bulk (coke, coal, sulfur, etc.) increased 25.0% to 8.3 million MRTs, break bulk (vehicles, metals, and lumber) increased 14.2% to 1.1 million MRTs, and liquid bulk (petroleum and crude) increased 10.0% to 33.0 million MRTs. The Port continues to invest in capital programs to modernize its terminal facilities and infrastructure to enhance operational excellence for the anticipated growth in trade volumes. Its terminals continue to serve as the port of choice for shipping lines to move cargo into and out of the continental United States.

Container count, measured in Twenty Foot Equivalent Units (TEUs) increased 24.0% to 9.50 million TEUs versus 7.66 million TEUs in the prior fiscal year. The significant increase was primarily due to the continued robust consumer demand for imported goods and the replenishment of depleted inventories, which was largely caused by the global pandemic.

The chart below depicts the components of inbound and outbound TEUs as a percentage of total volume:

-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
FY 2020 FY 2021

49.1%

50.9%

50.9%
TEU in Thousands
Inbound and Outbound TEUs

INBOUND OUTBOUND

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
18 (Continued)
Change in Net Position
Change in net position for fiscal year 2021 was $95.9 million, a decrease of $12.0 million, or 11.1%, from the prior fiscal year. This was primarily due to $36.0 million higher in operating revenues, offset by $15.2 million higher total operating expenses (including depreciation), and a $33.3 million decrease in grants funding. The following section provides a further discussion of the operations.

Operating Expense and Other Income and Expense
Total operating expenses (excluding depreciation) for fiscal year 2021 was $134.7 million, or $8.0 million lower than the prior fiscal year. Personnel services expense was $37.3 million, or $19.9 million lower than prior year primarily due to a $26.4 million reduction of the Department’s portion of the City’s managed pension and postretirement healthcare benefits expenses (GASB 68 & 75), which was offset by a $6.0 million increase in salaries and fringe benefits. Maintenance and operations expense was $59.1 million, or $12.4 million higher primarily consisted of a $5.4 million emergency repair work on Pier B Street pump station, a $3.7 million increase in on-call underground wet utility services, and approximately $3.3 million in other administrative costs.

Depreciation expense is affected by capital assets being placed into service or being retired in accordance with their useful lives. Depreciation expense in fiscal year 2021 was $172.8 million, or $23.2 million higher than the prior fiscal year primarily from the increase in structures and facilities, when the new Gerald Desmond Bridge was placed in service as of the first quarter of fiscal year 2021.

Interest expense, net amount is comprised of the following: (1) investment interest income with unrealized gain or loss, and (2) debt service interest expense. Fiscal years 2021 and 2020 had a net interest expense of $27.1 million and $19.1 million, respectively, or an increase of $8.0 million in fiscal year 2021. Investment interest income has declined by $17.0 million year over year, of which $11.7 million was due to the change in market valuation on the investment portfolio. Interest income earned from the pooled cash also declined by $4.9 million due to falling short-term interest rates. Debt service interest expense, however, was $9.1 million lower than the prior year mostly due to the pay-off of the short-term bond anticipation notes.

Transfers to the City totaled $21.6 million in fiscal year 2021, or $0.3 million higher than prior fiscal year, which is for the City Tidelands Operating Fund to be paid in fiscal year 2021, per the City Charter. Refer to note 9 for additional discussion.

Grants totaled $11.8 million in fiscal year 2021, a decrease of $33.3 million in comparison to prior fiscal year.

Grants are recorded based on eligible project costs incurred. The completion of the Gerald Desmond Bridge Replacement Project was the primary driver of grants funding decrease in fiscal year 2021.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
19 (Continued)
Capital Assets and Debt Administration
Capital Assets
The Department’s capital assets, net of accumulated depreciation as of September 30, 2021 and 2020 are as follows (amounts expressed in thousands):
2021 2020
Nondepreciable capital assets:

Land $ 1,313,696 1,251,388
Construction in progress 441,539 1,950,346
Right-of-way 197,884 197,884
Total nondepreciable capital assets 1,953,119 3,399,618 Depreciable capital assets (net):

Structures and facilities 3,151,019 1,604,657
Furniture, fixtures, and equipment 93,437 26,379
Total depreciable capital assets (net) 3,244,456 1,631,036 Total capital assets, net $ 5,197,575 5,030,654

Capital Assets Discussion
The capital asset accounts, net of accumulated depreciation totaled $5.2 billion, a net increase of $166.9 million from the prior fiscal year. The increase in capital spending during fiscal year 2021 comprised largely of the following: Gerald Desmond Bridge Replacement Project for $159.5 million and the Middle Harbor terminal development for $72.5 million. These amounts were partially offset by incremental accumulated depreciation and discontinued or canceled projects. The amount of capital assets transferred out of construc tion in progress and into service totaled approximately $1.8 billion for the year ended September 30, 2021. Refer to (note 4 and 5) for additional discussion related to capital assets.

Debt Administration
The following table summarizes the Department’s debt as of September 30, 2021 and 2020 (amounts expressed in thousands):
2021 2020
Short-term notes (principal and net premiums) $ — 477,548 Line of credit 50,000 —
TIFIA Loan 495,000 —
Long-term debt (principal and net premiums) 717,592 751,577 Total $ 1,262,592 1,229,125

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2021 and 2020
20 Debt Administration Discussion
The Department’s total debt increased by $33.5 million, or 2.7%. This was primarily due to a $50 million draw on the existing line of credit, partially offset by the annual debt service principal payments. Refer to notes 11 and 12 for additional discussion related to debt service.

The underlying ratings assigned to the Department’s long term debt are as follows: S&P Global Ratings AA, positive outlook; Moody’s Investors Services Aa2, stable outlook; and Fitch Ratings AA, stable outlook; AA - for the TIFIA loan.

The debt service coverage ratio for fiscal year 2021 was approximately 4.63, and is calculated as (operating revenues plus interest income minus operating expenses excluding depreciation) divided by (debt service on senior bonds). The minimum required debt service coverage ratio is 1.25.

Factors that May Affect the Department
There is significant competition among North American ports. The Department cannot predict the impact of this competition.

The Port is subject to Federal and State environmental regulations governing ships, trains, trucks, and other operational activities within the Port. Mandated environmental mitigation costs have become a significant portion of the Department’s capital and operating budgets.

The coronavirus (COVID 19) pandemic has had a significant impact on the global supply chain. Initially it resulted in higher than normal cancellations of vessel calls arriving from Asia in early 2020, followed by a surge in imported cargo for the remainder of the year which persisted throughout fiscal year 2021. The Harbor Department cannot predict the duration of the pandemic nor the impact on goods movement.

Notes to Financial Statements
The notes to the Department’s financial statements can be found on pages 26–57 of this report. These notes provide additional information that is essential to a full understanding of the financial statements.

Requests for Information
This financial report is designed to provide a general overview of the Department ’s finances. Questions concerning any of the information provided in this report should be addressed to the Director of Finance, 415 West Ocean Blvd., Long Beach CA 90802. This report and other financial reports can be viewed on the Port’s Web site at www.polb.com under the Finance menu. On the home page, select Finance; there are links to reports by title and reporting date.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Net Position
September 30, 2021
(Dollars in thousands)
Assets and Deferred Outflows
Current assets:

Pooled cash and cash equivalents (note 2) $ 713,462
Trade accounts receivable, net of allowance (note 3) 59,686 Due from other governmental agencies (note 3) 25,419
Other current assets 10,586
Subtotal 809,153
Restricted funds as to use (Harbor Revenue Bonds and other):

Restricted pooled cash and cash equivalents (note 2) 27,625 Total current assets 836,778
Noncurrent assets:

Capital assets (notes 4 and 5):

Land 1,313,696
Construction in progress 441,539
Right-of-way (note 6) 197,884
Structures and facilities 5,489,895
Furniture, fixtures, and equipment 196,718
Less accumulated depreciation (2,442,157)
Net capital assets 5,197,575
Other assets:

Long-term receivables (note 3) 1,210
Environmental mitigation credits (note 7) 37,743
Investment in joint venture (note 8) 3,674
Other noncurrent assets 13,335
Total other assets 55,962
Total noncurrent assets 5,253,537
Total assets 6,090,315
Deferred outflows of resources (note 18) 15,989
Total assets and deferred outflows of resources $ 6,106,304 21 (Continued)

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Net Position
September 30, 2021
(Dollars in thousands)
Liabilities and Deferred Inflows
Current liabilities payable from current assets:

Accounts payable and accrued expenses $ 185,665
Due to the City of Long Beach (note 9) 23,478
Compensated absences (note 11) 6,207
Security deposits and unearned revenue 21,865
Liability claims (note 10) 450
Total current liabilities payable from current assets 237,665 Current liabilities payable from restricted assets:

Current portion of bonds indebtedness (notes 11 and 12) 35,530 Current portion of loans payable (notes 11 and 14) 1,075 Line of credit (note 15) 50,000
Accrued interests payable 13,908
Total current liabilities payable from restricted assets 100,513 Total current liabilities 338,178
Long-term obligations net of current portion:

Bonded indebtedness (notes 11 and 12) 682,062
Loans payable (notes 11 and 14) 493,925
Due to City of Long Beach (note 11) 4,087
Compensated absences (note 11) 12,238
Environmental remediation liability (notes 11 and 17) 2,600 Net pension liability (notes 11 and 16) 60,174
Net OPEB liability (notes 11 and 16) 675
Total noncurrent liabilities 1,255,761
Total liabilities 1,593,939
Deferred inflows of resources (note 18) 53,642
Total liabilities and deferred inflows of resources 1,647,581 Net position:

Net investment in capital assets 3,768,983
Restricted – capital projects 37,743
Restricted – debt service 13,717
Unrestricted 638,280
Total net position $ 4,458,723
See accompanying notes to financial statements.
22 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Revenues, Expenses, and Changes in Net Position Year ended September 30, 2021
(Dollars in thousands)
Port operating revenues:

Berths and special facilities $ 408,312
Rental properties 23,061
Miscellaneous 3,271
Total port operating revenues 434,644
Port operating expenses:

Personnel services 37,258
Maintenance and operations 59,145
Interdepartmental services 38,320
Total operating expenses before depreciation 134,723
Depreciation 172,827
Total operating expenses 307,550
Income from operations 127,094
Nonoperating revenues, (expenses) net:

Investment income, net (637)
Interest expense (26,431)
Equity in income from joint venture 2,243
Discontinued capitalized projects (839)
Other income, net 4,292
Total nonoperating expenses, net (21,372)
Income before transfers and grants 105,722
Transfers (note 9) (21,598)
Grants 11,769
Increase in net position 95,893
Total net position – beginning of year 4,362,830
Total net position – end of year $ 4,458,723
See accompanying notes to financial statements.
23 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Cash Flows
Year ended September 30, 2021
(Dollars in thousands)
Cash flows from operating activities:

Cash received from customers $ 457,190
Cash paid to employees (53,006)
Cash paid to suppliers (125,119)
Other income (1,209)
Net cash provided by operating activities 277,856
Cash flows from noncapital financing activities:

Transfers to City Tidelands Fund (19,797)
Net cash used in noncapital financing activities (19,797) Cash flows from capital and related financing activities:

Grants provided 29,251
Interest paid (46,727)
Principal payments made on bonds payable (24,470)
Principal payments made on short term notes (472,050)
Proceeds from loans 495,000
Proceeds from line of credit 50,000
Payments for capital acquisitions – personnel costs (10,522) Payments for capital acquisitions – vendors (192,708)
Disbursement of other receivable 3,795
Net cash used in capital and related financing activities (168,431) Cash flows from investing activities:

Interest received 4,866
Return on investment in joint venture 3,000
Net cash provided by investing activities 7,866
Net increase in cash and cash equivalents 97,494
Cash and cash equivalents, beginning of year 643,593
Cash and cash equivalents, end of the year $ 741,087
Reconciliation of cash and cash equivalents:

Unrestricted pooled cash and cash equivalents $ 713,462 Restricted pooled cash and cash equivalents 27,625
$ 741,087
24 (Continued)

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Cash Flows
Year ended September 30, 2021
(Dollars in thousands)
Reconciliation of income from operations to net cash provided by operating activities:

Income from operations $ 127,094
Adjustments to reconcile income from operations to net cash provided by operating activities:

Depreciation 172,827
Other income, net (1,209)
Changes in assets, liabilities, and deferred outflows and inflows of resources Accounts receivable and prepaid 9,654
Accounts payable (10,362)
Accrued liabilities (1,100)
Accrued claims and judgments (4,800)
Unearned revenues 6,938
Due to other funds (694)
Compensated absences 2,994
Net pension liability and related deferred outflows of resources (7,273) Net pension liability and related deferred inflows of resources (16,248) Net OPEB liability 35
Total adjustments 150,762
Net cash provided by operating activities $ 277,856
Supplemental schedule of noncash capital and financing activities:

Accrued capital assets liabilities $ 135,773
Accrued transfers to the City’s tidelands fund 21,732
Amortization of bond premium 15,014
Amortization of deferred inflows on debt refunding 1,254 Discontinued capital projects 839
See accompanying notes to financial statements
25 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
26 (Continued)
(1) Summary of Significant Accounting Policies
(a) The Reporting Entity
Article XII of the City Charter of the City of Long Beach, California (the City) created the Harbor Department of the City of Long Beach (the Department) to promote and develop the Port of Long Beach (the Port). The Department’s operations are included in the City’s reporting entity as an enterprise fund; its activities are conducted in the Tidelands Trust area of the City and are subject to coastal area laws of the State of California and to the terms of the trust agreement between the City and the State of California. The financial statements present only the financial activities of the Department and are not intended to present the financial position and results of operations of the City.

The Department, together with the Harbor Department of the City of Los Angeles, formed a joint venture in 1983 to finance the construction of the Intermodal Container Transfer Facility (ICTF). The ICTF venture has been recorded as an investment under the equity method of accounting in the accompanying financial statements.

In 1989, the cities of Los Angeles and Long Beach entered into a Joint Exercise of Powers Agreement to create the Alameda Corridor Transportation Authority (ACTA). This agreement was amended and restated in 1996. The purpose of ACTA was to acquire, construct, finance, and operate the Alameda Corridor. The Alameda Corridor consists of a 20-mile-long rail cargo expressway connecting the ports in San Pedro Bay to the transcontinental rail yards near downtown Los Angeles, and it began operating in April 2004. ACTA prepares its own financial statements and its transactions are not included as part of the Department’s financial statements due to the separate legal status. Refer to Note 6 for additional discussion.
(b) Basis of Accounting and Measurement Focus
Disbursement of funds derived from the Department’s operations are restricted to Harbor Trust Agreement purposes. The costs of providing port services are recovered entirely through leases, tariffs, and other charges assessed to the Department’s tenants. Consistent with U.S. generally accepted accounting principles for enterprise funds, the accounting policies of the Department conform to the accrual basis of accounting. The accompanying financial statements have been prepared using the economic resources measurement focus.

Operating revenue and expenses are generated and incurred through cargo activities performed by port tenants; operating expenses include maintenance of facilities and infrastructure, security, and payments to other City departments for services provided to the Port. Administration and depreciation expenses are also considered operating expenses. Other revenue and expenses not included in the above categories are reported as nonoperating revenues (expenses). The Department applies applicable Governmental Accounting Standards Board (GASB) pronouncements and interpretations. (c) City of Long Beach Investment Pool
In order to maximize investment return and in accordance with City Charter requirements, the Department pools its available cash with other City funds into the City of Long Beach Investment Pool (the Pool). The Pool is an internal investment pool that is used as a demand deposit account by participating units. Investment decisions are made by the City Treasurer and approved by a general investment committee, whose membership includes a member of the Department’s management.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
27 (Continued)
Interest income and realized and unrealized gains and losses arising from the Pool are apportioned to each participating unit based on their average daily cash balances compared to aggregate pooled cash and investments.

The Department’s share of the Pool is stated at fair value.

For a complete description of the Pool and its underlying investments, refer to the City ’s separately issued financial statements.
(d) Cash Equivalents
The Department classifies its investment in the Pool as cash and cash equivalents, regardless of the underlying maturity of the Pool’s investments as the pool operates as a demand account for the Department.

The Department classifies all other investments with maturities of three months or less at the time of purchase as cash equivalents.
(e) Investments
Investments are reflected at fair value using quoted market prices in active and inactive markets.

Realized and unrealized gains and losses are included in the accompanying statement of revenue, expenses, and changes in net position as investment income, net. (f) Fair Value Measurements
Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction.

The Department categorizes investments reported at fair value within the fair value hierarchy established by generally accepted accounting principles. Refer to note 2 for additional detailed disclosure.

The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as follows:
(i) Level 1: Quoted prices for identical investments in active markets (ii) Level 2: Observable inputs other than quoted market prices (iii) Level 3: Unobservable inputs
(g) Inventories
Inventories of supplies are valued at cost as the Department does not have inventories held for resale, which would be valued at the lower of average cost or market. Inventory is recorded when purchased and expensed at the time the inventory is consumed. This is reported as other assets in the accompanying financial statements.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
28 (Continued)
(h) Capital Assets
An asset is classified as a capital asset if it is a nonconsumable, tangible item, valued at a single amount greater than $10,000, and with a useful life of more than one year. Capital assets are valued at historical costs. The historical cost of acquiring an asset includes the cost necessarily incurred to bring it to the condition and location necessary for its intended use.

Identifiable intangible assets are recognized as such if they are separable or when they arise from contractual or other legal right, regardless of whether those rights are transferable or separable from the entity, or from other rights and obligations.

Depreciation is determined using the straight-line method with no allowance for salvage values.

Estimated useful lives used in the computation of depreciation of capital assets are as follows:

Structures and facilities:

Bridges and overpasses 75 years
Wharves and bulkheads 40 years
Transit sheds and buildings 5–20 years
State highway connections 15 years
Others 5–50 years
Furniture, fixtures, and equipment 5–15 years

(i) Investment in Joint Venture
The investment in ICTF is accounted for using the equity method. The amount realized by the Department is proportional to the reported value and is based on the Department’s share of ICTF. The reported profit is proportional to the size of the equity investment. (j) Compensated Absences
The Department records all accrued employee benefits, including accumulated sick leave and vacation, as a liability in the period when the benefits are earned. Accrued employee benefits are classified into current and noncurrent liability for financial statement presentation. The current liability is calculated based on a five years average of vacation taken or used annually. (k) Transfers to the City Tidelands Operating Fund
City Charter Chapter XII, Section 1209 (c) (4), as amended, provides for the transfer of a maximum of 5% of Harbor Department operating revenue. The City Charter provides that the City Council, by a 2/3 vote expressed by resolution, may request the transfer to meet the lawful obligations of the Tidelands Operations Fund. The provision requires a majority vote of the Board of Harbor Commissioners, expressed by Resolution, to enact the transfer, determining that the funds will not be needed for Harbor Department operations.
(l) Net Position
The Department has adopted a policy of generally utilizing restricted funds, prior to unrestricted funds, when an expense is incurred for purposes for which both are available.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
29 (Continued)
The Department’s net position is classified into the following categories:

Net investment in capital assets – Capital assets net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets and unexpended bond proceeds and economic losses of refunding of debt Restricted – Net position subject to externally imposed conditions or constraints that can be fulfilled by the actions of the Department or by the passage of time; the restrictions are externally imposed by creditors, grantors, contributors, laws, or regulations of other governments, or by law through constitutional provisions or enabling legislation
Unrestricted – All other categories of net position; additionally, unrestricted net position may be designated for use by management of the Department. These requirements limit the area of operations for which expenditures of net position may be made and require that unrestricted net position be designated to support future operations in these areas. (m) Revenue Recognition
The Department recognizes revenue when earned on an accrual basis based upon measurable information. Rents, tariffs, or other miscellaneous receipts that are received in advance of earnings are recorded as unearned revenue until earned.

Federal or state grants are considered as nonoperating revenue, recognized as such when reimbursable and grant-eligible expenses are incurred, and are identified as capital grants in the statement of revenue, expenses, and changes in net position. Operating revenue or capital grant funds that have been received but not earned are identified as unearned revenue in the statem ent of net position.
(n) Allowance for Doubtful Accounts
The allowance for doubtful accounts (allowance) is estimated at a level to absorb expected accounts receivable losses. The allowance is established to reflect the amount of the Department ’s receivables that management estimates will be uncollectible.

The allowance is set at the greater of (1) one half of one percent (0.5%) of actual annual operating revenues or (2) the sum of 75% of aged receivable amounts over 120 days delinquent, plus 50% of amounts over 90 days delinquent, plus 25% of amounts over 60 days delinquent, plus 10% of amounts over 30 days delinquent.

In addition, management reviews the adequacy of the allowance on a monthly basis by reviewing the aging report and assesses whether any further adjustment is necessary. To determine uncollectible amounts, the Department’s Finance Division reviews all delinquent accounts in August of each year.

Amounts deemed uncollectible are written off.
(o) Pension Plan and Postretirement Benefits
All full-time Department employees are members of the City’s Miscellaneous Plan. The Department’s policy is to fund all pension costs accrued. The costs to be funded are determined annually as of

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
30 (Continued)
October 1 and are incorporated into the payroll burden rate to reimburse the City’s Employee Benefits Internal Service Fund for contributions made on behalf of Department employees (see note 15(a)).

For purposes of measuring net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Miscellaneous Plan and additions to/deductions from Miscellaneous Plan’s fiduciary net position have been determined on the same basis as they are reported by the Miscellaneous Pl an. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

The Department also participates in the City’s Retiree Health Care plan (OPEB). This program is a single-employer defined benefit healthcare plan (see note 15(b)). (p) Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates.
(q) Recent Accounting Pronouncements
GASB Statement No. 84, Fiduciary Activities: issued in January 2017, effective for periods beginning after December, 2019. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This statement has been evaluated in fiscal year 2021, and it has no impact on the Department’s financial statements.

GASB Statement No. 87, Leases: issued in June 2017, effective for reporting periods beginning after June, 2022. The objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases. The statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases. The statement is effective beginning fiscal year 2022, and the Department is currently evaluating the financial impact of this statement.

GASB Statement No. 91, Conduit Debt Obligations: issued in May 2019, effective for reporting periods beginning after December, 2022. The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additio nal commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. This statement will be effective beginning fiscal year 2023, and the Department is currently evaluating the financial impact of this statement.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
31 (Continued)
GASB Statement No. 92, Omnibus 2020: issued in January 2020, effective for reporting periods beginning after June, 2022. The objectives of this statement are to enhance comparability in accounting and financial reporting by addressing practice issues identified from the implementation and application of certain GASB statements. The statement is effective beginning fiscal year 2022, and the Department is currently evaluating the financial impact of this statement.

GASB Statement No. 93, Replacement of Interbank Offered Rates, issued in March 2020, effective for reporting periods beginning after December, 2021. The objective of this statement is to address accounting and financial reporting implications that result from the replacement of an interbank offered rate (IBOR), such as the London Interbank Offered Rate (LIBOR). As a result of global reference rate reform, LIBOR is expected to cease to exist in its current form at the end of 2021. This statement has been evaluated in fiscal year 2021, and it has no impact on the Department’s financial statements.

GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, issued in March 2020, effective for reporting periods beginning after June, 2023. The objectives of this statement are to establish definitions of public-public partnership arrangements (PPPs) and availability payment arrangements (APAs) and provide specific guidance on accounting and financial reporting for PPPs and APAs transactions. The statement is effective beginning fiscal year 2023, and the Department is currently evaluating the financial impact of this statement.

GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance, issued in May 2020, effective immediately. This statement provides temporary relief to governments and other stakeholders in light of the COVID-19 pandemic by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective for periods beginning after June 15, 2018.

GASB Statement No. 96, Subscription-Based Information Technology Arrangements, issued in May 2020, effective for fiscal years beginning after June, 2023. This statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users. This statement (1) defines a SBIT; (2) establishes that a SBITA results in a right-to-use subscription asset- an intangible asset- and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, inclu ding implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. The statement is effective beginning fiscal year 2023, and the Department is currently evaluating the financial impact of this statement.

GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, issued in June 2020, effective for fiscal years beginning after June, 2022. The primary objectives of this statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans as fid uciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans that meet the definition of a pension plan and for

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
32 (Continued)
benefits provided through those plans. This statement has been evaluated in fiscal year 2021, and it has no impact on the Department’s financial statements.

GASB Statement No. 98, The Annual Comprehensive Financial Report, issued in October 2021, effective for fiscal years ending after December 15, 2021. This statement established the term annual comprehensive financial report and its acronym ACFR. The new term and acronym replace instances of comprehensive annual financial report and its acronym in generally accepted accounting principles for state and local governments. This statement has been implemented early in fiscal year 2021. (2) Cash, Cash Equivalents, and Other Investments
The Department’s cash and cash equivalents and investments is classified in the accompanying statement of net position as follows (in thousands):

Unrestricted Restricted Total
Equity in the City’s investment pool $ 713,462 27,625 741,087

The Department’s investment policy allows funds to be invested with the City. The City’s investment policy limits the permitted investments in the investment pool to the following: obligations of the U.S. government, federal agencies, local agency bonds, medium-term corporate notes, certificates of deposit; bankers’ acceptances, commercial paper, LAIF, repurchase agreements, reverse repurchase agreements, securities lending, asset-backed securities, mortgage-backed securities, and money market mutual funds.

As of September 30, 2021, the City’s majority investment pool has a weighted average maturity of two years or less. At September 30, 2021, the Department had $741.1 million equity in the pool, representing approximately 42.1% of the pool. The following are the actual ratings as of September 30, 2021 for each investment type (in thousands):

Rating as of year end
Minimum
legal
Investment type rating Total A- A+ AA AA+ AAA Unrated
Pooled cash and investments:

Money market mutual funds N/A $ 6,437 — — — 6,437 — — U.S. Treasury notes N/A 1,234,191 — — — 1,234,191 — — Federal agency securities N/A 276,744 — — — 276,744 — — Corporate notes N/A 21,316 7,138 5,992 1,190 3,156 3,840 — Local Agency Investment
Fund (LAIF) N/A 221,623 — — — — — 221,623
Total pooled
investments $ 1,760,311 7,138 5,992 1,190 1,520,528 3,840 221,623

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
33 (Continued)
Fair Value Hierarchy
The following table categorizes the City’s pooled investments within the fair value hierarchy (in thousands):

Fair value measurement
Investments at fair value level Total Level 1 Level 2 Level 3 Debt securities:

U.S. Treasury notes $ 1,234,191 — 1,234,191 —
Federal agency securities 276,744 — 276,744 —
Corporate notes 21,316 — 21,316 —
Total investments at fair value 1,532,251 $ — 1,532,251 — Other investments at fair value:

Local Agency Investment Fund (LAIF) 221,623
Other investments at cost or contract value:

Money market mutual funds 6,437
Total investments $ 1,760,311

(3) Accounts Receivable and Other Receivables
Accounts receivable as of September 30, 2021, included the following (expressed in thousands):

Trade accounts receivable $ 61,857
Less allowance for doubtful accounts (2,171)
Accounts receivable, net $ 59,686

Other receivables as of September 30, 2021 included the following (expressed in thousands):

Due from other governmental agencies:

Current:

Federal and state grants $ 25,419
Long term:

Due from the City of Long Beach 1,210
Total due from other
governmental agencies $ 26,629

The due from other governmental agencies is related to the grant programs from various governmental agencies, which include, but are not limited to: The Federal Highway Bridge Program; the Trade Corridor Improvement Program; and the Port Security Grant Program. Funds from these grant programs are available to the Department on a reimbursement basis. Most of these programs require a contribution from the Department.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
34 (Continued)
(4) Capital Assets
Capital assets’ schedule as of September 30, 2021 is as follows: (expressed in thousands):

Balance, Balance,
October 1, Adjustments/ Placed in September 30,
Description 2020 Additions disposals service 2021
Nondepreciable capital assets:

Purchased land $ 462,108 — 767 61,541 524,416
Constructed land 789,280 — — 789,280
Construction in progress 1,950,346 343,941 (5,456) (1,847,292) 441,539 Right of way (note 6) 197,884 — — — 197,884
Subtotal 3,399,618 343,941 (4,689) (1,785,751) 1,953,119 Depreciable capital assets:

Structures and facilities 3,708,729 — (767) 1,781,933 5,489,895 Furniture, fixtures, and equipment 191,637 1,263 — 3,818 196,718 Subtotal 3,900,366 1,263 (767) 1,785,751 5,686,613
Total capital assets 7,299,984 345,204 (5,456) — 7,639,732 Less accumulated depreciation:

Structures and facilities 2,174,678 164,198 — — 2,338,876 Furniture, fixtures, and equipment 94,652 8,629 — 103,281 2,269,330 172,827 — — 2,442,157
Net capital assets $ 5,030,654 172,377 (5,456) — 5,197,575

Construction in progress at September 30, 2021 includes the following projects (in thousands):

Gerald Desmond Bridge Replacement Project $ 162,411
Pier B On-Dock Rail Program 84,160
All other programs and projects 194,968
Total $ 441,539

During the year ended September 30, 2021, $5.5 million of Construction in Progress was written off, of which $0.8 million was due to discontinued projects.
(5) Operating Property Leases to Tenants
The major portion of the Department’s property is leased to others. Such property includes marine terminal facilities, special-purpose facilities, office and commercial space, and land.

Some marine terminal facilities are leased under agreements that provide the tenants with preferential but not exclusive use of the facilities. Some leases provide for rentals based on gross revenue or, in the case of marine terminal facilities, on annual usage of the facilities. The leases and the preferential assignments generally provide for minimum rentals.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
35 (Continued)
Property under lease at September 30, 2021 consisted of the following (expressed in thousands):

Land $ 851,587
Structures and facilities:

Docks and wharves 816,526
Warehouses and sheds 24,416
Cranes and shiploaders 70,602
Buildings and other facilities 1,021,214
Infrastructure 2,901,547
Historical cost of leased property 5,685,892
Less accumulated depreciation (2,230,182)
Carrying value of leased property $ 3,455,710

The guaranteed annual minimum (GAM) rental income from the existing noncancelable operating leases under the current terms is as follows (expressed in thousands):
2022 $ 396,921
2023 387,600
2024 405,609
2025 400,546
2026 395,090
2027–2031 1,189,129
2032–2036 1,002,476
2037–2041 969,513
2042 and thereafter 1,238,528
$ 6,385,412

(6) Right-of-Way Purchase
Alameda Corridor Transportation Authority (ACTA)
In December 1994, the Department and the Harbor Department of the City of Los Angeles (Port of Los Angeles), executed the purchase of the rights of way needed for the development of the Alameda Corridor Project (the Project), which is a comprehensive transportation corridor between the Ports and the central Los Angeles area. The Ports purchased these rights, sharing the cost on a 50/50 basis, from the three railroad companies then serving the Ports: Union Pacific Railroad Company (Union Pacific), Southern Pacific Railroad Company (Southern Pacific), and Atchison, Topeka and Santa Fe Railroad companies (Atchison, Topeka and Santa Fe). After the purchase, (Atchison, Topeka and Santa Fe) merged with Burlington Northern becoming Burlington Northern Santa Fe; Union Pacific merged with Southern Pacific.

The total purchase involved the right-of-way property from the three former railroad companies and a drill track from Southern Pacific to provide an additional right of way to access local businesses along the Project. Construction of the Project began in 1997 and was completed in April 2002. Funding for the Project

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
36 (Continued)
came from federal, state, and local sources, and the issuance of debt. By the end of fiscal 2003, the Department had paid a total of $207.0 million for its share related to this right-of-way purchase.

In the future, when ACTA is able and entitled to distribute income or make equity distributions, the Ports shall share such income and equity distributions equally. Refer to note 10 for additional discussion related to the guarantee the Department has made related to the ACTA. (7) Environmental Mitigation Credits
The Bolsa Chica Mitigation Agreement of 1996 established a “Project for Wetland Acquisition and Restoration at the Bolsa Chica Lowlands in Orange County, California, for the purpose, among others, of Compensating for Marine Habitat Losses Incurred by the Port Development Landfills within the Harbor Districts of the cities of Los Angeles and Long Beach, California.” In exchange for contributions that the Ports made to restore Bolsa Chica Lowlands, the Bolsa Chica Mitigation Agreement granted the Ports mitigation credits that the Ports may use when they undertake landfill as part of port developments. The agreement established a ratio between the number of mitigation credits to be used and the number of acres to be developed based on whether development occurred within the inner or outer harbors. The agreement established that Bolsa Chica mitigation credits could be used by the Ports at one credit for each acre of outer harbor landfill and in accordance with Section 15(a), that “…inner harbor landfills shall be debited from this account at half the rate of outer harbor landfills…” Section 15(a) of the Bolsa Chica Mitigation Agreement also provided that the inner and outer harbor boundaries could be adjusted based on biological surveys.

The Department contributed a total of $50.8 million to federal and state regulatory agencies, $39.4 million in fiscal year 1997 and $11.4 million in fiscal 2006, to secure environmental mitigation credits that would allow the Department to complete landfill projects within its harbor. The cost incurred in the acquisition of the environmental credits has been classified as a noncurrent asset. The balance of environmental mitigation credits will get adjusted as landfill credits are used for the Port’s development.

As of September 30, 2021, the Department has utilized a total of $13.1 million of environmental credits for completed landfill as part of capital projects within the port boundaries to date. No environmental credit has been incurred and acquired in fiscal year 2021. The existing $37.7 million or 226 credits will be used in future projects.
(8) Investment in Joint Venture
Intermodal Container Transfer Facility (ICTF)
The Department and the Port of Los Angeles (POLA) entered into a joint powers agreement to form the ICTF Joint Powers Authority for the purpose of financing and constructing a facility to transfer cargo containers between trucks and railroad cars. The facility, which began operations in December 1986, was developed and operated by Southern Pacific Transportation Company (SPTC) under a long -term lease agreement. SPTC was subsequently merged and continues to operate as Union Pacific Corporation. The Department appoints two members of the ICTF’s five-member governing board and accounts for its investment using the equity method. The Department and POLA share income and equity distributions equally.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
37 (Continued)
The ICTF’s operations are financed from lease revenue from ICTF activities. The Department’s share of the ICTF’s net position as of September 30, 2021 totaled $3.7 million. (9) Transfers to the City Tidelands Operating Fund
City Charter Chapter XII, Section 1209 (c)(4), as amended, provides for the transfer of a maximum of 5% of Harbor Department’s operating revenue. The City Charter provides that the City Council, by a two-third vote expressed by Resolution, may request the transfer to meet the lawful obligations of the Tidelands Operations Fund. The provision requires a majority vote of the Board of Harbor Commissioners, expressed by Resolution, to enact the transfer, determining that the funds will not be needed for Harbor Department’s operations. During fiscal year 2021, the Department accrued $21.7 million as transfers due to the City Tidelands Operating Fund, to be paid in the following fiscal year. (10) Commitments and Contingencies
The Department is subject to claims and lawsuits arising from the normal course of business. The City Attorney’s office evaluates these claims on a regular basis. Department management may make a provision for probable losses if deemed appropriate on advice of legal counsel. To the extent that such provision for damages is considered necessary, appropriate amounts are reflected in the accompanying financial statements. Based upon information obtained from the City Attorney with respect to remaining cases, it is the opinion of management that the estimated liability for unreserved claims and suits will not have a material impact on the financial statements of the Department.

Claims expenditures and liabilities are reported when it is probable that a loss has been incurred and the amount of that loss, including those incurred but not reported, can be reasonably estimated. Based on an opinion from legal counsel, the Department reserved a litigation claim liability of $0.5 million for fiscal year 2021, most of which is related to construction claims and recorded as component of accrued expenses.

Contract commitments and purchase orders, mostly related to capital projects, for which materials or services were not received at September 30, 2021 aggregated $21.6 million.

In September of 2019, the Department entered into a nonoperating Memorandum of Understanding (MOU) with the City of Long Beach Public Works Department to purchase 19.7 mitigation credits from the Colorado Lagoon Restoration project for a total of $26.3 million, of which $1.3 million has already been advanced to the City in the form of a loan that remains outstanding. The remaining funds will be paid to the

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
38 (Continued)
City as reimbursement for actual cost incurred per the MOU terms from fiscal year 2020 through 2023. As of September 30, 2021 the MOU amount remains unchanged. (a) Risk Management
The Department currently carries an all-risk property insurance program covering loss or damage by fire and other risks (excluding earthquake and flood) with a loss limit of $1.0 billion in aggregate. The coverage also includes terrorism exposure.
(i) Construction Related
The Department also carries an insurance program known as “Builder’s Risk,” which cover property under construction in the Port. The policy is a master builder’s risk insurance program that covers all other active Department’s construction projects currently underway. The coverage limit for each construction project in this program is equivalent to the contract’s contract price. Exclusive of earthquake coverage, the maximum per project coverage is $125.0 million, but can be increased as needed with underwriter approval.
(ii) General Liability
To address third-party liability exposure, an excess liability insurance program is carried by the Department with total limits of $150.0 million in excess of a $1.0 million self-insured retention. The excess liability insurance program covers the Department’s operations and includes acts of terrorism within the $150.0 million limit. In addition, the Department carries specialized insurance policies providing coverage for damage to owned vessels, damage to other vessels, and pollution liability.

The amount of settlements reached by the Department did not exceed the amount of insurance coverage in any of the past three fiscal years.

The following is a summary of insurance coverage for the Department as of September 30, 2021 (in thousands):

Property insurance coverage for fire and other risks $ 1,000,000 Property insurance coverage for new Gerald Desmond Bridge 200,000 Builder’s risk for other projects 125,000
Comprehensive general liability 150,000
Self-insured retention 1,000

The Port has a provision that requires tenants, contractors, and vendors to carry various types and levels of insurance, including general liability insurance on leased premises. The insurance must include coverage for bodily injury and property damage liabilities, and name of the City, its Board of Harbor Commissioners, and the Department’s officers and employees as additional insured. This provision helps the Port in mitigating its insurance liabilities.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
39 (Continued)
(iii) Workers Compensation
The Department participates in the City’s self-insured workers’ compensation program. During fiscal years 2021, it made payments to the City’s Insurance Fund totaling $2.3 million for permanent and temporary Department employees. Amounts in the City’s Insurance Fund are accumulated to meet losses as they arise.
(b) Potential Obligations Related to the ACTA
The Alameda Corridor Use and Operating Agreement was executed by the Department, the Harbor Department of the City of Los Angeles (Port of Los Angeles), ACTA, and the Burlington Northern Santa Fe and Union Pacific Railroads (the Railroads) in 1998. This agreement provides for a payment of funds, known as a “Shortfall Advance,” to be made, under certain circumstances, to ACTA by the Department and the POLA. Revenue generated by use fees and container charges, paid by the Railroads, will be used to pay debt service on ACTA financing, to establish and maintain bond repayment and reserve funds, to establish and replenish a reserve account, and to pay ACTA ’s reasonable expenses relating to administration of the rail corridor.

To the extent that the revenue from use fees and container charges is not sufficient to meet ACTA’s obligations, the Department and the POLA have agreed to advance the funds necessary to make up the difference. This obligation began after completion of the corridor project and is limited to a total of 40% of the total annual debt service, with the Department and the POLA each responsible for one-half or 20% of the total amount due in such calendar year.

Prior to April 1 of each year, ACTA is required to provide a Notice of Estimated Shortfall Advances and Reserve Account Funding (the Notice); estimates included in the Notice are dependent upon the accuracy of the assumptions used in their formulation. It is anticipated that there will be differences between estimates and actual results; the differences may be material.

In 2011 and 2012, the Department funded Shortfall Advances of $2.95 million each year. The balance reimbursable by ACTA of $5.9 million, recorded under “other noncurrent assets”, the previously paid Shortfall Advances remained unchanged as of September 30, 2021. Shortfall Advances made by the Department and the POLA are reimbursable, with interest, upon ACTA’s ability to pay, which is undefined in the near term.

On May 24, 2016, ACTA issued the Series 2016 Bonds and restructured a portion of its debt. This potentially helped reduced the frequency and amount of future Shortfall Advances. The most recent notice date, August 15, 2021, indicates that there is no projected shortfall for ACTA’s fiscal year ending June 30, 2022.
(c) Gerald Desmond Bridge Replacement Project (GDBR Project) The GDBR Project consists of replacing the existing four-lane Gerald Desmond Bridge, which spans the Port’s Main Channel, with a new six-lane bridge. Currently, the Gerald Desmond Bridge is only two lanes in each direction with no shoulder and, depending on tide conditions, is too low to accommodate passage of the largest ships. The new bridge has been built with a cable-stayed design under a design-build contract and features three lanes in each direction for improved traffic flow, emergency lanes on both the inner and outer shoulders in each direction to reduce traffic delays and safety hazards from accidents and vehicle breakdowns, a 200-foot vertical clearance to accommodate the

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
40 (Continued)
world’s largest vessels, a reduction in the bridge’s steep grades, and a bicycle/pedestrian path with scenic overlooks. Additional improvements include reconstruction of the Terminal Island East Interchange and a new interchange with the 710 Freeway. Construction of the new bridge began in 2013 and the bridge was opened to traffic on October 5, 2020, while the substantial completion date was declared by the Board on December 16, 2020.

As of September 30, 2021, the Department has incurred approximately $1.454 billion in costs to construct the replacement bridge. Of this total amount, approximately $753.5 million has been received from grants contribution since inception, and $7.7 million reported as part of due from other governmental agencies on the statement of net position as of September 30, 2021.

Additionally, the Department has agreed to pay Caltrans operating and maintenance costs with respect to the new bridge for a 30-year period commencing on the date ownership of the new bridge is transferred to Caltrans.
(11) Long-Term Liabilities
Schedule of Changes in Long-term Liabilities (In thousands) Balance, Balance,
October 1, September 30, Due in
Description 2020 Additions Reductions 2021 one year
Revenue bonds $ 653,275 — 24,470 628,805 35,530
Premium 98,302 — 9,515 88,787 —
Total revenue bonds 751,577 — 33,985 717,592 35,530 2018A Note 327,050 — 327,050 — —
2020C Note 145,000 — 145,000 — —
Premium 5,498 — 5,498 — —
Total notes payable 477,548 — 477,548 — —
TIFIA loan — 495,000 — 495,000 1,075
Line of credit — 50,000 — 50,000 50,000
Compensated absences 15,451 4,459 1,465 18,445 6,207 Net pension liability 121,539 60,174 121,539 60,174 — Net OPEB liability 640 675 640 675 —
Environmental remediation liability 3,700 — 1,100 2,600 — Due to City of Long Beach 4,560 27 500 4,087 —
Total long-term liability $ 1,375,015 610,335 636,777 1,348,573 92,812

Senior Bonds are secured by and payable solely from revenues of the Harbor Department pledged under the Senior Resolution, and are not a debt of the City. Upon the occurrence and continuation of an event of default under the Senior Resolution, the bond owners, credit facility provider, a liquidity facility provider or any other party do not have the right to accelerate the payment of principal of and interest on the bonds outstanding. Subordinate Obligations are secured by and payable solely from revenues of the Harbor Department pledged under the Subordinate Resolution (subject to the prior pledge to the Senior Bonds),

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
41 (Continued)
and are not a debt of the City. Pursuant to Section 10.02 of the Subordinate Resolution, except as otherwise permitted in the Subordinate Resolution or a supplemental resolution, upon the occurrence and continuation of an event of default under the Subordinate Resolution, the holders, a credit facility provider, a liquidity facility provider or any other party do not have the right to accelerate the payment of principal of and interest on the Subordinate Obligations outstanding. (12) Bonds Senior Indebtedness
Bond premiums and discounts of long-term debt issues are amortized over the life of the related debt. The Harbor department’s bonded indebtedness issues and transactions are as follows (in thousands):

Fiscal term Beginning Ending Principal
and balance balance due
Date of maturity Original October 1, September 30, within Description issue Interest rate year principal 2020 Additions Payments * 2021 one year Revenue bonds:
2014B 4/24/2014 3%–5% 2018–27 $ 20,570 11,700 — — 11,700 — 2015A 4/16/2015 4%–5% 2018–23 44,845 26,265 — 4,835 21,430 14,390 2015B 4/16/2015 5 % 2023–25 20,130 20,130 — — 20,130 — 2015C 7/15/2015 5 % 2026–32 66,085 66,085 — — 66,085 — 2015D 7/15/2015 5 % 2033–42 66,865 66,865 — — 66,865 — 2017A 6/28/2017 5 % 2026–40 101,610 101,610 — — 101,610 — 2017B 6/28/2017 5 % 2041–43 25,985 25,985 — — 25,985 — 2017C 6/28/2017 5 % 2043–47 42,660 42,660 — — 42,660 — 2019A 7/11/2019 5 % 2026–49 161,310 161,310 — — 161,310 — 2020A 2/19/2020 4%–5% 2024–27 55,725 55,725 — — 55,725 — 2020B 2/19/2020 4%–5% 2021–24 74,940 74,940 — 19,635 55,305 21,140 Total bonds $ 680,725 653,275 — 24,470 628,805 35,530 Unamortized bond premium 98,302 — 9,515 88,787 —
Net total bonds indebtedness $ 751,577 — 33,985 717,592 35,530 * Bonds’ principal payable is annually on May 15, and interest payable is semiannually on May 15 and November 15.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
42 (Continued)
Annual Debt Service Requirements to Maturity – All Bonded Debt (excluding Bond Anticipated Notes) Scheduled annual principal bond maturities and interest are summarized as follows (in thousands):

Principal Interest Total
Fiscal year(s) ending September 30:
2022 $ 35,530 31,058 66,588
2023 37,090 29,493 66,583
2024 38,945 27,639 66,584
2025 32,000 25,786 57,786
2026 33,525 24,262 57,787
2027-2031 98,075 101,996 200,071
2032-2036 89,485 79,568 169,053
2037-2041 110,330 55,536 165,866
2042 and thereafter 153,825 30,589 184,414
$ 628,805 405,927 1,034,732

The Department has pledged operating revenues to repay all bonds. The bonds were issued to finance either redevelopment activities within various project areas or to refinance existing debt that was originally issued for the same purpose.

Details of each outstanding debt issue are as follows:
(a) 2014B Harbor Revenue Refunding Bonds
The City of Long Beach Harbor Revenue Senior Bonds Series 2014B (the 2014B Bonds) are secured by the Department’s gross revenue. The 2014B Bonds, dated April 24, 2014, amounting to $20.6 million were issued in conjunction with the 2014A Bonds described above to refund all of (a)(i) the City of Long Beach, California, Harbor Revenue Bonds, Series 2002B, which were outstanding in the aggregate principal amount of $43.4 million, (a) (ii) the City of Long Beach, California, Harbor Revenue Refunding Bond, Series 2004A, which were outstanding in the aggregate principal amount of $13.1 million, and (a)(iii) the City of Long Beach, California, Harbor Revenue Refunding Bonds Series 2004B, which were outstanding in the aggregate principal amount of $32.0 million (collectively, the Refunded Bonds), and (b) pay the costs of issuing the 2014 Bonds.

The 2014B Bonds maturing on or before May 15, 2024 are not subject to redemption prior to maturity.

The 2014B Bonds maturing on or after May 15, 2025 are subject to redemption prior to maturity, at the option of the Board, as a whole or in part on any date, on or after May 15, 2024, at a redemption price equal to 100% of the principal amount of the 2014B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemptions, without premium.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
43 (Continued)
(b) 2015A Harbor Revenue Refunding Bonds
The City of Long Beach Harbor Revenue Senior Bonds Series 2015A (the 2015A Bonds) are secured by the Department’s gross revenue. The 2015A Bonds, dated April 16, 2015, amounting to $44.8 million were issued in conjunction with the 2015B Bonds described below and other available moneys to (a) current refund and/or defeased all or a portion of the Series 2005 Senior Bonds, and (b) pay the costs of issuing the 2015A Bonds. This refunding was undertaken to reduce total debt service payments over the next 10 years by $36.2 million with an economic gain of $12.1 million.

The 2015A Bonds are not redeemable prior to maturity.

The difference between the reacquisition price and net carrying amount is amortized using the straight-line method over the life of the new bonds and is reported in the accompanying statements of net position as component of deferred inflow of resources. (c) 2015B Harbor Revenue Refunding Bonds
The City of Long Beach Harbor Revenue Senior Bonds Series 2015B (the 2015B Bonds) are secured by the Department’s gross revenue. The 2015B Bonds, dated April 16, 2015, amounting to $20.1 million, were issued in conjunction with the 2015A Bonds described above and other available money to (a) current refund and/or defeased all or a portion of the Series 2005 Senior Bonds, and (b) pay the costs of issuing the 2015 Bonds. Even though this refunding resulted in an increase of $0.8 million in the total of debt service payments over the next 10 years, it resulted in an economic gain of $1.7 million.

The 2015B Bonds are not subject to redemption prior to maturity.

The difference between the reacquisition price and net carrying amount is amortized using the straight-line method over the life of the new bonds and is reported in the accompanying statements of net position as component of deferred inflow of resources. (d) 2015C Harbor Revenue Bonds
The City of Long Beach Harbor Revenue Senior Bonds Series 2015C (the 2015C Bonds) are secured by the Department’s gross revenue. The 2015C Bonds, dated July 15, 2015, amounting to $66.1 million were issued in conjunction with the 2015D Bonds (the Series 2015 Senior Revenue Bonds) described above to (a) pay and/or reimburse the Harbor Department for capital expenditures incurred or to be incurred by the Harbor Department at the Port of Long Beach, including, but not limited to, the Series 2015 Projects, and/or repaying all or a portion of the outstanding Series A Subordinate Obligations and Series B Subordinate Obligations and (b) paying the financing costs and the costs of issuing the Series 2015 Senior Revenue Bond.

The 2015C Bonds are subject to redemption prior to maturity, at the option of the Board, as a whole or in part on any date, or after May 15, 2025, at a redemption price equal to 100% of the principal amount of the 2015C Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
44 (Continued)
(e) 2015D Harbor Revenue Bonds
The City of Long Beach Harbor Revenue Senior Bonds Series 2015D (the 2015D Bonds) are secured by the Department’s gross revenue. The 2015D Bonds, dated July 15, 2015, amounting to $66.8 million were issued in conjunction with the 2015C Bonds (the Series 2015 Senior Revenue Bonds) described above to (a) pay and/or reimburse the Harbor Department for capital expenditures incurred or to be incurred by the Harbor Department, including, but not limited to, the Series 2015 Projects, and/or repaying all or a portion of the outstanding Series A Subordinate Obligations and Series B Subordinate Obligations and (b) paying the financing costs and the costs of issuing the Series 2015 Senior Revenue Bond.

The 2015D Bonds are subject to redemption prior to maturity, at the option of the Board, as a whole or in part on any date, or after May 15, 2025, at a redemption price equal to 100% of the principal amount of the 2015D Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
(f) 2017A Harbor Revenue Bonds
The City of Long Beach Harbor Revenue Senior Bonds Series 2017A (the 2017A Bonds) are secured by the Department’s gross revenue. The 2017A Bonds, dated June 28, 2017, amounting to $101.6 million were issued in conjunction with the 2017B and 2017C Bonds (the Series 2017 Senior Revenue Bonds) described above to (a) pay and/or reimburse the Harbor Department for capital expenditures incurred or to be incurred by the Harbor Department, including, but not limited to, the Series 2017 Projects, and (b) pay the financing costs and the costs of issuing the Series 2017 Senior Revenue Bond.

The 2017A Bonds maturing on or before May 15, 2027 are not subject to redemption prior to maturity.

The 2017A Bonds maturing on or after May 15, 2028 are subject to redemption prior to maturity, at the option of the Board, as a whole or in part on any date, on or after May 15, 2027, at a redemption price equal to 100% of the principal amount of the 2017A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. (g) 2017B Harbor Revenue Bonds
The City of Long Beach Harbor Revenue Senior Bonds Series 2017B (the 2017B Green Bonds) are secured by the Department’s gross revenue. The 2017B Bonds, dated June 28, 2017, amounting to $26.0 million were issued in conjunction with the 2017A and 2017C Bonds (the Series 2017 Senior Revenue Bonds) described above to (a) pay and/or reimburse the Harbor Department for capital expenditures incurred or to be incurred by the Harbor Department, including, but not limited to, the Series 2017B Green Projects, and (b) pay the financing costs and the costs of issuing the Series 2017 Senior Revenue Bond.

The 2017B Green Bonds maturing on or before May 15, 2027 are not subject to redemption prior to maturity. The 2017B Green Bonds maturing on or after May 15, 2028 are subject to redemption prior to maturity, at the option of the Board, as a whole or in part on any date, on or after May 15, 2027, at a redemption price equal to 100% of the principal amount of the 2017B Green Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
45 (Continued)
(h) 2017C Harbor Revenue Bonds
The City of Long Beach Harbor Revenue Senior Bonds Series 2017C (the 2017C Bonds) are secured by the Department’s gross revenue. The 2017C Bonds, dated June 28, 2017, amounting to $42.7 million were issued in conjunction with the 2017A and 2017B Bonds (the Series 2017 Senior Revenue Bonds) described above to (a) pay and/or reimburse the Harbor Department for capital expenditures incurred or to be incurred by the Harbor Department, including, but not limited to, Series 2017 Projects, (b) repay all of the outstanding Series B Subordinate Revolving Obligations, and (c) pay the financing costs and the costs of issuing the Series 2017 Senior Revenue Bond.

The 2017C Bonds maturing on or before May 15, 2027 are not subject to redemption prior to maturity.

The 2017C Bonds maturing on or after May 15, 2028 are subject to redemption prior to maturity, at the option of the Board, as a whole or in part on any date, on or after May 15, 2027, at a redemption price equal to 100% of the principal amount of the 2017C Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. (i) 2019A Harbor Revenue Bonds
The City of Long Beach Harbor Revenue Bonds Series 2019A (the 2019A Bonds) are secured by the Department’s gross revenue. The 2019A Bonds, dated July 11, 2019, amounting to $161.3 million were issued to provide funds to (a) pay and/or reimburse the Harbor Department for the costs of the design and construction of the new headquarters building for the Harbor Department, and (b) pay the costs of issuing the Series 2019A Bonds.

The 2019A Bonds maturing on or before May 15, 2029 are not subject to redemption prior to maturity.

The 2019A Bonds maturing on or after May 15, 2030 are subject to redemption prior to maturity, at the option of the Board, as a whole or in part on any date, on or after May 15, 2029, at a redemption price equal to 100% of the principal amount of the 2019A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. (j) 2020A Harbor Revenue Refunding Bonds
The City of Long Beach Revenue Refunding Bonds Series 2020A (the 2020A Bonds) are secured by the Department’s gross revenue. The 2020A Bonds, dated February 19, 2020, amounting to $55.7 million were issued to refund and defease all of the City’s Harbor Revenue Bonds Series 2010A and Series 2010B, and to pay the costs of issuing the 2020A Bonds. The sources contributed to reducing principal balance are $20.0 million of the 2010A reserve fund, $10.8 million in principal payment, and $12.1 million in issue premium. This refunding was undertaken to reduce total debt service payments over the next 7 years by $41.2 million with an economic gain of $9.8 million.

The 2020A Bonds are not subject to redemption prior to maturity.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
46 (Continued)
(k) 2020B Harbor Revenue Refunding Bonds
The City of Long Beach Revenue Refunding Bonds Series 2020B (the 2020B Bonds) are secured by the Department’s gross revenue. The 2020B Bonds, dated February 19, 2020, amounting to $74.9 million were issued to refund and defease all of the City’s Harbor Revenue Bonds Series 2010A and Series 2010B, and to pay the costs of issuing the 2020B Bonds. The sources contributed to reducing principal balance are $16.5 million of the 2010A reserve fund, $12.1 million in principal payment, and $7.0 million in issue premium. This refunding was undertaken to reduce total debt service payments over the next 4 years by $45.5 million with an economic gain of $12.8 million.

The 2020B Bonds are not subject to redemption prior to maturity.

Fiscal Beginning Ending Principal
term and Balance balance due
Date Interest maturity Original October 1, September 30, within Description of issue rate year principal 2020 Additions Payments 2021 one year Senior Notes:
2018A Notes 9/19/2018 5 % 2021 $ — 327,050 — 327,050 — — 2020C Notes 5/19/2020 5 % 2021 — 145,000 — 145,000 — — Total notes $ — 472,050 — 472,050 — —
Unamortized bond premium 5,498 — 5,498 — —
Net total notes indebtedness $ 477,548 — 477,548 — —

(a) 2018A Senior Notes
The City of Long Beach Harbor Revenue Notes Series 2018A Senior Notes (the 2018A Notes) are secured by the Department’s gross revenue. The 2018A Notes were issued on September 19, 2018 to refund the 2014C Notes that were due to mature on November 15, 2018. The 2018A Notes were issued with a 2.25 year term for an aggregate principal and interest amount of $327.1 million and $36.0 million, respectively. Proceeds of the Series 2018A Senior Notes, along with certain moneys and investments to be released from the Interest Account of the Bond Service Fund, will be used to (a) refund and pay, all of the principal and interest on the City’s Harbor Revenue Short Term Notes, Series 2014C (the Refunded Notes), which are outstanding in the aggregate principal amount of $325.0 million, (b) fund the “Capitalized Interest Fund”, a debt service account reserve for interest payments on the Series 2018A Senior Notes through approximately April 24, 2020, and (c) pay the costs of issuing the Series 2018A Senior Notes.

The 2018A Notes were paid off in full as of its maturity date on December 15, 2020.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
47 (Continued)
(b) 2020C Senior Notes
The City of Long Beach Harbor Revenue Notes Series 2020C Senior Notes (the 2020C Notes) are secured by the Department’s gross revenue. The 2020C Notes were issued on May 19, 2020 with an approximately 1.5 year term for an aggregate principal and interest amount of $145.0 million and $6.7 million, respectively Proceeds of the Series 2018A Senior Notes, along with certain moneys and investments to be released from the Interest Account of the Bond Service Fund, will be used to (a) pay and/or reimburse the Department for capital expenditures incurred or to be incurred, including, but not limited to, the costs of designing and constructing a replacement for the Gerald Desmond Bridge, (b) fund capitalized interest on the 2020C Notes through the maturity date, and (c) pay the costs of issuing the 2020C Notes.

The 2020C Notes were paid off in full as of its maturity date on July 15, 2021. (14) TIFIA Loan Subordinate Indebtedness
In May 2014, the Harbor Department (the Port) entered into a loan agreement (the 2014 TIFIA Loan) with the United States Department of Transportation (USDOT) under the TIFIA for an approved amount of $325.0 million. On May 2020, the Port entered into a revised new TIFIA loan agreement (the 2021 TIFIA Loan) for an approved amount up to $500.0 million that replaced the 2014 TIFIA Loan. Under the 2020 TIFIA Loan, the USDOT will allow the Department to borrow up to $500.0 million, provided the amount so borrowed will be used to finance and refinance the costs related to the replacement of the Gerald Desmond Bridge, including, but not limited to, the repayment of the 2018A Notes and the 2020C Notes. The l oan is secured by a subordinate lien on the Port’s gross revenue. The loan agreement defines the permissible period for the drawdown of funds to be within the one year after substantial completion of the replacement bridge that was retroactively declared in December of 2020. As of September 30, 2021, the Department has made two draws on the TIFIA Loan in the total amounted of $495.0 million which represents the outstanding loan balance. The drawn TIFIA Loan will be repaid over a period not to exceed 35 years at an interest rate of 1.26%.

Annual Debt Service Requirements to Maturity – TIFIA Loan Scheduled annual principal loan maturities and interest are summarized as follows (in thousands):

Principal Interest Total
Fiscal year(s) ending September 30:
2022 $ 1,075 6,137 7,212
2023 2,215 6,223 8,438
2024 2,330 6,204 8,534
2025 2,390 6,158 8,548
2026 2,475 6,136 8,611
2027-2031 13,820 30,407 44,227
2032-2036 22,005 30,422 52,427
2037-2041 50,445 27,026 77,471
2042 and thereafter 398,245 43,611 441,856
$ 495,000 162,324 657,324

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
48 (Continued)
(15) Lines of Credit
On May 16, 2019, the Board of Harbor Commissioners approved a three-year revolving credit agreement in connection with a tax-exempt and taxable revolving line of credit to be provided by MUFG Union Bank, N.A. in an aggregate principal amount not to exceed $200.0 million outstanding at any one time. The tax-exempt and taxable interest rates to be paid by the Department for borrowings under the revolving lines of credit will be based on a percentage of the one-month London Interbank Offered Rate (LIBOR). The purpose of this line of credit is to provide more flexibility to access unrestricted funds when the Department has a need.

As of September 30, 2021, the Department has outstanding balance of $50.0 million under this revolving line of credit at the tax exempt interest rate. The expiration date of this line of credit is May 13, 2022. (16) Retirement Program
(a) Pension Plan
(i) Plan Description – California Public Employees’ Retirement System (CalPERS) The City contributes to the CalPERS agent multiple-employer defined benefit pension plan. The City is considered the employer and the Department is a department of the City. The Department ’s employees are enrolled in the City Miscellaneous Plan. CalPERS provides retirement benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and City resolution. All City departments are considered collectively to be a single employer, and the actuarial present value of vested and nonvested accumulated plan benefits attributable to the Department’s employees is determined as the Department’s percentage of the City as a single employer. Similarly, the net assets available for benefits of Department employees is determined as the Department’s percentage of the City’s net assets. CalPERS issues publicly available reports that include a full description of the pension plans, including benefit provisions, assumptions and membership information. All qualified permanent employees of the Department are eligible to participate in the Miscellaneous Plan. The reports can be found on the CalPERS website.

Benefits Provided – CalPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees or beneficiaries.

Benefits are based on years of credited service equal to one year of full-time employment, age at retirement and final compensation. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. The cost of living adjustments for the plan is applied as specified by the Public Employees’ Retirement Law.

Contributions – California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. 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 City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
49 (Continued)
The Miscellaneous Plan’s provisions and benefits in effect at September 30, 2021, are summarized in the following table:

Miscellaneous
On or after
October 1,
2006 and
Prior to prior to On or after
October 1, January 1, January 1,
Hire date 2006 2013 2013
Benefit formula 2.7% at 55 2.5% at 55 2.0% at 62
Benefit vesting schedule 5 years of service
Benefit payments Monthly for life
Retirement age 50–55 50–55 52–62
Required contribution rates
Employee 8.0 % 8.0 % 7.0 %
Employer 28.446 % 28.446 % 28.446 %
Percentage of eligible compensation
Monthly benefits 2.0% to 2.7% 2.0% to 2.5% 1.0% to 2.0%

(ii) Allocation Methodology
The City used a calculated percentage based on the Department’s share of contribution to the City’s total contribution amounts for each plan, to provide the Department’s net pension liability and related GASB 68 accounting elements. The Department’s proportionate share totaled 19.1% as of September 30, 2021.
(iii) Pension Liability, Pension Expense, Deferred Outflows and Deferred Inflows Related to Pensions The City’s net pension liability for the Miscellaneous Plan is measured as the total pension liability, less the plan’s fiduciary net position. Net pension liability is measured as of June 30, 2021 (measurement date). The Department’s share of the net pension liability for the Miscellaneous Plan was $121.5 million at the beginning of the period and $60.2 million at June 30, 2021. For the measurement period ending June 30, 2020, the Department incurred pension expense of $0.8 million.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
50 (Continued)
As of September 30, 2021, the Department had deferred outflows and deferred inflows related to pensions as follows (in thousands):

Deferred outflows of resources:

Pension contributions after measurement date $ 11,468
CalPERS change in proportion 3,361
Total deferred outflows of resources $ 14,829
Deferred inflows of resources:

CalPERS difference between actual and expected investment returns $ 45,041 CalPERS differences between actual and expected experience 1,942 CalPERS change in proportion 2
Total deferred inflows of resources $ 46,985

Exclusive of deferred outflows related to payments after the measurement date which will be recognized in the following year, the net amount of deferred outflows (inflows) of resources related to pensions that will be recognized in pension expense during the next five years and thereafter is as follows (in thousands):

Measurement period ending
June 30 Total
2022 $ 10,676
2023 9,675
2024 10,792
2025 12,481
Total $ 43,624

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
51 (Continued)
(iv) Actuarial Methods and Assumptions Used to Determine Total Pension Liability A summary of principal assumptions and methods used to determine the net pension liability as of September 30, 2021 is as follows:

Miscellaneous
Valuation date June 30, 2020
Measurement date June 30, 2021
Actuarial cost method Entry Age Normal
Actuarial assumptions:

Discount rate 7.15 %
Inflation 2.50 %
Projected salary increase Varies by entry age and service Investment rate of return 7.00 %
Mortality 1
1 The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

All other actuarial assumptions used in the June 30, 2021 Actuarial Valuation Report were based on the results of an actuarial experience study for the period from 1997 to 201 5. Further details of the experience study can be found on the CalPERS website.

Discount Rate – The discount rate used to measure the total pension liability was 7.15%. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.15% is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called GASB Crossover Testing Report that can be obtained from the CalPERS website under the GASB Statement No. 68 section.

The long-term expected rate of return on pension plan investments of 7.375% was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
52 (Continued)
the short-term (first 10 years) and the long-term (11–60 years) using a building-block approach.

Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The following table reflects the long-term expected real rate of return by asset class for the Miscellaneous Plan. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

Asset class Assumed asset Real return Real return
as of September 30, 2021 allocation years 1–10 a years 11+ b Global equity 50.00 % 4.80 % 5.98 %
Fixed income 28.00 1.00 2.62
Inflation sensitive — 0.77 1.81
Private equity 8.00 6.30 7.23
Real assets 13.00 3.75 4.93
Liquidity 1.00 — (0.92)
a an expected inflation of 2.00% used for this period
b an expected inflation of 2.92% used for this period

Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following table presents the net pension liability of the Department as of the measurement date, calculated using the discount rate of 7.15%, compared to a discount rate that is 1.0% age point lower (6.15%) or 1.0% age point higher (8.15%). Amounts shown below are in thousands:

Sensitivity to net pension liability

1.0% Decrease (6.15%) $ 130,358
Current discount rate (7.15%) 60,174

1.0% Increase (8.15%) 1,976

(b) Postretirement Healthcare Benefits (OPEB)
(i) Plan Description
The Department participates in the City of Long Beach Retiree Health Care plan (the Plan), a single-employer plan administer by the City of Long Beach. The Plan covers all eligible full-time employees of the City. City Council has the authority to establish and amend the benefit terms currently permitted by Ordinance No. C-7556.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
53 (Continued)
(ii) Benefits Provided
The Plan provides access to health, dental and long-term care insurance for retirees and their dependents at active employee rates as long as (a) that employee participated in a City provided insurance program of that type (PPO or HMO) during the year immediately preceding retirement, (b) has not attained the eligibility age for Medicare payments, and (c) has attained the minimum retirement age for the employee’s retirement plan. Benefits are administered through a third-party provider.
(iii) Total OPEB Liability, OPEB Expense, and Deferred Outflows and Deferred Inflows of Resources Related to OPEB
At September 30, 2021, the Department reported a total OPEB liability of $0.7 million for its proportionate share of the total OPEB liability. The total OPEB liability was measured as of September 30, 2020 and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation as of September 30, 2020. At September 30, 2021, the Department’s proportion of the City’s total OPEB liability was 7.7%.

For the years ended September 30, 2021, the Department incurred OPEB expense of $14 thousand and is reported in the personnel services expense in the accompanying financial statements.

As of September 30, 2021, the Department had deferred outflows and deferred inflows related to OPEB as follows (in thousands):

Deferred outflows of resources:

OPEB contributions after measurement date $ 233
Difference between actual and expected experience 83
Change in assumptions 339
Total deferred outflow of resources $ 655
Deferred inflows of resources:

Difference between actual and expected experience $ 371 Change in assumptions 2,524
Total deferred inflow of resources $ 2,895

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
54 (Continued)
Amounts reported as deferred outflows related to OPEB from the Department ’s contributions subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the following year. Amounts related to both the deferred outflow of resources and deferred inflow of resources will be amortized over the next 8.3 years. As follows (in thousands):

Amount to be
Year ending September 30 recognized
2022 $ (361)
2023 (361)
2024 (361)
2025 (375)
2026 (370)
2027–2031 (645)
Total $ (2,473)

(iv) Actuarial Assumptions
The total OPEB liability in the September 30, 2020 actuarial valuation was determined using the following actuarial assumptions.

Valuation date September 30, 2020
Measurement date September 30, 2020
Actuarial cost method Entry age
Actuarial assumptions:

Inflation 2.50 %
Discount rate 2.41 % Based on Fidelity Municipal Bond GO AA 20-year Bond Index
Payroll increases 2.75 %
Merit CalPERS 1997-2015 Experience Study
Healthcare costs trend rates 6.75% for 2020, decreasing to

3.75% in 2076 and later
Mortality, termination,
disability, retirement CalPERS 1997-2015 Experience Study Mortality improvement Mortality projected fully generational with Scale MP-2018 Participation rates:

Miscellaneous plan 75%, 100% select City plans
Safety 90%, 85% select City plans

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
55 (Continued)
(v) Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the Department, as well as what the Department’s total OPEB liability would be if it were calculated using a discount rate that is 1 -percentage-point lower or 1-percentage-point higher than the current discount rate (in thousands):
1 Percent Discount 1 Percent
decrease rate increase
(1.41%) (2.41%) (3.41%)
Total OPEB liability (asset) $ (562) 675 1,524

(vi) Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates The following presents the total OPEB liability of the Department, as well as what the Department ’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or higher than the current healthcare cost trend rates:
1 Percent Healthcare cost 1 Percent
decrease trend rate increase
Total OPEB liability (asset) $ 1,392 675 (436)

(c) Termination Benefits
As of September 30, 2021, the City has recorded a liability in the Employee Benefits Internal Service Fund of $136.6 million, based on an actuarial study of current and future retiree accumulated sick leave in accordance with GASB Statement No. 16, Accounting for Compensated Absences (GASB 16). The liability takes into account an estimate of future usage, additional leave accumulation and wage increases for both current retirees and active employees.

The $136.6 million long-term portion of the liability is being funded over time through burden rates, applied as a percentage of current productive salaries, and charged to the various City funds.

For the years ended September 30, 2021, the Department has recorded noncurrent liabilities totaling $10.5 million, which represents the Departments share of these liabilities. (d) Deferred Compensation Plan
The City offers its employees the option to participate in a deferred compensation plan created in accordance with Internal Revenue Code Section 457 allowing them to defer or postpone receipt of income. Amounts deferred may not be paid to the employee during employment with the City except for a catastrophic circumstance creating an undue financial hardship for the employee. Further information regarding the City’s deferred compensation plan may be found in the City’s Annual Comprehensive Financial Report for the years ended September 30, 2021.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2021
56 (17) Environmental Remediation Obligation
The Department identified an environmentally sensitive materials in a warehouse as a result of a hazardous building materials survey in 2017. The current remediation cost estimate is $2.6 million as of September 30, 2021. This warehouse has a net book value of zero and there is no reasonable expectation of any recovery associated with these remediation efforts. (18) Deferred Outflows/Inflows of Resources
The deferrals of accounting gains and losses are related to cumulative bond refunding activity from current year and prior year bonds. The deferred outflows and deferred inflows of resources related to net pension liability are certain changes in total pension liability and fiduciary net position of the pension plan that are to be recognized in future pension expense.

The schedule of deferrals as of September 30, 2021 is as follows (expressed in thousands):

Deferred outflows of resources:

Pension related deferred outflows $ 14,829
OPEB related deferred outflows 655
Change in OPEB allocated proportion 505
Total deferred outflows of resources $ 15,989
Deferred inflows of resources:

Gain on debt refunding $ 3,657
Pension related deferred inflows 46,985
OPEB related deferred inflows 2,895
Change in OPEB allocated proportion 105
Total deferred inflows of resources $ 53,642

(19) Subsequent Event
On March 9, 2022, the ownership of the new Gerald Desmond Bridge Replacement was officially transferred to Caltrans as a component of the state highway system, with approval of the Board and concurrence by Caltrans. The asset transfer of the total Gerald Desmond Bridge Replacement Project is coordinated in a two-phase process that will result in a loss of the contributed asset to other government agency, and a reduction of the Department’s asset of approximately $1.6 billion. The first phase of the transfer consists of the new completed replacement bridge itself with an approximate value of $1.5 billion.

The second phase encompasses all remaining capital costs, including but not limited to the demolition of the old bridge, anticipated to be completed with a final closed out in 2024.

Required Supplementals

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Pension Liability and Related Ratios1
September 30, 2021
Last 10 Years1
(Dollars in thousands)
(Unaudited)
2021 2020 2019 2018 2017 2016 2015
Department’s percentage of total City pension liability 19.1 % 18.4 % 18.3 % 18.7 % 19.2 % 20.9 % 18.9 % Department’s total pension liability $ 60,174 121,539 113,611 110,982 129,893 124,170 90,470 Department covered-employee payroll 54,483 46,826 47,718 45,236 48,381 47,203 45,316 Department pension liability as a percentage of covered payroll 110.4 % 259.6 % 238.1 % 245.3 % 268.5 % 263.1 % 199.6 % Fiduciary net position as a percentage of the pension liability 89.12 % 76.13 % 76.77 % 76.92 % 73.72 % 73.71 % 78.41 % Notes to Schedule:
1 Fiscal year 2015 was the first year of implementation.

See accompanying independent auditors’ report.
57 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Schedule of Contributions
Miscellaneous Plan
September 30, 2021
Last 10 Years1
(Dollars in thousands)
(Unaudited)
2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution2
$ 14,952 13,175 11,422 9,963 8,815 8,338 6,637
Contributions in relation to the actuarially determined contribution3 (14,952) (13,175) (11,422) (9,963) (8,815) (8,338) (6,637) Contribution deficiency (excess) $ — — — — — — —
Covered payroll 54,483 46,826 47,718 45,236 48,381 47,203 45,316 Contributions as a percentage of covered payroll 27.44 % 28.14 % 23.94 % 22.02 % 18.22 % 17.66 % 14.65 % Notes to schedule:

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2020 were from the June 30, 2017 funding valuation report public agency valuations.

Valuation Date: 6/30/2017
Actuarial Cost Method Entry age normal
Amortization Method For details, see June 30, 2017 Funding Valuation Report.

Asset Valuation Method Market Value of Assets. For details, see June 30, 2017 Funding Valuation Report.

Inflation 2.625 %
Salary Increases Varies by entry age and service
Payroll Growth 2.875 %
Investment Rate of Return 7.25%, net of pension plan investment and administrative expenses, including inflation Retirement Age Probabilities of retirement are based on the 2017 CalPERS Experience Study for the period 1997 to 2015.

Mortality The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

Notes:
1 Historical information is required only for years for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation. 2 Actuarially Determined Calculation is based on a CalPERS projection of the Miscellaneous payroll 3 Amount represents actual contributions as recorded by CalPERS See accompanying independent auditors’ report.
58 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
OPEB Liability and Related Ratios1
September 30, 2021
Last 10 Years1, 2
(Dollars in thousands)
(Unaudited)
2021 2020 2019 2018 2017 2016
Department’s percentage of total City OPEB liability 7.7 % 6.6 % 6.7 % 6.7 % 6.5 % 6.9 % Department’s Total OPEB liability $ 675 640 1,555 3,467 3,250 3,103 Department covered-employee payroll 52,900 46,826 47,718 45,236 48,381 47,203 Total department OPEB liability as a percentage of covered payroll 1.3 % 1.4 % 3.3 % 7.7 % 6.7 % 6.6 % Notes to Schedule:
1 No assets are accumulated in a trust to pay related benefits 2 Fiscal year 2016 was the first year of implementation.

See accompanying independent auditors’ report.
59 Statistics

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statistical Section
Year ended September 30, 2021
(Unaudited)

This section presents detailed information as a context for understanding of what the information in the financial statements and note disclosures shows about the Department’s overall financial health.

Page
Financial Trends Information:

These condensed schedules provide trend information of how the Department’s financial performance and well-being have changed over time.

Statements of Net Position – Last 10 Fiscal Years – Exhibit 1 60 Changes in Fund Net Position – Last 10 Fiscal Years – Exhibit 2 61 Revenue Capacity Information:

This schedule contains information of the Department’s major revenue sources.

Operating Revenue by Type – Last 10 Fiscal Years – Exhibit 3 62 Debt Capacity Information:

This schedule presents the affordability of the Department’s current level of outstanding debt and the Department’s ability to issue additional debt in the future.

Revenue Bonds Debt Service Coverage – Last 10 Fiscal Years – Exhibit 4 63 Operating Information:

These schedules and the schedules under Other Information provide operating data that reflects how the Department’s financial report relates to the services it provides and the activities it performs.

Principal Customers – Exhibit 8 67
Employee Headcount by Division – Last 10 Fiscal Years – Exhibit 9 68 Exhibit 1

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statements of Net Position
Last Ten Fiscal Years
(In millions)
(Unaudited)
2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Assets and deferred outflows:

Current $ 837 793 658 717 690 487 501 453 441 673 Other 5,254 5,089 5,039 4,853 4,665 4,550 4,474 4,229 3,612 2,931 Deferred outflows 16 9 14 21 42 42 22 10 11 13 Total assets and deferred outflows $ 6,107 5,891 5,711 5,591 5,397 5,079 4,997 4,692 4,064 3,617 Liabilities and deferred inflows:

Current $ 238 131 125 315 101 111 100 123 153 123 Current – restricted* 100 520 55 58 65 61 60 67 61 59 Long term 1,256 868 1,263 1,115 1,292 1,115 1,215 1,037 672 641 Deferred inflows 54 9 13 22 13 12 15 3 — —
Total liabilities and deferred inflows $ 1,648 1,528 1,456 1,510 1,471 1,299 1,390 1,230 886 823 Net position:

Net investment in capital assets $ 3,769 3,791 3,745 3,643 3,492 3,442 3,077 2,975 2,848 2,105 Restricted 52 52 47 56 51 90 265 199 62 157
Unrestricted 638 520 463 382 383 248 267 289 269 531 Total net position $ 4,459 4,363 4,255 4,081 3,926 3,780 3,609 3,463 3,179 2,793 Working capital $ 599 662 533 402 589 376 401 330 288 550 Current ratio 2.5 1.2 3.7 1.9 4.2 2.8 3.1 2.4 2.1 3.7
Debt to asset ratio 31.3 % 30.0 % 29.0 % 31.0 % 31.0 % 28.0 % 31.0 % 29.0 % 25.0 % 28.0 % * Current liabilities payable from restricted assets.

Source: Finance Division, Harbor Department.

See accompanying independent auditors’ report. 60
Exhibit 2

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Changes in Fund Net Position
Last Ten Fiscal Years
(In millions)
(Unaudited)
2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Operating revenue $ 435 399 412 402 381 362 355 358 346 335 Operating expense 308 292 279 287 291 292 271 228 188 177 Income from operations 127 107 133 115 90 70 84 130 158 158 Investment earnings (25) (17) (9) (10) — (15) 39 (12) — (16) Other income/(expense) 3 (6) 3 2 2 5 4 7 1 3
Transfers to City Tidelands Fund/Other Operating Funds (21) (21) (21) (20) (19) (19) (18) (18) (17) (17) Capital grants 12 45 68 68 73 132 121 178 251 14 Change in net position $ 96 108 174 155 146 173 230 285 393 142 Return on investment 2.7 % 2.8 % 4.6 % 4.3 % 4.2 % 0.1 % 7.4 % 9.4 % 14.4 % 6.7 % Capital expenditures (Includes personnel costs) $ 203 265 496 251 252 367 363 552 792 373 Personnel:

Wages and benefits from operations $ 53 76 66 63 60 62 55 48 45 43 Source: Finance Division, Harbor Department.

See accompanying independent auditors’ report.
61 Exhibit 3

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Operating Revenue by Type
Last 10 fiscal years
(In millions)
(Unaudited)
2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Berth and special facilities:

Wharfage $ 367 355 367 359 342 323 312 308 297 269 Dockage 18 6 6 7 7 8 11 11 12 12
Bunkers 1 1 1 1 1 1 1 1 1 1
Special facilities rentals 21 18 19 16 13 16 16 14 12 28 Crane rentals — — — — — — 2 13 13 13
Other 1 1 1 1 1 1 1 1 1 —
Total berths and special facilities 408 381 394 384 364 349 343 348 336 323 Rental properties 23 15 15 14 14 10 10 9 9 10
Miscellaneous 3 3 3 4 3 3 2 1 1 2
Total operating revenue $ 434 399 412 402 381 362 355 358 346 335 Growth (reduction)% 5.5 5.6 1.5 (1.1) 3.4 3.6 (3.5) Special facility revenue by terminal commodity:

Containers $ 325 302 311 311 291 275 270 280 268 256 Liquid bulk 22 19 23 17 18 17 17 16 17 17
Dry bulk 37 37 37 37 35 29 29 26 26 24
Vehicles 18 18 17 14 15 15 14 13 12 13
Steel 5 4 5 4 4 8 8 8 8 8
Lumber 1 1 1 1 1 1 1 1 1 1
Miscellaneous — — — — — 3 3 3 3 3
Total special facility revenue $ 408 381 394 384 364 348 342 347 335 322 Source: Finance Division, Harbor Department
See accompanying independent auditors’ report.
62 Exhibit 4

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Revenue Bonds Debt Service Coverage
Last Ten Fiscal Years
(Millions of Dollars)
(Unaudited)
Revenue
Maintenance Net bonds deb t Times
Revenues costs revenues service debt service
Fiscal year (a) (b) (a–b) (c) covered
2021 $ 434 135 299 65 4.60
2020 415 145 270 66 4.09
2019 432 135 297 77 3.86
2018 406 139 267 80 3.34
2017 383 143 240 72 3.33
2016 365 144 221 73 3.03
2015 359 134 225 78 2.88
2014 360 108 252 80 3.15
2013 347 98 249 80 3.11
2012 337 87 250 80 3.13
(a) Total port operating revenue and interest income only. (b) Port operating expenses before depreciation and amortization. (c) Bonds only not including bond anticipation notes (BANs) or line of credit.

BANs are set up with capitalized interest reserve funds.

Source: Finance Division, Harbor Department.

See accompanying independent auditors’ report.
63 Exhibit 5

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Tonnage Summary
Last 10 fiscal years
(Thousands of Metric Revenue Tons)
(Unaudited)
Port of
Inbound tonnage Outbound tonnage Long Beach
Fiscal year Municipal Private * Total Municipal Bunkers Total Total 2021 156,874 — 156,874 39,336 1,908 41,244 198,118 2020 129,133 — 129,133 37,812 1,630 39,442 168,575 2019 134,070 — 134,070 38,036 851 38,887 172,957
2018 139,597 — 139,597 39,734 1,262 40,996 180,593 2017 130,435 — 130,435 36,190 1,474 37,664 168,099 2016 122,937 — 122,937 36,733 1,652 38,385 161,322 2015 124,525 — 124,525 38,436 1,313 39,749 164,274 2014 122,244 — 122,244 42,415 867 43,282 165,526
2013 119,504 — 119,504 41,910 843 42,753 162,257
2012 107,283 — 107,283 36,947 914 37,861 145,144
Average annual growth (reduction)
Metric revenue ton = 1 metric ton or 1 cubic meter, whichever is the basis for tariff assessment * Private berth information is no longer available. Revenue from private berth leases is revenue of the terminal operator and no t part of the Port’s revenue.

Beginning in 2012, the Port implemented a new automated billing system that no longer collects private berth statistics.

Source: Finance Division, Harbor Department
See accompanying independent auditors’ report.
64 Exhibit 6

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Tonnage by Commodity Group and Vessel Calls
Last 10 fiscal years
(Thousands of metric revenue tons)
(Unaudited)
Average
annual
2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Total growth Containerized:

In 124,547 100,669 103,173 108,091 98,941 93,614 95,798 94,310 91,047 77,910 863,553 3.46 % Out 31,110 30,247 29,204 30,823 28,174 29,400 29,307 31,262 30,525 27,584 266,526 1.34 % Other break bulk:

In 1,107 964 1,116 1,243 1,127 1,008 1,039 1,002 854 917 9,270 1.18 % Out 61 60 115 129 61 99 101 92 108 98 863 2.20 % Liquid bulk:

In 30,325 26,950 29,310 29,819 30,130 27,971 27,479 26,696 27,398 28,197 253,950 (0.47)% Out 2,703 3,074 2,300 2,351 2,497 3,203 3,521 2,995 3,197 2,466 25,604 4.43 % Dry bulk:

In 894 550 471 445 238 344 209 235 259 259 3,010 15.38 % Out 7,371 6,060 7,268 7,692 6,933 5,684 6,820 8,934 8,869 7,713 65,973 (1.73)% Total:

In 156,873 129,133 134,070 139,598 130,436 122,937 124,525 122,243 119,558 107,283 1,129,783 2.47 % Out 41,245 39,441 38,887 40,995 37,665 38,386 39,749 43,283 42,699 37,861 358,966 — % Vessel calls* 2,561 2,237 2,095 2,278 2,149 2,227 2,676 2,752 3,425 3,993 23,832 Annual growth/(decline) 14.48 % 6.78 % (8.03)% 6.00 % (3.50)% (16.78)% (2.76)% (19.65)% (14.22)% (16.08)% TEU’s 9,501 7,661 7,747 8,001 7,231 6,946 7,088 6,818 6,648 5,857 63,997 TEU annual growth/(decline) 24.02 % (1.11)% (3.17)% 10.65 % 4.10 % (2.00)% 3.96 % 2.56 % 13.51 % (7.00)% * Beginning in FY 2014, only billable vessel calls are included in the total vessel call number.

Metric revenue ton = 1 metric ton or 1 cubic meter, whichever is the basis for the tariff assessment See accompanying independent auditors’ report.
65 Exhibit 7

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Metric Revenue Tons and Container Counts
Last 10 fiscal years
(In thousands)
(Unaudited)
2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Municipal berths1:

Foreign 125,923 101,566 104,012 108,811 99,468 93,928 98,464 104,245 101,027 91,490 Coastwise/intercoastal 30,950 27,567 30,058 30,787 30,977 29,009 26,061 17,998 18,477 15,793 Total inbound cargo 156,873 129,133 134,070 139,598 130,445 122,937 124,525 122,243 119,504 107,283 Outbound cargo:

Foreign 34,871 34,061 34,418 36,218 32,923 32,737 33,592 37,067 36,769 Coastwise/intercoastal 4,466 3,751 3,618 3,516 3,258 3,996 4,843 5,348 5,141 3,270 Bunkers 1,908 1,630 851 1,261 1,474 1,653 1,313 867 843 1,311 Total outbound cargo 41,245 39,442 38,887 40,995 37,655 38,386 39,748 43,282 42,753 4,581 Total municipal cargo 198,118 168,575 172,957 180,593 168,100 161,323 164,273 165,525 162,257 111,864 Private berths
1:

Inbound — — — — — — — — — —
Outbound — — — — — — — — — —
Total private cargo — — — — — — — — — —
Grand total 198,118 168,575 172,957 180,593 168,100 161,323 164,273 165,525 162,257 111,864 Container count summary (000’s)2
Loaded inbound TEUs 4,667 3,761 3,862 4,044 3,698 3,514 3,596 3,523 3,420 2,932 Loaded outbound TEUs 1,456 1,492 1,441 1,564 1,451 1,538 1,528 1,664 1,671 1,491 Total loaded 6,123 5,253 5,303 5,608 5,149 5,052 5,124 5,187 5,091 4,423 Full containers annual growth (decline) (5.4)% 8.9 % 1.9 % (1.4)% (1.2)% 1.9 % 15.1 % (6.3)% Total empty 3,378 2,408 2,444 2,393 2,081 1,894 1,964 1,631 1,557 1,434 Empty containers annual growth (decline) 2.1 % 15.0 % 9.9 % (3.6)% 20.4 % 4.8 % 8.6 % (9.1)% Total TEUs 9,501 7,661 7,747 8,001 7,230 6,946 7,088 6,818 6,648 5,857 Annual growth 24.0 % (1.1)% (3.2)% 10.7 % 4.1 % (2.0)% 4.0 % 2.6 % 13.5 % (7.0)% 1 Metric revenue tons is equal to either 1,000 kilograms or one cubic meter. 2 A TEU represents a 20-foot equivalent unit.

Source: Finance Division, Harbor Department
See accompanying independent auditors’ report.
66 Exhibit 8

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Principal Customers
(Unaudited)
Effective Expiration
The Port’s largest customers date date
Total Terminals International, LLC 08/2002 08/2027
OOCL, LLC – Long Beach Container Terminal, LLC 07/2011 06/2051 Pacific Maritime Services – Pacific Container Terminal 05/2002 04/2042 International Transportation Service, Inc. 09/2006 08/2026 SSA Terminals (Long Beach), LLC 12/2002 10/2027
Toyota Logistics Services 01/2009 12/2028
SSA Terminals, LLC – SSA Terminal C60/Matson Navigation 05/2002 04/2022 Metropolitan Stevedore Company 09/2014 09/2034
Oxbow Carbon & Minerals, LLC 09/2014 09/2029
Carson Cogeneration Company – Tesoro Refining & Marketing 06/1983 05/2023 SA Recycling, LLC 11/1994 11/2024
Tesoro Refining & Marketing Co – Tesoro Logistics LP 01/2012 01/2032 Koch Carbon, Inc. 01/1988 12/2027
Tesoro Refining & Marketing 01/2015 12/2034
Tesoro Refining & Marketing 01/1981 12/2022
Jacobsen Pilot Service, Inc. 08/2017 07/2032
Chemoil Corporation 07/2010 06/2025
Crescent Terminals, Inc. 07/2000 06/2027
Pacific Crane Maintenance Company, LLC 05/2002 Month-to-month CSA Equipment Company, LLC 02/2013 06/2027
Contractual obligations between the Port and its customers prevent the Port from releasing information related to tenant revenue.

Source: Real Estate Division, Harbor Department.

See accompanying independent auditors’ report.
67 Exhibit 9

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Employee Headcount by Division
Last 10 fiscal years
(Unaudited)
2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Executive administration 17.0 18.0 18.0 15.0 14.0 18.0 17.0 11.9 9.3 15.4 Business development 10.0 12.0 11.0 12.0 13.0 13.0 11.0 — — — Communications 17.0 19.0 18.0 16.0 14.0 14.0 16.0 15.0 12.8 14.0 Construction management 50.0 48.0 47.0 48.0 45.0 47.0 46.0 — — — Design 48.0 46.0 46.0 46.0 51.0 49.0 48.0 — — — Engineering — — — — — — — 140.7 128.8 128.0
Environmental planning 22.0 23.0 21.0 24.0 21.0 24.0 23.0 — — — Finance 27.0 28.0 23.0 22.0 25.0 25.0 25.0 24.5 24.9 26.0 Government relations/affairs 4.0 4.0 3.0 3.0 4.0 3.0 4.0 4.0 4.0 4.0 Human resources 17.0 19.0 20.0 18.0 16.0 18.0 18.0 17.4 16.3 17.0 Information management 25.0 27.0 24.0 20.0 22.0 22.0 22.0 20.6 20.8 21.0 Maintenance 79.0 81.0 78.0 82.0 90.0 92.0 84.0 76.3 81.1 81.0 Master planning 5.0 6.0 8.0 7.0 7.0 5.0 6.0 31.7 30.6 31.0 Program delivery 3.0 3.0 3.0 3.0 3.0 3.0 2.0 — — — Program management 27.0 25.0 23.0 22.0 27.0 28.0 25.0 — — — Project controls 16.0 16.0 15.0 12.0 11.0 11.0 8.0 — — — Real estate 10.0 9.0 7.0 8.0 9.0 9.0 8.0 8.8 9.0 9.0 Risk management 12.0 11.0 11.0 11.0 9.0 10.0 10.0 8.3 7.6 8.0 Security 84.0 85.0 78.0 84.0 81.0 74.0 79.0 68.0 71.2 76.5 Survey 22.0 21.0 20.0 21.0 22.0 22.0 23.0 — — — Tenant services/trade relations 11.0 13.0 13.0 13.0 12.0 9.0 9.0 19.3 16.5 16.0 Transportation planning 6.0 6.0 6.0 5.0 7.0 6.0 6.0 — — — Full-time/permanent subtotal 512.0 520.0 493.0 492.0 503.0 502.0 490.0 446.5 432.9 446.9 Growth/decline (1.5)% 5.5 % 0.2 % (2.2)% 0.2 % 2.4 % 9.7 % 3.1 % (3.1)% 7.2 % Part-time/temporary subtotal 24.0 13.7 19.0 31.0 29.0 34.0 25.5 29.4 13.0 Growth/decline (100.0)% 75.2 % (27.9)% (38.7)% 6.9 % (14.7)% 33.3 % (13.3)% 126.2 % (31.2)% Total number of employees 512.0 544.0 506.7 511.0 534.0 531.0 524.0 472.0 462.3 459.9 Growth/decline (5.9)% 7.4 % (0.8)% (4.3)% 0.6 % 1.3 % 11.0 % 2.1 % 0.5 % 5.5 % Note:

FY2015 – FY2020 presented the count at year-end (personnel inventory report) FY2006 – FY2014 presented the count average of the year Board of Harbor Commissioners are not included
Source: Human Resources, Harbor Department
See accompanying independent auditors’ report.
68 Pico Ave.

Pico Ave.

Los Angeles River
W Ocean Blvd.W Ocean Blvd.

Seaside Fwy
Seaside Fwy
Ocean Blvd.

E Seaside WayW Seaside Way
W 1st St.

W 3rd St.

W 4th St.

W 5th St. E 5th St.

W 6th St.

W 7th St.

W 8th St.

W 9th St.

W 10th St.

W 11th St.

E 11th St.

W 12th St.

W Broadway
New Dock St.

New Dock St.

Old Dock St.

Terminal Way
Berth St.

Navy Way
Navy Way
Navy Way
Navy Way
Pier A Plaza
Pier A Way
Ocean Ave.

Pier D St.

Queensway Dr.

S Harbor Scenic Dr.

Pier J Ave E.

S Harbor Scenic Dr.

Q
ueens Way
Carrack Ave.

Pier B St.

Pier T Ln.

Pier T Ave.

Pier T Way
Mediterranean Way
S Henry Ford Ave.

N Henry Ford Ave.

Harbor Plaza
Harbor Plaza
Pier F Ave.

Pier G Ave.Pier F Ave.

W Shoreline Dr.

E Shoreline Dr.

Golden Shore
Golden Shore
W Shoreline Dr.W Shoreline Dr.

N Golden Ave.

Loma Vista Dr.

De Forest Ave.

Fairbanks Ave.

Shoemaker
Bridge W Chester Pl.

MaineAve.

DaisyAve.

Magnolia
Ave.

Chestnut
Ave.

CedarAve.

Cedar Ave. Locust Ave.

The Pike
PAB
Pacific Ave.

Pacific Ave.

Pine Ave.

S Pine Ave.

Pine Ave.

Elm Ave.

Long Beach Blvd.

Linden Ave. Atlantic Ave.

Navy Mole Rd.

Ferry St.

Terminal Way
Terminal Way
S Seaside Ave.

S Seaside Ave.

Terminal Way
Nimitz Rd.

Navy Mole Rd.

Lugger Way
W Edison Way
Canal Ave.

Caspian
Ave.

Santa Fe
Ave.

Jackson
Ave.

HayesAve.

Farragut Ave. Anaheim Way
JudsonAve.

Harbor Ave.

Pico Ave.

W 12th St. W 12th St.

W 11th St.

W Cowles St.

W 14th St.

Pier B St.

W 9th St.

E 1st St.

W Anaheim St.

E Anaheim St.

W Anaheim St.

Pier D St.

E Anaheim St.

Queens Hwy.

Windsor Way
Queensway Dr.

Chestnut
Ave.

W Ocean Blvd.

Queens Hwy.

Long Beach
Convention Center
Aquarium
of the Pacific
Shore Rd.

Peninsula Rd.

Pier F Ave.

Pier C St.

Carrack Ave.

W Seaside Blvd.

NRG Facitily
Pier S Ln.

Anchorage Rd.

Edison Ave.

Pier F Ave.

Pico Ave.

PIER S
PIER A
WEST
PIER D
PIER D
PIER B

PIER G PIER G
PIER J
PIER J
PIER H
PIER H
PIER F
PIER E
PIER C
PIER
B
PIER A
PIER T
PIER T
PIER T
Queensway Bay
Downtown Marina
Inner Harbor
Turning Basin
Channel Three
Channel Two
Back Channel
Middle Harbor
West Basin
East Basin
Fish Harbor
Turning Basin
West Basin
Port of Los Angeles
Watchorn
Basin
Los Angeles Harbor
Outer Harbor
Basin Six
Outer Harbor
San Pedro Bay
Long Beach Channel
Southeast Basin
Grissom
Cerritos Channel
East Basin
Pier S
Ave.

Main Channel
East Channel
West Channel
Cruise Terminal
N
City of Long Beach
City of Los Angeles
City of Los Angeles
City of Long Beach
City of Los Angles
Terminal Island
Pier 300
San Pedro
City of Long Beach
City of Los Angeles
Total Terminals
International
Long Beach
Container
Terminal
International
Transportation
Service
Paciﬁc Container
Terminal
SSA-Matson
Terminals
SSA Terminals
Long Beach
City of Long Beach Harbor Department
City of Long Beach
415 W. Ocean Blvd. • Long Beach • CA 90802
www.polb.com
For The Fiscal Year Ended
September 30, 2021
ANNUAL

COMPREHENSIVE

FINANCIAL
REPORT

OF THE LONG BEACH WATER DEPARTMENT
A Department of the City of Long Beach, California
Attachment C
•

LONG BEACH WATER DEPARTMENT
1800 East Wardlow Road
Long Beach, CA 90807
www.lbwater.org

ANNUAL COMPREHENSIVE FINANCIAL REPORT
OF THE

LONG BEACH WATER DEPARTMENT
(A Department of the City of Long Beach, California)

For the Fiscal Year Ended
SEPTEMBER 30, 2021

CHRISTOPHER J. GARNER
General Manager

B. ANATOLE FALAGAN
Assistant General Manager

BRANDON WALKER
Director of Finance

SOKHALAY HONG
Senior Accountant

YUMINA C. EGGLESTON
Senior Accountant

Prepared by the Finance Division
of the
Business Bureau

Intentionally Left Blank

INTRODUCTORY SECTION

Intentionally Left Blank

i
Annual Comprehensive Financial Report

of the

Long Beach Water Department
(A Department of the City of Long Beach, California)

For the Fiscal Year Ended September 30, 2021

Table of Contents

Introductory Section Page
Table of Contents ........................................................................................................... i Letter of Transmittal ..................................................................................................... iv GFOA Certificate of Achievement for Excellence in Financial Reporting ................... xiv Organization Chart ...................................................................................................... xv Board of Water Commissioners and Staff .................................................................. xvi

Financial Section

Independent Auditors’ Report ........................................................................................ 1

Management Discussion and Analysis .......................................................................... 3

Financial Statements:

Statements of Net Position ............................................................................... 22 Statements of Revenues, Expenses, and Changes in Fund Net Position ........ 24 Statements of Cash Flows ................................................................................ 25 Notes to Financial Statements .......................................................................... 26

Required Supplementary Information Section (Unaudited)

Schedule of the Department Proportionate Share of the Net Pension Liability and Contributions ............................................................................................................... 51

Table of Contents
(continued)

Statistical Section (Unaudited)

Page
Financial Trends 55-64

Exhibit
1 Changes in Net Position – Water Fund - Last Ten Fiscal Years ................... 57 2 Changes in Net Position – Sewer Fund - Last Ten Fiscal Years ................... 58 3 Net Position by Component – Water Fund - Last Ten Fiscal Years .............. 59 4 Net Position by Component - Sewer Fund - Last Ten Fiscal Years .............. 60 5 Water Fund Revenue by Type - Last Ten Fiscal Years ................................. 61 6 Sewer Fund Revenue by Type - Last Ten Fiscal Years ................................ 62 7 Water Fund Expenses by Type - Last Ten Fiscal Years ............................... 63 8 Sewer Fund Expenses by Type - Last Ten Fiscal Years ............................... 64

Revenue Capacity 65-72

Exhibit
9 Source of Water (Pumped, Purchased, and Reclaimed)
and Consumption - Last Ten Fiscal Years ................................................ 67 10 Water Rates: Volumetric Rate Charges - Last Ten Fiscal Years ................... 68 11 Water Rates: Daily Service Charges by Size - Last Ten Fiscal Years .......... 68 12 Water Rates: Daily Fireline Service Charge by Size ..................................... 69 13 Ten Largest Water Users in the City of Long Beach
Current Year and Nine Years Ago ............................................................ 69 14 Ten Largest Reclaimed Water Users in the City of Long Beach Current Year and Nine Years Ago ............................................................ 70 15 Sewer Rates: Volumetric Rate Charges & Capacity Charges - Last Ten Fiscal Years ........................................................................ 70 16 Sewer Rates: Daily Service Charges by Size - Last Ten Fiscal Years .......... 71 17 Ten Largest Sewer Users in the City of Long Beach
Current Year and Nine Years Ago ........................................................ 71

iii

Table of Contents
(continued)

Debt Capacity Information 73-78

Exhibit

18 Water Fund Debt Service Coverage - Last Ten Fiscal Years ........................ 75 19 Sewer Fund Debt Service Coverage - Last Ten Fiscal Years ....................... 76 20 Water Fund Ratios of Outstanding Debt by Type - Last Ten Fiscal Years .... 77 21 Sewer Fund Ratios of Outstanding Debt by Type - Last Ten Fiscal Years ... 77

Demographic and Economic Information 79-81

Exhibit

22 Demographic Statistics - Last Ten Fiscal Years ............................................ 81 23 Major Employers - Current Year and Nine Years Ago ................................... 82 24 Number of Employees by Fund ..................................................................... 82

Operating Information 83-88

Exhibit

25 Water Demand - Last Ten Fiscal Years ........................................................ 85 26 Metropolitan Water District’s Rate Changes - Last Ten Fiscal Years ............ 86 27 Water Replenishment District Assessment (Pump Tax) – Last Ten Fiscal Years ........................................................................... 86 28 Operating and Capital Assets Statistics - Water Fund – Last Ten Fiscal Years ........................................................................... 87 29 Operating and Capital Assets Statistics - Sewer Fund – Last Ten Fiscal Years ........................................................................... 87 30 Infrastructure Maintenance and Improvements - Last Ten Fiscal Years ....... 88

DATE March 28, 2022
TO Board of Water Commissioners
FROM B. Anatole Falagan, Assistant General Manager
SUBJECT Approval of Annual Comprehensive Financial Report for the fiscal years ended September 30, 2021

Management is pleased to present the Annual Comprehensive Financial Report (ACFR) of the Long Beach Water Department (Department), for the fiscal year ended September 30, 2021. The Department’s financial statements are also included in the City of Long Beach ( the City) Financial Statements as enterprise funds (Water Fund and Sewer Fund).

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 is established for this pur pose. 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 accompanying financial statements have been audited by KPMG LLP, an independent certified public accounting firm. KPMG LLP has issued an unmodified (“clean”) opinion on the Department’s financial statements for the fiscal year ended September 30, 2021. The independent auditors ’ report is located at the front of the financial section of this report.

Management’s Discussion and Analysis (MD&A) immediately follows the independent auditors ’ report, and provides a narrative introduction, overview, and analysis of the financial statements. MD&A complement s this letter of transmittal and should be read in conjunction with it.

Long Beach Water
Exceptional Water• Exceptional Service
1800 E. Wardlow Road, Long 13eacn, CA 90807-4931
56'-!i70.1300 I lbw;itfir.org

THE REPORTING ENTITY

During the early years of the 20th Century, Long Beach began establishing itself as an up-and-coming area that seemed destined to someday become a large city. In order to sustain the expected growth that would occur in future years, it was critical that the City identify and secure a reliable source of water. In recognizing the importance of this , on June 27, 1911, Long Beach voters approved an $850,000 bond issuance to purchase two private water companies that had been providing water supplies to the Long Beach population. Three days later, on June 30, 1911, the Long Beach city council approved an emergency ordinance creating the Long Beach Water Department, thereby giving the City its own municipal water agency that would regulate and control the use, sale and distribution of water owned or controlled by the City.

Twenty years later, in 1931, two additional significant milestones came to pass for the Department. The first was the creation of the Long Beach Board of Water Commissioners (Board) , which governs the Department and is comprised of five members appointed by the Mayor, subject to confirmation by the City Council.

Members of the Board serve overlapping five- year terms to provide continuity of operations. That same year , the City also became one of the original 13 founding members of the Metropolitan Water District of Southern California (MWD). Joining MWD would allow the Department to eventually acquire imported water as a supplement to the City’s groundwater supplies.

In February 1988, the Department assumed the responsibility of the various functions of the City’s sanitary sewer system, including operations and maintenance. In April 1990, the citizens of Long Beach passed a City Charter amendment that allowed greater autonomy for the Department in administering the City’s sanitary sewer operations.

The Department’s service area encompasses the boundaries of the City of Long Beach, the seventh largest city in State, with an area of approximately 50 square miles and a population of 466,742 with some customers outside the City limits. The Department is not subject to regulation by the California Public Utilities Commission.

LOCAL ECONOMY

Long Beach has drawn from the strength and adaptability of the local economy to maximize opportunities in today’s global world economy. The blending of local, national, and international businesses keep Long Beach growing and adapting to meet t he constantly changing needs of today’s modern life.

The Coronavirus Disease 2019 (COVID-19) pandemic has been a big challenge, and the City has been state and national leader in addressing it and minimizing the impact on the city of Long Beach and its residents and businesses.

On March 11, 2020, the World Health Organization (WHO) declared a global pandemic due to the outbreak of the COVID-19. The City took many actions including issuing health orders (the City is one of the few in California with its ow n health department) to restrict

vi
social gatherings, require face coverings when in a business or within six feet of another person, deferring payment of business taxes and fees for those businesses impacted by the COVID -19 pandemic, deferring most lease payments to the city if a tenant was impacted, a series or grants and other actions (often supported by federal grants) to assist businesses, a moratorium on evictions to provide relief to residential tenants facing hardships and different forms of parking r elief. In September 2020, the unemployment rate in Long Beach was recorded at 15.9% due mostly to the COVID -19 pandemic.

Thanks to the resilience of the Long Beach economy and the committed response of the community, it fell to 8.9% by the end of September 2021.

The City found opportunities in the television and film industry which selected Long Beach for the filming of many television shows like “NCIS:LA” and “Battlebots” as well as feature films such as “Chip n’ Dale Rescue Rangers”, “Purple Hearts”, and “Me Time.” In 2021, 350 film permits were issued bringing 604 production days to the City. In addition to the improvements that can be easily seen, but equally important to the safety of the citizens and visitors, were the 13.7 lane-miles of streets and 2 .1 lane-miles of alleys rehabilitated and the 1.45 million square feet of graffiti abated by City staff and contractors. Further information on the local economy is provided in the City of Long Beach Annual Comprehensive Financial Report.

As an older, est ablished and geographically built -out City, the Department’s customer base is relatively stable and is comprised of ninety percent (90%) residential accounts, with the remaining ten percent (10%) comprised of commercial, industrial, irrigation and other accounts. The residential accounts comprise approximately seventy -one percent (71%) of the Department’s total potable water sales.

The Department recognizes the potential effect on revenue streams of the COVID -19 pandemic and has been monitoring the accounts receivables in unpaid bills as a portion of these receivables are expected to ultimately become uncollectable and be written off as lost revenue. As of January 2022, the Water Fund has approximately $1.9 million and the Sewer Fund has approximately $261 ,000 in unpaid bills which are over 120 days past due. The Department is monitoring Federal and State legislation which is intended to provide economic relief to customers in the form of assistance in paying past due utility bills. The Department is also engaging in customer outreach with flexible payment options for customers with past due bills. The economic impact on revenues is not expected to be permanent and the time frame to return to a normal standard of operations cannot yet be determined.

WATER SUPPLY

The Department meets the needs of its customers through an increasingly diverse portfolio of water resources. Local groundwater, combined with imported supplies, water recycling and water conservation are used in combination to meet the water demands within the service area.

vii
Drought Related Developments
Long Beach water demand peaked in 1990, but water demand has been declining ever since. The reduced water demand can be attributed to a combination of a steady commitment to water conservation efforts by the Department and statewide droughts in 1990-1991, 2007- 2009, and 2015- 2016, each of which triggered a sharp decrease in water demand. Conservation efforts have included aggressive public outreach and incentive programs for water saving meas ures. The Water Department will continue these efforts to incorporate the conservation success into a sustained change in consumption behavior.

Reduced water usage due to conservation does result in reduced revenues. At the same time, those reductions ar e also offset by a reduction in operating expenses as a result of less imported water purchases from Metropolitan Water District (MWD).

Additionally, the Department managed discretionary budget expenses to minimize initial budget and rate impacts from reduced consumption. The Water Department’s budget and rate structure is based annually on cost recovery and on State law governing water utility rate setting (Proposition 218).

The following subsections provide an overview of the Department’s water resources.

Groundwater
Ownership of water rights allows approximately sixty percent ( 60%) of Long Beach’s water supply needs to be produced from groundwater wells located within the City.

Before it reaches our customers’ taps, local groundwater must journey many miles from its source high up in the mountains. Rain and snow -melt from the San Gabriel Mountains watershed travel through washes and creeks into the San Gabriel River and the Whittier Narrows Basin. From there it percolates underground through sand and water beds where it begins a lengthy subsurface journey to Long Beach. High- powered pumps then extract it from 24 active groundwater wells and pump it to our groundwater treatment plant.

During the 1940’s and 1950’s the population grew and the increased water demand in the San Gabriel Valley significantly reduced the flows southward to the Central Basin, contributing to falling water tables. In 1959, to protect this vital source of local water supply, the Board initiated a lawsuit against major water producers in the San Gabriel Valley to guarantee water supplies to Central Basin producers.

Parties to the lawsuit negotiated a settlement which provided the basis of a stipulated judgment (the “Long Beach Judgment”) rendered by the Superior Court on October 8, 1965. By separate action, a committee of Central Basin producers reached an agreement for voluntary reduction of pumpage within the basin to restore and protect the water table and to expedite the above judgment to permanently prevent excessive pumping. The reduction in pumping began October 1, 1962. The two events were of major importance in securing local water supplies for the City. The Department is the largest producer of water in the Central Basin.

viii
Imported Supplies
Another portion of the City’s potable (drinking) water supply is treated water purchased from MWD. This water originates from two sources: the Colorado River Aqueduct and the State Water Project (SWP).

Through its 242-mile long system, the Colorado River Aqueduct provides up to a billion gallons of water a day to residents and businesses in Southern California’s coastal plain. Water is taken in at Lake Havasu and carried to the reservoir facilities at Lake Mathews. The State Water Project delivers water originating from the Oroville Dam and Reservoir and the Sacramento River Delta. The SWP is an intricate network of dams, pumping plants, reservoirs, hydroelectric plants, the Sacramento and San Joaquin Rivers and 440 miles of aqueducts that carry water to several Southern Calif ornia reservoirs.

Water Recycling
Effective water recycling helps stretch the potable water supply; that is the primary reason the Department launched a reclaimed water system in 1978. In the fiscal year ended September 30, 2021 ( FY2021), the Department served approximately 3.2 billion gallons of reclaimed water to a variety of users throughout the City.

Water that would otherwise flow to the ocean and be wasted is reclaimed and used to irrigate park land, golf courses, freeway landscaping and school grounds, which reduces our dependence on imported water. Since 2005, recycled water treated at the Leo J. Vander Lans Advanced Water Treatment Facility (LVLAWTF) has partially replaced the use of imported water at the Alamitos Barrier, an engineered freshwater pressure ridge and seawater trough constructed to prevent seawater intrusion into the Central Basin and neighboring Orange County Groundwater Basin. In 2015, LVLAWTF was expanded, providing the operational flexibility to meet the needs of the Alamitos Barrier almost entirely with recycled water, minimizing the need of imported water.

Conservation
The Department has an aggressive water conservation program that offers a variety of opportunities to conserve water across different sectors of the community and for both indoor and outdoor water uses.

Single-family and multi -family customers together are responsible for approximately two-thirds of the City’s demand for water. Several of the Department’s programs provide rebates to residential customers towards the purchase of water -efficient toilets and washing machines.

Close to half of s ingle-family residential water use is estimated to be for landscape irrigation. T he Department provides, at no cost to the customer s, very well attended and well received classroom instruction on the design, installation, and maintenance of water-efficient California-friendly landscapes. The Department has also developed and implemented an award-winning Lawn-to-Garden program whereby customers can apply for an incentive to replace up to 1,500 square feet of t urf with a California -friendly landscape. Incentives are also offered for customers to change traditional spray

ix
irrigation systems to water-efficient drip irrigation.

In addition to promoting conservation to residential and landscape accounts, we work closely with commercial, industrial and institutional (CII) customers to help them conserve water. The Department has encouraged conservation through targeted direct marketing, through rebates for water conserving devices, and offers a Certified Blue program to promote water efficiency in restaurants which will be expanded to include other CII sectors.

Long Beach Water Department promotes water use efficiency with many community partners, including schools, organizations and businesses. The Department takes pride in its award-winning outreach efforts, including supporting community functions, making presentations at local and regional events, and marketing through print, digital and social media strategies.

WATER QUALITY

A primary objective of the Department is to deliver to our customers water that meets or exceeds all Federal and State standards . The Department continues to be recognized as a leader in water quality . Our extensive testing and Quality Assurance/Qualit y Control program ensures that water delivered to our customers is of the highest possible quality.

The Long Beach Groundwater Treatment Plant is a state of the art water treatment facility, including four advanced water quality laboratories. This combination helps explain why the City's high quality drinking water consistently meets or exceeds all Federal and state drinking water regulations.

The Department conducts extensive sampling and testing of groundwater wells, water storage reservoirs, the water distribution system and, when appropriate, selected homes, businesses, schools and public facilities. This year, our Water Quality laboratories collected 11,709 samples and performed 63,758 tests while maintaining certification with the California Depart ment of Health Services and Environmental Protection Agency (EPA).

During fiscal year 2021, the Groundwater Treatment Plant processed approximately 9.7 billion gallons of drinking water. Overall , 16.6 billion gallons of high- quality water were delivered to the Long Beach community.

MAJOR INITIATIVES

Automated Metering Infrastructure
The Department has undertaken a comprehensive overhaul of its metering infrastructure, by installing Automated Metering Infrastructure (AMI) on all of its approximately 90,000 metered connections. The installed automated meters will capture and store real -time flow measurements, and then routinely upload them electronically into the existing Meter Data Management System (MDMS) and interface with the Customer Information System (CIS), used for all utility billing in the City.

AMI is expected in the near future to provide enhanced customer benefits, ultimately allowing for more self -monitoring of water use by customers via an interactive web portal, allowing for more ti mely responses to customer leaks through high use alerts, and provide additional data to help with Department operations.

Seawater Desalination Research
During the 1990’s and early 200’s, through an innovative public sector partnership, the Long Beach Wat er Department along with the Los Angeles Department of Water & Power and the United States Bureau of Reclamation operated a 300,000 gallon-per-day prototype desalination facility, one of the largest seawater desalination research and development facilities in the United States. The Seawater Desalination study was completed in March 2010 and research gathered from the operation of the prototype plant was published as a report to the U.S. Bureau of Reclamation. Additionally, the Department continues to operate an ongoing research project for an under-ocean intake and discharge system.

Conjunctive Use
The Department has also partnered with MWD and the California Department of Water Resources (DWR) on an innovative groundwater storage program. The $4.5 million project, which was funded by State of California Proposition 13, stored surplus water in the Central Groundwater Basin, and has previously, delivered the stored water during previous drought conditions in 2008 and 2009. A second $2.7 million joint conjunctive use project with the City of Lakewood was completed in 2009 and water stored under this project may also be called upon in a drought.

Water Distribution System
The City has an aging infrastructure, which needs to be maintained, and in certain parts, replaced. At September 30, 2021 , the water distribution system totaled 917 miles of water mains with approximately 90,000 service connections.

During fiscal year 2021 , the Department replaced 5,340 feet of deteriorated cast iron water mains with new ductile iron pipe. This critical replacement program addresses upgrading old pipelines, many of which were installed more than 50 years ago.

xi
The Department maintains 6 44 large control valves 20 inches or more in diameter and 23,455 smaller control valves . The Department has a maintenance and replacement program to ensure that control valves are operational and that they can be turned off or on promptly during emergencies. The Department responds immediately, 24- hours a day, 365 days a year to water emer gencies. W ith 24 active water wells across Long Beach supplying just over half of the City’s water, well maintenance is another ongoing project for the Department. Rehabilitation of water wells and storage tanks at Alamitos and J. Will Johnson Reservoirs continues to ensure a reliable supply of water in the future.

Sanitary Sewer Collection System
The Department has made considerable progress since 1988 in addressing the substantial challenges posed by an aging sanitary sewer infrastructure, much of which is between 60 and 100 years old. On September 30, 2021, the sanitary sewer collection system totaled 715 miles of sewer pipelines. The Department developed the first City - wide Sewer Master Plan in 1991, which provided a n initial prioritization of sewer deficiencies to be addressed. The Department has since developed a comprehensive program of maintenance, monitoring and repair of sewer lines including:

• an aggressive annual pipeline cleaning program;
• a Fats, Oil and Grease (FOG) program, working collaboratively with the City’s Department of Health and Human Services, to address impacts to lines; • a video monitoring program to assess conditions of pipelines; • a comprehensive annual sewer infrastructure rehabilitation and replacement program

The Department continues to develop and implement a multi -year Capital Improvement Program to address aging pipeline and lift station infrastructure. In 2021, the Department began the 2021 Sewer Master Plan Update Project to update the comprehensive plan for the Department's sanitary sewer system, studying the existing sewer infrastructure and aiding in the planning of future operations, maintenance, and upgrades of the system. The Project builds on the existing sewer hydraulic system model, originally created in the 2009 Sewer Master Plan Project and updated further in the 2013 Update, and expands on the recently -updated downtown sewer hydraulic system model created in the 2018 Downtown Area Sewer Focus Study.

xii

RELEVANT FINANCIAL POLICIES

The Department’s financial statements are presented on the accrual basis of accounting. As an enterprise fund, the cost of providing water is recovered through user charges assessed by meter size, volumetric charges and other miscellaneous charges. The cost of providing sewer service is also recovered through user and volumetric charges for all water customers who are connected to the City’s sewers.

Certain services, such as payroll, civil service, public service, general service, customer billing, data processing, legal, etc. , are provided to the Department by other City departments; these costs are reimbursed to the City by transfer of funds from the Water Fund or the Sewer Fund.

Internal Control Structure
In the development and enhancement of the Department’s accounting system, careful consideration is given to the adequacy of the internal controls designed to provide reasonable assurance regarding the safeguarding of assets against possible loss, unauthorized use or disposition; to ensure the reliability of financial records for preparing financial statements and maintaining accountability for assets, and to promote operational efficiency and compliance with managerial policies. The concept of reasonable assurance recognizes that: (1) the cost of a specific control feature should not exceed the benefits likely to be derived, and; (2) the evaluation of costs and benefits requires continued estimates and judgment by management.

Budgetary Control
The budget is a management control device for the forthcoming fiscal year. Prior to July 1 each year, the Board adopts an operating budget, which covers anticipated rev enues and expenditures of the Department. The Department's budget is also subject to the approval of the City Council. By September 30 each year, the City Council shall approve the budget as adopted by the Board of Water Commissioners, or shall amend the budget and approve it as amended.

Budgets are prepared on a cash basis for revenues and for several categories of expenses. These budgets are not designed to be pro- forma statements of income and expense in the same format as the Water Department’s financial statements. Instead, they are utilized primarily for controlling costs along organizational and programmatic lines. Each Bureau within the Department is responsible for outlays initiated by Divisions. Revenues are monitored only at the departmental level, except in certain areas where they are controlled by individual projects.

AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Department for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended September 30, 2020.

The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting and its attainment represents a significant accomplishment by a government agency and its management. In order to be awarded a Certificate of Achievement , the Department must publish an easily readable and efficiently organized ACFR whose contents not only conform to the high program standards of the GFOA, but also satisfy 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 ACFR continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.

We would like to acknowledge the assistance of Sokhalay Hong, Senior Accountant , and Yumina C. Eggleston , Senior Accountant, of the Business Bureau Finance Division in the preparation of this report.

It is recommended that the Board of Water Commissioners receive and file the Annua l Comprehensive Financial Report for the fiscal years ended September 30, 2021.

Prepared by:
~inan :

Approved by:
xiii
xiv
Executive Director/CEO
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Long Beach Water Department
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
September 30, 2020
Long Beach Water Department
Organizational Chart
Board of Water
Commissioners
Executive Assistant to
the General Manager
General Manager
Assistant General
Manager
Director of Water
Resources
Administrative Officer
Executive Secretary
Manager of Engineering
- Pipelines
Manager of Engineering
- Facilities
Superintendent-Water
Services
Superintendent-
Support Services
Director of
Finance
Director of
Administration
Director of Government
and Public Affairs
Superintendent- Sewer
Operations
Superintendent-Water
Treatment
Superintendent-Water
Construction
Laboratory Services
Officer
Manager of Security
and Emergency
xv
Executive Assistant to
the Board
Assistant General
Manager - Operations
Director of Water
Quality/Process
Director of Field
Operations
Manager of Engineering
-Construction
Manager of Engineering
-Development Services
Manager of Information
Services
Public Information
Officer
Director of Engineering
Manager of Water
Resources

xvi

LONG BEACH WATER DEPARTMENT

BOARD OF WATER COMMISSIONERS

ROBERT SHANNON PRESIDENT

GLORIA CORDERO VICE PRESIDENT

NAOMI RAINEY SECRETARY

FRANK MARTINEZ MEMBER

Position to be filled MEMBER

STAFF

CHRISTOPHER J. GARNER
General Manager

B. ANATOLE FALAGAN
Assistant General Manager

FINANCIAL SECTION

Intentionally Left Blank

Independent Auditors’ Report
The Honorable Mayor and City Council
The Honorable Members of the Board of Water Commissioners:

Report on the Financial Statements
We have audited the accompanying financial statements of the business-type activities and each major fund of the Long Beach Water Department (the Department) of the City of Long Beach, California (the City), as of and for the year ended September 30, 2021, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements as listed in the table of contents.

Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, and each major fund of the Long Beach Water Department of the City of Long Beach, California, as of September 30, 2021, and the respective changes in financial position and, cash flows thereof for the year then ended in accordance with U.S. generally accepted accounting principles.

KPMG LLP
Suite 1500
550 South Hope Street
Los Angeles, CA 90071-2629
KPMG LLP , a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. 2 Emphasis of Matter
As discussed in note 1, the financial statements of the Department are intended to present the financial position, the changes in financial position and, where applicable, cash flows of only that portion of the business-type activities and each major fund of the City that is attributable to the transactions of the Department. They do not purport to, and do not, present fairly the financial position of the City as of September 30, 2021, the changes in its financial position, or, where applicable, its cash flows for the year then ended in accordance with U.S. generally accepted accounting principles. Our opinion is not modified with respect to this matter.

Other Matters
Required Supplementary Information
U.S. generally accepted accounting principles require that the management’s discussion and analysis and schedules listed under the Required Supplementary Information in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statemen ts, 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 and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Department’s basic financial statements. The introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 28, 2022 on our consideration of the Department’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 the Department’s 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 Department’s internal control over financial reporting and compliance.

Los Angeles, California
March 28, 2022

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

3 As the management of the Long Beach Water Department , a department of the City of Long Beach (the City), we offer readers of the Long Beach Water Department’s financial statements this narrative overview and analysis of the financial activities of the Long Beach Water Department (the Department) for the fiscal year ended September 30, 2021.

We encourage readers to consider the information presented here in conjunction with the accompanying financial statements. The Department comprises the City’s Water Enterprise Fund (Water Fund) and Sewer Enterprise Fund (Sewer Fund) operations. All amounts, unless otherwise indicated, are expressed in thousands of dollars.

FINANCIAL HIGHLIGHTS

The Department’s assets and deferred outflows exceeded its liabilities and deferred inflows at the close of fiscal year 2021 (FY2021) by $427,806 (net position). The Department’s net position is further broken down between the Water Fund and Sewer Fund below.

Water Fund. Assets and deferred outflows exceeded liabilities and deferred inflows at the close of FY2021 by $348,137. This amount includes a total of net investment in capital assets of $326,635, and $1,441 in resources that are subject to restrictions on how they may be used. The Water Fund reported an unrestricted net position of $20,061 in FY2021.

Total Water Fund net position increased by $54,396 (+18.5%) from the prior fiscal year .

The increase reflects income in excess of expenses and c apital grants and contributions received during the year.

Sewer Fund. Total Sewer Fund net position totaled $79,669 as of September 30, 202 1, an increase of $ 4,908 (+6.6%) from the prior fiscal year. The increase reflects income in excess of expenses during the year and capital grants and contributions received during the year. In FY2021, the net investment in capital assets and the unrestricted portion of net position totaled $74,875 and $4,490, respectively.

Significant Department Events

On March 11,2020, the World Health Organization declared a global pandemic due to an outbreak caused by a respiratory disease called Coronavirus Disease 2019 (COVID -19).

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

4 of the City’s mandate by closing its facilities to the public, encouraging employees whose positions enabled them to work remotely , purchasing and providing personal protective equipment (PPE) for employees at work, implementing changes in work environments and continued communication updates about COVID-19.

The Department recognizes the potential effect on revenue streams of the COVID -19 pandemic and has been monitoring the accounts receivables in unpaid bills as a portion of these receivables are exp ected to ultimately become uncollectable and be written off as lost revenue. Also, the Department is monitoring Federal and State legislation which is intended to provide economic relief to customers in the form of assistance in paying past due utility bills. Furthermore, the Department continues to engage in customer outreach with flexible payment options for customers with past due bills. As part of the 2021 -22 State budget approval in late 2021, the State of California initiated the California Water and Wastewater Arrearage Payment Program (CWWAPP) to offer financial assistance to water and sewer customers to help reduce past due bill balances that accrued during the pandemic. Awarded funds will not be received until fiscal year 2022 (FY2022).

As change s in the pandemic continue, t he Department , being part of the critical infrastructure sector, remains diligent in providing the City of Long Beach with clean water as its top priority.

Effects of these significant events on the Water Fund and Sewer Fund operations are further discussed in the Financial Analysis section of this report.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the Department’s financial statements. Because the Department is a business -type activity of the City, enterprise funds are used to account for its water and sewer operations. These financial statements include only the activities of the Department and provide comparative information for the last fiscal year. Information on Citywide financial operating results is available in the City of Long Beach Annual Comprehensive Financial Report as of September 30, 2021.

The Department’s financial statements comprise two components: 1) financial statements and 2) notes to financial statements. Included as part of the financial statements are the Statements of Net Position , Statements of Revenues, Expenses , and Changes in Fund Net Position, and Statements of Cash Flows.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

5 The Statements of Net Position present the Department’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Department is improving or deteriorating.

The Statements of Revenues, Expenses, and Changes in Fund Net Position present information showing how the Department’s net position have changed during the most recent fiscal year. Results of operations are recorded under the accrual basis of accounting, whereby transactions are reported as underlying events occur, regardless of the timing of cash flows. Thus, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (i.e., accoun ts payable and accounts receivable). The Department’s use of the accrual basis of accounting is more fully described in the accompanying Notes to Financial Statements.

The Statements of Cash Flows present flows of cash and cash equivalents during the last fiscal year, including certain restricted amounts.

The Notes to Financial Statements provide additional information that is essential to the full understanding of the data provided in the financial statements and can be found on pages 26-49 of this report.

FINANCIAL ANALYSIS

As noted earlier, net position may serve over time as a useful indicator of the Department’s financial position. As of September 30, 202 1, Water Fund assets and deferred outflows exceeded liabilities and deferred inflows by $ 348,137, and Sewer Fund assets and deferred outflows exceeded liabilities and deferred inflows by $79,669, representing an

18.5% increase in net position over the prior fiscal year for the Water Fund and a 6.6% increase in Sewer Fund net position . Net position s are further categorized by net investment in capital assets, restricted and unrestricted net positions.

As of September 30, 2021, investment in capital assets, such as production, transmission, and distribution facilities, less any related debt used to acquire those assets that remains outstanding, amounted to $3 26,635 and $ 74,875 of Water Fund and Sewer Fund, respectively. The Department uses these capital assets to provide services to customers; consequently, these assets are not available for future spending. Resources needed to repay the outstanding debt on the Statements of Net Position must come from other sources such as operations.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

6 The restricted portion of the Department’s net position amounted to $1,441 and $304 for Water Fund and Sewer Fund, respectively. This re presents resources that are subject to external restrictions on how they may be used. These restrictions are for items such as debt repayment and other legally restricted purposes.

The unrestricted portion of the net position for Water Fund of $20,061 as of September 30, 2021, representing a 166.6% decrease on the deficit over FY2020. The Sewer Fund’s unrestricted portion amounted to $ 4,490, representing a 76.0% increase over FY2020.

The unrestricted portion of the Department’s net position may be used to meet the Department’s ongoing obligations to creditors and customers.

The Department’s Condensed Schedules of Net Position as of September 30, 2021 and 2020 are as follows:

2021 2020 Amount %
Assets:

Current and other assets 97,238$ 59,778$ 37,460$ 62.7% Capital assets 445,147 437,885 7,262 1.7%
Total assets 542,385 497,663 44,722 9.0%
Deferred outflows of resources 6,511 7,194 (683) -9.5%
Liabilities:

Current liabilities 30,180 28,674 1,506 5.3%
Noncurrent liabilities 69,594 105,546 (35,952) -34.1%
Total liabilities 99,774 134,220 (34,446) -25.7%
Deferred inflows of resources 21,316 2,135 19,181 898.4% Net Position:

Net investment in capital assets 401,510 393,373 8,137 2.1% Restricted 1,745 2,681 (936) -34.9%
Unrestricted 24,551 (27,552) 52,103 -189.1%
Total net position 427,806$ 368,502$ 59,304$ 16.1% Long Beach Water Department
Condensed Schedules of Net Position
September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

7 The Department’s financial position is further broken down as follows between the Department’s Water Fund and the Sewer Fund as of September 30, 2021 and 2020:

2021 2020 Amount %
A
ssets:

Current and other assets 83,340$ 44,829$ 38,511$ 85.9% Capital assets 360,205 356,447 3,758 1.1%
Total assets 443,545 401,276 42,269 10.5%
Deferred outflows of resources 5,423 5,808 (385) -6.6% Liabilities:

Current liabilities 27,403 25,252 2,151 8.5% Noncurrent liabilities 55,824 86,327 (30,503) -35.3% Total liabilities 83,227 111,579 (28,352) -25.4%
Deferred inflows of resources 17,604 1,764 15,840 898.0% Net Position:

Net investment in capital assets 326,635 321,467 5,168 1.6% Restricted 1,441 2,377 (936) -39.4%
Unrestricted 20,061 (30,103) 50,164 -166.6%
Total net position 348,137$ 293,741$ 54,396$ 18.5% Water Fund
Condensed Schedules of Net Position
September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

2021 2020 Amount %
A
ssets:

Current and other assets 13,898$ 14,949$ (1,051)$ -7.0% Capital assets 84,942 81,438 3,504 4.3%
Total assets 98,840 96,387 2,453 2.5%
Deferred outflows of resources 1,088 1,386 (298) -21.5% Liabilities:

Current liabilities 2,777 3,422 (645) -18.8% Noncurrent liabilities 13,770 19,219 (5,449) -28.4% Total liabilities 16,547 22,641 (6,094) -26.9% Deferred inflows of resources 3,712 371 3,341 900.5% Net Position:

Net investment in capital assets 74,875 71,906 2,969 4.1% Restricted 304 304 - -
Unrestricted 4,490 2,551 1,939 76.0%
Total net position 79,669$ 74,761$ 4,908$ 6.6% Sewer Fund
Condensed Schedules of Net Position
September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

8 Fiscal Year Ended September 30, 2021 Compared to 2020

Water Fund. Net position increased by $ 54,396 (+18.5%) over FY2020. This net increase is mostly attributable to capital grants and contributions of $2,665 from various Developers for water distribution system improvements and revenues in excess of expenses of $51,731.

Current and other assets increased by $38,511 (+85.9%) from FY2020, which reflects an increase in pooled cash and cash equivalents by $10,123 (+67.59%) due to an increase in cash reserves from revenues in excess of operating expenses and an increase in amounts due from the City of $30,846 (+100.0%). However, this increase was offset by a decrease in receivables from other government funds in the amount of $2,299 (-82.5%), primarily due to a decrease in grant proceeds related to the Automated Metering Infrastructure (AMI) project.

Capital assets increased by $3,758 (+1.1%) over the prior year, mainly due to the ongoing capital improvement program such the AMI project, cast iron water main replacement, water service installations, machinery and equipment purchases, and facilit y improvements.

Deferred outflows of resources decreased by $385 (-6.6%) over FY2020. The majority of the net decrease in FY2021 is a result of decreases on difference between actual and expected investment returns in the amount of $1,091 (-100.0%) and changes on actuarial assumptions in the amount of $1,555 ( -67.3%). This net decrease was offset by an increase in pension contributions after the measurement date in the amount of $ 2,514 (+193.7%) in FY2021. In addition, there was a decrease of $198 ( -27.9%) on debt refunding and a decrease of $55 ( -13.8%) in changes in actuarial assumptions on Other Postemployment Benefits (OPEB) costs compared to FY2020. Additional information on deferred outflows related to pensions is provided on Note 5 - Retirement Program of the Notes to Financial Statements on page 43.

Current liabilities increased by $2,151 (+8.5%) compared to FY2020 , mainly due to an increase in accounts payable by $1,730 ( +12.4%) relating to continued expenditures in operating activities and capital improvement programs. In addition, there was an increase of $333 (+61.1%) in accrued employee benefits in FY2021.

Noncurrent liabilities decreased by $30,503 (-35.3%) from FY2020, primarily due to the net pension liability decrease in the amount of $22,894 ( -53.4%) resulting from a significant increase in investment returns in the California Public Employees’ Retirement System (CalPERS) pension plans. In addition, annual principal payments on debt and bonds premium amortization in FY2021 resulted to a decrease in long -term bonds payable by $3,580 (-25.9%). Furthermore, long-term obligations on the lease-purchase agreement

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

9 executed by the Department to finance the AMI project decreased by $3,757 ( -16.1%) in FY2021. Additional information is provided on Note 4 - Long-term Liabilities of the Notes to Financial Statements in page 39 and on Note 6 - Leasing Arrangements on page 48.

Deferred inflows of resources increased by $ 15,840 (+898.0%) over FY2020. This net increase mainly reflects a total of $16,031 (+8,856.9%) increase in changes in actuarial assumptions, differences between actual and projected experience and proportionate share of deferred pension. This increase was offset by a decrease on OPEB costs in the amount of $191 (-12.1%). Additional information on deferred outflows related to pensions is provided on Note 5 - Retirement Program of the Notes to Financial Statements on page

43. Sewer Fund. Net position increased $ 4,908 (+6.6%) over FY20 20. This increase is primarily due to revenues in excess of expenses.

Current assets and other ass ets decreased by $1,051 (-7.0%) over FY2020, reflecting a decrease in pooled cash and cash equivalents by $1,190 ( -8.9%) due primarily to the funding of major sewer capital improvement projects and other sewer operations.

Capital assets increased by $ 3,504 (+4.3%) over FY2020 , due to machinery and equipment purchases and to continued expenditures on sewer main pipe relining and replacement, and sewer pump station rehabilitation projects across the City of Long Beach.

Deferred outflows of resources de creased by $ 298 (-21.5%) over FY2020. This net decrease reflects decreases in changes in actuarial assumptions on OPEB costs in the amount of $14 ( -16.5%) and on deferred pension costs in the amount of $284 ( -21.8%).

The actuarial determined deferred pension costs decreased by $566 (-70.6%) compared to FY2020, due to changes in actuarial assumptions, experience and funds proportion of the City-wide pension liability. However, pension contributions after measurement date increased by $510 (+188.2%) compared t o FY2020. Additional information on deferred outflows related to pensions is provided on Note 5 - Retirement Program of the Notes to Financial Statements on page 43.

Current liabilities decreased by $645 (-18.8%) over FY2020, which is mainly due to a reduction in accounts payable and accrued wages payable amounts at the end of fiscal year.

Noncurrent liabilities decreased by $ 5,449 (-28.4%) from FY20 20, primarily due to an increase in the net pension liabilities by $ 4,850 (-54.2%). In addition, long-te rm bonds payable decreased by $513 (-5.6%) due to annual principal payments on Series 2016A

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

10 Bonds. Additional information is provided on Note 4 - Long-term Liabilities of the Notes to Financial Statements in page 39 and on Note 5 - Retirement Program on page 43.

Deferred Inflows of resources increased by $3,341 (+900.5%) over FY2020. This increase reflects increases in actuarial assumptions, differences between actual and projected experience and proportionate share of deferred pension in the amount of $3, 387 (+8,913%) in FY2021. However, this increase was slightly offset by a decrease in OPEB costs in the amount of $46 (-13.8%). Additional information on deferred outflows related to pensions is provided on the Note 5 - Retirement Program of the Notes to Fi nancial Statements in page 43.

The Water Department’s Condensed Schedules of Revenues, Expenses , and Changes in Fund Net Position provide further insight as to the nature and source of changes in net position and are summarized as follows for the years ended September 30, 20 21 and 2020:

2021 2020 Amount %
O
perating Revenues:

Metered sales 79,591$ 73,511$ 6,080$ 8.3% Reclaimed water sales 4,888 3,154 1,734 55.0% Service charges 46,062 43,954 2,108 4.8% Other services 6,747 10,397 (3,650) -35.1% Total operating revenues 137,288 131,016 6,272 4.8%
Operating Expenses:

Cost of water 27,672 36,163 (8,491) -23.5%
Personal services 18,810 38,857 (20,047) -51.6%
Commercial Services 2,751 4,291 (1,540) -35.9%
Maintenance and other 33,825 29,377 4,448 15.1%
Street Impact charges 4,066 3,903 163 4.2%
Depreciation and amortization 16,272 15,636 636 4.1%
Total operating expenses 103,396 128,227 (24,831) -19.4% Operating income 33,892 2,789 31,103 1115.2%
Nonoperating Income (Expenses):

Interest income 101 1,060 (959) -90.5%
Interest expense (1,637) (1,774) 137 -7.7%
Rental income 1,036 1,043 (7) -0.7%
Payments from/(to) the City 22,204 (10,450) 32,654 -312.5% Other 854 1,638 (784) -47.9%
Total non-operating income (expense) 22,558 (8,483) 31,041 -365.9% Income (loss) before capital grants and contributions 56,450 (5,694) 62,144 -1091.4% Capital grants and contributions 2,854 3,947 (1,093) -27.7% Changes in net position 59,304 (1,747) 61,051 -3494.6%
Net position - October 1 368,502 370,249 (1,747) -0.5%
Net position - September 30 427,806$ 368,502$ 59,304$ 16.1% Long Beach Water Department
Condensed Schedules of Revenues, Expenses, and Changes in Fund Net Position F iscal Years Ended September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

11 The Department’s operations are further broken down as follows between the Department’s Water Fund and the Sewer Fund for the years ended September 30, 2021 and 2020:

2021 2020 Amount %
Operating Revenues:

Metered sales 73,876$ 67,987$ 5,889$ 8.7% Reclaimed water sales 4,888 3,154 1,734 55.0% Service charges 34,900 32,807 2,093 6.4%
Other services 5,304 9,143 (3,839) -42.0%
Total operating revenues 118,968 113,091 5,877 5.2%
Operating Expenses:

Cost of water 27,672 36,163 (8,491) -23.5%
Personal services 15,555 31,617 (16,062) -50.8%
Commercial Services 1,496 2,405 (909) -37.8% Maintenance and other 30,052 25,774 4,278 16.6% Street Impact charges 1,948 1,753 195 11.1% Depreciation and amortization 13,429 13,025 404 3.1% Total operating expenses 90,152 110,737 (20,585) -18.6% Operating income 28,816 2,354 26,462 1124.1%
Nonoperating Income (Expenses):

Interest income 101 697 (596) -85.5%
Interest expense (1,394) (1,538) 144 -9.4% Rental income 1,036 1,043 (7) -0.7%
Payments from/(to) the City 22,204 (10,450) 32,654 -312.5% Other 968 1,636 (668) -40.8%
Total non-operating income (expense) 22,915 (8,612) 31,527 -366.1% Income (loss) before capital grants and contributions 51,731 (6,258) 57,989 -926.6% Capital grants and contributions 2,665 3,909 (1,244) -31.8% Changes in net position 54,396 (2,349) 56,745 -2415.7%
Net position - October 1 293,741 296,090 (2,349) -0.8% Net position - September 30 348,137$ 293,741$ 54,396$ 18.5% Water Fund
Condensed Schedules of Revenues, Expenses, and Changes in Fund Net Position F iscal Years Ended September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

12 2021 2020 A mount %
Operating Revenues:

Metered sales 5,715$ 5,524$ 191$ 3.5% Service charges 11,162 11,147 15 0.1% Other services 1,443 1,254 189 15.1% Total operating revenues 18,320 17,925 395 2.2%
Operating Expenses:

Personal services 3,255 7,240 (3,985) -55.0%
Commercial Services 1,255 1,886 (631) -33.5%
Maintenance and other 3,773 3,603 170 4.7%
Street Impact charges 2,118 2,150 (32) -1.5%
Depreciation 2,843 2,611 232 8.9%
Total operating expenses 13,244 17,490 (4,246) -24.3%
Operating income 5,076 435 4,641 1066.9%
Nonoperating Income (Expenses):

Interest income - 363 (363) -100.0%
Interest expense (243) (236) (7) 3.0% Other (114) 2 (116) -5800.0%
Total non-operating income (expense) (357) 129 (486) -376.7% Income before capital grants and contributions 4,719 564 4,155 736.7% Capital grants and contributions 189 38 151 397.4% Changes in net position 4,908 602 4,306 715.3%
Net position - October 1 74,761 74,159 602 0.8%
Net position - September 30 79,669$ 74,761$ 4,908$ 6.6% Sewer Fund
Condensed Schedules of Revenues, Expenses, and Changes in Fund Net Position F iscal Years Ended September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

13 Sources of Revenues

Sources of revenue for fiscal years 2021 and 2020 are shown on the following charts.

Water Fund

2021 2020

Sewer Fund

2021 2020

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

14 Management Review of the Department’s Revenues

Water Fund

Fiscal Year Ended September 30, 2021 Compared to 2020
Total operating revenues were $118,968 , an increase of $5,877 (+5.2%) over FY2020 .

The major elements of this net increase are as follows:
• Metered sales revenue increased by $5,889 (+8.7%), primarily due to a 6% water rates increase effective October 1, 2020. In addition, customer potable water consumption increased by 961 AF (+2.0%) compared to FY2020.
• Reclaimed water sales revenue increased by $1,734 (+55.0%) mainly due to a n increase in consumption by 1,780 AF (+ 46.7%) compared to FY 2020. In addition, there was a 6% reclaimed water rates increase in FY2021. • Service charges increased by $2,093 (+6.4%) over FY2020 which reflects the 6% rate increase effective October 1, 2020.
• Revenue from other services totaled $ 5,304, a net decrease of $3,839 (-42.0%) from the prior year. The major factors of this net decrease are as follows:
 In FY2020, the Department agreed to retire unused Current Allocated Pumping Rights (CA PR) of 5,000 AF with Water Replenishment District of Southern California (WRD) . Similar transaction did not occur in FY2021, which contributed to a decrease of $2,532 ( -100.0%) in revenue from an In-Lieu Groundwater Replenishment Agreement with WRD.
 Revenue received from sales of potable water and readiness-to-serve charges to WRD and Orange County Water District (OCWD) decreased by $1,054 (-23.7%) and $121 (-25.7%), respectively. This is mainly due to the decrease in demand by 1,071 AF ( -25.8%) r elating to the Alamitos Seawater Intrusion Barrier.

FY2021 net nonoperating income totaled $22,915, a net increase of $31,527 (-366.1%) over FY2020. The net increase is primarily due to the following factors:
• Payments from the City increased by $32,654 ( -312.5%) compared to FY2020.

Effective June 5, 2018, the Department began annual payments to the City related to Measure M. In March 2022, after exhausting appeal options, the City, as required by the court, approved repayment of all current and previous Measure M payments totaling $30,832.
• Other income had a net decrease of $668 ( -40.8%) in FY2021, primarily due to the water capital improvement projects charged to expense in the amount of $607. • Interest income decreased by $596 ( -85.5%) mainly due to a dec rease in income received relating to pooled cash and mark-to -market pooled cash investments

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

15 Capital grants and contributions decreased by $ 1,244 (-31.8%) compared to FY20 20, primarily due to a decrease in the amount of $1,499 (-100.0%) on contributions received in relation to the AMI project. This decrease was offset by grant proceeds received for water distribution system facilities in FY2021 which totaled to $294 (+100.0%).

Sewer Fund

Fiscal Year Ended September 30, 2021 Compared to 2020
Total operating revenues increased $395 (+2.2%) over FY 2020. The key elements of this increase are as follows:
• Metered sales revenue increased by $ 191 (+3.5%) as a result of a 1,384 AF (+3.9%) increase in demand. In addition, Service charges revenue slightly increased in FY2021 by $15 (+0.1%). There was no sewer rate increase in FY2021. • Other services revenue increased by $189 (+15.1%) over FY2020, mainly due to an increase in sewer capacity charges revenue resulting from several new residential and commercial sewer collection system developments in the city of Long Beach.

Capital grants and contributions i ncreased by $ 151 (+397.4% ) compared to FY20 20, primarily due to an increase in proceeds received from s ewer collection system development agreements with the Department.

Functional Expenses

Functional expenses for the 2021 and 2020 fiscal years are shown on the following charts.

Water Fund

2021 2020

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

16 Sewer Fund

2021 2020

Management Review of the Department’s Expenses.

Water Fund

Fiscal Year Ended September 30, 2021 Compared to 2020
Operating expenses totaled $90,152 , a decrease of $ 20,585 (-18.6%) over FY20 20.

The major elements attributable to the net decrease are as follows:
• In FY2021, purchased water costs and volume decreased by $ 8,491 (-23.5%) and 11,360 AF ( -31.7%) respectively. T here were no purchases of imported water from Metropolitan Water District (MWD) in relation to the Central Groundwater Basin replenishment agreement with WRD and the Department’s Groundwater Treatment Plant was fully operational in FY2021, which resulted to a decrease on imported water demand by 8,018 AF ( -29.6%). In addition, the Department’s stored groundwater obligation with MWD relating to the Long Beach Conjunctive Use Program (CUP) decreased by 3,250 AF (-100.0%) in FY2021.
• Personal services costs decreased by $16,062 (-50.8%) in FY2021, primarily due to decreases in pension costs and fringe benefits in the amount of $9,609 (-95.5%). In addition, a decrease in the amount of $4,595 (-100.4%) reflects a one-time adjustment on City’s Employee Benefit Fund (EBF) for sick leave and Retired Employees Health Insurance Program (REHIP) costs recorded in FY2020, which did not occur in FY2021.

Also, on September 26, 2020, the City implemented employee furloughs to up to 26 days of unpaid time off for City employees during FY2021. This is to address the revenue loss and budget shortfall associated with the COV ID-19 pandemic, which resulted to a $1,704 (-12.1%) decrease in employee salaries and overtime costs in FY2021. The employee furloughs ended on April 17, 2021.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

17 • Maintenance and other costs had a net increase of $4,278 (+16.6%) from FY2020. The net increase is primarily attributable to the following factors:
 Replenishment assessment (pump tax) increased by $3,589 (+40.6%) due to increased groundwater pumping of 8,147 AF (+33.7%) compared to FY2020. In addition, replenishment assessment rate increased by 4.7% for the first three quarters and 3.1% for the last quarter of FY2021.
 Utility services, mainly electricity consumption for the Groundwater Treatment Plant operations, increased by $331 (+14.4%) due to the increase in groundwater pumping in FY2021.
 Laboratory and chemical supplies increased by $228 (+27.9%) compared to FY2020, primarily due to an increase in purchases of chemicals used for treating groundwater.

Sewer Fund

Fiscal Year Ended September 30, 2021 Compared to 2020

Total operating expenses amounted to $ 13,244, a decrease of $ 4,246 (- 24.3%) over FY2020. This decrease is mostly attributable to the following elements :
• Personal services costs decreased by $3,985 (-55.0%) in FY2021, primarily because of decreases in pension costs and fringe benefits in the amount of $2,095 (-75.8%). In addition, a decrease in the amount of $1,402 ( -2,027.1%) reflects a one -time adjustment on EBF for sick leave and REHIP costs recorded in FY2020, which did not occur in FY2021. Due to employee furloughs implemented by t he City in September 2020, employee salaries and overtime costs decreased by $401 ( -10.8%). This employee furloughs ended on April 17, 2021.
• Commercial services costs decreased by $631 (-33.5%) compared to FY2020, due to a decrease in allocated costs for utility customer support and billing and collection services charges from the City.

FY2021 net nonoperating expense totaled $357, a net increase of $486 ( -376.7%) compared to FY2020. This is primarily due to a decrease of $382 (-105.0%) in interest income received in relation to pooled cash and mark -to-market pooled cash investments in FY2021.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

18 Capital Assets and Debt Administration

Capital assets. The Department’s capital assets (net of accumulated depreciation and amortization) as of September 30, 2021 amounted to $360,205 for the Water Fund and $84,942 for the Sewer Fund. Capital assets include investments in production, transmission, patent, improvements on buildings and structures, and distribution related facilities, as well as general items such as office equipment and furniture. For FY2021, net capital assets increased $3,758 (+1.1%) and $3,504 (+ 4.3%) for Water Fund and Sewer Fund , respectively. The net increase is due primarily to machinery and equipment purchases and capitalization of major potable water and reclaimed water distribution systems, and sewer collection systems.

The Department’s capital assets are summarized as follows for the years ended September 30, 2021 and 2020 (in thousands):

2021 2020 Amount %
Land 11,214$ 11,214$ -$ -
Water Rights 40 40 - - Patent 815 815 - - Buildings, structures, and facilities 163,547 159,452 4,095 2.6% Distribution/collection systems 601,956 583,169 18,787 3.2% Machinery and equipment 27,744 27,548 196 0.7%
Construction in progress 68,166 69,048 (882) -1.3%
Total capital assets 873,482 851,286 22,196 2.6%
Less: accumulated depreciation and amortization (428,335) (413,401) (14,934) 3.6% Total capital assets, net 445,147$ 437,885$ 7,262$ 1.7% Long Beach Water Department
Condensed schedules of Capital Assets
September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

19 The Department’s capital assets ar e further broken down as follows between the Department’s Water Fund and the Sewer Fund for the years ended September 30, 2021 and 2020:
2021 2020 Amount %
Land 11,214$ 11,214$ -$ -
Water Rights 40 40 - - Patent 815 815 - - Buildings, structures, and facilities 151,117 147,022 4,095 2.8% Distribution/collection systems 383,489 371,322 12,167 3.3% Machinery and equipment 20,921 20,853 68 0.3%
Construction in progress 60,015 60,496 (481) -0.8%
Total capital assets 627,611 611,762 15,849 2.6%
Less: accumulated depreciation and amortization (267,406) (255,315) (12,091) 4.7% Total capital assets, net 360,205$ 356,447$ 3,758$ 1.1% Water Fund
Capital Assets
September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

2021 2020 A mount %
Buildings, structures, and facilities 12,430$ 12,430$ -$ - Distribution/collection systems 218,467 211,847 6,620 3.1% Machinery and equipment 6,823 6,695 128 1.9%
Construction in progress 8,151 8,552 (401) -4.7%
Total capital assets 245,871 239,524 6,347 2.6%
Less: accumulated depreciation (160,929) (158,086) (2,843) 1.8% Net capital assets 84,942$ 81,438$ 3,504$ 4.3% Sewer Fund
Capital Assets
September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

Additional information regarding capital assets can be found in notes 1 and 3 to the Department’s financial statements.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

20 Long-term obligations. As of September 30, 20 21, the Department had total outstanding long-term obligations in the amount of $34,765 for the Water Fund and $9,034 for the Sewer Fund. All debt is supported by Water Fund revenues and Sewer Fund revenues. Total Department outstanding debt as of September 30, 2021 and 2020 is summarized as follows:

2021 2020 A mount %
Capital Lease:

AMI Capital Lease 21,226$ 24,860$ (3,634)$ -14.6% Total capital lease outstanding 21,226 24,860 (3,634) -14.6% Long-term debt:

Revenue refunding bonds 12,945 16,115 (3,170) -19.7% Long-term debt outstanding, net 12,945 16,115 (3,170) -19.7% Add: Unamortized bond premium 594 873 (279) -32.0%
Total long-term debt outstanding 13,539 16,988 (3,449) -20.3% Total long-term obligations 34,765$ 41,848$ (7,083)$ -16.9% Water Fund
Long-Term Obligations
September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

2021 2020 Amount %
Long-term debt:

Revenue refunding bonds 7,960$ 8,335$ (375)$ -4.5% Long-term debt outstanding, net 7,960 8,335 (375) -4.5% Add: Unamortized bond premium 1,074 1,197 (123) -10.3%
Total long-term obligations 9,034$ 9,532$ (498)$ -5.2% Sewer Fund
Long-Term Obligations
September 30, 2021 and 2020
(in thousands)
Variance
2021/2020

The Department maintains AA+ credit ratings from Standard & Poor ’s for the Water and Sewer Funds. Additional information on the Department’s long-term obligations can be found in Note 4 - Long-term Liabilities of the Notes to Financial Statements in page 39 and on Note 6- Leasing Arrangements on page 48.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2021

21 Economic Factors and Next Year’s Budget and Rates

The Board of Water Commissioners (Board) approved the budget for the fiscal year -end September 30, 202 2, with budgeted expenditures totaling approximately $159,883, an increase of $23,688 (+17.4%) compared to FY2021. In addition, Sewer Fund’s budgeted expenditures amounted to $23,321, which decreased by $231 (-1.0%) in FY2022.

In FY2022, there w ere 8.0% rate increases for potable water and reclaimed water. In addition, there were 10% rate increases for sewer collection services in FY2022.

Requests for Information

This financial report is de signed to provide a general overview of the Department’s finances. Questions concerning any information provided in this report or requests for additional financial information should be addressed to the Director of Finance, Long Beach Water Department, 1800 E. Wardlow Road, Long Beach, California 90807.

22 Water Fund Sewer Fu nd Total
ASSETS
Current Assets:

Pooled cash and cash equivalents $ 25,099 12,261 37,360 Non-pooled cash equivalents 510 - 510 Interest receivable 10 - 10 Due from other government 475 - 475 Due from the City 30,846 - 30,846 Customer accounts receivable 10,925 1,304 12,229 Allowance for doubtful accounts (1,071) (156) (1,227) Material and supplies inventory 6,557 185 6,742 Prepaid expense 5,050 - 5,050 Restricted assets:

Pooled cash and cash equivalents:

Funds held in trust 922 - 922 Bond service funds 1,622 304 1,926 Sub-total pooled cash and cash equivalents 2,544 304 2,848 Non-pooled investments 2,395 - 2,395 Total restricted assets 4,939 304 5,243 Total current assets 83,340 13,898 97,238 Noncurrent Assets:

Capital assets:

Land 11,214 - 11,214 Water rights 40 - 40 Patent 815 - 815 Buildings, structures and facilities 151,117 12,430 163,547 Distribution/collection systems 383,489 218,467 601,956 Machinery and equipment 20,921 6,823 27,744 Construct
ion in progress 60,015 8,151 68,166 Total capital assets 627,611 245,871 873,482 Less: Accumulated depreciation and amortization (267,406) (160,929) (428,335) Total capital assets, net 360,205 84,942 445,147 Total assets 443,545 98,840 542,385

DEFERRED OUTFLOWS OF RESOURCES
Economics loss from the refunding of debt 511 - 511 Pension contributions after measurement date 3,812 781 4,593 Pension changes in proportions 755 236 991 OPEB contributions after measurement date 97 20 117 OPEB liability change in proportions 71 15 86 OPEB c
hange in assumptions 142 29 171 OPEB change in experience 35 7 42 Total deferred outflows of resources $ 5,423 1,088 6,511 (Continued)

LONG BEACH WATER DEPARTMENT
Statements of Net Position
Business Type Activity - Enterprise
September 30, 2021
23 Water Fund Sewer Fund Total

LONG BEACH WATER DEPARTMENT
Statements of Net Position
Business Type Activity - Enterprise
September 30, 2021

LIABILITIES
Current Liabilities:

Accounts payable $ 15,686 1,126 16,812 Accrued wages payable 816 156 972 Unearned revenue 180 120 300 Accrued compensated absences 2,294 459 2,753 Due to other funds 1,535 191 1,726 Advances from developers 763 194 957 Accrued interest payable 247 141 388 Capital lease due with in one year 1,640 - 1,640 Long-term debt due within one year 3,300 390 3,690 Customer deposits 942 - 942 Total current liabilities 27,403 2,777 30,180 Noncurrent Liabilities:

Capital lease, net of current portion 19,586 - 19,586 Long-term debt, net of current portion 10,239 8,644 18,883 Compensated absences 4,712 971 5,683 Total OPEB liability 282 58 340 Net pension liability 20,005 4,097 24,102 Accrued site restoration cost 1,000 - 1,000 Total noncurrent liabilities 55,824 13,770 69,594 Total Liabilities 83,227 16,547 99,774

DEFERRED INFLOWS OF RESOURCES
Difference between actual and expected
CalPERS investment returns 14,974 3,066 18,040 Pension changes in experience 646 132 778 CalPERS change in proportion 592 227 819 OPEB change in assumptions 1,055 218 1,273 OPEB change in proportion 156 37 193 OPEB change in experience 181 32 213 Total deferred inflows of resources 17,604 3,712 21,316

NET POSITION
Net investment in capital assets 326,635 74,875 401,510 Restricted for:

Bond Service 1,441 304 1,745 Unrestricted 20,061 4,490 24,551 Total Net Position $ 348,137 79,669 427,806 See accompanying notes to financial statements
24 Water Fund Sewer Fund Total
Operating Revenues:

Metered sales $ 73,876 5,715 79,591 Reclaimed water sales 4,888 - 4,888 Service charges 34,900 11,162 46,062 Other services 5,304 1,443 6,747 Total operating revenues 118,968 18,320 137,288 Operating Expenses:

Cost of water 27,672 - 27,672 Personal services 15,555 3,255 18,810 Commercial services 1,496 1,255 2,751 Maintenance and other 30,052 3,773 33,825 Street Impact charges 1,948 2,118 4,066 Depreciation and amortization 13,429 2,843 16,272 Total operating expenses 90,152 13,244 103,396 Operating income 28,816 5,076 33,892 Non-operating Income (Expense):

Interest income 101 - 101 Interest expense (1,394) (243) (1,637) Rental income 1,036 - 1,036 Payments from/(to) the City 22,204 - 22,204 Other 968 (114) 854
Total non-operating income (expense) 22,915 (357) 22,558 Income before capital grants and contributions 51,731 4,719 56,450 Capital grants and contributions 2,665 189 2,854 Changes in net position 54,396 4,908 59,304 Net position - October 1 293,741 74,761 368,502 Net Position - September 30 $ 348,137 79,669 427,806 See accompanying notes to financial statements

LONG BEACH WATER DEPARTMENT
Statements of Revenues, Expenses,
and Changes in Fund Net Position
Business Type Activity - Enterprise
Year Ended September 30, 2021
25 Water Fund Sewer Fund Tot al
Cash flows from operating activities:

Cash received from customers $ 118,419 18,301 136,720 Cash paid to employees (22,871) (4,683) (27,554) Cash paid for water (31,327) - (31,327) Cash paid for goods and services (28,248) (5,596) (33,844) Cash paid to the City (1,948) (2,118) (4,066) Other income 375 1,292 1,667 Other expense (792) (1,406) (2,198) Net cash provided by operating activities 33,608 5,790 39,398 Cash flows from non-capital financing activities:

Payments to the City (8,628) - (8,628) Cash received from rental income 1,036 - 1,036 Payments received from the City 1,710 - 1,710 Net cash (used for)/provided by non-capital financing activities (5,882) - (5,882) Cash flows from capital and related financing activities:

Proceeds from sale of capital assets 238 - 238 Contributions in aid of construction 4,082 189 4,271 Payments for capital acquisitions (17,828) (6,421) (24,249) Principal repayments-bonds (3,170) (375) (3,545) Principal repayments-capital lease (3,634) - (3,634) Interest payments (1,530) (373) (1,903) Net cash used for capital and related financing activities (21,842) (6,980) (28,822) Cash flows from investing activities:

Interest income received 553 - 553 Net cash provided by investing activities 553 - 553 Net increase (decrease) in cash and cash equivalents 6,437 (1,190) 5,247 Cash and cash equivalents, October 1 21,716 13,755 35,471 Cash and cash equivalents, September 30 28,153 12,565 40,718 Reconciliation of operating income to net cash provided by operating activities:

Operating income 28,816 5,076 33,892 Adjustments to reconcile operating income to net cash
provided by operating activities:

Depreciation expense and amortization 13,429 2,843 16,272 Other income 375 1,292 1,667 Other expense (792) (1,406) (2,198) Decrease in pension, OPEB and compensated absences (7,027) (1,276) (8,303) Increase in prepaid expense (2,498) - (2,498) Increase in customer accounts receivable (1,447) (196) (1, 643)
Decrease in due from City of Long Beach 879 57 936 Increase in material and supplies inventory (45) - (45) Increase (decrease) in accounts and retainage payable 1,730 (579) 1,151 Decrease in accrued wages payable (289) (152) (441) Increase in unearned revenue 82 120 202 Increase in due to City of Long Beach 460 11 471 Decrease in customer deposits (65) - (65) Total adjustments 4,792 714 5,506 Net cash provided by operating activities $ 33,608 5,790 39,398 See accompanying notes to financial statements

LONG BEACH WATER DEPARTMENT
Statements of Cash Flows
Business Type Activity - Enterprise
Year ended September 30, 2021

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

26 Note 1 - Descripti on of the Department and Summary of Significant Accounting Policies

Description of the Department

The Long Beach Water Department (the Department) was established in 1911 through adoption of the City Charter of the City of Long Beach, C alifornia (the City) to regulate and control the use, sale, and distribution of water owned or controlled by the City. In February 1988, the City Council of the City of Long Beach voted to transfer administrative, operational, and maintenance responsibility of the City’s sewer system to the Department.

In addition, in April 1990, the citizens of Long Beach passed a City Charter amendment that allowed greater autonomy of the Department in administering sewer operations. For accounting purposes, the transfer was effective July 1, 1988.

The Department services the City’s sewer system that consists of 715 miles of sewer mains, 15,132 manholes, and 28 sewage pumping stations. This system is capable of transporting for treatment approximately 40 to 60 million gallons of raw sewage daily.

The Department obtains potable water for distribution from two sources. Historically, approximately half of the City’s water is purchased from the Metropolitan Water District of Southern California; the other half is pumped from the Department ’s own groundwater wells. Potable water is stored in two reservoirs with a combined capacity of 108.9 million gallons. As of September 30, 2021, t he Department delivered over 3.2 billion gallons of reclaimed water to various users in the City.

Reporting Entity

The Department’s financial activities are considered to be enterprise operations of the City of Long Beach; accordingly, such activities are included in the City’s Annual Comprehensive Financial Report in the Water Utility Fund and Sewer Utility Fund. Control and management of the Department is vested in the five- member Board of Water Commissioners (the Board). Each Commissioner is appointed by the Mayor, confirmed by the City Council, and may serve two five-year terms.

The acco mpanying Department financial statements include the W ater and S ewer F und operations of the City of Long Beach. The statements of the Department are intended to present the financial position, and changes in financial position, and cash flows of only that portion of the business -type activities of the City that is attributable to the transactions of the Department. They do not purport to, and do not, present fairly the financial position of the City, as of September 30, 20 21, and the changes in its financial position, and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

27 The City’s Annual Comprehensive Financial Report may be obtained by contacting:

City of Long Beach, California – Department of Financial Management 411 W. Ocean Blvd.

Long Beach, CA 90802

Basis of Accounting

The Department’s accounts are maintained on a flow of economic resources measurement focus utilizing the accrual basis of accounting. Revenues are recognized in the accounti ng period in which they are earned, regardless of when they are received, and expenses are recognized in the period incurred. The Department’s operations are not subject to regulation by the Public Utilities Commission.

The Department applies all Governm ental Accounting Standards Board (GASB) Statements and Interpretations.

Implementation of New Accounting Pronouncements

Application of the following Statements was effective for the Department’s fiscal year ended September 30, 2021.

In August of 2018, GASB issued Statement No. 90, Majority Equity Interests – an Amendment of GASB Statements No. 14 and No. 61. The objectives of this Statement are to improve consistency in the measurement and comparability of the financial statement presentation of majority equity interests in legally separate organizations and to improve the relevance of financial statement information for certain component units. The Statement is effective for reporting periods after December 31, 2020. Application of this Statement did not have a material impact to the Department ’s financial statements for the fiscal year ended September 30, 2021.

In June of 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement No. 32. The requirements in paragraph 6- 9 of this Statement are effective for fiscal years beginning after June 15, 2021. All other requirements of this Statement are effective for reporting periods beginning after June 15, 2021. Early application of this Statement did not have a material impact to the Department’s financial statements for the fiscal year ended September 30, 2021.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

28 In October 2021, GASB issued Statement No. 98, The Annual Comprehensive Financial Report. The objectives of this Statement are to address references in authoritative literature to the term comprehensive annual financial report. The Statement is effective for reporting periods after December 15, 2021. The Department elected to early implemented this Statement for the fiscal year ended September 30, 2021.

The Department is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB Statements:

In June of 2017, the GASB issued Statement No. 87, Leases. This Statement is effective for the Department' s fiscal year ending September 30, 2022.

In May of 2019, GASB issued Statement No. 91, Conduit Debt Obligations. This Statement is effective for the Department' s fiscal year ending September 30, 2023.

In January of 2020, GASB issued Statement No. 92, Omnibus 2020. This Statement is effective for the Department' s fiscal year ending September 30, 2022.

In March of 2020, GASB issued Statement No. 93, Replacement of Interbank Offered Rates. This Statement is effective for the Department' s fiscal year ending September 30, 2022.

In March of 2020, GASB issued Statement No. 94, Public -Private and Public -Public Partnerships and Availability Payment Arrangements . This Statement is effective for the Department's fiscal year ending September 30, 2023.

In May of 2020, GASB issued Statement No. 96, Subscription -Based Information Technology Arrangements . This Statement is effective for the Department 's fiscal year ending September 30, 2023.

City of Long Beach Investment Pool

In order to maximize investment return and in accordance with City Charter requirements, the Department pools its available cash with other City funds into the City of Long Beach Investment Pool (the Pool). The Pool is an internal investment pool that is used as a demand deposit account by participating units. Investment decisions are made by the City Treasurer and approved by a general investment committee whose membership includes a member of the Department’s management. Interest income and realized and unrealized gains and losses arising from the Pool are apportioned to each participating unit based on their average daily cash balances compared to aggregate pooled cash and investments.

At September 30, 2021, the Water Fund and Sewer Fund had equity in the Pool of $27,643 and $12,565, respectively, which represents approximately 1.41% and 0.64%, respectively, for a total departmental equity of $40,208 or 2.05% of the Pool.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

29 The Department’s share of the Pool is stated at fair value. For a complete description of the Pool and its underlying investments, refer to the City of Long Beach’s separately issued financial statements.

Cash Equivalents

The Department classifies its investment in the Pool as cash and cash equivalents, regardless of the underlying maturity of the Pool’s investments as the Department can withdraw amounts from the pool without penalty or notice.

The Department classifies all other investments with maturities of three months or less at the time of purchase as cash equivalents. These cash equivalents are reported at amortized cost in the accompanying financial statements.

Fair Value

Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction.

The Department categorizes investments reported at fair value within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as follows:
• Level 1: Quoted prices for identical investments in active markets; • Level 2: Observable inputs other than quoted market prices; and, • Level 3: Unobservable inputs

Material and Supplies Inventory

Material and supplies inventory are reported at cost determined on a first-in, first-out basis.

Capital Assets

Capital assets, which include property, plant, equipment, and transmission and distribution infrastructure, are composed of assets with an initial, individual cost of more than five thousand dollars and an estimated useful life in excess of one year. The cost of additions to capital assets and replacement of retired property is capitalized. T he costs of replacement expenditures are expensed as incurred. Upon retirement or sale of capital assets, the cost and related accumulated depreciation are removed from the accounts, with any resulting gain or loss recorded in the Department’s financial statements (see note 3).

LONG BEACH WATER DEPARTMENT
Notes to Financial Statements
Septem
ber 30, 2021
(in thousands of dollars)
30 Deprec
iation of capital assets is provided by the straight -line method based on the estimated service lives of the properties, as follows:

Buildings, structures, and facilities 10 to 50 years
Distribution/collection systems 20 to 75 years
Patents 20 years
Other machinery and equipment 5 to 10 years
Capital grants and contributions
Advances received f rom developers for construction of plant assets are recorded as advances from developers when received. As construction progresses, advanced amounts equivalent to
capitalized expenditures are recorded as capital grants and contributions
in the accompanying financial statements. Donated assets, donated works of art and similar items, capital assets received in service concession arrangement and assets
constructed by developers and contributed to the Department are capitalized at fair value a
t the date of acquisition which equates to the acquisition cost.

Revenue Recognition
Operating revenues include revenues derived from the sale of water, from providing sewer service, and from other activities closely related to providing water and sewer service.

P
rincipal revenues are derived from volumetric usage and service charges for water and sewer services. Nonoperating revenues and expenses are those not directly associated with the
Department’s normal business operations of supplying water and sewer service and include
interest income and expense, rents received for Department property, and gains and losses on disposition of property. Revenues for water and sewer charges are recorded when delivered to customers. Bi llings to customers are based on monthly meter readings.

Operating Expenses
The cost of water includes all purchases of water from the Metropolitan Water District of Southern California. Personal services include labor costs for operations, maintenance, and general
and administrative functions. Commercial services cost is the Department’s share of the City’s utility billing system. Maintenance and other costs include the operating costs of the Department and include costs of pumping and treating groundwater as well as general and administrative costs. Permit fees are transfers made to the City.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

31 Employee Benefits, Compensated Absences and Termination Benefits

At September 30, 2021 , the Department has recorded compensated absences of $8, 436 ($7,006 for Water and $1,430 for Sewer) of which short -term amounts totaled to $2,753 ($2,294 for Water and $459 for Sewer) and long-term balances of $5,683 ($4,712 for Water and $971 for Sewer) . C ompensated absences include accrued but unused vacation and holiday benefits, and accumulated sick and termination benefits.

Vacation, holiday and sick benefits are recognized when earned and recorded as personal services in the accompanying financial statements. Amounts that are earned but unused at year end, are reported as compensated absences and classified as current or non- current in the accompanying financial statements based on historical usage of the benefits. The City’s policy is to pay all accumulated vacation and holiday pay when an employee retires or terminates. Accumulated sick leave vests when an employee meets the City’s minimum requirements for retirement and is forfeited if the employee terminates prior to vesting.

Upon retirement, management employees may convert 75 percent of their outstanding vacation leave to sick leave. The retiree’s accumulated sick leave and any covered sick leave may be used to either purchase additional pension benefits from CalPERS or to participate in the City’s Retired Employee Health Insurance Program (REHIP) until the sick leave is exhausted. The REHIP allows retirees to convert their accumulated vested unused sick leave to the cash value at the date of retirement and use those amounts for for health, dental, and long- term care insurance premiums for the retiree, their spouse, and eligible dependents in accordance with the City’s Personnel Ordinance.

The sick and termination benefits are determined based on an actuarial study of current and future retiree accumulated sick leave in accordance with GASB Statement No. 16, Accounting for Compensated Absences (GASB 16). The liability considers an estimate of future usage, additional leave accumulation and wage increases for both current retirees and active employees. The Department’s share of the liability is based on the its share of accrued sick leave at September 30, 2021 . The liability is being funded over time th rough burden rates, applied as a percentage of current productive salaries.

Pension Plan and Postret
irement Benefits

All full- time Department employees are members of the City’s Miscellaneous Plan. The Department’s policy is to fund. The costs to be funded are determined annually as of July 1 and are incorporated into the payroll burden rate to reimburse the Employee Benefits Internal Service Fund for contributions made on behalf of Department employees (see n ote 5).

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

32 For purposes of measuring net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Miscellaneous Plan and additions to/deductions from Miscellaneous Plan’s fiduciary net position have been determined on the same basis as they are reported by the Miscellaneous Plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Restricted Assets

Amounts restricted for bond indenture requirements and funds held in trust are recorded as restricted assets. Related liabilities of these funds are identified as amounts payable from restricted assets when such obligations are incurred.

Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Financial Position reports a separate section for deferred outflows of resources. This separate financial statement element, D eferred Outflows of R esources, represent a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then.

In addition to liabilities, the Statement of Financial Position reports a separate section for deferred inflows of resources. The separate financial element, Deferred Inflows of Resources, represent an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

Risk Management

The Department, as an entity of the City, participates in the City’s self-insured program for workers’ co mpensation, property , and tort liability. The City and the Department ’s management believe that sufficient funds are being accumulated in the City ’s Insurance Internal Service Fund (Insurance Fund) to meet losses as they arise. The Department contributes to the Insurance Fund through payroll burden charges applied as a percent of current productive salaries. In addition, various risk control techniques, including safety training for all employees and the inclusion of appropriate legal provisions in third- party contracts, have been implemented to minimize risk losses.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

33 Estimates

The preparation of the Department’s financial statements in conformity with the U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Net Position

The Department has adopted a policy of generally utilizing restricted funds, prior to unrestricted funds, when an expense is incurred for purposes for which both are available.

The Department’s net position are classified into the following net position categories:

Net Investment in Capital Assets - Capital assets net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets and unexpended bond proceeds and economic losses of refunding of debt.

Restricted - Amounts restricted for bond indenture requirements.

Unrestricted - All other categories of net position.

Current Environment – Coronavir
us Disease 2019 (COVID-19)

On March 11, 2020, the World Health Organization declared a global pandemic due to an outbreak caused by a respiratory disease called Coronavirus Disease 2019 (CO VID-19).

Since then, the virus and its impact on economic activity has spread across the globe. On March 17, 2020, the City issued a notice to modify all city operations in accordance to the mandate issued by the City of Long Beach Health and Human Service s Department. On March 19, 2020, the Safer-At-Home Order went into effect whereas residents of Long Beach were informed to stay at home as much as possible, requiring face coverings indoors and outdoors, employers offering telework, closing of local schools for in-person learning, limiting commercial businesses capacity, and implementing restrictions on community gathering and non-essential travels. The Department responded in full support of the City’s mandate by closing its facilities to the public, encou raging employees whose positions enabled them to work remotely, purchasing and providing personal protective equipment (PPE) for employees at work, implementing changes in work environments and continued communication updates about COVID-19. As changes in the pandemic continue, the Department, being part of the critical infrastructure sector, remains diligent in providing the city of Long Beach with clean water as its top priority.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

34 With the onset of COVID-19, the City initiated steps to avoid furthering the financial burdens experienced by utility customers impacted by the pandemic. In March 2020, the City suspended charging late fees to utility customers (including Water and Sewer customers), suspended terminations (shut -offs) of utilities for nonpayment, and suspended collection efforts for amounts in arrears. This suspension of late fees, utility service shut -offs, and collection efforts continued through September 30, 2021. These moratoriums continue into FY 2022.

As part of the 2021-22 State budget approval in late 2021, the State of California initiated the California Water and Wastewater Arrearage Payment Program (CWWAPP) to offer financial assistance to water and sewer customers to help reduce past due bill balances that accrued during the pandemic. Awarded funds will not be received until FY 22.

Utility Revenue Transfer Charter Amendment (Measure M)

On June 5, 2018, the residents of the city of Long Beach voted to pass the Utility Revenue Transfer Charter Amendment (Measure M). With this amendment , the Department is authorized to make annual transfers of any funds from the Water and Sewer Funds to the General Fund that are determined by the Board of Water Commissioners (Commission) to be unnecessary to meet its obligations; provided that the maximum transfer does not exceed 12% of each funds’ audited annual gross revenues. The transfers to the General Fund can be spent for unrestricted general revenue purposes. The Commission is authorized to set, and the City Council to approve, water and sewer rates in an amount sufficient to recover the cost of Water and Sewer Fund obligations.

In October of 2018, a lawsuit was filed against the City of Long Beach (City) alleging that, among other things, the passage of Measure M violated Article XIII of the C alifornia Constitution and was unenforceable insofar as it authorized the transfer of funds from the Water and Sewer Funds to the General Fund. On January 2, 2020, a judge in the Superior Court of Los Angeles County issued a tentative ruling in favor of the plaintiffs, finding Measure M unconstitutional, ordering the return of funds previously transferred under the authority granted by Measure M, and prohibiting the future transfer of funds pursuant to Measure M.

The tentative ruling became final in February of 2020. On March 23, 2022, the Supreme Court denied the City’s petition to review and therefore the appellate court decision stood. The City is required to transfer $30,832 to the Department within 180 days from the final ruling.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

35 Note 2 - Cash Equival ents and Investments

The Department’s unrestricted and restricted cash equivalents and investments are as follows:

Unrestricted Restricted
Total Investments
& Cash
Equivalent
Equity in the City of Long Beach's investment pool 25,099$ 2,544 27,643 Non-pooled cash equivalents 510 - 510 Investments - U.S. Treasury Notes - 2,395 2,395 Total cash and investments 25,609$ 4,939 30,548 Water Fund

Unrestricted Restricted
Total Investments
& Cash
Equivalent
Equity in the City of Long Beach's investment pool 12,261$ 304 12,565 Total c
ash and investments 12,261$ 304 12,565 Sewer Fund
Sewer Fund

The Departments investment policy allows funds to be invested with the City or to be held outside of the Pool based on the requirements of bond indentures or by actions of the Board. The City’s investment policy limits the permitted investments in the Investment Pool to the following: Obligations of the U.S. government, federal agencies, local agency bonds, medium-term corporate notes, certificates of deposit; bankers’ acceptances, commercial paper, Local Agency Investment Fund, repurchase agreements, reverse repurchase agreements, securities lending, asset -backed securities, mortgage- backed securities and money market mutual funds. Cash equivalents held outside of the Pool are governed by the provisions of the debt agreement.

As of September 30, 2021, the City’s Investment Pool has weighted average maturity of

1.44 years and is not rated. The Department’s investment in the Pool is not categorized nor leveled in the fair value hierarchy.

The Water Funds’ investments in U.S. Treasury notes have a weighted average maturity of

1.59 years and are not rated. These investments are reported at fair value using observable inputs and are accordingly reported as a level 2 investment in the fair value hierarchy.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

36 Note 3 – Capital Assets

Capital assets at September 30, 2021 were as follows:

Balance Deletions, Balance
Septem
ber 30, Retirements September 30,
Water Fund 2020 Additions and Transfers 2021
Capital assets, not being depreciated:

Land 11,214 - - 11,214 Construction in progress 60,496 17,434 (17,915) 60,015 Water Rights 40 - - 40 Total capital assets, not being depreciated 71,750 17,434 (17,915) 71,269 Capital assets, being depreciated:

Buildings, structures and facilities 147,022 4,193 (98) 151,117 Patents 815 - - 815 Distribution/collection systems 371,322 13,116 (949) 383,489 Machinery and equipment 20,853 922 (854) 20,921 Total capital assets, being depreciated 540,012 18,231 (1,901) 556,342 Less accumulated depreciation for:

Buildings, structures and facilities (73,884) (4,182) 98 (77,968) Patents (572) (41) - (613) Distribution/collection systems (162,816) (7,764) 386 (170,194) Machinery and equipment (18,043) (1,442) 854 (18,631) Total accumulated depreciation (255,315) (13,429) 1,338 (267,406) Total capital assets, being depreciated, net 284,697 4,802 (563) 288,936 Total Water Fund capital assets, net 356,447 22,236 (18,478) 360,205

Balance Deletions, Balance
September 30, Retirements September 30,
Sewer Fund 2020 Additions and Transfers 2021
Capital assets, not being depreciated:

Construction in progress 8,552 6,528 (6,929) 8,151 Total capital assets, not being depreciated 8,552 6,528 (6,929) 8,151 Capital assets, being depreciated:

Buildings, structures and facilities 12,430 - - 12,430 Distribution/collection systems 211,847 6,620 - 218,467 Machinery and equipment 6,695 128 - 6,823 Total capital assets, being depreciated 230,972 6,748 - 237,720 Less accumulated depreciation for:

Buildings, structures and facilities (2,735) (278) - (3,013) Distribution/collection systems (151,162) (2,029) - (153,191) Machinery and equipment (4,189) (536) - (4,725) Total accumulated depreciation (158,086) (2,843) - (160,929) Total capital assets, being depreciated, net 72,886 3,905 - 76,791 Total Sew er Fund capital assets, net 81,438 10,433 (6,929) 84,942

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

37 Balance Deletions, Balance
September 30, Retirements September 30,
Combined Total 2020 Additions and Transfers 2021
Capital assets, not being depreciated:

Land 11,214 - - 11,214 Construction in progress 69,048 23,962 (24,844) 68,166 Water Rights 40 - - 40 Total capital assets, not being depreciated 80,302 23,962 (24,844) 79,420 Capital assets, being depreciated:

Buildings, structures and facilities 159,452 4,193 (98) 163,547 Patents 815 - - 815 Distribution/collection systems 583,169 19,736 (949) 601,956 Machinery and equipment 27,548 1,050 (854) 27,744 Total capital assets, being depreciated 770,984 24,979 (1,901) 794,062 Less accumulated depreciation for:

Buildings, structures and facilities (76,619) (4,460) 98 (80,981) Patents (572) (41) - (613) Distribution/collection systems (313,978) (9,793) 386 (323,385) Machinery and equipment (22,232) (1,978) 854 (23,356) Total accumulated depreciation (413,401) (16,272) 1,338 (428,335) Total capital assets, being depreciated, net 357,583 8,707 (563) 365,727 Total Department capital assets, net 437,885 32,669 (25,407) 445,147

In FY2021, the Department capitalized enhancements to several facilities and structures, which amounted to $ 4,193 for Water Fund. These improvements included water reservoir tank roofing and interior lining installation, well development and cistern improvements. In addition, the Department completed numerous projects as part of ongoing improvements to its current water distribution system and sewer collection system, which totaled $13,116 for the Water Fund and $6,620 for the Sewer Fund. These improvements include ongoing programs for Water Cast Iron Main replacement, Water Services installations, Fireline and Fire Hydrant installations, Large Valve replacement, and Sewer Pipe rehabilitation. The Department also purchased machinery and equipment which totaled $922 for the Water Fund and $128 for the Sewer Fund. These machinery and equipment purchases included utility vehicles and sewer collection pump.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

38 Construction in Progress

Construction in progress at September 30, 2021 includes the following projects:

Project Water Fund Sewer Fund
Water Main Replacement Program 4,457$ -$ Water Reservoir Improvements 1,743 - Water Well Development and Rehabilitation 6,983 - Water System Facility Improvements 38,634 - Reclaimed Water System 732 -
Sewer Main Replacement Program - 3,067 Sewer Lift Stations Rehabilitation - 4,010 Other Projects 7,466 1,074
Total Combined Construction in Progress 60,015$ 8,151$

It is the Department ’s policy to transfer the costs of projects after their completion to other capital asset classifications or to expense. For the fiscal year ended September 30, 2021 , completed projects were transferred from Construction in progress as follows:

Water Fund Sewer Fund
Transfers to Capital Assets 17,309$ 6,694
Transf
ers to Expense 606 235
Total 17,915$ 6,929
Total

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

39 Note 4 – Long-term Lia bilities:

Beginning of End of Due within
S
eptember 30, 2021 year Additions Reductions year one year 2010 Water Revenue Refunding Bonds 10,740$ - (2,490) 8,250 2,590 2012 Water Revenue Refunding Bonds 5,375 - (680) 4,695 710 16,115 - (3,170) 12,945 3,300
Add 2010 unamortized bond premium 481 - (189) 292 - Add 2012 unamortized bond premium 392 - (90) 302 - Total long-term debt 16,988 - (3,449) 13,539 3,300 Compensated Absences 7,122 1,624 (1,740) 7,006 2,294 Net Pension Liability 42,899 - (22,894) 20,005 - Total OPEB Liability 326 - (44) 282 - Capital Lease 24,860 - (3,634) 21,226 1,640 Accrued site restoration cost 1,000 - - 1,000 - Total 93,195$ 1,624 (31,761) 63,058 7,234 Beginning of End of Due within
September 30, 2021 year Additions Reductions year one year 2016 Sewer Revenue Refunding Bonds 8,335$ - (375) 7,960 390 8,335 - (375) 7,960 390 Add 2016 unamortized bond premium 1,197 - (123) 1,074 - Total long-term debt 9,532 - (498) 9,034 390 Compensated Absences 1,484 330 (384) 1,430 459 Net Pension Liability 8,947 - (4,850) 4,097 - Total OPEB Liability 69 - (11) 58 - Total 20,032$ 330 (5,743) 14,619 849 Water Fund
Sewer Fund

The bonds are payable from and secured by net revenues of the Department.

Second Lien Water R evenue Bonds - Series 2012A

On August 30, 2012, the Water Fund issued $9,850 in Second Lien Water Revenue Bonds, Series 2012A (the Series 2012A Bonds) at a premium of $1,342 to provide funds to (a) refund, on a current basis, $11, 000 aggregate principal outstanding in Subordinate Water Revenue Commercial Paper Notes , and ( b) pay the cost of issuing the Series 2012A Bonds. There is no bond reserve requirement. The objective of this debt refinancing was to take advantage of historically low fixed bond rates and provide the Department with

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

40 certainty in its future debt service payment requirements. The Commercial Paper program, as authorized by the Board under Resolution WD-1170, expired on October 1, 2012.

The Bonds bear interest ranging from 2 .0% to 5.0% per annum payable on May 1 and November 1 of each year, commencing on November 1, 2012. Principal payments are due every May 1, commencing on May 1, 2013, with bond terms maturing through the year 2027. The initial issuance premium of $1,342 on the Series 2012 Bonds is reported as an addition to long-term debt and is amortized using the effective-interest-rate method over the life of the Bonds.

Under Board Resolution WD-1300 adopted July 24, 2012 authorizing the issuance and sale of the Series 2012A Bonds, the Board also approved closure of the Senior Lien trust indentures pursuant to which the Department previously issued the Series 1997A City of Long Beach Water Revenue Refunding Bonds and Series 2010A City of Long Beach Water Revenue Refunding Bonds. The Board also irrevocably covenanted that the Department would not issue any additional Parity Obligations in the future that would have a lien on Net Revenues senior to its Subordinate Obligations, including the 2012A Bonds.

The Board, on behalf of the City, has covenanted under the M aster Subordinate Indenture, to set rates and charges for the supply of water to its customers sufficient to yield net revenues each year equal to at least equal to 1.10 times the aggregate annual amount of principal and interest due on the Senior Lien Bonds and any Subordinate Obligations, including the Series 2012A Bonds.

Water Revenue Refunding Bonds - Series 2
010A

On September 29, 2010, the Water Fund issued $22,740 in Water Revenue Refunding Bonds, Series 2010A (the Series 2010A Bonds) at a premium of $3,021 to (a) advance refund 82.4% or $24,290 of the outstanding Series 1997A Water Revenue Refunding Bonds at a redemption premium of 2% over par value, (b) fund a reserve fund for the Series 2010A Bonds, and (c) pay the cost of issuing the 2010 Bonds. The Series 2010A Bonds bear interest ranging from 3.0% to 5.0% per annum payable on May 1 and November 1 of each year, commencing on November 1, 2010. Principal payments are due May 1, commencing on May 1, 2012.

The remaining Series 1997A Bonds matur ing on May 1, 2015 were not subject to redemption prior to maturity and the $1,825 outstanding was paid off on May 1, 2015.

The initial issuance premium of $3,021 on the Series 2010A Bonds is reported as an addition to long-term debt and is amortized using the effective-interest-rate method over the life of the Bonds.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

41 In addition, the refunding resulted in a difference between the reacquisition price and the net carrying amount of the Series 1997A Bonds of $2,697. This difference is considered to be a deferred outflow on the refunding and is reported in the Statement of Net Positon as a separate category under Deferred Outflows of R esources. The deferred outflow from the refunding is being amortized using the straight-line method over the life of the Series 2010A bonds, which have the same maturity as the old debt. The Refunded Series 1997A Bonds were refunded in order to take advantage of lower interest rates to achieve debt service savings. The Department reduced its aggregate debt service payments by $3,286 , with the refunding structured to achieve such savings upfront over fiscal years 2011 and 2012. The economic gain from the refunding (difference between the present value of the old and new debt service payments) was $3,349.

The Series 2010A Bonds and any Parity Obligations are secured by a first lien upon and pledge of all of the net revenues of the entire water system (the Water Enterprise Fund) of the City of Long Beach. Net revenues are defined as all gross revenues derived by the ownership and operation of the Water Enterprise Fund less operation and maintenance costs. The Board has covenanted, on behalf of the City, to set rates and charges for the supply of water to its customers sufficient to provide net revenues each year equal to at least 1.10 times the aggregate annual amount of principal and interest due on the Bonds and any parity obligations.

Second Lien Water Revenue Short-Term Obl
igation Revolving Line of Credit

On April 16, 2020, the Board approved Resolution WD -1427 authorizing the issuance of up to $60,000 of Second Lien Water Revenue Short -Term Obligations pursuant to the M aster Subordinate Trust Indenture, the Fourth Supplemental Subordinate Trust I ndenture, and a Credit Agreement with JPMorgan Chase Bank, National Association, the provider of the Revolving Line of Credit (LOC) . The term of the Water LOC was for three years, with a Commitment Termination Date of May 19, 2023, with the option to extend for an additional two years after such date. Obligations under the Water LOC are secured and payable solely from the Water Fund revenues.

The Water LOC would accrue interest at a variable rate per annum equal to a percentage of the One Month London Interbank Offered Rate (LIBOR) plus a spread. This rate will be deemed no less than three- fourths of one percent in any one- month interest period. The purpose of establishing the Water LOC is to facilitate increased investment in the Department’s water system infrastructure. As of September 30, 2021, and for the year then ended, there were no draws on the Water LOC.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

42 Senior Sewer Revenue Refunding Bonds - Series 201 6A

On September 7, 2016, the Sewer Fund issued $9,830 in Senior Sewer Revenue Refunding Bonds, Series 2016A (the Series 2016A Bonds) at a premium of $1,727 to provide funds to (a) refund, on a current basis, $11,250 aggregate principal outstanding in Subordinate Sewer Revenue Obligations pursuant to the terms of a credit agreement with Wells Fargo Bank, National Association, and (b) pay the cost of issuing the Series 2016A Bonds. There is no bond reserve requirement. The objective of this debt refinancing was to take advantage of low fixed bond yield rates and provide the Department with certainty in its future debt service payment requirements.

The Series 2016A Bonds bear interest ranging from 4.0% to 5.0% per annum payable on May 1 and November 1 of each year, commencing on November 1, 2016. Principal payments are due every May 1, commencing on May 1, 2017, with bond terms maturing through the year 2036. The initial issuance premium of $1,727 on the Series 2016A Bonds is reported as an addition to long- term debt and is amortized using the effective- interest- rate method over the life of the Bonds.

The Series 2016A Bonds and any Parity Obligations are secured by a first lien upon and pledge of all of the net revenues of the Sewer Enterprise. Net revenues are defined as all gross revenues derived by ownership and operation of the Sewer Enterprise less operation and maintenance costs. The Board, on behalf of the City, has covenanted under the Senior Indenture to set rates and charges for sewer service to its customers sufficient to yield net revenues each year which are at least equal to 1.25 times the aggregate annual amount of debt service on the Senior Bonds (including the Series 2016A Bonds) for such fiscal year.

Total Annual Debt Service Requirements to Maturity

Annual debt service requirements to maturity are as follows:

Fiscal Year Total Debt
Ending Sept 30 Principal Interest Principal Interest Principal Interest S ervic e 2022 2,590$ 396 710 196 3,300 592 3,892 2023 2,715 276 735 168 3,450 444 3,894 2024 2,945 147 775 131 3,720 278 3,998 2025 - - 795 108 795 108 903 2026 - - 820 84 820 84 904 2027 - - 860 43 860 43 903 Total 8,250$ 819 4,695 730 12,945 1,549 14,494 Water Fund
Series 2010 Bonds Series 2012 Bonds Total

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

43 Fiscal Year Total Debt
Ending Sept 30 Principal Interest S ervic e
2022 390$ 339 729
2023 405 323 728

2024 420 307 727
2025 435 290 725
2026 455 273 728
2027-2031 2,615 1,025 3,640
2032-2036 3,240 399 3,639
Total 7,960$ 2,956 10,916
Series 2016 Bonds
Sewer Fund

Note 5 - Retirement Program

Plan Description – Public Em ployees’ Retirement System (CalPERS)

The Department contributes to the California Public Employees’ Retirement System (CalPERS) agent multiple -employer defined benefit pension plan. The City is considered the employer and the Department is a department of the City. The plan functions as a cost sharing plan for the Department. The Department’s employees are enrolled in the City Miscellaneous Plan. CalPERS provides retirement benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and City resolution. All City departments are considered collectively to be a single employer, and the actuarial present value of vested and non -vested accumulated plan benefits attributable to the Department's employees is determined as the Department's percentage of the City as a single employer. Similarly, the net assets available for benefits of Department employees is determined as the Department's percentage of the City’s net assets. CalPERS issues publicly available reports that include a full description of the pension plans, including benefit provisions, assumptions and membership information. All qualified permanent employees of the Department are eligible to participate in the Miscellaneous Plan. The reports can be found on the CalPERS website.

Benefits Provided

CalPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees or beneficiaries. Benefits are based on years of credited service equal to one year of full -time employment, age at retirement and final compensation. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. The cost of living adjustments for the plan is applied as specified by the Public Employees’ Retirement Law.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

44 Contributions - California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. 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 City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

The Plans’ provisions and benefits in effect at September 30, 2021 , are summarized in the following table:

Hire Date
Prior to
October 1, 2006
On or after
October 1, 2006
and prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 2.7% @ 55 2.5% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service
Benefit payments Monthly for life
Retirement age 50 - 55 50 - 55 52 - 62
Employee 8.0% 8.0% 6.5%
Employer 28.446% 28.446% 28.446%
Monthly benefits 2.0% to 2.7% 2.0% to 2.5% 1.0% to 2.0% Miscellaneous
Required Contribution Rates
Percentage of Eligible Compensation

Allocation Methodology

The City used a calculated percentage based on the Department's share of the pension plan contributions to the City’s pension plan contributions amounts for each plan, to provide the Department's net pension liability and related GASB 68 accounting elements. The Department's calculated percentage was 7.7% (6.4% for Water and 1.3% for Sewer) for the Plan.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

45 Pension Liability, Pension Expense, and Deferred Outflows and Deferred Inflows Related to Pensions

The City’s net pension liability for the Plan was measured as the total pension liability, less the plan’s fiduciary net p osition. Net p ension liability is measured as of June 30, 2021 (measurement date), using the actuarial valuation report as of June 30, 2020. T he Department's net pension liability for the Plan was $24,102 ($20,005 for Water and $4, 097 for Sewer) at September 30, 2021.

For the measurement period ended June 30, 2021 (the measurement date), the Department reported pension income of $311 ($258 for Water and $53 for Sewer).

As of September 30, 2021 , the Department had deferred outflows and deferred inflows related to pensions as follows:

Deferred outflows and inflows at September 30
Water Sewer Total
Deferred outflows of resources:

Pension contributions after measurement date 3,812$ 781 4,593 Change in proportion 755 236 991 Total deferred outflows of resources 4,567$ 1,017 5,584 Deferred inflows of resources:

Net difference between actual and expected investment returns 14,974$ 3,066 18,040 Differences between actual and expected experience 646 132 778 Change in proportion 592 227 819 Total deferred inflows of resources 16,212$ 3,425 19,637

Exclusive of deferred outflows related to payments after the measurement date, the net amounts of deferred outflows (inflows) of resources related to pensions that will be recognized in future pension expense is as follows:

Water Sewer Total
(3,695)$ (728) (4,423)
(4,025) (877) (4,902)
(3,588) (734) (4,322)
(4,149) (850) (4,999)
(15,457)$ (3,189) (18,646)
June 30
2022
2023
2024
2025
Measurem ent
Period Ending

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

46 Actuarial Methods and Assumptions Used to Determine Total Pension Liability

A summary of principal assumptions and methods used to determine the net pension liability is as follows:

Miscellaneous
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Actuarial Cost Method Entry Age Normal
Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.50%
Projected Salary Increase V aries by entry age and service Investment Rate of Return 7.15%
Mortality 1
1 The mortality table used was developed based on CalPERS' specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre- retirement and Post-retirement mortality rates include 15 yers of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer
to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

All other actuarial assumptions used in the June 30, 2020 Actuarial Valuation Report were based on the results of an actuarial experience study for the period from 1997 to 2015 .

Further details of the experience study can be found on the CalPERS website.

Discount Rate

The discount rate used to measure the total pension liability was 7.15%. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15% discount rate is adequate, and the use of the municipal bond rate calculation is not necessary. The long- term expected discount rate of 7.15% is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained from the CalPERS website under the GASB Statement No. 68 section.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

47 The long- term expected rate of return on pension plan investments of 7. 15% was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long- term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short -term (first 10 years) and the long- term (11-60 years) using a building- block approach. Using the expected nominal returns for both short -term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short -term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The following table reflects the long- term expected real rate of return by asset class for Miscellaneous Plan. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

Asset Class
New
Strategic
Allocation
Real Return
Years 1 - 10a
Real Return
Years 11+b
Global Equity 50.00% 4.80% 5.98%
Fixed In
come 28.00 1.00 2.62
Inflation Assets - 0.77 1.81
Private Equity 8.00 6.30 7.23
Real Assets 13.00 3.75 4.93
Liquidity 1.00 - (0.92)
a An expected inflation of 2.00% used for this period
b An expected inflation of 2.92% used for this period

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

48 Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following table presents the net pension liability of the City for each plan as of the measurement date, calculated using the discount rate of 7. 15%, compared to a discount rate that is 1 percentage point lower (6.15%) or 1 percentage point higher (8.15%):

Net Pension Liability/(Asset) Water Sewer Total
1% Decrease (6.15%) 43,337$ 8,874 52,211 Current Discount Rate (7.15%) 20,005 4,097 24,102 1% Increase (8.15%) 657 135 792

Note 6 – Leasing Arr angements

The Department owns approximately 820 acres of land, approximately 80 acres of which is leased for commercial purposes. Minimum future rental income due to the Water Fund under noncancelable operating leases which have an initial term in excess of one year is as follows:

Year ending September 30:
2022 $ 1,013
2023 1,012
2024 1,035

2025 1,064
2026 1,095
2027-2031 5,038
2032-2036 2,777
2037-2041 1,057
2042-2046 125
Total minimum future rentals $ 14,216

Capital Lease-Automated
Metering Infrastructure (AMI)

On November 1, 2018, the Board of Water Commissioners authorized the Long Beach Water Department to proceed with execution of a lease- purchase agreement and related financing documents with Banc of America Public Capital Corp, for the financing of the Advanced Meter ing Infrastructure (AMI) Project, in an amount not to exceed $36,000, including cost of issuance, principal and interest, payable over a fifteen-year period.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2021
(in thousands of dollars)

49 The AMI Project is an integrated network of smart meters, communication collectors, and data management systems that allow water meters to be read automatically and uploaded electronically. AMI Project costs to be financed total approximately $27,400.

On December 11, 2018, City Council approved the execution of the 15- year lease- purchase agreement through the City’s Master Lease Agreement with Banc of America Public Capital Corporation to finance the AMI Project. The lease- purchase agreement was executed and funded on December 20, 2018. The total purchase price was $27,400, at an interest rate of 3.35%. In FY2021 , the Department paid a total of $4,440 ($ 3,634 principal and $806 interest) in rental payments.

Fiscal Year Total Debt
Ending Sept 30 Pr
incipal Interest S ervic e
2022 1,640 686 2,326
2023 1,696 630 2,326
2024 1,753 573 2,326
2025 1,813 513 2,326
2026 1,875 451 2,326
2027-2031 10,373 1,255 11,628
2032 2,076 35 2,111
Total 21,226$ 4,143 25,369
Water Fund - Capital Lease

Note 7 - Commitments and Contingencies

Litigation

The Department is subject to claims and lawsuits arising from the normal course of business. Such claims are routinely evaluated by representatives of the City Attorney ’s office. Department management may make provision for probable losses if deemed appropriate on advice of legal counsel. To the extent that such provision for damages is considered necessary, appropriate amounts are reflected in the accompanying basic financial statements. Based upon information obtained from the City Attorney with respect to remaining cases, it is the opinion of management that any liability for unreserved claims and lawsuits will not have a material impact on the basic financial statements of the Department.

Commitments

Contract commitments and purchase orders for which materials or services were not received as of September 30, 2021 amount to $12,005 and $1,111 for the Water Fund and Sewer Fund, respectively.

Intentionally Left Blank

REQUIRED SUPPLEMENTARY

INFORMATION SECTION
(Unaudited)

Intentionally Left Blank

51 Schedule of the Department's proportionate share of the net pension liability 2021 2020 Department’s proportion of the collective net pension liability 7.7% 7.9% Department’s proportionate share of the collective net pension liability 2 $ 24,102 $ 51,846 Department’s covered payroll $ 21,507 $ 22,915 Department’s proportionate share of the collective net pension liability as a percent of covered payroll 112.1% 226.3% Pension plan’s fiduciary net position as a percentage of total pension liability 89.1% 76.5% Schedule of the Water Fund's proportionate share of the net pension liability 2021 2020 Water’s proportion of the collective net pension liability 6.40% 6.50% Water’s proportionate share of the collective net pension liability 2 20,005 42,899 Water’s covered payroll $ 17,876 $ 18,854 Water’s proportionate share of the collective net pension liability as a percent of covered payroll $ 111.9% $ 227.5% Pension plan’s fiduciary net position as a percentage of total pension liability 89.1% 76.5% Schedule of the Sewer's Fund's proportionate share of the net pension liability 2021 2020 Sewer’s proportion of the collective net pension liability 1.30% 1.40% Sewer’s proportionate share of the collective net pension liability 2 $ 4,097 $ 8,947 Sewer’s covered payroll $ 3,631 $ 4,061 Sewer’s proportionate share of the collective net pension liability as a percent of covered payroll 112.8% 220.3% Pension plan’s fiduciary net position as a percentage of total pension liability 89.1% 76.5% Schedule of the Department's Contributions 2021 2020
Contractually required contribution 3 $ 6,018 $ 5,654
Contributions in relation to the contractually required contributions 4 6,018 5,654 Contribution deficiency (excess) $ — $ —
Department's covered payroll $ 21,507 $ 22,915
Department's contributions as a percentage of covered payroll 28.0% 24.7% Schedule of the Water Fund's Contributions 2021 2020
Contractually required contribution 3 $ 5,002 $ 4,652
Contributions in relation to the contractually required contributions 4 5,002 4,652 Contribution deficiency (excess) $ — $ —
Water's covered payroll $ 17,876 $ 18,854
Water's contributions as a percentage of covered payroll 28.0% 24.7% Schedule of the Sewer Fund's Contributions 2021 2020
Contractually required contribution 3 $ 1,016 $ 1,002
Contributions in relation to the contractually required contributions 4 1,016 1,002 Contribution deficiency (excess) $ — $ —
Sewer's covered payroll $ 3,631 $ 4,061
Sewer's contributions as a percentage of covered payroll 28.0% 24.7% Notes to Required Supplementary Information
1 The Department implemented GASB Statement No. 68 effective October 1, 2014; therefore, data is not available prior to October 1, 2014.
2 The net pension liability includes the impact of changes in assumptions. Amounts reported in 2017 and later reflect a discount rate reduction from 7.65% to 7.15%. For amounts reported from 2015 to 2017, reflect a discount rate increase on 7.5% to 7.65%.
3 Actuarial Determined contribution is based on a CalPERS projection of the payroll for the Miscellaneous plan 4 Amount represents actual contributions recorded by CalPERS. (Unaudited)

LONG BEACH WATER DEPARTMENT
Schedule of the Department Proportionate Share of the
Net Pension Liability and Contributions
September 30, 2021 (in thousands of dollars)
Last 10 years1
52 Schedule of the Department's proportionate share of the net pension liability Department’s proportion of the collective net pension liability Department’s proportionate share of the collective net pension liability 2 Department’s covered payroll
Department’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Water Fund's proportionate share of the net pension liability Water’s proportion of the collective net pension liability Water’s proportionate share of the collective net pension liability 2 Water’s covered payroll
Water’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Sewer's Fund's proportionate share of the net pension liability Sewer’s proportion of the collective net pension liability Sewer’s proportionate share of the collective net pension liability 2 Sewer’s covered payroll
Sewer’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Department's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Department's covered payroll
Department's contributions as a percentage of covered payroll Schedule of the Water Fund's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Water's covered payroll
Water's contributions as a percentage of covered payroll Schedule of the Sewer Fund's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Sewer's covered payroll
Sewer's contributions as a percentage of covered payroll Notes to Required Supplementary Information
1 The Department implemented GASB Statement No. 68 effective October 1, 2014; therefore, data is not available prior to October 1, 2014.
2 The net pension liability includes the impact of changes in assumptions. Amounts reported in 2017 and later reflect a discount rate reduction from 7.65% to 7.15%. For amounts reported from 2015 to 2017, reflect a discount rate increase on 7.5% to 7.65%.
3 Actuarial Determined contribution is based on a CalPERS projection of the payroll for the Miscellaneous plan 4 Amount represents actual contributions recorded by CalPERS. (Unaudited)

LONG BEACH WATER DEPARTMENT
Schedule of the Department Proportionate Share of the
Net Pension Liability and Contributions
September 30, 2021 (in thousands of dollars)
Last 10 years1
2019 2018

7.3% 7.0%
45,960 41,860
20,246 18,709
227.0% 223.7%

77.2% 77.4%
2019 2018

6.1% 5.9%
38,216 35,183
16,918 15,769
225.9% 223.1%

77.2% 77.4%
2019 2018

1.2% 1.1%
7,744 6,677
3,328 2,940
232.7% 227.1%

77.2% 77.4%
2019 2018
4,562 3,729
4,562 3,729
— —
20,246 18,709

22.5% 19.9%
2019 2018
3,812 3,143
3,812 3,143
— —
16,918 15,769

22.5% 19.9%
2019 2018
750 586
750 586
— —
3,328 2,940

22.5% 19.9%
53 Schedule of the Department's proportionate share of the net pension liability Department’s proportion of the collective net pension liability Department’s proportionate share of the collective net pension liability 2 Department’s covered payroll
Department’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Water Fund's proportionate share of the net pension liability Water’s proportion of the collective net pension liability Water’s proportionate share of the collective net pension liability 2 Water’s covered payroll
Water’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Sewer's Fund's proportionate share of the net pension liability Sewer’s proportion of the collective net pension liability Sewer’s proportionate share of the collective net pension liability 2 Sewer’s covered payroll
Sewer’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Department's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Department's covered payroll
Department's contributions as a percentage of covered payroll Schedule of the Water Fund's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Water's covered payroll
Water's contributions as a percentage of covered payroll Schedule of the Sewer Fund's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Sewer's covered payroll
Sewer's contributions as a percentage of covered payroll Notes to Required Supplementary Information
1 The Department implemented GASB Statement No. 68 effective October 1, 2014; therefore, data is not available prior to October 1, 2014.
2 The net pension liability includes the impact of changes in assumptions. Amounts reported in 2017 and later reflect a discount rate reduction from 7.65% to 7.15%. For amounts reported from 2015 to 2017, reflect a discount rate increase on 7.5% to 7.65%.
3 Actuarial Determined contribution is based on a CalPERS projection of the payroll for the Miscellaneous plan 4 Amount represents actual contributions recorded by CalPERS. (Unaudited)

LONG BEACH WATER DEPARTMENT
Schedule of the Department Proportionate Share of the
Net Pension Liability and Contributions
September 30, 2021 (in thousands of dollars)
Last 10 years1
2017 2016

6.9% 6.9%
46,689 43,284
17,696 17,271
263.8% 250.6%

74.1% 74.2%
2017 2016

5.8% 5.7%
39,341 36,007
14,875 14,267
264.5% 252.4%

74.1% 74.2%
2017 2016

1.1% 1.2%
7,348 7,277
2,821 3,004
260.5% 242.2%

74.1% 74.2%
2017 2016
3,165 2,752
3,165 2,752
— —
17,696 17,271

17.9% 15.9%
2017 2016
2,660 2,273
2,660 2,273
— —
14,875 14,267

17.9% 15.9%
2017 2016
505 479
505 479
— —
2,821 3,004

17.9% 15.9%
54 Schedule of the Department's proportionate share of the net pension liability Department’s proportion of the collective net pension liability Department’s proportionate share of the collective net pension liability 2 Department’s covered payroll
Department’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Water Fund's proportionate share of the net pension liability Water’s proportion of the collective net pension liability Water’s proportionate share of the collective net pension liability 2 Water’s covered payroll
Water’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Sewer's Fund's proportionate share of the net pension liability Sewer’s proportion of the collective net pension liability Sewer’s proportionate share of the collective net pension liability 2 Sewer’s covered payroll
Sewer’s proportionate share of the collective net pension liability as a percent of covered payroll Pension plan’s fiduciary net position as a percentage of total pension liability Schedule of the Department's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Department's covered payroll
Department's contributions as a percentage of covered payroll Schedule of the Water Fund's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Water's covered payroll
Water's contributions as a percentage of covered payroll Schedule of the Sewer Fund's Contributions
Contractually required contribution 3
Contributions in relation to the contractually required contributions 4 Contribution deficiency (excess)
Sewer's covered payroll
Sewer's contributions as a percentage of covered payroll Notes to Required Supplementary Information
1 The Department implemented GASB Statement No. 68 effective October 1, 2014; therefore, data is not available prior to October 1, 2014.
2 The net pension liability includes the impact of changes in assumptions. Amounts reported in 2017 and later reflect a discount rate reduction from 7.65% to 7.15%. For amounts reported from 2015 to 2017, reflect a discount rate increase on 7.5% to 7.65%.
3 Actuarial Determined contribution is based on a CalPERS projection of the payroll for the Miscellaneous plan 4 Amount represents actual contributions recorded by CalPERS. (Unaudited)

LONG BEACH WATER DEPARTMENT
Schedule of the Department Proportionate Share of the
Net Pension Liability and Contributions
September 30, 2021 (in thousands of dollars)
Last 10 years1
2015

7.2%
37,374
17,270
216.4%

78.4%
2015

6.0%
31,033
14,392
215.6%

78.4%
2015

1.2%
6,341
2,878
220.3%

78.4%
2015
2,530
2,530
—
17,270

14.6%
2015
2,108
2,108
—
14,392

14.6%
2015
422
422
—
2,878

14.7%

STATISTICAL SECTION
(Unaudited)

Intentionally Left Blank

Financial Trends

These schedules contain trend information to help the
reader understand how the Department’s financial performance and well-being have changed over time.

Intentionally Left Blank

57 (Unaudited) Exhibit 1
Total Total Operating Total Capital Changes
Fis cal Year Operating Operating Income Non-Operating grants and in Ended Revenue (1) Expense (Loss) Income (Expense) contributions Net Position 9/30/2012 86,515 79,342 7,173 (1,573) 247 5,847 9/30/2013 91,949 85,783 6,166 (2,152) 131 4,145 (2) 9/30/2014 100,187 91,992 8,195 (216) 2,924 10,903 9/30/2015 99,475 102,134 (2,659) 1,051 1,726 118 9/30/2016 97,650 92,253 5,397 (672) 2,710 7,435 9/30/2017 97,383 91,893 5,490 510 734 6,734 9/30/2018 99,173 95,066 4,107 2,167 6,122 12,396 9/30/2019 99,289 93,480 5,809 (6,506) 1,627 930 9/30/2020 113,091 110,737 2,354 (8,612) 3,909 (2,349) 9/30/2021 118,968 90,152 28,816 22,915 2,665 54,396 Notes: (1) Total Operating Revenue is net of Provision for doubtful accounts expense. (2) Changes in Net Position amount excludes adjustment reflecting the removal of deferred charges relating to the issuance of debt in compliance with GASB Statement No. 65.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

CHANGES IN NET POSITION - WATER FUND

LAST TEN FISCAL YEARS
(in thousands of dollars)

58 (Unaudited) Exhibit 2
Total Total Operating Total Capital Changes
Fis cal Year Operating Operating Income Non-Operating grants and in Ended Revenue (1) Expense (Loss) Income (Expense) contributions Net Position 9/30/2012 17,325 14,411 2,914 (1,260) 185 1,839 9/30/2013 17,311 15,165 2,146 (761) - 1,385 (2) 9/30/2014 17,953 15,479 2,474 (462) 759 2,771 9/30/2015 17,903 16,024 1,879 (257) - 1,622 9/30/2016 18,355 15,835 2,520 (280) - 2,240 9/30/2017 19,949 15,312 4,637 (1,087) - 3,550 9/30/2018 18,872 14,428 4,444 345 549 5,338 9/30/2019 19,130 14,903 4,227 909 96 5,232 9/30/2020 17,925 17,490 435 129 38 602 9/30/2021 18,320 13,244 5,076 (357) 189 4,908 Notes: (1) Total Operating Revenue is net of Provision for doubtful accounts expense. (2) Changes in Net Position amount excludes adjustment reflecting the removal of deferred charges relating to the issuance of debt in compliance with GASB Statement No. 65.

Source: Department's annual reports
See accompanying independent auditors' report

LAST TEN FISCAL YEARS
(in thousands of dollars)

LONG BEACH WATER DEPARTMENT

CHANGES IN NET POSITION - SEWER FUND

59 (Unaudited) Exhibit 3
Unrestricted
Fis cal Year Net Investment in Restricted Net Position Total Ended Capital As s ets Net Position (deficit) Net Position 9/30/2012 237,793 1,350 44,978 284,121 9/30/2013 249,256 1,656 36,814 287,726 (1) 9/30/2014 260,538 1,673 7,725 269,936 9/30/2015 (2) 267,041 1,697 (143) 268,595 9/30/2016 277,394 1,716 (3,080) 276,030 9/30/2017 284,413 1,700 (3,349) 282,764 9/30/2018 299,325 1,706 (5,871) 295,160 9/30/2019 309,416 3,277 (16,603) 296,090 9/30/2020 321,467 2,377 (30,103) 293,741 9/30/2021 326,635 1,441 20,061 348,137 Notes: (1) Total Net Position amount includes adjustment reflecting the removal of deferred charges relating to the issuance of debt in compliance with GASB Statement No. 65. (2) Amounts adjusted due to implementation of GASB Statement No. 75.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

NET POSITION BY COMPONENT - WATER FUND

LAST TEN FISCAL YEARS
(in thousands of dollars)

60 (Unaudited) Exhibit 4
Fis cal Year Net Investment in Restricted Unrestricted Total Ended Capital As s ets Net Position Net Position Net Position 9/30/2012 52,465 - 5,849 58,314 9/30/2013 52,151 - 7,412 59,563 (1) 9/30/2014 55,006 - 7,328 62,334 9/30/2015 (2) 53,604 - 4,195 57,799 9/30/2016 56,462 84 3,493 60,039 9/30/2017 58,927 302 4,360 63,589 9/30/2018 61,593 303 7,031 68,927 9/30/2019 67,357 294 6,508 74,159 9/30/2020 71,906 304 2,551 74,761 9/30/2021 74,875 304 4,490 79,669 Notes: (1) Total Net Position amount includes adjustment reflecting the removal of deferred charges relating to the issuance of debt in compliance with GASB Statement No. 65. (2) Amounts adjusted due to implementation of GASB Statement No. 75.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

NET POSITION BY COMPONENT - SEWER FUND

LAST TEN FISCAL YEARS
(in thousands of dollars)

61 (Unaudited) Exhibit 5

OPERATING NON-OPERATING
Total Payments Total
Fis cal Year Metered Service Other Operating Interes t Rental Other from the Non-Operating Ended Sales (1) Charges Services Revenue Income Income Income City Income 9/30/2012 61,884 20,223 4,408 86,515 193 885 - - 1,078 9/30/2013 64,347 20,363 7,239 91,949 58 1,087 196 - 1,341 9/30/2014 67,818 21,548 10,821 100,187 120 1,158 36 - 1,314 9/30/2015 61,995 22,061 15,419 99,475 223 1,256 62 - 1,541 9/30/2016 63,658 23,121 10,871 97,650 299 1,027 - - 1,326 9/30/2017 64,721 24,599 8,063 97,383 87 811 - - 898 9/30/2018 64,490 27,325 7,358 99,173 210 905 1,429 - 2,544 9/30/2019 62,943 29,121 7,225 99,289 1,518 942 1,283 - 3,743 9/30/2020 71,141 32,807 9,143 113,091 697 1,043 1,636 - 3,376 9/30/2021 78,764 34,900 5,304 118,968 101 1,036 968 30,832 32,937 Notes: (1) Water Sales is net of Provision for doubtful accounts expense.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

WATER FUND REVENUE BY TYPE - LAST TEN FISCAL YEARS
(in thousands of dollars)

62 (Unaudited) Exhibit 6

OPERATING NON-OPERATING
Other Total Total
Fis cal Year Service Operating Operating Interes t Other Non-Operating Ended Charges Revenue Revenue Income Income Income
9/30/2012 10,380 6,945 17,325 25 2 27 9/30/2013 10,477 6,834 17,311 11 2 13 9/30/2014 10,637 7,316 17,953 23 - 23 9/30/2015 10,916 6,987 17,903 52 2 54 9/30/2016 11,428 6,927 18,355 94 5 99 9/30/2017 11,870 8,079 19,949 32 - 32 9/30/2018 11,372 7,500 18,872 58 577 635 9/30/2019 11,082 8,048 19,130 568 341 909 9/30/2020 11,147 6,778 17,925 363 2 365 9/30/2021 11,162 7,158 18,320 - - - Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

SEWER FUND REVENUE BY TYPE - LAST TEN FISCAL YEARS
(in thousands of dollars)

63 (Unaudited) Exhibit 7

OPERATING NON-OPERATING
Maintenance Depreciation Total Payments Total
Fis cal Year Cost Personal and Other & Amortization Operating Interes t Other to the Non-Operating Ended of Water Services Operating Expenses Expense Expens es Expense Expens es City Expens es 9/30/2012 23,887 17,594 28,502 9,359 79,342 872 1,779 - 2,651 9/30/2013 29,753 18,309 28,155 9,566 85,783 363 3,130 - 3,493 9/30/2014 34,378 17,822 29,566 10,226 91,992 587 943 - 1,530 9/30/2015 42,178 18,923 30,294 10,739 102,134 292 198 - 490 9/30/2016 28,743 18,405 33,936 11,169 92,253 433 1,565 - 1,998 9/30/2017 25,374 21,389 33,436 11,694 91,893 161 227 - 388 9/30/2018 29,927 22,500 30,086 12,553 95,066 123 - 254 377 9/30/2019 28,659 23,532 29,569 11,720 93,480 527 - 9,722 10,249 9/30/2020 36,163 31,617 29,932 13,025 110,737 1,538 - 10,450 11,988 9/30/2021 27,672 15,555 33,496 13,429 90,152 1,394 - 8,628 10,022 Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

WATER FUND EXPENSES BY TYPE - LAST TEN FISCAL YEARS
(in thousands of dollars)

64 (Unaudited) Exhibit 8

OPERATING NON-OPERATING
Maintenance Total Payments Total
Fis cal Year Personal and Other Depreciation Operating Interes t to the City & Bond Issuance Non-Operating Ended Services Operating Expenses Expense Expens es Expense Other Expens es Costs Expens es 9/30/2012 3,748 8,988 1,675 14,411 101 1,186 - 1,287 9/30/2013 4,122 9,246 1,797 15,165 2 772 - 774 9/30/2014 4,043 9,475 1,961 15,479 27 458 - 485 9/30/2015 4,021 9,993 2,010 16,024 51 260 - 311 9/30/2016 3,968 9,680 2,187 15,835 - 81 298 379 9/30/2017 3,764 9,225 2,323 15,312 77 1,021 21 1,119 9/30/2018 4,206 7,732 2,490 14,428 146 144 - 290 9/30/2019 5,106 7,372 2,425 14,903 - - - - 9/30/2020 7,240 7,639 2,611 17,490 236 - - 236 9/30/2021 3,255 7,146 2,843 13,244 243 114 - 357 Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

SEWER FUND EXPENSES BY TYPE - LAST TEN FISCAL YEARS
(in thousands of dollars)

Revenue Capacity

These schedules contain information to help the
reader assess the Department’s significant revenue sources.

Intentionally Left Blank

67 (Unaudited) Exhibit 9

SOURCE OF SUPPLY CONSUMPTION
Average Average
Fis cal Year Potable Water Reclaimed Total Daily Demand Peak Day Daily Sales Ended Pumped Purchased Water Supply Potable Water (1) Distribution Per Capita Population 9/30/2012 10,772,406 8,302,455 2,255,671 21,330,532 52,260 74,700 126 465,576 9/30/2013 10,125,461 9,248,531 2,164,954 21,538,946 53,079 68,700 126 467,646 9/30/2014 9,131,485 9,990,526 1,897, 724 21,019,735 52,389 72,000 123 469,428 9/30/2015 7,169,276 10,146,544 1,684,650 19,000,470 47,441 68,600 110 473,577 9/30/2016 10,455,223 6,487,074 2,470,635 19,412,932 46,417 63,300 112 474,140 9/30/2017 10,283,141 6,459,051 2,303,734 19,045,926 45,869 60,300 111 470,130 9/30/2018 9,479,592 7,901,528 1,790,910 19,172,030 47,620 64,200 112 469,450 9/30/2019 9,105,157 7,129,392 1,204,117 17,438,666 44,478 63,900 102 467,354 9/30/2020 7,424,678 10,339,252 1,805,475 19,569,405 48,668 58,900 116 462,628 9/30/2021 9,667,706 6,986,636 3,176,852 19,831,194 45,628 64,500 116 466,742 Note: (1) Does not include reclaimed water which is used for irrigation only.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

SOURCE OF WATER (PUMPED, PURCHASED, AND RECLAIMED) AND CONSUMPTION - LAST TEN FISCAL YEARS (in thousands of gallons, except population)

68 (Unaudited) Exhibit 10
Potable Water (1)
Effective
Date TIER I (2) TIER II (3) TIER III (4)
Peaking Rate
Per Cubic Foot (5)
Non-Peaking
Rate Per Cubic
Foot (6)
Interruptible
Rate Per Cubic
Foot (7)
10/1/2012 2.196 2.439 3.659 1.708 1.220 1.220 10/1/2013 2.283 2.537 3.806 1.776 1.269 1.269 10/1/2014 2.374 2.638 3.957 1.847 1.319 1.319 10/1/2015 2.470 2.744 4.116 1.921 1.372 1.372 10/1/2016 2.569 2.854 4.281 1.998 1.427 1.427 7/1/2017 (8) 1.921 3.678 5.366 1.859 1.578 1.578 10/1/2017 1.998 3.825 5.581 1.933 1.641 1.641 1/1/2018 1.914 3.664 5.347 1.852 1.572 1.572 10/1/2018 2.052 3.928 5.732 1.985 1.685 1.685 10/1/2019 2.298 4.399 6.420 2.223 1.887 1.887 10/1/2020 2.436 4.663 6.805 2.356 2.000 2.000 Note: (1) Volumetric rate charges for Single family residence, not granted an exemption (one billing unit equals 100 cubic feet).
(2) From 10/1/2007 to 10/1/2016, Tier I is billed for first five (5) billing units. Starting 7/1/2017, Tier I is billed for first six (6) billing units. (3) All non-residential customers are charged at the Tier II rate. From 10/1/2007 to 10/1/2016, Tier II is billed for next ten (10) billing units.

Starting 7/1/2017, Tier I is billed for first seven (7) billing units. (4) From 10/1/2007 to 10/1/2016, Tier III is billed for over fifteen (15) billing units. Starting 7/1/2017, Tier III is billed for over thirteen (13) billing units. (5) Rate for total average daily demand occurring between the hours of 9:00pm and 6:00am. (6) Rate for total average daily demand occurring at a continuous, constant level over a 24 hour period. (7) Rate for reclaimed water service that can be suspended at anytime at the Board of Water Commissioner's discretion, without liability and dependent upon the Department's reclaimed water system needs for such service. (8) Restructured water rates effective July 1, 2017.

Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT
WATER RATES: VOLUMETRIC RATE CHARGES

LAST TEN FISCAL YEARS
Reclaimed Water

(Unaudited) Exhibit 11
Effective
Date 3/4" 1" (1) 1-1/2" 2" 3" 4" 6" 8" 10" 12" 16"
10/1/2012 0.418 0.630 1.175 1.742 3.608 5.708 10.519 16.511 27.041 33.048 54.696 10/1/2013 0.435 0.655 1.222 1.812 3.752 5.936 10.940 17.171 28.123 34.370 56.884 10/1/2014 0.452 0.681 1.271 1.884 3.902 6.173 11.378 17.858 29.248 35.745 59.159 10/1/2015 0.470 0.708 1.322 1.959 4.058 6.420 11.833 18.572 30.418 37.175 59.159 10/1/2016 0.489 0.736 1.375 2.037 4.220 6.677 12.306 19.315 31.635 38.662 63.986 7/1/2017 (2) 0.550 0.815 1.478 2.273 4.790 8.102 18.039 37.251 55.800 70.374 103.497 10/1/2017 0.572 0.848 1.537 2.364 4.982 8.426 18.761 38.741 58.032 73.189 107.637 1/1/2018 0.548 0.812 1.472 2.265 4.773 8.072 17.973 37.114 55.595 70.115 103.116 10/1/2018 0.587 0.870 1.578 2.428 5.117 8.653 19.267 39.786 59.598 75.163 110.540 10/1/2019 0.657 0.974 1.767 2.719 5.731 9.691 21.579 44.560 66.750 84.183 123.805 10/1/2020 0.696 1.032 1.873 2.882 6.075 10.272 22.874 47.234 70.755 89.234 131.233 Note: (1) Normal residential size.
(2) Restructured water rates effective 7/1/2017.

Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT
WATER RATES: DAILY SERVICE CHARGE BY SIZE

LAST TEN FISCAL YEARS

69 (Unaudited) Exhibit 12
Effective
Date 2" 3" 4" 6" 8" 10" 12" 16"
10/1/2012 0.872 1.
491 2.203 3.754 5.503 7.444 9.383 13.758 10/1/2013 0.907 1.551 2.291 3.904 5.723 7.742 9.758 14.308 10/1/2014 0.943 1.613 2.383 4.060 5.952 8.052 10.148 14.880 10/1/2015 0.981 1.678 2.478 4.222 6.190 8.374 10.554 15.475 10/1/2016 1.020 1.745 2.577 4.391 6.438 8.709 10.976 16.094 7/1/2017(1) 0.325 0.654 1.221 3.256 6.767 12.047 19.365 41.095 10/1/2017 0.338 0.680 1.270 3.386 7. 038 12.529 20.140 42.739 1/1/2018 0.324 0.651 1.217 3.244 6.742 12.003 19.294 40.944 10/1/2018 0.347 0.698 1.305 3.478 7.227 12.867 20.683 43.892 10/1/2019 0.389 0.782 1.462 3.895 8.094 14.411 23.165 49.159 10/1/2020 0.412 0.829 1.550 4.129 8.580 15.276 24.555 52.109 Note: (1) Restructured water rates effective 7/1/2017.

Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT
WATER RATES: DAILY FIRELINE SERVICE CHARGE BY SIZE

LAST TEN FISCAL YEARS

(Unaudited) Exhibit 13
Industry Ranking
Sales
in
thousands
Acre Feet
(AF)
AF Percent
of Total Industry Ranking
Sales
in
thousands
Acre Feet
(AF)
AF Percent
of Total
Government 1 6,488$ 3,147 6.16 % Government 1 4,391$ 4,393 7.84 % Education 2 1,328
492 0.96 Education 2 950 680 1.21 Utility 3 1,014 628 1.23 Utility 3 765 710 1.27 Utility 4 730 447 0.87 Education 4 500 433 0.77 Education 5 672 355 0.69 Utility 5 489 440 0.79 Healthcare 6 511 266 0.52 Utility 6 474 435 0.78 Healthcare 7 479 283 0.55 Government 7 335 247 0.44 Utility 8 426 238 0.47 Healthcare 8 310 269 0.48 Education 9 265 65 0.13 Healthcare 9 308 279 0.50 Oil Production 10 261 158 0.31 Cruise Line 10 244 224 0.40 Total Ten Largest Users 12,174 6,079 11.89 Total Ten Largest Users 8,766 8,110 14.48 Total All Other Users 96,602 45,031 88.11 Total All Other Users 70,575 47,919 85.52 Total City 108,776$ 51,110 100.00 Total City 79,341$ 56,029 100.00 Source: Department's utility billing records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

TEN LARGEST POTABLE WATER USERS IN CITY OF LONG BEACH

CURRENT YEAR AND NINE YEARS AGO
Fiscal Year 2012Fiscal Year 2021

70 (Unaudited) Exhibit 14
Industry Ranking
Acre Feet
(AF)
AF Percent
of Total Industry Ranking
Acre Feet
(AF)
AF Percent
of Total
Water Resource Management 1 4,156 42.63 % Water Resource Management 1 2,277 32.90 % Oil Produc
tion 2 1,928 19.78 Oil Production 2 1,454 21.01 Golf Course 3 1,534 15.73 Golf Course 3 1,328 19.19 Government 4 1,269 13.02 Government 4 1,073 15.50 Education 5 191 1.96 Education 5 180 2.60 Education 6 126 1.29 Memorial Park 6 116 1.68 Memorial Park 7 124 1.27 Golf Course 7 94 1.36 Memorial Park 8 100 1.03 Memorial Park 8 87 1.26 Education 9 76 0.78 Education 9 82 1.18 Property Management 10 33 0.34 Education 10 75 1.08 Total Ten Largest Users 9,537 97.83 Total Ten Largest Users 6,766 97.76 Total All Other Users 212 2.17 Total All Other Users 156 2.24 Total City 9,749 100.00 Total City 6,922 100.00 Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

TEN LARGEST RECLAIMED WATER USERS IN CITY OF LONG BEACH

CURRENT YEAR AND NINE YEARS AGO
Fiscal Year 2021 Fiscal Year 2012

(Unaudited) Exhibit 15
Effective
Date Volumetric Rate Charges (1) Capacity Charges (2) 10/1/2011 0.347 91.370 10/1/2012 0.347 93.200 10/1/2013 0.347 93.390 10/1/2014 0.361 97.310 10/1/2015 0.375 99.520 10/1/2016 0.390 101.110 7/1/2017(3) 0.390 101.110 10/1/2017 0.398 108.390 1/1/2018 0.357 108.390 10/1/2018 0.357 108.720 10/1/2019 0.357 109.050 10/1/2020 0.357 109.160 Note: (1) Volumetric rate charges one (1) billing unit equals 100 cubic feet. (2) A one-time capacity charge per equivalent fixture unit is applied to all new developments in the City.
(3) Restructured sewer rates effective July 1, 2017
Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT
SEWER RATES: VOLUMETRIC RATE CHARGES & CAPACITY CHARGES

LAST TEN FISCAL YEARS

71 (Unaudited) Exhibit 16
Effective
Da
te 3/4"(1) 1" 1-1/2" 2" 3" 4" 6" 8" 10" 12" 16"
10/1/2011 0.250 0.396 0.721 1. 046 2.164 3.428 6.315 9.920 16.229 19.838 32.462 10/1/2012 0.250 0.396 0.721 1.046 2.164 3.428 6.315 9.920 16.229 19.838 32.462 10/1/2013 0.250 0.396 0.721 1.046 2.164 3.428 6.315 9.920 16.229 19.838 32.462 10/1/2014 0.260 0.412 0.750 1.088 2.251 3.565 6.568 10.317 16.878 20.632 33.760 10/1/2015 0.270 0.428 0.780 1.132 2.341 3.708 6.831 10.731 17.553 21.457 35.110 10/1/2016 0.281 0.445 0.811 1.177 2.435 3.856 7.104 11.159 18.255 22.315 36.514 7/1/2017(2) 0.246 0.365 0.957 1.649 3.842 5.558 15.482 16.412 25.405 32.042 47.125 10/1/2017 0.251 0.372 0.976 1. 682 3.919 5.669 15.792 16.740 25.913 32.683 48.068 1/1/2018 0.225 0.333 0.874 1.507 3.511 5.079 14.150 14.999 23.218 29.284 43.069 10/1/2018 0.225 0.333 0.874 1.507 3.511 5.079 14.150 14.999 23.218 29.284 43.069 10/1/2019 0.225 0.333 0.874 1.507 3.511 5.079 14.150 14.999 23.218 29.284 43.069 10/1/2020 0.225 0.333 0.874 1.507 3.511 5.079 14.150 14.999 23.218 29.284 43.069 Note: (1) Normal residential size
(2) Restructured sewer rates effective July 1, 2017
Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT
SEWER RATES: DAILY SERVICE CHARGE BY SIZE

LAST TEN FISCAL YEARS

(Unaudited) Exhibit 17
Industry Ranking
Sales
in
thousands
Acre Feet
(AF)
AF Percent
of Total Industry Ranking
Sales
in
thousands
Acre Feet
(AF)
AF Percent
of Total
Government 1 414$ 1,209 3.24 % Government 1 334$ 1,412 3.44 % Education 2 250 289 0.78 Education 2 179 395 0.96 Education 3 96 349 0.94 Education 3 86 416 1.01 Healthcare 4 76 263 0.70 Healthcare 4 55 264 0.64 Education 5 59 64 0.17 Government 5 45 170 0.41 Healthcare 6 35 122 0.33 Residential Community 6 23 104 0.25 Hotel 7 30 44 0.12 Hotel 7 22 53 0.13 Manufacturing 8 26 54 0.14 Residential Community 8 20 82 0.20 Manufacturing 9 25 131 0.35 Manufacturing 9 17 75 0.18 Government 10 24 30 0.08 Residential Community 10 17 71 0.17 Total Ten Largest Users 1,035 2,555 6.85 Total Ten Largest Users 798 3,042 7.39 Total All Other Users 15,842 34,717 93.15 Total All Other Users 15,744 38,051 92.61 Total City 16,877$ 37,272 100.00 Total City 16,542$ 41,093 100.00 Source: Department's utility billing records
See accompanying independent auditors' report

TEN LARGEST SEWER USERS IN CITY OF LONG BEACH

CURRENT YEAR AND NINE YEARS AGO
Fiscal Year 2021 Fiscal Year 2012

LONG BEACH WATER DEPARTMENT

Intentionally Left Blank

Debt Capacity Information

These schedules contain information to help the reader assess the affordability of the Department’s current levels of outstanding debt and ability to issue additional debt in the future.

Intentionally Left Blank

75 (Unaudited) Exhibit 18
Net Amount
Total Net Non-Operating Available Total
Fis cal Year Operating Operating Operating Income/ for Debt Debt Times Ended Revenue (1) Expens es (2) Income (Expens e) (3) Service Principal Interes t Service(4) Coverage 9/30/2012 86,515 69,983 16,532 (331) 16,201 490 1,249 1,739 9.32 9/30/2013 91,949 76,217 15,732 (1,985) 13,747 2,110 1,485 3,595 3.82 9/30/2014 100,187 81,766 18,421 335 18,756 2,385 1,502 3,887 4.83 9/30/2015 99,475 91,395 8,080 1,541 9,621 2,510 1,390 3,900 2.47 9/30/2016 97,650 81,084 16,566 44 16,610 2,630 1,264 3,894 4.27 9/30/2017 97,383 80,199 17,184 764 17,948 2,730 1,165 3,895 4.61 9/30/2018 99,173 82,767 16,406 2,406 18,812 2,815 1,077 3,892 4.83 9/30/2019 99,289 81,760 17,529 (6,085) 11,444 2,930 965 3,895 2.94 9/30/2020 113,091 97,712 15,379 (7,056) 8,323 3,050 848 3,898 2.14 9/30/2021 118,968 76,723 42,245 (6,196) 36,049 3,170 725 3,895 9.26 Bond Issues: Water Revenue Refunding Bonds - 1997 Series A, 2010 Series A, & 2012 Series A Average Coverage, ten years 4.85
Rate Covenant (Series: 1997A, 2010A, & 2012A) 1.10
Notes:(1) Total Operating Revenue is net of Provision for doubtful accounts expense. (2) Operating Expenses are exclusive of depreciation expense. (3) Net Non-Operating Income (Expense) is exclusive of bond interest, amortization of bond issue costs, contributed capital and loss on disposition of property. (4) Total Debt Service is the current year's scheduled principal interest payments on November 1st and May 1st. (5) Debt Service for FY2010 includes interest only, reflecting the issuance of Water Revenue Refunding Bonds - Series 2010A to advance refund 82.4% of outstanding Series 1997A Water Revenue Refunding Bonds. The refunding reduced the Department's aggregate debt service payments by $3.3 million, with the refunding structured to achieve such savings upfront over fiscal years 2011 and 2012.

Source: Depar
tment's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

WATER FUND DEBT SERVICE COVERAGE - LAST TEN FISCAL YEARS (in thousands of dollars)

76 (Unaudited) Exhibit 19
Amount
Total Net Net Available Total
Fis cal Year Operating Operating Operating Non-Operating for Debt Debt Times Ended Revenue (1) Expens es (2) Income Income (Expense) (3) Service Principal Interes t Service(4) Coverage 9/30/2012 17,325 12,736 4,589 (1,161) 3,428 - 57 57 60.14 9/30/2013 17,311 13,368 3,943 (761) 3,182 - 54 54 58.93 9/30/2014 17,953 13,518 4,435 (434) 4,001 - 76 76 52.64 9/30/2015 17,903 14,014 3,889 (208) 3,681 - 79 79 46.59 9/30/2016 18,355 13,648 4,707 13 4,720 - 125 125 37.76 9/30/2017 19,949 12,989 6,960 (969) 5,991 460 269 729 8.22 9/30/2018 18,872 11,984 6,888 635 7,523 330 395 725 10.38 9/30/2019 19,130 12,478 6,652 812 7,464 345 382 727 10.27 9/30/2020 17,925 14,879 3,046 356 3,402 360 368 728 4.67 9/30/2021 18,320 10,401 7,919 (114) 7,805 375 354 729 10.71 Average Coverage, ten years 30.03
Bond Issues: None Rate Covenant 1.25
Notes: (1) Total Operating Revenue is net of Provision for doubtful accounts expense. (2) Operating Expenses are exclusive of depreciation expense. (3) Net Non-Operating Income (Expense) is exclusive of bond interest, amortization of bond issue costs, contributed capital and loss on disposition of property. (4) Total Debt Service is the current year's scheduled principal interest payments on November 1st and May 1st.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

SEWER FUND DEBT SERVICE COVERAGE - LAST TEN FISCAL YEARS (in thousands of dollars)

77 (Unaudited) Exhibit 20
Subordinate Discounts, Percentage
Fis cal Year Water Revenue Capital premiums, of Personal Per Ended Series 1997 Series 2010 Series 2012 Commercial Paper Notes Leas e & adjustments Total Income (1) Capita (1) 9/30/2012 5,175 22,250 9,850 - - 1,584 38,859 0.28% 0.083 9/30/2013 3,545 22,125 9,495 - - 3,498 38,663 0.26% 0.083 9/30/2014 1,825 21,995 8,960 - - 3,107 35,887 0.23% 0.076 9/30/2015 - 21,860 8,410 - - 2,703 32,973 0.20% 0.070 9/30/2016 - 19,795 7,845 - - 2,303 29,943 0.18% 0.063 9/30/2017 - 17,645 7,265 - - 1,914 26,824 0.15% 0.057 9/30/2018 - 15,435 6,660 - - 1,537 23,632 0.13% 0.050 9/30/2019 - 13,135 6,030 - 26,326 1,190 46,681 0.25% 0.100 9/30/2020 - 10,740 5,375 - 24,860 873 41,848 0.21% 0.090 9/30/2021 - 8,250 4,695 - 21,226 594 34,765 0.17% 0.074 Notes: (1) See Exhibit 22-Demographic Statistics for Personal Income and Population Data.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

WATER FUND RATIOS OF OUTSTANDING DEBT BY TYPE - LAST TEN FISCAL YEARS (in thousands of dollars)
Revenue Refunding Bonds
(Unaudited) Exhibit 21
Revenue Perc
entage
Fis cal Year Refunding Bonds Sewer Revolving of Personal Per Ended Series 2016A L ine of Credit Premium Total Income (1) Capita (1) 9/30/2012 - 6,000 - 6,000 0.04% 0. 013
9/30/2013 - 9,750 - 9,750 0.07% 0.021
9/30/2014 - 9,750 - 9,750 0.06% 0.021
9/30/2015 - 11,250 - 11,250 0.07% 0.024
9/30/2016 9,830 - 1,719 11,549 0.07% 0.024
9/30/2017 9,370 - 1,584 10,954 0.06% 0.023
9/30/2018 9,040 - 1,453 10,493 0.06% 0.022
9/30/2019 8,695 - 1,323 10,018 0.05% 0.021
9/30/2020 8,335 - 1,197 9,532 0.05% 0.021
9/30/2021 7,960 - 1,074 9,034 0.04% 0.019
Notes: (1) See Exhibit 22-Demographic Statistics for Personal Income and Population Data.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

SEWER FUND RATIOS OF OUTSTANDING DEBT - LAST TEN FISCAL YEARS (in thousands of dollars)

Intentionally Left Blank

Demographic and Economic
Information

These schedules offer demographic and economic indicators to help the reader understand the environment within which the Department’s financial activities take place.

Intentionally Left Blank

81 (Unaudited) Exhibit 22
Fis cal Year Estimated Personal Income Per Capita Unemployment Ended Population (1) (4) (in millions) (2) (4) Personal Income (2) (4) Rate (3) 9/30/2012 465,576 14,058 30,196 12.2%
9/30/2013 467,646 14,757 31,556 10.3%
9/30/2014 469,428 15,525 33,072 8.6%
9/30/2015 473,577 16,242 34,296 6.8%
9/30/2016 474,140 16,939 35,725 5.7%
9/30/2017 470,130 17,490 37,203 5.3%
9/30/2018 469,450 18,209 38,789 4.7%
9/30/2019 467,354 18,892 40,423 4.7%
9/30/2020 462,628 19,467 42,079 15.9%
9/30/2021 466,742 (6) 20,460 43,836 8.9%
Source: (1) California Department of Finance Demographic Reports (2) U.S. Department of Commerce, Bureau of Economic Analysis: Personal Income and per capita personal income are based on percent change of per capita personal income for Los Angeles-Long Beach-Anaheim, CA (Metropolitan Statistic Are). The BEA's Report does not have personal income available for 2015, so an average of the last five years was used.
(3) Average annual rate reported by California Employment Development Department (EDD) for Long Beach city.
(4) Data from 2008-2014 restated due to the annual revisions. (5) Data is estimated value from previous year.

See accompanyi
ng independent auditors' report

LONG BEACH WATER DEPARTMENT

DEMOGRAPHIC STATISTICS

LAST TEN FISCAL YEARS

82 (Unaudited) Exhibit 23
Ranking
Number of
Employees (1)
Percentage of Total
City Employment (2) Ranking
Number of
Employees (1)
Percentage of Total
City Employment (2)
Long Beach Unified School District 1 11,157 4.72% 1 11,334 4.83% City of Long Beach 2 5,384 2.28% 2 5,758 2.45%
Long Beach Memorial Medical Center 3 5,114 2.16% 3 5,743 2.45% Veteran Affairs Medical Center 4 3,300 1.40% 6 2,200 0.94% California State University Long Beach 5 3,120 1.32% 5 3,527 1.50% Long Beach City College 6 2,515 1.06% 7 1,785 0.76%
The Boeing Company 7 1,844 0.78% 4 5,186 2.21%
St. Mary Medical Center 8 1,558 0.66% 9 1,432 0.61%
California State Univ Long Beach Research Foundation 9 1,227 0.52% 8 1,500 0.64% Molina Healthcare Inc 10 1,119 0.47%
United States Postal Service 10 1,306 0.56%
Sources: (1) Department of Financial Management Accounting and Business License (2) State of California Employment Development Department Labor Market Info for 2012 and 2021.

See accompanying independent auditors' report
This data was compiled from various sources by the City of Long Beach Departments of Development Services and Financial Management. Employment data is intended for use as a general guide only. The City of Long Beach does not warrant the accuracy of this data. Inquiries should be directed to the respective employer.

LONG BEACH WATER DEPARTMENT

MAJOR EMPLOYERS

CURRENT YEAR AND NINE YEARS AGO
Fiscal Year 2021 Fiscal Year 2012
Employer

(Unaudited) Exhibit 24
Fis cal Year
Ended Water Fund Sewer Fund Total
9/30/2012 184 48 232
9/30/2013 179 47 226
9/30/2014 170 49 219
9/30/2015 172 47 219
9/30/2016 180 44 224
9/30/2017 183 47 230
9/30/2018 207 47 254
9/30/2019 214 56 270
9/30/2020 212 49 261
9/30/2021 220 44 264
Sources: Department's Personnel records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

NUMBER OF EMPLOYEES BY FUND

LAST TEN FISCAL YEARS

Operating Information

These schedules contain information about operations and resources to help the reader understand how the
Department’s financial information relates to the services the Department provides and the activities it performs.

Intentionally Left Blank

85 (Unaudited) Exhibit 25
Potable Water
Total
Fis cal Year Potable Reclaimed Total
Ended Pumped Purchased Demand Water Demand
9/30/2012 33,059 25,479 58,538 6,922 65,460 9/30/2013 31,074 28,383 59,457 6,644 66,101 9/30/2014 28,024 30,660 58,683 5,824 64,507 9/30/2015 22,002 31,139 53,141 5,170 58,311 9/30/2016 32,086 19,908 51,994 7,582 59,576 9/30/2017 31,558 19,822 51,380 7,070 58,450 9/30/2018 29,092 24,249 53,341 5,496 58,837 9/30/2019 27,943 21,879 49,822 3,695 53,517 9/30/2020 22,785 31,730 54,515 5,541 60,056 9/30/2021 29,669 21,441 51,110 9,749 60,860 Note: One acre foot equals 43,560 cubic feet or 325,851 gallons.

Source: Department's annual reports
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

WATER DEMAND - LAST TEN FISCAL YEARS
(in acre feet)

86 (Unaudited) Exhibit 26
Effective
Date
Non-
Interruptible
Treated Water
Percent Change
Non-
Interruptible
Treated Water
1/1/2012 794 6.7
1/1/2013 847 6.7
1/1/2014 890 5.1
1/1/2015 923 3.7
1/1/2016 942 2.1
1/1/2017 979 3.9
1/1/2018 1,015 3.7
1/1/2019 1,050 3.4
1/1/2020 1,078 2.7
1/1/2021 1,104 2.4
Source: Metropolitan Water District of Southern California See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

METROPOLITAN WATER DISTRICT'S RATE CHANGES

LAST TEN FISCAL YEARS
(in dollars per acre foot)
(Unaudited) Exhibit 27
Effective
Date
Rate per Acre-
Foot Percent Change
7/1/2012 244.00 -
7/1/2013 268.00 9.8
7/1/2014 268.00 -
7/1/2015 283.00 5.6
7/1/2016 297.00 4.9
7/1/2017 318.00 7.1
7/1/2018 339.00 6.6
7/1/2019 365.00 7.7
7/1/2020 382.00 4.7
7/1/2021 394.00 3.1
Source: Water Replenishment District of Southern California (WRD) See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

WATER REPLENISHMENT DISTRICT ASSESSMENT (PUMP TAX)

LAST TEN FISCAL YEARS
87 (Unaudited) Exhibit 28
Reclaimed Sys tem
Fis cal Year
Ended
Number of Active
Groundwater
wells
Miles of water
mains
Number of
active water
service
Number of fire
hydrants
Number of water
sa mple s
collected
Number of
te sts
performed Miles of Pipeline
9/30/2012 31 911 89,957 6,594 12,292 57,310 33
9/30/2013 31 912 89,996 6,589 14,388 60,
819 34
9/30/2014 31 912 89,895 6,604 13,750 58,968 34
9/30/2015 31 912 89,897 6,631 13,050 57,070 34
9/30/2016 31 912 90,955 6,894 14,635 72,587 34
9/30/2017 31 912 89,147 6,910 15,370 79,442 34
9/30/2018 30 912 89,354 6,953 16,421 82,033 34
9/30/2019 27 916 89,805 7,036 16,316 75,459 34
9/30/2020 24 917 90,192 7,049 13,273 65,771 35
9/30/2021 24 917 90,126 7,054 11,709 63,758 35
Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

OPERATING AND CAPITAL ASSETS STATISTICS - WATER FUND

LAST TEN FISCAL YEARS
Water Sys tem Water Quality
(Unaudited) Exhibit 29
Fiscal
Year
Ended
Number of
sewer pump
stations
Miles of
s ewer
pipeli n
es
Number of
s ewer
manhole
s
9/30/2012 28 712 16,148
9/30/2013 28 714 16,158
9/30/2014 28 714 16,
170
9/30/2015 28 714 15,129
9/30/2016 28 714 15,127
9/30/2017 28 714 15,112
9/30/2018 28 714 15,122
9/30/2019 28 714 15,125
9/30/2020 28 715 15,126
9/30/2021 28 715 15,132
Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

OPERATING AND CAPITAL ASSETS STATISTICS - SEWER FUND

LAST TEN FISCAL YEARS
88 (Unaudited) Exhibit 30
Fis cal Year
Ended
Cast Iron
Water Mains
Replaced
(in feet)
Fire Hydrants
Repaired
Water
Meters
Repaired (2)
Sewer Mains &
Laterals
Repaired (1)
Sewer
Ma ins
Cleaned
(in miles)
Sewer
Manholes
Chemically
Treated
9/30/2012 25,733 269 3,690 261 414 5,000 9/30/
2013 24,595 266 3,348 241 535 5,000 9/30/2014 19,475 208 1,835 213 498 5,000 9/30/2015 16,366 544 760 224 492 5,000 9/30/2016 20,427 259 2,037 215 405 7,719 9/30/2017 20,360 156 2,939 169 446 7,734 9/30/2018 22,198 492 2,196 157 439 8,100 9/30/2019 9,216 161 3,096 164 477 8,100 9/30/2020 5,802 182 4,181 237 360 8,100 9/30/2021 5,340 95 3,919 270 294 4,358 Note: (1) Repairs are tracked according to the number of jobs. (2) Data from 2018 to 2020 updated.

Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

INFRASTRUCTURE MAINTENANCE AND IMPROVEMENTS

LAST TEN FISCAL YEARS
Long Beach Transit
A component unit of the City of Long Beach, California
for the years ending June 30, 2021 and 2020
FY 2021 Annual Comprehensive
Financial Report
Attachment D
Long Beach Transit
Intentionally Left Blank
All text pages of this report are made from 100% Recycled Fiber and manufactured Carbon Neutral Plus with 100%
renewable green electricity.

Long Beach Transit
FY 2021 Annual Comprehensive Financial Report
A component unit of the City of Long Beach, California, for the years ending June 30, 2021 and 2020.

Prepared by the Finance and Budget Department
Lisa Patton, Executive Director/VP
Long Beach Transit
Intentionally Left Blank
Long Beach Transit

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEARS ENDED JUNE 30, 2021 AND 2020

TABLE OF CONTENTS
Introductory Section
Letter of Transmittal i
Reporting Entity ii
Services ii
Accomplishments and Major Initiatives v
2019 Novel Coronavirus (COVID-19) Impact vii
Key Performance Indicator Results viii
Factors Affecting Financial Condition xi
Financial Policies xii
Recognition xv
Acknowledgements xvi
Organizational Chart xviii
Principal Officials xix
Financial Section
Independent Auditors’ Report 1
Management's Discussion and Analysis 3
Financial Highlights 3
Overview of the Financial Statements 3
Financial Statement Analysis 4
Capital Assets 9
Economic Factors and Next Year's Financial Plan 10
Statements of Net Position 12
Statements of Revenues, Expenses and Changes in Net Position 14 Statements of Cash Flows 15
Notes to Financial Statements 17
(1) Summary of Significant Accounting Policies 17
(2) Cash and Investments 20
(3) Operating Subsidies 26
(4) Accounts Receivable 27
(5) Unearned Revenue 27
(6) Estimated Liability for Insurance Claims 28
(7) Deferred Compensation 29
(8) Capital Assets 30
(9) Subsidy Deferral 31
Long Beach Transit

TABLE OF CONTENTS
(Continued)
(10) Commitments and Contingencies 32
(11) Employee Benefits 34
(12) Labor Agreements 35
(13) Pension Benefits 35
(14) Note Payable 47
(15) Subsequent Events 47
Required Supplementary Information 48
Schedule of Changes in Net Pension Liability and Related Ratios Schedule of Contributions
Statistical Section
Exhibits
Financial Trends
1 Net Position by Component 56
2 Operating Expenses by Type 56
3 Changes in Net Position 57
4 Capital Expenditures by Type 58
Revenue Capacity
5 Operating Subsidy Sources 59
6 Fare Recovery Percentage 59
7 Fare History 60
Demographic and Economic Information
8 Demographic Statistics 61
9 Principal Employers 62
Operating Information
10 Key Performance Indicators 63
11 Customer Satisfaction Trends 64
12 Fixed Route Statistics 65
13 Dial-A-Lift Statistics 66
14 Water Taxi Statistics 67
15 Schedule of Insurance in Force 68
16 Summary of Service Frequency and Hours of Operation 70 Pension Information
17 Employer and Employee Pension Contributions 71
18 Pension Revenues by Source and Expenses by Type 72
Grant Information
19 Capital Grant History, Federal 73
20 Capital Grant History, State 74
21 Capital Grant History, Local 75
Introduction
Long Beach Transit
Intentionally Left Blank
Long Beach Transit
December 20, 2021
Dear Long Beach Transit Board of Directors:

On behalf of Long Beach Transit (LBT or Agency), I am pleased to submit for your information and consideration the Annual Comprehensive Financial Report of LBT for fiscal year July 1, 2020 to June 30, 2021.

The Annual Comprehensive Financial Report has become the standard format used in presenting the results of the financial operations for the fiscal year. LBT believes this report is presented in a manner designed to fairly disclose the financial position and results of Agency operations as measured by its financial activities. To the best of LBT’s knowledge and belief, the disclosures are accurate in all material respects.

The accompanying basic financial statements, supplemental schedules and statistical information are the representations of the management, which bears the responsibility for its completeness and reliability based upon a comprehensive framework of internal controls that it has established for this purpose. Because the cost of internal controls 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 Independent Auditors' Report, prepared by Windes, Inc., is included, along with other necessary disclosures, to enable the reader to gain maximum understanding of the Agency’s financial activities.

The independent audit of the accompanying basic financial statements of LBT was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the accompanying basic financial statements, but also on the audited Agency’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in LBT’s separately issued Single Audit Report.

The Governmental Accounting Standards Board (GASB) requires the Agency's management to provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Agency’s MD&A can be found immediately following the report of the independent auditors. i
Long Beach Transit

Reporting Entity

Long Beach Transit is a California nonprofit corporation, formed in 1963 to provide public transportation services to the City of Long Beach and its neighboring cities.

LBT is governed by a seven-member Board of Directors (Board) who are appointed by the Mayor of Long Beach and confirmed by the City Council. The Board provides broad policy and financial decisions, setting direction for management.

Additionally, two designees of t he City Manager’s Office serve as nonvoting City Representative members of the Board. The Board appoints a Chief Executive Officer (CEO) who is responsible for the performance of the organization and the day-to-day operation of the business of LBT. LBT’s Executive Leadership Team is represented by the Deputy CEO and six Executive Directors/Vice Presidents heading Finance and Budget; Maintenance and Infrastructure; Information Technology; Organizational Development and Administration; Transit Service Deliv ery and Planning; and Customer Relations and Communications. LBT’s organizational chart is shown later in this introductory section.

LBT’s reporting entity includes only transit operations. There is no other organization within the City of Long Beach providing a similar scope of public transportation service.

In accordance with GASB, LBT is considered a component financial reporting unit of the City of Long Beach (City). As such, the Agency’s financial statements are included in the City’s annual comprehensive financial report as a discretely presented component unit. LBT has a separate legal status and has historically operated as an independently managed and operated nonprofit corporation, receiving no direct administrative or financial support from th e City. Currently, there has been no expressed intent to alter the status of this financial reporting and administrative relationship.

Services

LBT began operations in 1963 with fewer than 100 buses and carrying eight million boarding customers annually. LBT has grown to operate 250 buses, 10 paratransit vehicles, two catamarans and two boats that provide service to 23 million customer boardings annually across the City of Long Beach and 13 surrounding communities. LBT makes everyday life better through i ts dedication to connecting communities and moving people.

LBT is a full-service public transit agency, providing a wide range of transit services, including:

 Fixed-Route Bus Service
 Downtown Circulator (Passport Route)
 Demand-Responsive Paratransit Service (Dial-A-Lift)
 Water Taxi Service (AquaBus and AquaLink)
 Community Special Services
 Commuter Express (UCLA)
Long Beach Transit

iii

Fixed-Route Bus Service

LBT provides fixed-route bus service to a 100 -square-mile area, which includes the cities of Long Beach, Lakewood and Signal Hill; and portions of Artesia, Bellflower, Carson, Cerritos, Compton, Downey, Hawaiian Gardens, Los Alamitos, Norwalk, Paramount and Seal Beach. This service currently covers 31 routes, under a modified schedule due to the COVID-19 pandemic. See the 2019 Novel Coronavirus (COVID-19) Impact section on page vii for more information on the pandemic's impact on LBT's operations.

Of the 31 fixed routes operated by LBT, 23 transfer through the First Street Transit Gallery. The First Street Transit Gallery, located in downtown Long Beach, is the focal point of the fixed -route system, as well as the Los Angeles County Metropolitan Transportation Authority (LA Metro) Metro A (Blue) Line service running between Long Beach and downtown Los Angeles. The First Street Transit Gallery provides special features such as exclusive bus lanes and traffic control equipment, enhanced bus stop amenities, customer transit shelters equipped with graphic displays, and digital monitors displaying real-time schedule information. This location is also a major transfer point for Flixbus, Los Angeles Department of Transportation (LADOT), LA Metro, and Torrance Transit.

All of LBT’s fixed -route service fleet are low -floor and mobility -device accessible. These buses are maintained and dispatched from two facilities. Approximately half of the vehicles are stored at the central administrative, operating and maintenance facility located at 1963 E. Anaheim St. in Long Beach (LBT1). The remaining buses are assigned to a second operatin g and maintenance facility located at 6860 Cherry St. in North Long Beach (LBT2). Besides the buses, LBT owns a number of non -revenue vehicles used for supervisory and administrative functions and various maintenance vehicles for emergency road services and bus stop support.

LBT maintains transit shelters and benches, providing customer convenience and comfort. There are approximately 2,000 bus stops throughout the system and the Agency ensures the stops are well- maintained and meet cleanliness standards.

Downtown Circulator (Passport Route)

The Passport is a downtown and waterfront service that is a vital mobility component to the City of Long Beach. The Passport connects many points of interest such as the Aquarium of the Pacific, the Pike, the Queen Mary, Pine Avenue, Shoreline Village, the Convention Center, the Long Beach Arena, and surrounding hotels, businesses and government hubs. It is a compliment ary service that starts at 10th Street and Pine Avenue and links the restaurants, shops and businesses on Pacific Avenue and Long Beach Boulevard to the many points of interest in the downtown waterfront.

The service is provided by low -floor, zero -emission battery -electric buses. The Passport fleet is stored and maintained at the central administrative, operating and maintenance facility at LBT1.

The Passport route would normally operate daily from 5 a.m. to 11 p.m., however it has been suspended in the current modified schedule.

Long Beach Transit

Demand-Responsive Paratransit Service (Dial-A-Lift)

LBT offers Dial-A-Lift demand response paratransit service for persons with disabilities. This curb- to-curb, shared-ride service operates on a call -in basis and is provided by a private contractor. All vehicles are owned by LBT, but stored, maintained and dispatched by the contractor. In fiscal year (FY) 2021, there were 14,342 boardings on Dial-A-Lift.

Water Taxi Service (AquaBus and AquaLink)

Long Beach attractions like t he Aquarium of the Pacific, Convention Center, and the Pike venue with restaurants, retail and theatres, continue to bring many visitors to the City’s downtown waterfront. As a complement to the Passport route, LBT also operates water taxi service in Queensway Bay and along the Long Beach coastline.

There are two AquaBus water taxis that provide connections to the Queen Mary, Aquarium of the Pacific, and Shoreline Village. These vessels, which carry up to 38 customers each, tie directly with the downtown Passport route and parking facilities, allowing residents, visitors and tourists to see Long Beach’s many attractions without using a car.

For customers wanting to travel farther down the coast, the AquaLink vessels provide service that operates between the Queen Mary, Aquarium of the Pacific and Alamitos Bay Landing. There are two AquaLink catamarans that provide seating for up to 75 passengers per vessel.

Both AquaBus and AquaLink services are provided by a private contractor. The vessels are owned by LBT, and stored and maintained at the contractor’s docking facilities. This service runs daily during the summer months. LBT suspended the Water Taxi Service from March 2020 through May 2021 due to the COVID-19 pandemic.

Community Special Services

LBT provides express services to different locations and attractions throughout the year. During the summer, LBT operates the Museum Express bus service to major museums and cultural attractions in Los Angeles and Orange counties. Customers purchase tickets in advance to ride LBT's services to visit popular attractions during the months of July and August. The Museum Express offers residents who would not ordinarily use transit an opportunity to experience transit and is particularly beneficial to LBT’s se nior and transit -dependent customers who can rely on the service to access attractions they could not travel to on their own. LBT also provides transportation service to Dignity Health Sports Park for Los Angeles Galaxy home games through the Galaxy Expre ss. Each year, LBT also supports the Grand Prix of Long Beach and other large-scale, special events by providing supplemental service where needed. Many of these special services were temporarily suspended due to the COVID-19 pandemic.

Commuter Express (UCLA)

Since 2019, LBT also offers the UCLA/Westwood Commuter Express service. With trips operating weekdays, customers can be picked up at two locations in Long Beach and transported to the UCLA/Westwood area, including the UCLA Medical Center. The popular service helps commuters avoid sitting in personal cars in traffic and serves students and employees alike.

Long Beach Transit

Accomplishments and Major Initiatives

Organizational Focus
The performance of the Agency is the primary objective of the President and CEO, as he is responsible for the day -to-day operation of LBT. The five Strategic Priorities are the functional pillars of the organization and are used daily to plan, develop, mon itor and measure the successful implementation of LBT’s business.

LBT's Strategic Priorities are:

• Improve Safety and Service Quality
• Exercise Financial Accountability
• Foster Employee Engagement
• Enhance Customer Experience
• Promote Community and Industry Focus

Listed on the following pages are successful accomplishments and major initiatives addressed during the fiscal year, beginning July 2020 through June 2021, organized by Strategic Priority.

Improve Safety and Service Quality
On-Site Rapid COVID-19 Tests at LBT1 and LBT2 (Dec. 2020) In an effort to prioritize LBT's customers and employees, LBT started administering on -site rapid COVID-19 tests on both properties, LBT1 and LBT2. These tests were offered twice a week and continued through March 2021, with a total of 1,286 tests administered.

On-Site COVID-19 Vaccinations at LBT1 and LBT2 (Feb. 2021) Between February 24, 2021 and March 12, 2021, LBT provided on -site first round vaccines for its front line employees at both LBT1 and LBT2. Respective second round vaccines were administered to those who were vaccinated on-site. Additionally, LBT partnered with the City of Long Beach to allow all employees to get vaccinated at the Long Beach Convention Center. Employees were advised to register for appointments with the City of Long Beach to obtain their vaccination.

Battery-Electric Bus (BEB) Program (Feb. 2021)
LBT has taken several major steps to become a more sustainable transit agency by committing to convert its entire bus fleet to be 100% zero emissions by 2030. On February 25, 2021, LBT's Board of Directors authorized the President and CEO of LBT to enter into a contract for the construction of the LBT1 Battery -Electric Bus Charging Station expansion project. The completed project will add 14 electric bus charging stations, increasing LBT's electric bus charging station capacity to 24 chargers within the LBT1 bus depot.

Long Beach Transit

Exercise Financial Accountability
Purchase of 20, 30-35 foot Battery-Electric Buses (BEB) (Mar. 2021) LBT is committed to purchasing zero-emission buses (ZEBs) and plans to retire all non -ZEBs as they approach the end of their useful lives. At the March 2021 Board of Directors meeting, LBT was approved to purchase 20, 30-35 foot, low floor, BEBs with an option for an additional 20 BEBs.

The purchase of these buses will replace diesel and gasoline -electric hybrid buses on a one-for-one basis.

Improved Pension and Investment Strategies (Mar. 2021)
On March 25, 2021, LBT's Board of Directors approved the transition to the Publi c Agency Retirement System Trust as the qualified trust program for the Retirement Plan for both Contract and Salaried employees (Plan). This included appointing Public Agency Retirement Services (PARS) as the trust administrator of the Plan and U.S. Bank National Association (N.A) as trustee and custodian of Plan assets. This transition will reduce fees for trustee and custodial services per year in the amounts of $134,000 for the Contract Plan and $76,000 for the Salaried Plan.

Foster Employee Engagement
Deployment of Microsoft 365 Services (Oct. 2020)
On October 22, 2020, LBT's Board of Directors approved the deployment of LBT's intranet via SharePoint Online, Office 365 software and Microsoft Teams communication platform. This transition in software is meant to increase staff productivity, promote collaboration, strengthen company culture and secure knowledge management.

Employee Training and Engagement (Ongoing)
Under the CEO’s direction, the Agency has placed an even greater emphasis on the training and engagement of its most valuable asset—its employees. Beyond annual and mandated trainings, some of the notable training opportunities included:

 Agencywide CorVu Training
 Agencywide Procurement Training
 Cybersecurity Online Training
 De-Escalation Training for Operators
 Leadership/Management Training for Supervisors
 Microsoft 365 Teams Training
 Sexual Harassment Online Training
 Vistage Emerging Leader Program

Enhance Customer Experience
Customer Amenities Upgrade (Dec. 2020)
LBT's service area extends over a 100-square-mile radius, across 14 cities with approximately 2,000 bus stops. LBT staff conducted assessments to identify corridors within LBT’s service area that are in need of bus stop improvements. These corridors are Or ange Avenue, Santa Fe Avenue, Atlantic Avenue, Long Beach Boulevard, and Cherry Avenue. In FY 2021, LBT installed 47 solar powered Long Beach Transit

vii

LED light kits for bus stops along Orange Avenue and 44 solar powered LED light kits for bus stops along Santa Fe Avenue.

MOOVIT App (Apr. 2021)
LBT focuses on continuously improving and innovating ways that customers can access LBT routes and services. LBT partnered with MOOVIT to provide an easy and convenient way for customers to trip plan, check bus arrival times, maps, and service alerts. As of June 30, 2021, there was approximately 32,000 active users in LBT's service area.

Promote Community and Industry Focus
Public Transportation Agency Safety Plan (PTASP) (Dec. 2020) LBT is required to implement a Public Transportatio n Agency Safety Plan in accordance with Federal Regulations (49 CFR Part 673). LBT's PTASP also included an adoption of the Safety Management System (SMS) principles and methods, performance targets based on safety performance criteria established under th e National Public Transportation Safety Plan (49 CFR 673.11), and a timeline for conducting an annual review and update of the PTASP. LBT's PTASP was approved by its Board of Directors on December 10, 2020 and consists of the following elements, Safety Man agement Policies, Safety Risk Management, Safety Assurance, and Safety Promotion.

2019 Novel Coronavirus (COVID-19) Impact

The COVID-19 pandemic which began at the end of FY 2020, continued to surge through FY 2021 and LBT had to quickly adapt. LBT enhanced its safety procedures, including increasing scheduled cleanings for LBT buses and administrative offices, requiring all employees to wear face masks, and installing contactless sanitization stations throughout the Agency.

In response to Governor Newso m's "safer-at-home" orders in March 2020, LBT modified its bus services and suspended water taxi services. While some service has been restored, the Agency is still operating a modified service delivery schedule. Boardings significantly decreased in FY 202 1 as a result of these "safer-at-home" protocols, limiting all public activities and halting the operations of non-essential businesses. These protocols also led to all local schools in the Long Beach area to suspend their face -to-face instruction, thus ha lting a majority of LBT's ridership. As the state and local communities re-open, boardings on LBT's services have begun to increase.

Additionally, LBT formed a cross-departmental Health and Safety Executive Taskforce to activate the Agency’s response to the COVID -19 threat. The task force provided information to LBT employees and customers encouraging all to follow the Centers for Disease Control and Prevention (CDC) guidelines for personal hygiene and to stop the spread.

In February 2021, LBT procured plexiglass operator barriers to separate customers and operators alike for their mutual protection. The barriers were installed on LBT’s entire fleet of 250 buses during the summer of 2021.

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As part of the Agency’s COVID Prevention Plan, LBT made weekly ra pid COVID -19 testing available to all employees between January and March 2021. In March 2021, LBT employees became eligible to receive COVID-19 vaccinations.

COVID-19 continues to impact the Agency's ridership and revenue, as well as the way it operates its services. The health and safety of LBT's employees and customers continues to be LBT's top priority. LBT stands fast in its mission of connecting communities and moving people, making everyday life better.

Key Performance Indicator (KPI) Results

One of the several methods used to monitor the Agency's performance is through Key Performance Indicators (KPIs) that track service quality, efficiency, and productivity. The KPIs support LBT's strategic priorities and each has a specific goal set annually to measure progress. The KPIs also bring together cross-departmental analysts to track, measure and analyze the Agency's performance.

Quarterly, these analysts communicate and present the performance results to evaluate trends and identify action plans for improvement. The following are examples of LBT's KPIs and select results for FY 2021 can be found in Exhibit 10.

Successes
Improving Mean Distance Between Failures
Mean distance between failures (MDBF) is a transit industry standard that measures the mechanical reliability of the fleet. It measures the average bus miles between reportable mechanical failures, i.e. incidents preventing a revenue vehicle from completing its trip. The overall MDBF decreased in FY 2021 from 4,577 to 3,988 miles. While there is a decrease from in MDBF year-over-year, in Quarter 4 of FY 2021, MDBF reached 5,162. This marks the second highest quarterly MDBF in the last three fiscal years. LBT achieved this by completing at least 95% of all scheduled preventative maintenance routines on time.

Decreasing Preventable Accidents per 100k Platform Miles Preventable accidents per 100k platform miles measures the safety of LBT's bus operators as they serve the community. A preventable accident is one in which the bus operator failed to do everything they reasonably could have done to avoid a collision. To adhere to social distancing precautions, monthly Safety Blitzes, which promote employee engagement between staff and bus operators, were halted. However, monthly Safety Blitz commun ications continued to be sent to Transit Service Supervisors to relay safety information to operators. The blitzes helped to decrease the number of preventable accidents per 100k platform miles As a result of schools and business closures due to COVID-19, there were fewer vehicles on the road. This also contributed to a decrease of preventable accidents. In FY 2021, preventable accidents per 100k platform miles decreased from 1.08 to 0.95.

This is LBT's lowest preventable accidents per 100k platform miles in the last 10 fiscal years.

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Long Beach Transit’s Economic Impact
Economic impact measures how LBT's direct spending impacts the local economy. LBT’s spending generates more spending indirectly, as vendors spend on their materials, services, and employe e wages. Additionally, LBT's direct spending, and this indirect (vendor) spending, cause induced spending as employees spend their wages. Together direct, indirect, and induced spending produce a cumulative positive impact to the economy. Each quarter, LBT estimates the economic impact of the Agency’s spending in LA County. In FY 2021, for every $1.00 spent directly by LBT, $2.02 was put into the county's economy.

Challenges
Due to the pandemic and the efforts of LBT to protect both its customers and employees, performance in FY 2021 was deeply affected. Fares were not enforced, and schools and businesses were closed causing ridership to decline.

Increase in Unplanned Absences
An unplanned absence is when a bus operator is unexpectedly absent from work. Measuring and decreasing unplanned absences is important as excessive unplanned absences impact LBT’s ability to provide customers consistent and reliable transit servic e. In FY 2021, unplanned absences increased from 14.3% to 17.4%. COVID -19 contributed to increased absences as some employees needed to take unplanned time off to care for themselves or for family members.

Declining Passengers per Revenue Hour
Route productivity is measured in “passengers per revenue (in-service) hour”, which represents the total passengers on a route divided by the in-service time. The data may be used to determine if the level of transit service on that route is reasonably well matched with the distribution of demand throughout the day. As with many other transit systems across the county, LBT's overall passengers per revenue hour declined during FY 2021, down from 29.2 to 28.2 passengers. The decrease can be mainly attributed to the COVID-19 pandemic. In the last quarter of FY 2021, businesses slowly started re-opening with lesser social distancing restrictions. LBT saw an increase in passengers for revenue hour, from 28.1 in Quarter 3 to 30.2 in Quarter 4.

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Declining Fare Recovery Ratio
Fare recovery ratio is the proportion of operating cost that is covered by fare revenue. It is calculated by dividing the total revenue obtained through passenger fares and special events by the total cost of operations. It is generally used by transit and regulatory agencies as a measure of system efficiency. Fare recovery ratio is affected by several elements, including boardings, fare levels, fare structure (discounts), service levels and operating costs. Any changes in these elements affect the fare recovery ratio. As part of LBT's COVID -19 response, LBT instituted a reduced service schedule, rear-door boarding, and did not enforce fare collection for the entirety of FY 2021. Aqua Taxi services were suspended until May 2021 and there were no special event services in FY 2021.

This resulted in LBT’s fare recovery ratio drastically declining from 10.9% to 0.16%.

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Factors Affecting Financial Condition

General Economic Conditions
While there is still much uncertainty in light of the ongoing COVID -19 pandemic, the California economy is showing signs of recovery. California’s unemployment rate as of August 2021 was

7.5%, down from a high of 16% in April 2020. The University of California, Los Angeles (UCLA) Anderson Forecast projects that unemployment w ill continue to recover gradually until reaching pre-pandemic levels at the end of 2023, as shown in the graph below.

Source: UCLA Anderson Forecast - September 2021 Economic Forecast

Unemployment in Los Angeles County was higher than that of the state, at 9.7% as of August 2021.

Sectors where employment remains below 90% of pre -pandemic levels in the County include information; accommodation and food services; arts, entertainment, and recreation; and other services which includes salons and personal care . Similarly, unemployment in Long Beach was

10.2% as of August 2021. Traveling to work is a common trip purpose for LBT's customers, so higher unemployment in the region negatively impacts the Agency's ridership.

LBT receives subsidies from the County based on a formula allocation of sales tax revenues collected. Consumer spending in the County has largely recovered, and is up 13.4% compared to January 2020, as of September 2021. Spending on retail and health care exceed this average, while spending in other sectors still falls at or below pre-pandemic levels. These impacted sectors include transportation and travel; arts, entertainment, and recreation; and restaurants and hotels. In general goods consumption outpaces the pre -pandemic trend, while consum ption of services lags behind.

Consumer spending has recovered faster than initially projected. Thus, the impact to LBT’s subsidies will lessened by this recovery.

While the economy is showing signs of recovery, there are still several factors that will determine its momentum: the progression of the pandemic, when consumers and business are able and willing to return to old habits, and any further fiscal policies at the federal level, which are all unknown at this time.

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Financial Policies

It is LBT’s policy to maintain the fiscal integrity of its operating and capital budgets. The Agency accomplishes this by ensuring a balanced budget, which is defined as having ongoing operating costs that do not exceed the amount of its incoming revenue. Daily operatio ns are financed by fare revenue, annual sales tax subsidies received from state and county programs, and miscellaneous revenue such as income from advertising on Agency revenue vehicles and investment income.

The amount of operating sales tax subsidies r eceived each year is based on a regional formula comprised primarily of fare revenues and in-service miles. These subsidies are recorded in the year in which the grant is applicable and the related reimbursable expenditure is incurred.

LBT uses available grant funds to procure capital assets. Grants for the acquisition of capital assets are not formally recognized in the accounts until the grant becomes a valid receivable. It is LBT’s policy to record capital grants as an addition to capital assets and ne t assets as the related expenditures are incurred.

LBT procures the majority of its capital assets through annual grants awarded through the Federal Transit Administration (FTA). The federal grants are allocated by region under Section 5307 of the Fixing America’s Surface Transportation (FAST) Act of 2015. The six -year FAST Act was set to expire on September 30, 2020. The law was extended for one year through September 30, 2021. The one-year FAST extension will fund highways and transit programs at FY 2020 FAST Act levels.

The Agency is eligible to receive Section 5307 funds based on a formula allocation. The Agency also competes for discretionary funds to support specific transit projects. As permitted by federal law, the Agency also uses these funds for preventative maintenance operating expenses.

Capital Planning Policy
LBT’s capital program is a long -term planning and budget process that identifies capital funding needs in order to maintain, improve and enhance LBT’s fleet, equipment and infrastructure. The projects included in the capital program are those with initial project values exceeding $5,000 and having an estimated useful life of at least one year. The capital program is developed as a three - year, forward looking capital plan that considers the Agency’s Capital Strategic Focus including:

 Improving Customer Amenities
 Rehabilitating and Maintaining Assets
 Modifying and Expanding Facilities
 Replacing and Expanding Fleet
 Upgrading Technology

Projects included annually in the Agency’s capital plan are reviewed and aligned with LBT’s Strategic Focus. Funding is pri oritized to ensure that critical (essential) projects are addressed to facilitate meeting operational service requirements; meeting legal or liability mandates; and, ensuring the well -being of LBT employees and customers such that projects mitigate hazards or threats to health and safety.

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Transit Asset Management (TAM) and State of Good Repair (SGR) Policy In alignment with LBT’s vision statement,
“A leading provider of transportation options delivering innovative and high-performing services within a multi-modal network that transforms the social, environmental and economic well-being of the diverse communities we serve.” LBT is committed to keeping its assets in a state of good repair during their life -cycle. This allows LBT to fulfill its mission of “Dedicated to connecting communities and moving people…making everyday life better.”

SGR is the condition in which a capital asset is able to operate at a full level of performance. This means

 the asset is able to perform its designed function;
 the asset does not pose a known unacceptable safety risk;  the lifecycle investments have been met or recovered.

LBT will use its Enterprise Asset Management (EAM) system to manage its inventory of core assets, prioritize planned and unplanned maintenance and monitor asset performance. The results of regular asset condition assessments, the use and analysis of a decision support tool and the development of performance targets will allow LBT to track and measure the effectiveness of its maintenance program and planning.

Investment Policy
LBT's investment policy provides general investment and money management guidelines, ensuring investment compliance with state and local laws. To ensure prudent money management, priority emphasis is placed in order of safety, liquidity and return on investment. Moreover, LBT's investment portfolio requires sufficient liquidity to enable it to meet daily operating obligations.

Procurement Policy
LBT's procurement policy is established to ensure open, full and competitive partic ipation for all vendors and suppliers. The Agency optimizes public funds by using its solicitation process through quality of services or low bids to meet its operational needs. LBT's staff has authority to procure and award goods and services up to $200,0 00. Procurements exceeding that threshold must be authorized by LBT's Board of Directors. This threshold was previously set at $100,000. LBT's Board of Directors approved the increased threshold at their February 2021 meeting.

Reserve Policy
LBT maintains a three -month operating reserve, which equates to approximately 25% of the Agency's annual operating budget. The operating reserve allows the Agency to provide continuity of operations in the event of any significant challenges such as economic downturns, pandemics, acts of God, or any other catastrophic event.

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Long-Term Financial Planning
LBT’s long -term financial planning aligns the Agency's financial capacity with its strategic priorities and ensures its ability to provide essential public transportation services. Long -term strategies have been developed to reduce costs, optimize efficiency and increase revenue in order to achieve long-term sustainability.

Financial forecasts project revenues and expenditures, using assumptions about econo mic conditions and future spending, including such factors as:

 Service levels
 Operating revenue
 Wages and collective bargaining agreements
 Benefit costs and trends
 Fuel types and price trends
 Capital investment expenses
 Vendor contracts
 Risk management and mitigation
 Economic growth rates, including sales tax and Consumer Price Index

The Agency’s long-term operating and capital plan is a vital tool used to prepare for the future. It stimulates long-term strategic thinking and it gives guidance on LBT's financial direction, which is particularly critical in addressing the financial impacts of COVID-19.

Long-Term Debt Policy

LBT has historically not carried debt and prioritized only using available grant funds to procure capital acquisitions. In FY 2021, LBT executed a promissory note for the acquisition of its corporate administrative office. Principal payments toward the note are recorded as capital expenditures and interest payments as operating expenses.

Risk Management Policy
It is LBT's policy to b e self-insured for each occurrence of workers’ compensation and personal liability and property damage (PL/PD) up to $1.5 million and $3 million, respectively. Claims in excess of $1.5 million for workers’ compensation and $3 million for PL/PD are covered under policies in force with an insurance company. Risk retention levels for workers' compensation did not change during FY 2021. However, due to a significant increase in expenses on existing PL/PD claims in FY 2020, LBT's self-insured retention amount increased from $2 million to $3 million for PL/PD starting July 1, 2020.

It is LBT's policy to have an annual actuarial report, which computes losses and reserve levels. The Agency recognizes losses on an accrual basis. Cash and investments are maintaine d to fully fund the estimated liabilities. Additional information on LBT's risk management ac tivity can be found on page 28 in note (6) of the notes to the accompanying financial statements.

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Retirement Policy
The Agency sponsors two single employer defined benefit pension plans, one for contract employees and the other for salaried employees hired before April 1, 2011. Each year, an independent actuary calculates the amount of annual contribution that LBT must make to the pension plans to ensure each plan will be able to fully meet its obligations to retired employees on a timely basis. It is LBT's financial policy to fully fund the actuarially determined annual contribution requirement to the pension plans. L BT contributes funding to each plan based on the actuary’s calculation of future benefits.

In FY 2020, changes in the 401(a) Plan policy were ratified. The amendment mainly includes a matching employer contribution to the 401(a) Plan equal to an employe e's salary deferrals to the Agency's Deferred Compensation Plan, up to a maximum of five percent of compensation, excluding overtime and bonuses, plus a non -elective contribution to the 401(a) Plan equal to five percent of compensation, excluding overtime and bonuses.

Recognition

Achievement for Excellence in Financial Reporting
For the 31st consecutive year, the Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to LBT for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2020. A Certificate of Achievement is valid for a period of one year only. In order to receive the award, a governmental unit must publish an easily readable and efficiently organized Annual Comprehensive Financial Report in compliance with the GFOA policies, procedures and program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements.

Long Beach Transit
Acknowledgements
LBT acknowledges the participation and professional contribution of the accountancy firm of Windes, Inc., in providing technical assistance. In addition, LBT recognizes the Finance and Budget department staff members who contribute their time and efforts to ensure the Agency has accurate and timely daily financials.

President and Executive Director/VP,
Chief Executive Officer Finance and Budget
Treasurer Manager, Finance
Manager, Accounting Budget Analyst
Capital and Grants Planner Financial Analyst
Administrative Assistant, Finance
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Board of Directors

Michael Clemson Chair of the Board

David Sutton Vice Chair

Colleen Bentley Secretary/Treasurer

Sumire Gant Director

Jeffrey Price Director

Abigail Mejia Director

Jennifer Kumiyama Director

Lea Eriksen City Representative - Non Voting, City of Long Beach

Open City Representative - Non Voting, City of Long Beach

Executive Leadership Team (ELT)

Kenneth A. McDonald President and Chief Executive Officer

Open Deputy Chief Executive Officer

Lisa Patton Executive Director/VP, Finance and Budget

Lee Burner Executive Director/VP, Transit Service Delivery and Planning

James Scott Executive Director/VP, Maintenance
and Infrastructure

Elizabeth Brown Executive Director/VP, Organizational Development and Administration *

Patrick Pham Executive Director/VP, Information Technology

Michael Gold Executive Director/VP, Customer Relations
and Communications

* The position of Executive Director/VP, Organizational Development and Administration was vacant during FY 2021. Elizabeth Brown has held the position since August 16, 2021.

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Financial
Long Beach Transit
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Long Beach | Irvine | Los Angeles
www.windes.com
844.4WINDES
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors of
Long Beach Public Transportation Company
Report on the Financial Statements
We have audited the accompanying financial statements of the Long Beach Public Transportation Company (Company), a component unit of the City of Long Beach, California, which comprise the statements of net position as of June 30, 2021 and 2020, and the related statements of revenues, expenses, and changes in net position, and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessme nt of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes eval uating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Long Beach Public Transportation Company as of June 30, 2021 and 2020, and the changes in its net position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 1 Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis (MD&A) on pages 3 through 11 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historica l 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 opini on or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements as a whole. The supplemental informational schedules summarizing the funding progress of the Company’s defined benefit pension plan and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The supplemental informational schedules summarizing the funding progress of the Company’s defined benefit pension plan are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental informational schedules summarizing the funding progress of the Company’s defined benefit pension plan are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2021 on our consideration of Long Beach Public Transportation Company’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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Long Beach Public Transportation Company’s internal control over financial reporting and compliance.

Long Beach, California
December 20, 2021
2 Management's
Discussion and
Analysis
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Long Beach Transit
Management's Discussion and Analysis
As management of Long Beach Public Transportation Company (Long Beach Transit, LBT or the Agency), we offer readers of LBT’s financial statements this narrative overview and analysis of the financial activities of the Agency for the fiscal years ended June 2021, 2020 and 2019. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i-xix of this report.

FINANCIAL HIGHLIGHTS
 Passenger fares earned in FY 2021 were $154 thousand, a decrease from $10.45 million in FY 2020. This decrease was due to the suspension of fare enforcement in response to the COVID-19 pandemic.
 Subsidies for FY 2021 were $91.99 million, an increase from $82.03 million in FY 2020. This increase was due in large part to revenue from the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020.
 Operating expenses in FY 2021 were $110.76 million, a decrease from $115.87 million in FY 2020. The decrease in expenses was driven by the decrease in services operated due to the COVID-19 pandemic.
 Fuel expenses in FY 2021 were $3.20 million, a decrease from $4.10 million in FY 2020, due to a decrease in usage as well as in fuel prices.
 Total fuel credits in FY 2021 were $1.15 million, a decrease from $2.35 million in FY 2020. This decrease is a result of a decrease in miles and fuel usage.  Capital acquisitions in FY 2021 were $27.49 million, compared to $7.81 million in FY 2020.  Net position at the end of FY 2021 is $73.25 million compared to $67.01 million at the end of FY 2020. Total assets increased by $8.16 million and deferred outflows of resources decreased by $7.63 million, while total liabilities decreased by $21.13 million and deferred inflows of resources increased by $15.42 million.
 Total net pension liability decreased to $13.87 million in FY 2021, compared to $34.70 million in FY 2020. This decrease of $20.83 million consists of decreases of $4.07 million and $16.76 million for the Salaried and Contract Plans, respectively. The decrease was due to the performance of the
pension investments exceeding the rate of return assumption of the Plans for FY 2021.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to LBT’s financial statements and notes to the financial statements.

The statement of net position presents information on all of LBT’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference reported as net position.

The statement of revenues, expenses, and changes in net position presents information showing how the Agency’s net position changed for the two most recent fiscal years. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation leave). 3 Long Beach Transit
Management’s Discussion and Analysis (continued)
The statement of cash flows presents information on the Agency’s cash receipts, cash payments and net changes in cash (and cash equivalents) for the two most recent fiscal years. Generally accepted accounting principles for governmental units require that cash flows be classified into one of four categories:
 Cash flows from operating activities
 Cash flows from noncapital financing activities
 Cash flows from capital and related financing activities  Cash flows from investing activities
The Agency’s financial statements can be found on pages 12-16 of this report.

The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the financial statements. The notes to the financial statements can be found on pages 17-54 of this report.

FINANCIAL STATEMENT ANALYSIS
Net position may serve as a useful indicator of the Agency’s financial position over time. It is also notable to consider the factors that affect the increases and decreases in net position. In the case of LBT, the majority of the fluctuations are due to the timing of capital purchases.

The Agency's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $73.25 million at the close of FY 2021, an increase from $67.01 million at the close of FY 2020.

Long Beach Transit's
Condensed Summary of Net Position
Year Ended
2021 2020 2019
Assets
Current assets $ 64,590,635 $ 64,349,013 $ 57,761,863 Other noncurrent assets 22,890,271 28,184,651 27,052,581 Capital assets, net 96,356,715 83,144,218 91,068,904 Total assets 183,837,621 175,677,882 175,883,348
Deferred outflows of resources 7,325,749 14,957,584 15,468,079 Liabilities
Current liabilities 71,809,117 66,478,825 60,112,279 Noncurrent liabilities 30,685,138 57,150,511 54,110,928 Total liabilities 102,494,255 123,629,336 114,223,207 Deferred inflows of resources 15,418,522 - -
Net position
Net investment in capital assets 91,604,336 83,144,218 91,068,904 Restricted 303,855 526,717 87,193
Unrestricted (18,657,598) (16,664,805) (14,027,877)
Total net position
$ 73,250,593 $ 67,006,130 $ 77,128,220
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Management’s Discussion and Analysis (continued)
Assets. Current assets increased to $64.59 million in FY 2021 from $64.35 million in FY 2020, an increase of $240 thousand. This increase is largely due to the increase in accounts receivable of $1.47 million.

Subsidies and capital grants receivable make up the majority of the increase in accounts receivable. In FY 2020, current assets increased by $6.59 million compared to FY 2019 mainly due to deposits of funds received from the Federal Transit Administration (FTA) and the State of California in June 2020.

Other noncurrent assets, which are Agency investments, decreased to $22.89 million in FY 2021 from $28.18 million in FY 2020. Agency investments increased in FY 2020, from $27.05 million in FY 2019.

Net capital assets totaled $96.36 million in FY 2021, compared to $83.14 million in FY 2020, an increase of $13.22 million. This increase is due to capital acquisitions in FY 2021, the largest being the purchase of the corporate office building. In FY 2020, net capital assets decreased by $7.93 million compared to FY 2019. This decrease was a result of ongoing depreciation exceeding new capital acquisitions. Depreciation expenses for FY 2020 were $15.74 million and capital acquisitions amounted to $7.81 million.

Deferred Outflows of Resources. Deferred outflows of resources decreased in FY 2021 to $7.33 million from $14.96 million in FY 2020, a decrease of $7.63 million. In FY 2020, there was a decrease of $510 thousand, from $15.47 million in FY 2019. Changes in deferred outflows are a result of the amortization of prior years' changes in pension liability, as well as gains and losses in the value of the plan investments.

More information on deferred outflows of resources can be found in note (1) and note (13) of the notes to the accompanying financial statements.

Liabilities. Current liabilities increased to $71.81 million in FY 2021 from $66.48 million in FY 2020, an increase of $5.33 million. The increase was due in part to increases in accounts payable ($1.44 million) and subsidy deferral ($2.51 million). Accounts payable increased due to higher invoice accruals, including accruals for bus rehabilitation and operator barriers. The subsidy deferral represents Prop A, Measure M, and STA funding which are planned for use in the next fiscal year. In FY 2020, current liabilities increased by $6.37 million due to increases in estimated liabilities on insurance claims and subsidy deferral.

Noncurrent liabilities decreased to $30.69 million in FY 2021 from $57.15 million in FY 2020, a decrease of $26.46 million. The decrease is mainly comprised of decreases in net pension liability ($20.83 million) and unearned revenue ($9.46 million). Unearned revenue represents grants allocated for capital projects that have not yet been expended. In FY 2020, noncurrent liabilities increased by $3.04 million from $54.11 million due to increases in net pension liability and unearned revenue.

Deferred Inflows of Resources. Deferred inflows of resources increased in FY 2021 to $15.42 million.

Changes in deferred inflows are a result of the amortization of prior years' changes in pension liability, as well as gains and losses in the value of the plan investments. More information on deferred inflows of resources can be found in note (1) and note (13) of the notes to the accompanying financial statements.

Net Position. Total net position at the end of FY 2021 is $73.25 million, an increase from $67.01 million for FY 2020. Net position is calculated as assets and deferred outflows of resources less liabilities and deferred inflows of resources. LBT's net position includes $91.60 million invested in capital assets and $18.66 million of unrestricted deficit. Unrestricted net position represents Agency resources that have no restrictions in terms of their use. One reason for a net position shortfall is a significant noncurrent liability that is paid over time. In the case of LBT, this is the net pension liability that is funded over multiple years under the pension program. Recording the noncurrent net pension liability resulted in a deficit in unrestricted net position.
5 Long Beach Transit
Management’s Discussion and Analysis (continued)
Long Beach Transit's
Condensed Summary of Revenues, Expenses, and Changes in Net Position Year-Ended
2021 2020 2019
Operating revenues:

Passenger fares and
special events $ 155,130 $ 10,692,706 $ 14,459,643 Advertising 649,678 978,484 1,069,805
Other revenue 1,183,017 2,381,571 853,200
Total operating revenues 1,987,825 14,052,761 16,382,648 Nonoperating revenues:

Subsidies 91,986,813 82,029,003 76,153,983
Interest income 287,251 1,848,019 1,789,816
Total nonoperating revenues 92,274,064 83,877,022 77,943,799 Total revenues 94,261,889 97,929,783 94,326,447
Operating expenses:

Transportation 50,691,529 54,678,389 47,848,764
Maintenance 25,714,741 24,288,404 23,854,682
Administration 20,071,273 21,160,394 22,456,997
Depreciation 14,278,928 15,739,478 16,340,080
Total operating expenses 110,756,471 115,866,665 110,500,523 Change before capital grants (16,494,582) (17,936,882) (16,174,076) Capital grants 22,739,045 7,814,792 4,457,864
Change in net position 6,244,463 (10,122,090) (11,716,212) Total net position, July 1 67,006,130 77,128,220 88,844,432 Total net position, June 30 $ 73,250,593 $ 67,006,130 $ 77,128,220 Operating revenues. In FY 2021, overall total operating revenues decreased to $1.99 million compared to $14.05 million in FY 2020. This is an 85.9% decrease. This decrease was mainly an effect of the COVID-19 pandemic. For the entirety of FY 2021, LBT did not enforce fare collection, and there were no special event services. Additionally, the water taxi service was suspended until the end of May. Schools and businesses remained closed for the majority of FY 2021. LBT continued to limit bus capacity to adhere to social distancing guidelines. Revenue hours were reduced from 725,349 hours in FY 2020 to 625,146 hours in FY 2021. This is a reduction in service of 13.8%. As a result of all of these effects, passenger fares and special events revenue decreased by $10.54 million, as compared to FY 2020.

In FY 2020, overall total operating revenues decreased to $14.05 million in comparison to $16.38 million in FY 2019, a 14.2% decrease. This was mainly due to the effects of the COVID-19 pandemic. Prior to the pandemic, the Agency’s average weekly boardings were 326,651, translating to an increase of $126 thousand in passenger fares compared to the same period in FY 2019. However, ridership drastically decreased as a result of pandemic related closures in schools and businesses in the area. Rear-door boarding was enforced on all buses for the safety of the bus operators and the customers. Moreover, enforcement of fare collection was suspended. As a result, overall passenger fares decreased by $3.72 million, as compared to FY 2019.
6 Long Beach Transit
Management’s Discussion and Analysis (continued)
The pandemic continued to affect advertising revenue, which in FY 2021 was $650 thousand, a decrease compared to $978 thousand in FY 2020. During the pandemic and throughout FY 2021, LBT’s contract to earn a guaranteed minimum annual revenue for advertisements was placed on hold until the end of the pandemic. Instead, the advertising revenue share is earned by month. With the advertising contracts prior to the pandemic, any excess compared to the minimum annual guarantee (MAG) was collected at the end of each contract year. In FY 2021, LBT received $78 thousand over the MAG for the prior contract year. In fiscal years 2020 and 2019, LBT received $375 thousand and $400 thousand over the MAG, respectively.

Other revenues amounted to $1.18 million in FY 2021, a decrease from $2.38 million in FY 2020, mainly due to a decrease in fuel tax credits. In fiscal years 2021, 2020 and 2019, LBT received fuel tax credits totaling $1.15 million, $2.35 million, and $805 thousand respectively. A significant amount of the fuel credits were due to federal alternative fuel tax credits. The Consolidated Appropriations Act of 2021 extended the federal alternative fuel tax credits, effective through December 31, 2021. The alternative fuel tax credit rate is $0.50 per gallon or diesel gallon equivalent.

Nonoperating revenues. Subsidies in FY 2021 totaled $91.99 million, or 97.6% of total revenues. This represents an increase from $82.03 million in FY 2020, a difference of $9.96 million. This increase was due to $29.20 million in federal funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. There were decreases in other subsidy sources, largely due to decreases in estimated sales tax revenues as a result of the COVID-19 pandemic. In FY 2020, there was an increase in subsidies of $5.88 million, largely due to increases in state funds including TDA, STA and STA-SB1.

Interest re
venue decreased in FY 2021 to $287 thousand, compared to $1.85 million in FY 2020, due to lower interest income from investments. In FY 2020, there was an increase in interest income earnings, up from $1.79 million in FY 2019.

Total Revenues. Overall in FY 2021, revenues totaled $94.26 million, a decrease from $97.93 million in FY 2020. This is a result of the decrease in operating revenue discussed above. In FY 2020, there was an increase in total revenue, from $94.33 million in FY 2019 7 Long Beach Transit
Management’s Discussion and Analysis (continued)
Operating expenses . Operating expenses before depreciation decreased in FY 2021 to $96.48 million, from $100.13 million in FY 2020, a decrease of $3.65 million. The decrease is primarily due to cost reductions in daily transportation operations stemming from reduced services in response to the COVID-19 pandemic.

Total labor costs excluding benefits decreased by 6.2%, to $44.19 million in FY 2021 from $47.13 million in FY 2020 due to service reductions. Health benefit costs increased by $803 thousand due to higher premiums.

Personal liability and property damage (PL/PD) expenses decreased by $1.12 million because there were no new significant liability cases in FY 2021, and due to efforts in managing and closing cases more quickly.

The modified transit service schedule also impacted fuel usage, which is reflected in the decline of $886 thousand in fuel costs for FY 2021 compared to FY 2020. The average fuel prices were also lower for much of FY 2021 compared to FY 2020.

The Agency has managed to control operating costs and did not lay-off any of its employees during FY 2021. For the safety of LBT’s employees and customers, while in a pandemic environment, LBT spent $785 thousand in COVID-19 related items and equipment in FY 2021 compared to $296 thousand in FY 2020.

In FY 2020 operating expenses before depreciation increased to $100.13 million from $94.16 million in FY 2019. This increase of $5.97 million was due to higher costs of labor and benefits, as well as increases in provisions for PL/PD claims.

Capital Grants. In FY 2021 capital grants amounted to $22.74 million, an increase from $7.81 million in FY 2020. Depreciation expense totaled $14.28 million in FY 2021, compared with $15.74 million in FY 2020. Depreciation expense decreased by $1.46 million. 8 Long Beach Transit
Management’s Discussion and Analysis (continued)
Long Beach Transit's
Capital Assets (net of depreciation)
Year-Ended
2021 2020 2019
Land $ 14,275,000 $ 14,275,000 $ 14,275,000
Buildings and improvements 28,348,615 7,166,706 9,068,482 Fleet 46,277,445 54,148,498 59,723,463
Communications systems 992 992 1,638
Fare collection system 474,395 629,852 743,000
Office, shop and garage equipment 3,222,842 1,802,847 2,511,698 Customer amenities 1,846,494 2,344,204 3,252,143
Construction in progress 1,910,932 2,776,119 1,493,480 Total capital assets, net of depreciation $ 96,356,715 $ 83,144,218 $ 91,068,904 Capital Assets. LBT had $27.49 million in new capital acquisitions during FY 2021, an increase of $19.68 million when compared to FY 2020. In FY 2021, assets have been purchased with federal, state and local grants awarded to the Agency, totaling $22.74 million, as well as a promissory note for $4.75 million.

LBT’s investment in capital assets as of June 30, 2021 amounted to $96.36 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, fleet, communication and farebox systems, equipment, and customer amenities.

The Agency’s investment in capital assets increased by 15.9% in FY 2021, from $83.14 million in FY 2020. Major capital acquisitions in FY 2021 included the purchase of a corporate office building, mid-life rehabilitation of buses and information systems upgrades. In FY 2020, capital acquisitions amounted to $7.81 million, with major acquisitions including mid-life rehabilitation of buses, information systems upgrades, fueling and charging station upgrades and facility improvements.

Total grant awards will vary each year as LBT is eligible for a formula percentage of Los Angeles County's federal funding, plus one-time grants available for specific projects, such as bus replacement. Grant requirements allow, on average, three years to expend the funds.

Significant capital asset acquisitions during FY 2021 included the following:
 Corporate office building, $21.05 million
 Mid-life rehabilitation of buses, $2.14 million
 Information systems and technology upgrades, $1.27 million  CNG generator replacement, $1.02 million
 Customer amenities upgrades, $447 thousand
 Routine replacement of engines, transmissions and bus components, $315 thousand 9 Long Beach Transit
Management’s Discussion and Analysis (continued)
LBT’s investment in capital assets as of June 30, 2020, amounted to $83.14 million (net of accumulated depreciation). The Agency had $7.81 million in new capital acquisitions during the year, an increase of $3.36 million, when compared to FY 2019.

Significant capital asset acquisitions during FY 2020 included the following:
 Mid-life rehabilitation of buses, $4.39 million
 Information systems and technology upgrades, $1.27 million  Routine replacement of engines, transmissions and bus components, $588 thousand  Facility improvements, $510 thousand
 Fueling and charging equipment upgrades, $472 thousand  Service trucks and equipment, $211 thousand
 Customer amenities upgrades, $114 thousand
Additional information on LBT’s capital assets can be found in note (8) in the notes to the Agency's financial statements on page 30 of this report.

ECONOMIC FACTORS AND NEXT YEAR’S FINANCIAL PLAN
The overall economy has been deeply impacted by the COVID-19 pandemic and the associated closures.

These challenges affect not only LBT’s ridership and passenger revenue, but also the Agency's subsidies which are largely derived from sales taxes. LBT continues to be vigilant and prudent as the Agency moves into FY 2022 in the face of these uncertainties.

A history of strong financial planning and stewardship has allowed LBT to weather this pandemic without furloughs or layoffs. Federal assistance in the form of the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) has also helped LBT to develop a balanced financial plan for FY 2022.

However, the unknown timeline for recovery both from the pandemic and the economic downturn means that it is more vital than ever to look beyond one year in LBT's financial planning in order to make sustainable decisions.

In the midst of modified services and uncertainties around the pandemic, LBT remains focused on its mission: Dedicated to connecting communities and moving people...making everyday life better.

Additionally, the Agency's strategic priorities serve as the guideposts for daily decision-making. These were at the forefront of financial planning for FY 2022.

The FY 2022 financial plan focuses on the road to recovery and incrementally restoring the services that have been reduced during the pandemic. Additionally, the FY 2022 plan emphasizes employee recruitment and retention which will play a vital role in the Agency's ability to restore service and respond as customer demand recovers.

LBT is also planning for its current and future facility needs. In FY 2020, LBT conducted a facility assessment and developed a Facility Master Plan. During the course of that assessment, the consultant identified a suitable commercial office building that could fit LBT’s needs. In FY 2021, LBT acquired the building, located in the City of Long Beach, to be used as the Agency's corporate offices. The FY 2022 financial plan incorporates the relocation to this new facility as well as facility improvements identified in the Facility Master Plan.
10 Long Beach Transit
Management’s Discussion and Analysis (continued)
LBT has ongoing labor agreements with Amalgamated Transit Union (ATU), Local 1277 and American Federation of State, County, and Municipal Employees (AFSCME) District Council 36. The agreements provide the parties with specific procedures governing the duration and renewal of the agreements. Both agreements were effective through FY 2021 and expired on June 30, 2021.

On July 26, 2021, ATU Local 1277 and AFSCME District Council 36 Supervisory Unit, respectively, ratified new two-year Labor Agreements with Long Beach Transit. The contracts are effective from July 1, 2021 to June 30, 2023.

LBT has no reason to expect any service disruption with regard to these agreements.

Despite challenges, LBT remains financially healthy. The Agency's FY 2022 budget is balanced with current revenues equal to current expenditures. Through improvements in efficiency, LBT has been able to increase wages while controlling cost increases. The operating financial plan approved in May 2021 for FY 2022 totals $114.01 million.

REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of LBT's finances for all those with an interest in the Agency’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Executive Director/VP of Finance and Budget, Long Beach Transit, 1963 E. Anaheim St., Long Beach, CA 90813. 11 Long Beach Transit
Intentionally Left Blank
Financial
Statements
Long Beach Transit
Intentionally Left Blank
Long Beach Transit
Statements of Net Position
June 30, 2021 and 2020
2021 2020
ASSETS
Current Assets:

Cash and cash equivalents (note 2) $ 52,615,290 $ 53,214,214 Accounts receivable (note 4) 8,110,218 6,645,110
Materials and supplies inventory 2,716,573 2,524,437
Prepaid expenses 1,148,554 1,965,252
Total current assets 64,590,635 64,349,013
Noncurrent Assets:

Investments (note 2) 22,890,271 28,184,651
Capital assets (note 8)
Land 14,275,000 14,275,000
Construction-in-progress 1,910,932 2,776,119
Capital assets, net of accumulated depreciation:

Buildings and improvements 28,348,615 7,166,706
Fleet 46,277,445 54,148,498
Communications systems 992 992
Fare collection system 474,395 629,852
Office, shop and garage equipment 3,222,842 1,802,847
Customer amenities 1,846,494 2,344,204
Total noncurrent assets 119,246,986 111,328,869
Total assets 183,837,621 175,677,882

DEFERRED OUTFLOWS OF RESOURCES
Net difference of changes related to pension liability 7,325,749 14,957,584 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 191,163,370 $ 190,635,466 The notes to the financial statements are an integral part of these statements. 12 Long Beach Transit
Statements of Net Position, Continued
June 30, 2021 and 2020
2021 2020

LIABILITIES
Current Liabilities:

Accounts payable $ 4,194,835 $ 2,759,016
Accrued payroll expenses 981,869 1,000,440
Compensated absences payable (note 11) 3,265,004 3,444,177 Note payable, current portion (note 14) 1,124,341 -
Sick leave benefits (note 11) 179,221 179,727
Subsidy deferral (note 9) 42,179,845 39,665,072
Estimated liability for insurance claims (note 6) 19,884,002 19,430,393 Total current liabilities 71,809,117 66,478,825
Noncurrent Liabilities:

Unearned revenue (note 5) 8,470,897 17,930,345
Note payable, net of current portion (note 14) 3,628,038 - Sick leave benefits (note 11) 4,720,485 4,519,745
Net pension liability (note 13) 13,865,718 34,700,421
Total noncurrent liabilities 30,685,138 57,150,511
Total liabilities 102,494,255 123,629,336

DEFERRED INFLOWS OF RESOURCES
Net difference of changes related to pension liability 15,418,522 -

NET POSITION
Net investment in capital assets 91,604,336 83,144,218
Restricted for:

Restricted for capital procurement 303,855 526,717
Unrestricted (18,657,598) (16,664,805)
Total net position 73,250,593 67,006,130
TOTAL LIABILITIES AND NET POSITION $ 191,163,370 $ 190,635,466 The notes to the financial statements are an integral part of these statements. 13 Long Beach Transit
Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2021 and 2020
2021 2020
Operating revenues:

Passenger fares $ 154,380 $ 10,452,194
Special events 750 240,512
Advertising 649,678 978,484
Other revenue 1,183,017 2,381,571
Total operating revenues 1,987,825 14,052,761
Operating expenses:

Transportation 50,691,529 54,678,389
Maintenance 25,714,741 24,288,404
Administration 20,071,273 21,160,394
Depreciation (note 8) 14,278,928 15,739,478
Total operating expenses 110,756,471 115,866,665
Operating loss (108,768,646) (101,813,904)
Nonoperating revenues:

Subsidies (note 3) 91,986,813 82,029,003
Interest income 287,251 1,848,019
Total nonoperating revenues 92,274,064 83,877,022
Change in net position before capital grants (16,494,582) (17,936,882) Capital grants 22,739,045 7,814,792
Change in net position 6,244,463 (10,122,090)
Total net position, July 1 67,006,130 77,128,220
Total net position, June 30 $ 73,250,593 $ 67,006,130
The notes to the financial statements are an integral part of these statements. 14 Long Beach Transit
Statements of Cash Flows
Years Ended June 30, 2021 and 2020
2021 2020
Cash flows from operating activities:

Cash received from customers $ 2,909,226 $ 12,804,043 Cash paid to employees for services (44,185,548) (47,130,013) Cash paid to other suppliers of goods or services (47,209,585) (49,245,617) Net cash used for operating activities (88,485,907) (83,571,587) Cash flows provided by noncapital financing activities:

Operating subsidies received 92,406,268 84,742,600
Cash flows from capital and related financing activities:

Proceeds (use of proceeds) from sale of capital assets (77,682) 22,413 Purchase of capital assets (22,739,045) (7,814,792)
Capital grant contributions received 12,576,386 9,107,165 Net cash provided by (used for) capital
and related financing activities (10,240,341) 1,314,786 Cash flows provided by investing activities:

Net proceeds and gains from investments 10,858,657 36,394,850 Purchase of investments (5,564,353) (37,526,921)
Interest received on cash and investments 426,752 1,961,656 Net cash provided by investing activities 5,721,056 829,585 Net change in cash and cash equivalents (598,924) 3,315,384 Cash and cash equivalents, July 1 53,214,214 49,898,830 Cash and cash equivalents, June 30 (note 2) $ 52,615,290 $ 53,214,214 The notes to the financial statements are an integral part of these statements. 15 Long Beach Transit
Statements of Cash Flows, Continued
Years Ended June 30, 2021 and 2020
Reconciliation of Operating Loss to
Net Cash Used for Operating Activities 2021 2020
Operating loss $ (108,768,646) $ (101,813,904)
Adjustments to reconcile operating loss to net cash
used for operating activities:

Depreciation expense 14,278,928 15,739,478
(Increase) decrease in accounts receivable
from operations 1,278,620 (1,191,754)
(Increase) decrease in materials and supplies inventory (192,061) (297,769) (Increase) decrease in prepaid expenses 816,698 (388,412) (Increase) decrease in deferred outflows of resources 7,631,835 510,495 Increase (decrease) in accounts payable 1,428,801 174,319 Increase (decrease) in accrued payroll expenses,
compensated absences payable, and
sick leave benefits 2,490 694,707
Increase (decrease) in net pension liability (20,834,703) 1,686,872 Increase (decrease) in estimated liability for
insurance claims 453,609 1,314,381
Increase (decrease) in deferred inflows of resources 15,418,522 Total adjustments 20,282,739 18,242,317
Net cash used in operating activities $ (88,485,907) $ (83,571,587) Noncash investing, and capital financing activities:

During the years ended June 30, 2021 and 2020, the Agency had noncash capital asset additions of $5,711,640 and $199,147 respectively, which were included in accounts payable and note payable in the statements of net position.

The notes to the financial statements are an integral part of these statements. 16 Long Beach Transit
Notes to Financial Statements
June 30, 2021 and 2020
(1) Summary of Significant Accounting Policies
Reporting Entity
Long Beach Public Transportation Company (Long Beach Transit or the Agency) is a California nonprofit corporation organized to provide public transportation services in Long Beach, California. The Agency is governed by a seven-member Board of Directors appointed to serve four-year terms by the Mayor, with the approval of the Long Beach City Council. In turn, the Board Members appoint a Chief Executive Officer who is responsible for overseeing the Agency's daily operations. The Agency is responsible for the preparation of its own annual financial plan.

In accordance with U.S. generally accepted accounting principles (GAAP), the Agency is considered a component financial reporting unit of the City of Long Beach (City), California. As such, the Agency’s financial statements are included in the City’s annual comprehensive financial report as a discretely presented component unit. LBT has a separate legal status and has historically operated as an independently managed and operated nonprofit corporation, receiving no direct administrative or financial support from the City. For the present, there has been no expressed intent to alter the status of this financial reporting and administrative relationship.

Measurement Focus, Basis of Accounting and Financial Statement Presentation The accompanying financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, the Statement of Net Position reports separate sections for Deferred Outflows of Resources and Deferred Inflows of Resources, when applicable.

Deferred Outflows of Resources
– represent outflows of resources (consumption of net position) that apply to future periods and that, therefore, will not be recognized as an expense until that time.

Deferred Inflows of Resources – represent inflows of resources (accumulation of net position) that apply to future periods and that, therefore, will not be recognized as revenue until that time.

The Agency distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services in connection with the Agency’s principal ongoing operations. The principal operating revenues of the Agency include passenger fares charged for transportation service to the community and advertising fees. Operating expenses include the cost of transportation services, maintenance of capital assets and facilities, administrative expenses and depreciation on capital assets. All other revenues and expenses are reported as nonoperating revenues and expenses.

Use of Estimates and Assumptions
Management uses estimates and assumptions in preparing the financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets, deferred outflows, liabilities, and deferred inflows, the disclosure of
contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements. Principal areas requiring the use of estimates include determination of useful lives of capital assets, liability for insurance claims, accrued sick leave and defined benefit plan assumptions.
17 Long Beach Transit
Notes to Financial Statements (continued)
(1) Summary of Significant Accounting Policies (continued) Accounts Receivable
Accounts are written off when determined to be uncollectible. In the opinion of management, all significant accounts receivable at June 30, 2021 and 2020 are fully collectible.

Material and Supplies Inventory
Inventory is valued at cost on a first-in, first-out basis as applied on a moving-average-cost method, or market, whichever is lower.

Capital Assets
Capital assets, which include property, plant and equipment, are defined by the Agency as assets with an initial individual cost of more than $5,000 and having an estimated useful life of more than one year.

Capital assets are valued at historical cost. Depreciation is provided using the straight-line method, with no allowance for salvage values. Donated capital assets are reported at acquisition value at the date of donation. The Agency did not receive any donated capital assets during FY 2021.

Estimated useful lives of the Agency's capital assets are as follows:

Buildings and improvements 5-40 years
Buses and vessels 12 years
Fareboxes 10 years
Smaller buses 7 years
Furniture, equipment and customer amenities 5 years
Service trucks 4 years
Information systems equipment 3 years
Bus components 3 years
Service autos and vans 3 years
Long-Term Debt
LBT has historically not carried debt and prioritized only using available grant funds to procure capital acquisitions. When a promissory note is executed for the acquisition a capital asset, principal payments are recorded as capital expenditures and interest payments as operating expenses.

Net Position
The Agency's net position is classified under three categories - net investment in capital assets, restricted and unrestricted.

Net investment in capital assets : This category in the net position represents capital assets, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction or improvement of those assets.

Restricted
: Net position is reported as restricted when its use is subject to externally imposed stipulations by grantors, laws or regulations of governments that can be fulfilled by actions of the Agency pursuant to those stipulations.

Unrestricted: Net position classified as unrestricted are those that are not subject to externally imposed stipulations. Unrestricted net positions may be designated for specific purposes by action of management or the Board of Directors or may otherwise be limited by contractual agreements with outside parties.
18 Long Beach Transit
Notes to Financial Statements (continued)
(1) Summary of Significant Accounting Policies (continued) Financial Plan
The Agency adopts an annual financial plan for management information purposes only. Accordingly, financial statements presenting comparison of budgeted and actual results are not included.

Government Grants
Grants, with the exception of Proposition A’s local share (noted below) for operating assistance, for the acquisition of equipment or other capital outlay are not formally recognized in the accounts until the grant becomes a valid receivable as a result of the Agency complying with appropriate grant requirements.

Operating assistance grants are included in nonoperating revenues in the year in which a related reimbursable expenditure is incurred or in subsidy deferred for use in the subsequent fiscal year.

The Agency's policy is to report revenues from capital grants separately after nonoperating revenues as the related expenditures are incurred. Assets acquired with capital grant funds are included in capital assets.

Capital monies received prior to an expenditure being incurred are recorded as unearned revenue.

The City allocates a portion of its Proposition A local share funding to the Agency in accordance with an agreement among the Agency, the City and Metro (see notes 3 and 4). The Agency records such Proposition A funds received from the City as subsidy deferred until used for operating assistance and/or capital expenditures. Those Proposition A funds used for operating assistance are included in nonoperating subsidy revenue and those funds used for capital expenditures are included in capital assets.

Statements of Cash Flows
For purposes of the statements of cash flows, the Agency considers all of its cash deposits and investments with an original maturity of three months or less to be cash and cash equivalents. Monies invested with the State Treasurer’s Local Agency Investment Fund (LAIF) may have maturities longer than 90 days; however, LAIF functions as a demand deposit account. Therefore, the Agency considers such investments to be cash equivalents.

Adopted Pronouncements
In October 2021, GASB issued Statement No. 98 The Annual Comprehensive Financial Report. This statement establishes the term annual comprehensive financial report and its acronym ACFR. LBT has adoped this pronouncement for the financial report for the year ended June 30, 2021.

Future Pronouncements
In June 2017, GASB issued Statement No. 87 Leases. This statement establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.

Management is currently in the process of determining the impact of this statement on the financial statements.

Subsequent Events
Management has evaluated the impact of any subsequent events through December 20, 2021, the date on which the accompanying financial statements were available to be issued for the year ended June 30, 2021. 19 Long Beach Transit
Notes to Financial Statements (continued)
(2) Cash and Investments
Cash, cash equivalents and investments consist of the following as of June 30:
2021 2020
Cash on hand $ 10,218 $ 15,417
Deposits with financial institutions 2,054,554 6,139,496 Outstanding checks (875,773) (1,086,656)
Cash equivalents 51,426,291 48,145,957
Total cash and cash equivalents 52,615,290 53,214,214 Investments 22,890,271 28,184,651
Total cash, cash equivalents and investments $ 75,505,561 $ 81,398,865 Investments Authorized by the California Government Code and LBT’s Investment Policy The table below identifies the investment types that are authorized for LBT by the Agency’s investment policy. The table also identifies certain provisions of the Agency’s investment policy that address interest rate risk, credit risk and concentration of credit risk. During FY 2021 and FY 2020, the Agency elected to have its investments with LAIF and a similarly structured investment vehicle managed by an independent manager.

Maximum Maximum Percentage Maximum Percentage
Maturity
of Portfolio In One Issuer
Local Agency Investment Fund (LAIF) N/A None None
Negotiable Certificates of Deposit 5 years 30% None
Commercial Paper 270 days 10% 10%
Money Market Mutual Funds N/A None None
Bankers Acceptances 180 days 40% 10%
Repurchase Agreements 1 year None None
Reverse Repurchase Agreements 92 days 20% None
Mutual Funds N/A 15% 10%
U.S. Treasury Obligations 5 years None None
U.S. Agency Obligations 5 years None None
Medium-Term Notes 5 years 30% None
Mortgage Pass-Through Securities 5 years 20% None
Local Agency Bonds 5 years 10% None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The Agency manages its exposure to declines in fair values by limiting the weighted average maturity of the investment portfolio to no more than two years.

Information about the sensitivity of fair values of the Agency’s investments to market interest rate fluctuations is provided by the following table that shows the maturity date of each investment at June 30, 2021 and 2020, respectively.
20 Long Beach Transit
Notes to Financial Statements (continued)
(2) Cash and Investments (continued)
Weighted
Type 2021 Average
Maturity (Yrs)
Cash Equivalents
Local Agency Investment Fund (LAIF) $ 51,053,594 0.80 Fidelity Municipal Money Market 372,697 N/A
Total Cash Equivalents $ 51,426,291
Corporate Bonds
Apple Inc. 2.400% Due 05/03/2023 726,236 1.8
Home Depot Inc. 3.750% Due 02/15/2024 754,152 2.5
Intel Corp. 2.700% Due 12/15/2022 724,472 1.4
Microsoft Corp. 2.875% Due 02/06/2024 740,313 2.5
Nike Inc. 2.250% Due 05/01/2023 721,630 1.8
Prudential Financial 4.500% Due 11/16/2021 711,025 0.4 Toyota Motor Cr Corp. 1.800% Due 02/13/2025 722,911 3.5 UnitedHealth Group Inc. 2.375% Due 08/15/2024 736,442 3.0 Visa Inc. 3.150% Due 12/14/2025 766,080 4.0
Corporate Bonds Total $ 6,603,261
Government Bonds
Fannie Mae 2.000% Due 10/05/2022 1,534,425 1.3
Federal Farm Cr Bks Bond 0.600% Due 12/09/2025 491,070 1.0 Federal Farm Cr Bks Bond 0.900% Due 06/15/2026 998,740 1.0 Federal Farm Credit Bank 3.050% Due 11/15/2021 1,516,560 0.4 Federal Home Loan Banks 2.750% Due 12/13/2024 2,147,820 3.5 United States Treasury Note Bond 1.125% Due 08/31/2021 2,003,580 0.2 United States Treasury Note Bond 2.875% Due 11/15/2021 2,020,780 0.4 US Treasury N/B 2.125% Due 12/31/2021 2,020,400 0.5
US Treasury N/B 1.500% Due 01/31/2022 2,016,720 0.6
US Treasury Note Bond 2.000% Due 10/31/2022 1,536,915 1.3 Government Bonds Total $ 16,287,010
Total Investment Value $ 22,890,271
As of June 30, 2021 and 2020, there were $89,152 and $104,940, respectively, of accrued bond interest which are included in accounts receivable.
21 Long Beach Transit
Notes to Financial Statements (continued)
(2) Cash and Investments (continued)
Weighted
Type 2020 Average
Maturity (Yrs)
Cash Equivalents
Local Agency Investment Fund (LAIF) $ 47,842,419 0.52 Fidelity Municipal Money Market 303,538 N/A
Total Cash Equivalents $ 48,145,957
Corporate Bonds
Apple Inc 2.400% Due 05/03/2023 $ 739,949 2.8
Caterpillar Finl Svcs 3.350% Due 12/07/2020 708,806 0.4 Home Depot Inc 3.750% Due 02/15/2024 773,801 3.6
Intel Corp 2.700% Due 12/15/2022 741,510 2.5
Intercontinental Exchange 4.000% Due 10/15/2023 774,087 3.3 Microsoft Corp. 2.875% Due 02/06/2024 754,061 3.6
Nike Inc 2.250% Due 05/01/2023 736,645 2.8
Prudential Financial Inc 4.500% Due 11/16/2021 737,555 1.4 Shell International Finance 1.750% due 03/12/2021 710,178 1.2 Texas Instrument Inc 2.750% Due 03/12/2021 710,528 1.7 United Health Group 2.735% Due 08/15/2024 747,572 4.1 Corporate Bonds Total $ 8,134,692
Government Bonds
Fannie Mae 2.000% Due 10/05/2022 $ 1,557,465 2.3
Federal Farm 0.230% Due 06/09/2022 999,210 1.9
Farm Credit Syst 3.050% Due 11/15/2021 1,558,635 1.4
FHL Banks 2.750% Due 12/13/2024 2,204,219 4.5
US Treasury 2.875% Due 10/31/2020 2,017,780 0.3
US Treasury 1.625% Due 11/30/2020 2,011,720 0.4
US Treasury Nt 1.750% Due 12/31/2020 2,015,460 0.5
US Treasury 1.125% Due 08/31/2021 2,021,880 1.2
United States Treas Nts Note 2.125% Due 12/31/2021 2,058,200 1.5 United States Treas Nts Note 1.500% Due 01/31/2022 2,041,640 1.6 United States Treas Nts 2.000% Due 10/31/2022 1,563,750 2.3 Government Bonds Total $ 20,049,959
Total Investment Value $ 28,184,651
22 Long Beach Transit
Notes to Financial Statements (continued)
(2) Cash and Investments (continued)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. LAIF does not have a rating provided by a nationally recognized statistical rating organization. Ratings on the investments, excluding LAIF and money market accounts, are as follows at June 30, 2021.

Investment Type Rating
Corporate Bonds
Apple Inc 2.400% Due 05/03/2023 AA+
Home Depot Inc 3.750% Due 02/15/2024 A
Intel Corp 2.700% Due 12/15/2022 A+
Microsoft Corp. 2.875% Due 02/06/2024 AAA
Nike Inc 2.250% Due 05/01/2023 AA-
Prudential Financial 4.500% Due 11/16/2021 A
Toyota Motor Cr Corp 1.800% Due 02/13/2025 A+
United Health Group 2.735% Due 08/15/2024 A+
Visa Inc 3.150% Due 12/14/2025 AA-
Investment Type Rating
Government Bonds
Fannie Mae 2.000% Due 10/05/2022 AA+
Federal Farm Cr Bks Bond 0.600% Due 12/09/2025 AA+
Federal Farm Cr Bks Bond 0.900% Due 06/15/2026 AA+
Federal Farm Credit Bank 3.050% Due 11/15/2021 AA+
Federal Home Loan Banks 2.750% Due 12/13/2024 AA+
United States Treasury Note Bond 1.125% Due 08/31/2021 AA+ United States Treasury Note Bond 2.875% Due 11/15/2021 AA+ US Treasury N/B 2.125% Due 12/31/2021 AA+
US Treasury N/B 1.500% Due 01/31/2022 AA+
US Treasury Note Bond 2.000% Due 10/31/2022 AA+
23 Long Beach Transit
Notes to Financial Statements (continued)
(2) Cash and Investments (continued)
Concentration of Credit Risk
The investment policy of the Agency contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. No investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) represent 5% or more of total Agency investments including cash equivalents:

Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the Agency will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code and the Agency’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law. The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure government deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to the Agency’s indirect investment in securities through the use of mutual funds or government investment pools, such as LAIF.

Fair Value
The Agency follows the provisions of GASB No. 72 for fair value measurements of financial assets and financial liabilities and for fair value measurements that are recognized or disclosed at fair value in the financial statements on a recurring basis. GASB No. 72 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
 Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets that the Agency has the ability to access at the measurement date
 Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly
 Level 3 inputs are unobservable inputs for the asset
None of LBT's investments are valued using Level 1 or Level 3 inputs. 24 Long Beach Transit
Notes to Financial Statements (continued)
(2) Cash and Investments (continued)
The Agency has the following recurring fair value measurements as of June 30, 2021 and 2020:
 Money Market - valued at amortized costs which approximates fair value due to its short-term nature of maturity.
 Corporate Bonds - valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings.
 U.S. Treasury Securities/Government Bonds - valued using a market-based model which considers yield, price of comparable securities, coupon rate, maturity, credit quality and dealer-provided prices.  State of California Local Agency Investment Fund (LAIF) - valued at amortized costs basis based on the Agency's pro-rata share of the entire State of California's LAIF portfolio.

The following table sets forth by level, within the fair value hierarchy, the Agency's investments at fair value measurements:

Fair Value Measurements at June 30, 2021
(Level 1) (Level 2) (Level 3) Total
Money Market $ 372,697 $ 372,697
Corporate Bonds 6,603,261 6,603,261
Government Bonds 16,287,010 16,287,010
State of California Local
Agency Investment Fund 51,053,594 51,053,594
Total assets at fair value None $ 74,316,562 None $ 74,316,562 Fair Value Measurements at June 30, 2020
(Level 1) (Level 2) (Level 3) Total
Money Market $ 303,538 $ 303,538
Corporate Bonds 8,134,692 8,134,692
Government Bonds 20,049,959 20,049,959
State of California Local
Agency Investment Fund 47,842,419 47,842,419
Total assets at fair value None $ 76,330,608 None $ 76,330,608 25 Long Beach Transit
Notes to Financial Statements (continued)
(3) Operating Subsidies
Subsidies from the following sources were earned during the years ended June 30:
2021 2020
Proposition A Allocation, City of Long Beach $ 6,190,887 $ 6,008,758 Proposition A, County of Los Angeles 10,148,508 12,598,998 Proposition C, County of Los Angeles 5,408,081 6,165,277 Measure R, County of Los Angeles 7,903,883 10,411,483 Measure M, County of Los Angeles 6,243,110 9,332,798
TDA, STA, STA-SB1 and LCTOP, State of California 25,747,982 33,950,870 Preventive Maintenance, Federal 500,000 2,757,676
CARES Act, Federal 29,203,837 -
Other sources 640,525 803,143
Total $ 91,986,813 $ 82,029,003
The State of California's Transportation Development Act (TDA) of 1971 designated a portion of county sales tax receipts to finance transit operations and development. This financing is made available to eligible transit operators within the County through allocations from the Local Transportation Fund of Los Angeles County and administered by Metro. State Transit Assistance Funds (STA) are generated from state fuel taxes and are disbursed to transit agencies based on a formula allocation by Metro.

In April 2017, Governor Jerry Brown signed Senate Bill 1 (SB1), the Road Repair and Accountability Act of 2017, into law. A part of this program augments STA with a portion of the new sales tax on diesel fuel.

Los Angeles County Low Carbon Transit Operations Program (LCTOP) is one of several programs that are part of the Transit Affordable Housing and Sustainable Communities Program established by the California Legislature in 2014 in Senate Bill 862, which draws funds from the GGRF (Greenhouse Gas Reduction Fund). The LCTOP is designed to provide operating and capital assistance for transit agencies to reduce greenhouse gas emissions and improve mobility, with serving disadvantaged communities being a priority.

Los Angeles County voters approved Proposition A in November 1980 and Proposition C in November 1990. These voter-approved sales tax initiatives each provide a half-cent sales tax within the county to be used for mass transit and transportation purposes. A substantial portion of these funds are distributed to the various county transit operators by Metro on both a formula and discretionary basis.

Additionally, each city in the county receives a formula allocation of certain Proposition A revenues. The City of Long Beach in turn allocates a portion of its Proposition A local share funding to the Agency in accordance with an agreement between the Agency and the City. The portion of the local Proposition A funds used for operating assistance was $6,190,887 in FY 2021.

Measure R, approved by county voters in November 2008, provides a half-cent sales tax for transportation improvements. In November 2016, county votes approved Measure M which provides an additional half-cent sales tax for transportation and the indefinite extension of Measure R originally set to expire in 2039 for expansion or introduction of fixed-route bus service in congested corridors.

In accordance with the FTA regulations, the Agency is allowed to use a portion of federal grant monies for operating preventative maintenance expenditures. These funds are shown as subsidies in the Agency’s financial statements. The FTA funds 100% of the costs and FTA local match requirement is met by utilizing Transportation Development Credits.
26 Long Beach Transit
Notes to Financial Statements (continued)
(3) Operating Subsidies (continued)
On March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act provides relief funding to prevent, prepare for, and respond to the COVID-19 pandemic. The FTA allocated a total of $1.068 billion to Los Angeles County under the existing FTA Section 5307 Urbanized Area Formula Grant program. LBT was allocated and used $29,203,837 to fund operating expenses in FY 2021.

Other local monies are reimbursement for service hours supplied to eight surrounding cities. In 2017, LBT was awarded funds from the Metro ExpressLanes Net Toll Revenue Reinvestment Grant to operate the Los Angeles Galaxy Shuttle Bus Service.
(4) Accounts Receivable
Accounts receivable were comprised of the following at June 30:
2021 2020
Trade receivables $ 1,142,599 $ 2,076,046
Insurance reimbursements - 357,219
Interest 149,405 288,906
Capital grants receivable 3,250,866 375,339
Proposition A funds due from City 1,943,770 1,341,743 STA 853,595 1,241,951
STA-SB1 642,345 808,781
Other receivables 127,638 155,125
Total $ 8,110,218 $ 6,645,110
(5) Unearned Revenue
At June 30, 2021 and 2020, the balances of unearned revenue were as follows:
2021 2020
Capital grant funds $ 8,423,308 $ 17,798,153
Other 47,589 132,192
Total unearned revenue $ 8,470,897 $ 17,930,345
Capital grants receivable are grant funds earned and shown as capital contributions through purchase or construction of qualifying capital assets, but not yet received. Capital grant funds included in unearned revenue are funds the Agency has received in advance for capital asset acquisition or construction but which have not been expended at the date of the statements of net position.

Other unearned revenue includes proceeds from the sale of assets originally purchased with capital grant contributions, which will be used for future asset acquisitions, and escheat checks. 27 Long Beach Transit
Notes to Financial Statements (continued)
(6) Estimated Liability for Insurance Claims
Under its insurance programs, the Agency retains the risk for each occurrence of workers’ compensation claimed up to $1.5 million. Workers’ compensation maximum limit of indemnity per occurrence is statutory and employer’s liability is $2.0 million per aggregate. Individual claim settlements for workers' compensation did not exceed insurance coverage limits in FY 2021 and FY 2020.

Under its insurance programs, the Agency retains the risk for each occurrence of personal liability and property damage (PL/PD) claimed up to $3 million. There were no individual claim settlements for PL/PD that exceeded the insurance coverage for FY 2021 and FY 2020.

The level of risk retention is dictated by the insurance market and the rates available to the Agency. The Agency weighs the increased premium costs against the risk level attempting to minimize overall program expenses.

The Agency's policy is to estimate and recognize losses on the accrual basis based on the report of the Agency's independent claims manager or an actuarial report and to maintain designated cash and investments to fund the estimated liabilities. Liabilities may also be accrued if it is reasonable to suspect claims may arise from an incident that has occurred but has yet to be reported to the independent claims manager.

The changes in estimated liabilities for reported claims are as follows:

Personal Liability
and Property
Damage
Workers’
Compensation Total
Estimated liabilities at June 30, 2019 $ 7,164,486 $ 10,951,525 $ 18,116,011 Reserves:

New claims 344,046 1,317,579 1,661,625
Adjustments to existing claims 2,226,898 4,480,968 6,707,866 Payouts (2,999,294) (4,055,815) (7,055,109)
Estimated liabilities at June 30, 2020 6,736,136 12,694,257 19,430,393 Reserves:

New claims 148,821 694,640 843,461
Adjustments to existing claims 1,392,321 4,042,176 5,434,497 Payouts (2,067,455) (3,756,894) (5,824,349)
Estimated liabilities at June 30, 2021 $ 6,209,823 $ 13,674,179 $ 19,884,002 28 Long Beach Transit
Notes to Financial Statements (continued)
(7) Deferred Compensation
The Agency offers its employees a deferred compensation plan (the Plan) created in accordance with Internal Revenue Code Section 457. The Plan is administered by an independent contractor. The Plan is available to all Agency employees and permits them to defer a portion of their salary until future years.

Plan assets consist of mutual funds and are purchased based on elections made by the Agency's employees.

The deferred compensation is not available to employees or beneficiaries until termination, retirement, death or unforeseeable emergency.

Existing assets in the Plan are maintained in a qualified custodial account. The Custodian holds the Plan’s assets for the exclusive benefit of participants and beneficiaries. The Plan’s assets are not the legal property of the Agency and are not subject to the claims of the Agency’s general creditors nor can they be used by the Agency for any purpose other than the payment of benefits to employees participating in the Plan or their designated beneficiaries. Therefore, deferred compensation funds are not shown on the Agency’s Statements of Net Position.
29 Long Beach Transit
Notes to Financial Statements (continued)
(8) Capital Assets
Capital asset activity for the years ended June 30, 2021 and 2020 was as follows:

Balance at Adjustments/ Balance at
June 30, 2020 Transfers Increases Decreases June 30, 2021 Capital assets not
being depreciated:

Land $ 14,275,000 $ - $ - $ - $ 14,275,000
Construction in progress 2,776,119 (2,394,054) 1,528,867 - 1,910,932 Total capital assets not
being depreciated 17,051,119 (2,394,054) 1,528,867 - 16,185,932 Capital assets being
depreciated:

Buildings and improvements 54,270,027 1,030,778 22,106,673 - 77,407,478 Fleet 168,253,180 183,017 2,260,261 (1,285,024) 169,411,434 Communications systems 7,462,121 - - - 7,462,121
Fare collection system 9,314,770 11,091 14,628 - 9,340,489 Office, shop and garage
equipment 28,637,039 1,164,129 1,114,638 (24,538) 30,891,268 Customer amenities 17,432,056 5,039 466,358 (418,159) 17,485,294 Total capital assets
being depreciated 285,369,193 2,394,054 25,962,558 (1,727,721) 311,998,084 Less accumulated depreciation:

Buildings and improvements (47,103,321) - (1,955,542) - (49,058,863) Fleet (114,104,682) - (10,314,331) 1,285,024 (123,133,989) Communications systems (7,461,129) - - - (7,461,129) Fare collection system (8,684,918) - (181,176) - (8,866,094) Office, shop and
garage equipment (26,834,192) - (858,772) 24,538 (27,668,426) Customer amenities (15,087,852) - (969,107) 418,159 (15,638,800) Total accumulated
depreciation
(219,276,094) - (14,278,928) 1,727,721 (231,827,301)
Total capital assets
being depreciated, net 66,093,099 2,394,054 11,683,630 - 80,170,783 Total capital assets, net $ 83,144,218 $ - $ 13,212,497 $ - $ 96,356,715 30 Long Beach Transit
Notes to Financial Statements (continued)
(8) Capital Assets (continued)
Balance at Adjustments/ Balance at
June 30, 2019 Transfers Increases Decreases June 30, 2020 Capital assets not
being depreciated:

Land $ 14,275,000 $ - $ - $ - $ 14,275,000
Construction in progress 1,493,480 (1,088,068) 2,370,707 - 2,776,119 Total capital assets not
being depreciated 15,768,480 (1,088,068) 2,370,707 - 17,051,119 Capital assets being
depreciated:

Buildings and improvements 54,073,883 158,103 38,041 - 54,270,027 Fleet 166,766,571 158,086 4,880,570 (3,552,047) 168,253,180 Communications systems 7,462,121 - - - 7,462,121
Fare collection system 9,254,720 3,466 56,584 - 9,314,770 Office, shop and garage
equipment 28,172,937 768,413 355,008 (659,319) 28,637,039 Customer amenities 18,829,077 - 113,882 (1,510,903) 17,432,056 Total capital assets
being depreciated 284,559,309 1,088,068 5,444,085 (5,722,269) 285,369,193 Less accumulated depreciation:

Buildings and improvements (45,005,401) - (2,097,920) - (47,103,321) Fleet (107,043,108) - (10,613,621) 3,552,047 (114,104,682) Communications systems (7,460,483) - (646) - (7,461,129) Fare collection system (8,511,720) - (173,198) - (8,684,918) Office, shop and
garage equipment (25,661,239) - (1,832,272) 659,319 (26,834,192) Customer amenities (15,576,934) - (1,021,821) 1,510,903 (15,087,852) Total accumulated
depreciation
(209,258,885) - (15,739,478) 5,722,269 (219,276,094)
Total capital assets
being depreciated, net 75,300,424 1,088,068 (10,295,393) - 66,093,099 Total capital assets, net $ 91,068,904 $ - $ (7,924,686) $ - $ 83,144,218 (9) Subsidy Deferral
The amount of subsidies received each year is based upon estimated funding marks prepared by Metro.

These estimates are used for budget preparation, with final marks received after final budgets are approved.

Subsidies received in excess of expenditures are carried over for use in the next year. As of June 30, 2021 and 2020, the Agency had remaining Prop A subsidy funding of $31,686,744 and $30,771,984, respectively, to be utilized in future fiscal years.

As of June 30, 2021, the Agency maintained STA funds of $1,085,407, which was the same amount as of June 30, 2020. STA-SB1 funds remaining amounted to $1,614,890 and $1,564,571 as of June 30, 2021 and 2020, respectively. The Agency had Measure M funds of $7,792,804 and $6,243,110 as of June 30, 2021 and 2020, respectively. These funds are to be used to fund operations in future fiscal years. 31 Long Beach Transit
Notes to Financial Statements (continued)
(10) Commitments and Contingencies
Legal
The Agency is subject to claims and lawsuits arising in the normal course of business. Such claims are routinely evaluated by the Agency's legal counsel. Management may make provisions for probable losses if deemed appropriate on advice of legal counsel. To the extent provisions for damages are considered necessary, appropriate amounts are reflected in the Agency's financial statements. It is the opinion of management, based on consultation with legal counsel, that the estimated liability for unreserved claims and suits will not have a material impact on the Agency's financial statements.

Purchase Contracts
The Agency had the following significant purchase commitments outstanding at June 30, 2021. These purchase orders are for future goods and services the Agency is committed to by contract but has yet to receive. The balances listed include some contingency balances; therefore, actual costs may be lower than shown.

Vendor
Project Amount Expected
Completion
Cigna Health and Life Insurance CIGNA Employee Benefits $ 410,000 September 2021 Michelin North America, Inc. Michelin Option Year 3 Oct 2020 through Sep 2021 $ 599,437 September 2021 Cigna Health and Life Insurance CIGNA Employee Benefits $ 825,000 September 2021 City of Long Beach Police Police Services , October 1, 2020-September 30, 2021 $ 2,294,747 September 2021
Trapeze Software Group, Inc. TransitMaster Annual Software support - Contract option year 2 $ 246,116 October 2021
Universal Protection Service LP Additional Transit Ambassadors in accordance to RFP 16-073 $ 219,547 October 2021
Universal Protection Service LP Option Year 2 of 2 - Facility Security $ 502,571 October 2021 Dyntek Services, Inc. Deployment of Intranet and MS 365 $ 311,200 November 2021 Dorado Design and Construction LBT1 BEB Charging Stations For 14 BYD Bus Expansion $ 235,763 November 2021
Athens Administrators Final Option Year 2 Workers Compensation Third Party Admin $ 309,873 January 2022
Global Diversified Voltage ATS - Costs of Labor, Material and Equipment $ 208,638 April 2022 Complete Coach Works 2013 Gillig Rehab $ 253,279 June 2022 Delta Motor Co. Inc. Hybrid Recondition Project Base Website Management - Year 1 $ 448,067 December 2023
Downtown Long Beach Alliance Year 1- 3 CY2021 TVIC Restroom Host Service $ 687,935 January 2024 Smart Auto & Coaching Detailing
Inc.

Bus Detailing services and Window Treatment for
05/01/2021 to 04/30/2024. $ 654,644 April 2024
SC Fuels Diesel Fuel FY22 through FY24 $ 207,657 June 2024 Merrimac Energy Group Gasoline Fuel FY22 through FY24 $ 7,945,955 June 2024 Global Paratransit Inc Global Paratransit Contract $ 1,294,947 February 2026 32 Long Beach Transit
Notes to Financial Statements (continued)
(10) Commitments and Contingencies (continued)
Lease Obligations
In FY 2017 and prior, bus tire leases were included in the capital assets and depreciated over a 12-month period as allowed by the FTA. Beginning FY 2018, the Agency recorded bus tire leases as an operating expense. Under the terms of the lease, the vendor supplies the tires and invoices to the Agency based on monthly mileage. There are no minimum guarantee payments required in the contracts. Total lease costs were $549,085 and $590,290 for the years ended June 30, 2021 and 2020, respectively.

In FY 2021, LBT purchased new corporate administrative offices. As part of the purchase, the Agency was assigned to an existing ground lease with the City of Long Beach. The ground lease is set to expire on June 30, 2069, and calls for monthly payments in the amount of $22,949. Effective July 1, 2022, and every five years thereafter, the monthly payment amount will be adjusted by the Consumer Price Index of the preceding five-year period. The maximum increase in any given year will be eight percent. The total lease cost was $229,493 for year ended June 30, 2021. In connection with the purchase of the Agency’s corporate administrative offices, the Agency entered into a contract for property management services at a total cost not to exceed $772,725 for three years.

Business Risks Associated with the Impacts of COVID-19
The Agency's operations are affected by the recent and ongoing outbreak of COVID-19, which was declared a pandemic by the World Health Organization in March 2020. The ultimate disruption which may be caused by the outbreak is uncertain; however, possible effects may include, but are not limited to, disruption of the Agency's transportation services, which could have an impact on the Agency's net position and operating results. There is significant uncertainty as to the severity and longevity of the outbreak and management is in the process of evaluating the impact on the Agency and its financial statements. 33 Long Beach Transit
Notes to Financial Statements (continued)
(11) Employee Benefits
Vacation Compensation
Employees accrue vacation by reason of tenure at annual rates ranging from 12 to 30 days per year.

Salaried employees may accumulate and carryover no more than the number of vacation days earned in the previous year. Contract employees are paid their earned vacation in full each year. On June 30, 2021 and 2020, accrued unpaid vacation for all Agency employees amounted to $3,265,004 and $3,444,177 respectively.

Due Within
Balance 6/30/20
Additions Deletions Balance 6/30/21 One Year
$ 3,444,177 $ 3,265,004 $(3,444,177) $ 3,265,004 $ 3,265,004 Due Within
Balance 6/30/19 Additions Deletions Balance 6/30/20 One Year $ 3,200,850 $ 3,444,177 $(3,200,850) $ 3,444,177 $ 3,444,177 Once a year, the Agency allows employees to sell back a portion of their earned vacation in lieu of taking the time off. The Agency has agreed to buy back vacation time in excess of 10 days earned during the calendar year. Vacation days carried over from the previous year are not eligible for this program. The Agency paid $539,308 and $227,511 under this program during 2021 and 2020, respectively.

Sick Leave Benefit
Full-time Agency employees are entitled to receive up to 96 hours of sick leave per year. Unused sick leave may be accumulated and converted to a cash account only upon retirement from the Agency as termination payments. Employees leaving the Agency for any reason besides retirement, are not eligible to convert their unused sick leave to a cash account.

Upon retirement, the retiree is no longer eligible to participate in any Agency sponsored health plans and all health care related liabilities are the responsibility of the retiree. However, a retiree that incurs qualifying health related expenditures may seek reimbursement from the Agency from their converted cash account.

Once the cash value of the converted cash account is exhausted, the retiree is no longer eligible for any reimbursements.

There were 135 and 125 retirees with unused sick leave converted cash accounts at June 30, 2021 and 2020, respectively. The cash value equivalent of the remaining unused sick leave for the current retirees totaled $1,628,044 and $1,449,446 respectively. Total reimbursements paid by the Agency during the fiscal years ended June 30, 2021 and 2020, were $233,044 and $243,979, respectively.

The Agency has established a liability related to unused sick leave for both current and future payments.

The estimated liability at June 30, 2021 and 2020, was $4,899,706 and $4,699,472, respectively.

Due Within
Balance 6/30/20
Additions Deletions Balance 6/30/21 One Year
$ 4,699,472 $ 433,278 $(233,044) $ 4,899,706 $ 179,221 Due Within
Balance 6/30/19 Additions Deletions Balance 6/30/20 One Year $ 4,463,309 $ 480,142 $(243,979) $ 4,699,472 $ 179,727 34 Long Beach Transit
Notes to Financial Statements (continued)
(12) Labor Agreements
Union Labor Agreements
LBT has ongoing labor agreements with Amalgamated Transit Union (ATU), Local 1277 and American Federation of State, County, and Municipal Employees (AFSCME) District Council 36. The agreements provide the parties with specific procedures governing the duration and renewal of the agreements. Both agreements were effective through FY 2021 and expired on June 30, 2021.

On December 8, 2020, AFSCME District Council 36 became the representative for LBT's General Unit employees, including Parts Storekeepers, Stops & Zones Assistants, Stops & Zones Lead and Facilities Maintenance Technicians. On November 1, 2021, AFSCME District Council 36 General Unit and LBT ratified a new two-year agreement effective from July 1, 2021 to June 30, 2023. (13) Pension Benefits
Plan Descriptions
The Agency sponsors two single employer defined benefit pension plans: one for contract employees, the Long Beach Public Transportation Company Retirement Plan – Contract Employees (Contract Plan), and one for staff employees, the Long Beach Public Transportation Company Retirement Plan – Salaried Employees (Salaried Plan) for employees hired before April 1, 2011. For staff employees hired on or after April 1, 2011, LBT adopted a new 401(a) qualified retirement plan for employer matching contributions.

The Agency’s payroll for employees covered by each pension plan for the years ended June 30, 2021 and 2020 was $30,014,658 and $31,946,238 for the Contract Plan, respectively, and $4,869,172 and $4,589,323 for the Salaried Plan, respectively. Total Agency payroll for 2021 and 2020 was $44,440,364 and $46,876,197, respectively.

The Contract and the Salaried Plans are contributory single employer defined benefit pension plans sponsored by the Agency. Full-time employees in a job classification covered by an ATU collective bargaining agreement between the Agency and the Union participate in the Contract Plan as of their date of employment. All full-time employees not covered by an ATU collective bargaining agreement and hired before April 1, 2011 participate in the Salaried Plan as of their date of employment. For employees not covered by an ATU collective bargaining agreement and hired on or after April 1, 2011, LBT adopted a new 401(a) qualified retirement plan for employer matching contributions. Participants in the Contract Plan, and Salaried Plan employees hired before April 1, 2011 are eligible for annual benefit payments at the normal retirement age of 64 and completion of 10 years of credited service and become 100% vested after five credit years of service. Employees covered under the Salaried Plan can retire prior to 64 with a normal retirement benefit if the combination of the employee’s age and service equals 80 or more. 35 Long Beach Transit
Notes to Financial Statements (continued)
(13) Pension Benefits (continued)
Pension Plan Benefits
Benefit payments for the Salaried Plan are determined as 1.70% of adjusted final monthly earnings multiplied by years of credited service (maximum credit of 40 years). Adjusted final monthly earnings are the employee’s highest average monthly wage of 36 consecutive months of earnings during the last 10 calendar years of employment, prior to normal retirement date, which provide the highest value.

Long Beach City CouncilMay 3, 2022

Long Beach City Council
May 3, 2022