041823-C-15sr&att.pdf — Long Beach City Council, April 18, 2023 (part 2 of 3)

Personnel Services S 24,836 239 9,677 86 - 34,838 - 34,838 Maintenance and Other Operations 48,020 4,076 7,565 6,725 3,038 69,424 - 69,424 Depreciation/Amortization 9,843 1,710 5,495 421 3,222 20,691 - 20,691 Total Operating Expenses S 82,699 6,025 22,737 7,232 6,260 124,953 - 124,953 Operating Income (Loss) S (46,348) 4,553 3,701 (6,230) (6,260) (50,584) - (50,584) Non-Operating Income (Expense):

Interest Income 1,264 73 - 1 31 1,369 - 1,369 Interest Expense (99) - (4,987) (296) (2,339) (7,721) - (7,721) Unrealized Investment Loss (7,274) - (1,695) - - (8,969) - (8,969) Gain (Loss) on Disposition of Fixed Assets - - 25 - - 25 - 25 Operating Grants 16 - 15 - - 31 - 31 Other Income 6,244 - 1,470 2,762 - 10,476 - 10,476 Other Expense (692) (2,729) (8) (2) (1,053) (4,484) - (4,484) Total Non-Operating Income (Expense) (541) (2,656) (5,180) 2,465 (3,361) (9,273) - (9,273) Income (Loss) before Contributions
and Transfers (46,889) 1,897 (1,479) (3,765) (9,621) (59,857) - (59,857) Transfers:

Transfers In 68,592 - 3 6,644 6,645 81,884 (21,516) 60,368 Transfers Out (10,488) (2,804) - - (8,224) (21,516) 21,516 - Change in Net Position 11,215 (907) (1,476) 2,879 (11,200) 511 - 511 Net Position, October 1 265,349 14,692 18,465 (1,949) (4,431) 292,126 - 292,126 Net Position, September 30 S 276,564$ 13,785$ 16,989 $ 930$ (15,631)$ 292,637 $ - $ 292,637$ (In Thousands)
Combining Statement of Revenues, Expenses and Changes in Fund Net Position City of Long Beach
For the Fiscal Year Ended September 30, 2022
Tidelands Operating Fund
168
See accompanying Independent Auditors’ Report
Consolidated
Aquarium Eliminations Tidelands
INCREASE (DECREASE) IN CASH AND CASH Tideland Tideland Queen of the Increase Operating EQUIVALENTS Operating Parking Marin a Mary Pacific (Decrease) Total Cash Flows from Operating Activities:

Receipts from Customers 38,125$ 10,517$ 26,634$ -$ -$ -$ 75,276$ Receipts from Other Funds - 3,331 - 1,004 5,420 - 9,755 Receipts from Other Entities 131 - - - - - 131 Payments for Employee Salaries (24,900) (246) (10,100) (85) - - (35,331) Payments for Goods and Services (41,723) (3,932) (7,390) (6,360) (3,038) - (62,443) Payments to Other Entities - (15) (414) (195) - - (624) Payments to Other Funds (11,541) - - - - - (11,541) Other Income 6,244 - 1,470 2,762 - - 10,476 Other Expense (692) (2,729) (8) (2) (1,053) - (4,484) Net Cash Provided by (Used for) Operating Activities (34,356) 6,926 10,192 (2,876) 1,329 - (18,785) Cash Flows from Non-Capital Financing Activities:

Operating Grants Received from Other Governments 16 - 15 - - - 31 Transfers In 68,592 - 3 6,644 6,645 (21,516) 60,368 Transfers Out (10,488) (2,804) - - (8,224) 21,516 - Net Cash Provided by Non-Capital Financing Activities 58,120 (2,804) 18 6,644 (1,579) - 60,399 Proceeds from the Sale of Capital Assets - - 25 - - - 25 Changes Related to Capital Acquisitions S (9,033) (260) (117) (1) - - (9,411) Payments of Principal on Bonds Payable S (2,905) - (2,181) (2,093) (32,595) - (39,774) Payments of Principal on Other Long-Term Obligations (69) - - - - - (69) Payments of Interest, Net of Amounts Capitalized S (290) - (5,057) (318) (628) - (6,293) Net Cash Used for Capital and Related Financing Activities s (12,297) (260) (7,330) (2,412) (33,223) - (55,522) Cash Flows from Investing Activities:

Proceeds from the Sale of Investments - - 1,456 - 8,588 - 10,044 Receipts of Interest 456 73 44 1 61 - 635 Changes in Investments (7,274) - (1,695) - - - (8,969) Net Cash Provided by (Used for) Investing Activities (6,818) 73 (195) 1 8,649 - 1,710 Net Increase (Decrease) in Cash and Cash Equivalents 4,649 3,935 2,685 1,357 (24,824) - (12,198) Cash and Cash Equivalents - October 1 86,008 6,460 39,263 2,734 34,485 - 168,950 Cash and Cash Equivalents - September 30 90,657$ 10,395$ 41,948$ 4,091$ 9,661$ -$ 156,752$ Aquarium Eliminations
RECONCILIATION OF OPERATING INCOME TO NET Tideland Tideland Queen of the Increase CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating Parking Marin a Mary Pacific (Decrease) Total Operating Income (Loss) (46,348)$ 4,553$ 3,701$ (6,230)$ (6,260)$ -$ (50,584)$ Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities:

Depreciation and Amortization Expense 9,843 1,710 5,495 421 3,222 - 20,691 Other Income 6,244 - 1,470 2,762 - - 10,476 Other Expense (692) (2,729) (8) (2) (1,053) - (4,484) (Increase) Decrease in Accounts Receivable, Net 3,073 (61) (35) - - - 2,977 (Increase) in Amounts Due from Other Funds (14,693) (4) - - - - (14,697) (Increase) Decrease in Amounts Due from Other Governments 131 (15) - - - - 116 Decrease in Other Operating Assets - - - (195) - - (195) Increase in Accounts Payable 6,233 144 251 365 - - 6,993 Increase (Decrease) in Accrued Wages Payable (64) (7) (423) 1 - - (493) Increase (Decrease) in Amounts Due to Other Funds 1,942 3,335 (414) 2 5,420 - 10,285 (Decrease) in Unearned Revenues (104) - - - - - (104) Increase in Collections Held in Trust 79 - 155 - - - 234 Total Adjustments 11,992 2,373 6,491 3,354 7,589 - 31,799 Net Cash Provided by (Used for) Operating Activities (34,356)$ 6,926$ 10,192$ (2,876)$ 1,329$ -$ (18,785)$ NON-CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES:

Amortization of Deferred Outflows on Debt Refunding g (575)$ -$ -$ -$ -$ -$ (575)$ City of Long Beach
Tidelands Operating Fund
Combining Statement of Cash Flows
For the Fiscal Year Ended September 30, 2022
(In Thousands)
Cash Flows from Capital and Related Financing Activities:

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

Pooled Cash and Cash Equivalents -$ 38,293$ 241$ 33$ -$ 38,567$ Non-Pooled Cash and Cash Equivalents - 12,873 - - - 12,873 Receivables:

Accounts Receivable 39 - - - - 39 Due from Other Funds 613 - - 6,381 (6,981) 13 Allowance for Receivables (24) - - - - (24) Inventory 3,119 - - - - 3,119 Total Current Assets 3,747 51,166 241 6,414 (6,981) 54,587 Noncurrent Assets:

Capital Assets:

Capital Assets, Net of Accumulated Depreciation/Amortization 65,164 - - - - 65,164 Other NonCurrent Assets - 21,832 - - - 21,832 Total Noncurrent Assets 65,164 21,832 - - - 86,996 Total Assets 68,911 72,998 241 6,414 (6,981) 141,583

DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows of Resources 4,763 - - - - 4,763

LIABILITIES
Current Liabilities Payable from Current Assets:

Accounts Payable 2,021 748 - 128 - 2,897 Accrued Wages and Benefits 39 7 - - - 46 Accrued Interest Payable - 18 116 - - 134 Due to Other Funds 6,547 629 - - (6,981) 195 Compensated Absences and Accrued Employee Benefits 837 - - - - 837 Environmental Remediation - Current 115 - - - - 115 Financed Purchase Obligations - Current - 3,236 - - - 3,236 Bonds Payable Due Within One Year - - 1,600 - - 1,600 Total Current Liabilities 9,559 4,638 1,716 128 (6,981) 9,060 Noncurrent Liabilities:

Environmental Remediation 485 - - - - 485 Financed Purchase Obligations - 16,139 - - - 16,139 Bonds Payable - - 13,518 - - 13,518 Compensated Absences and Accrued Employee Benefits 2,075 - - - - 2,075 OPEB Liability 58 - - - - 58 Net Pension Liability 14,457 - - - - 14,457 Total Noncurrent Liabilities 17,075 16,139 13,518 - - 46,732 Total Liabilities 26,634 20,777 15,234 128 (6,981) 55,792

DEFERRED INFLOWS OF RESOURCES
Deferred Inflows of Resources 1,561 - 395 - - 1,956

NET POSITION (DEFICIT)
Net Investment in Capital Assets 65,164 (6,502) (15,118) - - 43,544 Unrestricted (19,685) 58,723 (270) 6,286 - 45,054 Total Net Position (Deficit) 45,479$ 52,221$ (15,388) $ 6,286 $ -$ 88,598$ City of Long Beach
Fleet Services Fund
Combining Statement of Net Position (Deficit)
September 30, 2022
(In Thousands)
168 169
See accompanying Independent Auditors’ Report
Consolidated
Aquarium Eliminations Tidelands
INCREASE (DECREASE) IN CASH AND CASH Tideland Tideland Queen of the Increase Operating EQUIVALENTS Operating Parking Marin a Mary Pacific (Decrease) Total Cash Flows from Operating Activities:

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

Pooled Cash and Cash Equivalents -$ 38,293$ 241$ 33$ -$ 38,567$ Non-Pooled Cash and Cash Equivalents - 12,873 - - - 12,873 Receivables:

Capital Assets:

DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows of Resources 4,763 - - - - 4,763

LIABILITIES
Current Liabilities Payable from Current Assets:

DEFERRED INFLOWS OF RESOURCES
Deferred Inflows of Resources 1,561 - 395 - - 1,956

NET POSITION (DEFICIT)
Net Investment in Capital Assets 65,164 (6,502) (15,118) - - 43,544 Unrestricted (19,685) 58,723 (270) 6,286 - 45,054 Total Net Position (Deficit) 45,479$ 52,221$ (15,388) $ 6,286 $ -$ 88,598$ City of Long Beach
Fleet Services Fund
Combining Statement of Net Position (Deficit)
September 30, 2022
(In Thousands)
170
See accompanying Independent Auditors’ Report
Fleet Fleet Adjustments Total
Fleet Vehicle Debt Flee t and Fleet Service
Operating Acquisitions Service Othe r Eliminations Fund Operating Revenues:

Billing to Other Departments 27,002$ 26,668$ -$ 1,618$ -$ 55,288$ Other 568 34 - 239 - 841 Total Operating Revenues 27,570 26,702 - 1,857 - 56,129 Operating Expenses:

Personnel Services 8,653 1,496 - - - 10,149 Maintenance and Other Operations 7,216 15,444 - 1,034 - 23,694 Depreciation/Amortization 13,549 - - - - 13,549 Total Operating Expenses 29,418 16,940 - 1,034 - 47,392 Operating Income (Loss) (1,848) 9,762 - 823 - 8,737 Non-Operating Income (Expenses):

Interest Income - 83 - - - 83 Interest Expense (736) (364) (130) - - (1,230) Unrealized Investment Loss (1,727) - - - - (1,727) Gain (Loss) on Disposition of Capital Assets (138) 1,313 - - - 1,175 Other Income 1,491 - - - - 1,491 Other Expense (1,561) (1,754) 1,897 - - (1,418) Total Non-Operating Income (Expenses) (2,671) (722) 1,767 - - (1,626) Income (Loss) Before Contributions
and Transfers (4,519) 9,040 1,767 823 - 7,111 Transfers:

Transfers In 1,182 - - - (964) 218 Transfers Out - (964) - - 964 - Change in Net Position (3,337) 8,076 1,767 823 - 7,329 Net Position (Deficit) - October 1 48,816 44,145 (17,155) 5,463 - 81,269 Net Position (Deficit) - September 30 45,479$ 52,221$ (15,388) $ 6,286 $ -$ 88,598$ City of Long Beach
Fleet Service Funds
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position (Deficit) For the Fiscal Year Ended September 30, 2022
(In Thousands)
170
Fleet Fleet Adjustments Total
Fleet Vehicle Debt Flee t and Fleet Service
Operating Acquisitions Service Othe r Eliminations Fund Operating Revenues:

Billing to Other Departments 27,002$ 26,668$ -$ 1,618$ -$ 55,288$ Other 568 34 - 239 - 841 Total Operating Revenues 27,570 26,702 - 1,857 - 56,129 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
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Governmental activities:

Net Investment in Capital Assets 242,105$ 245,780$ 344,839$ 346,224$ 361,370$ 377,098$ 418,191$ 432,090$ 452,155$ 456,247$ Restricted 458,167 473,181 351,055 393,588 397,204 403,557 428,903 442,908 475,699 517,994 Unrestricted (61,528) (53,167) (595,857) (610,409) (716,979) (761,817) (844,483) (833,911) (655,868) (624,992) Total governmental
activities net position 638,744 665,794 100,037 129,403 41,595 18,838 2,611 41,087 271,986 349,249 Business-type activities:

Net Investment in Capital Assets 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 3,548,274 Restricted 297,694 439,163 494,526 323,827 323,827 298,613 297,552 312,076 326,665 361,377 Unrestricted 399,890 418,151 237,808 160,569 160,569 272,494 338,972 320,382 487,398 357,369 Total business-type
activities net position 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 4,267,020 Primary government:

Net Investment in Capital Assets 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 4,004,521 Restricted 755,861 912,344 845,581 717,415 721,031 702,170 726,455 754,984 802,364 879,371 Unrestricted 338,362 364,984 (358,049) (449,840) (556,410) (489,323) (505,511) (513,529) (168,470) (267,623) Total primary government
net position 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$ 4,616,269$ 4,616,269$
-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ prior year change to ck input amts 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$ 4,616,269$ -$ -$ -$ 0 (3,698,447) (3,829,779)
0 (3,698,447) (3,829,779)
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
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$ in Thousands
Fiscal Year
Net Assets
General Fund and All Other Governmental Funds
2021-2022
Total governmental activities net position Total business-type activities net position Total primary government net position 174
See accompanying Independent Auditors’ Report
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Expenses:

Governmental Activities:

Legislative and Legal 10,957$ 12,001$ 10,632$ 11,814$ 13,343$ 13,025$ 15,245$ 13,155$ 13,058$ 16,722$ General Government 23,342 21,378 22,400 23,869 29,718 29,189 43,637 40,408 36,564 41,335 Public Safety 303,872 296,817 307,116 344,358 402,361 409,632 430,512 389,489 311,933 407,420 Public Health 41,966 41,877 43,710 46,150 49,688 53,045 57,729 71,880 60,016 101,438 Community and Cultural 173,239 153,206 165,501 155,792 173,637 167,624 183,825 190,370 217,381 259,577 Public Works 102,979 114,303 104,744 103,772 123,268 139,209 171,927 136,067 163,203 170,385 Oil Operations 7,101 4,869 3,961 6,466 9,694 3,755 3,777 1,775 3,679 6,830 Interest on Long-Term Debt 26,941 24,945 22,738 19,104 19,120 17,916 17,473 19,055 19,781 18,253 Total Governmental Activities
Expenses 690,397 669,396 680,802 711,325 820,829 833,395 924,125 862,199 825,615 1,021,960 Business-type Activities:

Gas Utility 82,693 80,651 68,414 66,896 80,680 83,276 110,991 94,835 83,900 128,684 Water Utility 89,767 93,297 102,501 93,959 96,082 98,204 95,970 111,219 93,075 136,550 Tidelands Operating 96,881 111,074 121,547 107,313 126,123 130,796 124,283 143,249 110,419 146,178 Tideland Oil Revenue 362,144 327,087 81,565 70,949 93,200 101,495 101,872 30,436 84,298 164,564 Harbor 195,335 233,410 236,186 307,546 298,756 298,441 309,722 327,081 336,106 1,871,078 Sewer 15,542 15,681 16,244 16,151 16,766 14,931 15,375 18,819 14,973 16,871 Airport 41,616 44,067 44,844 47,686 51,917 53,758 55,739 58,627 51,655 67,459 Development Services 15,404 15,753 17,621 20,281 25,907 25,912 27,223 28,928 22,505 28,481 Solid Waste Management 71,708 76,027 73,525 72,745 76,332 71,388 88,967 90,197 76,048 85,257 Towing 5,915 4,938 5,134 5,815 5,524 5,283 6,402 5,421 4,557 7,264 Subsidence 3 - - - - - - - 287 8,042 Total Business-Type Activities
Expenses 977,008 1,001,985 767,581 809,341 871,287 883,484 936,544 908,812 877,823 2,660,428 Total Primary Government
Expenses 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 3,682,388 Program Revenues:

Governmental Activities:

Charges for services:

Legislative and Legal 61 163 224 1,804 52 481 34 558 18 186 General Government 16,093 16,459 16,545 17,955 17,981 17,727 16,473 16,182 15,729 16,244 Public Safety 32,371 34,659 38,961 38,050 34,995 43,536 50,961 50,198 49,116 53,776 Public Health 11,856 8,498 8,178 7,284 8,052 8,550 10,232 9,826 7,471 10,289 Community and Cultural 14,656 12,168 15,084 17,051 25,801 21,980 35,649 32,599 34,452 21,627 Public Works 25,011 25,963 25,246 27,949 29,875 32,208 43,283 38,123 32,872 49,737 Oil Operations 39,869 36,942 19,414 10,900 12,176 16,060 14,926 9,743 11,190 16,195 Operating Grants and Contributions 171,937 183,789 164,621 170,614 176,643 187,038 167,793 200,489 352,336 302,613 Capital Grants and Contributions 10,778 8,530 3,780 2,085 12,286 10,739 67,976 65,232 76,033 86,781 Total Governmental Activities
Program Revenues 322,632$ 327,171$ 292,053$ 293,692$ 317,861$ 338,319$ 407,327$ 422,950$ 579,217$ 557,448$ (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)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Business-Type activities:

Charges for Services:

Gas Utility 87,141$ 82,293$ 77,398$ 79,826$ 97,033$ 92,109$ 120,562$ 103,869$ 112,277$ 144,115$ Water Utility 93,036 101,345 101,158 98,677 100,761 104,701 102,474 116,071 122,089 123,932 Tidelands Operating 59,929 64,318 67,894 67,205 76,352 77,734 80,594 72,467 99,458 84,845 Tideland Oil Revenue 397,301 362,783 99,401 53,630 81,989 124,721 117,528 59,385 99,144 190,336 Harbor 346,244 362,752 363,309 363,343 388,834 406,420 415,321 399,841 440,340 513,989 Sewer 17,311 17,954 17,904 18,355 19,964 19,578 19,750 19,200 19,613 21,694 Airport 43,817 44,811 36,537 39,723 49,607 50,464 46,997 31,034 30,899 51,026 Development Services 17,546 17,573 20,783 23,015 31,039 29,471 30,803 24,293 18,670 34,161 Solid Waste Management 79,542 81,051 80,322 75,637 82,848 75,450 79,627 86,034 82,722 84,838 Towing 6,445 5,440 5,253 5,568 5,310 5,139 5,885 4,583 6,140 7,217 Subsidence - - - - - - 499 499 500 614 Operating Grants and Contributions 1,105 921 753 758 976 2,768 932 3,394 160 219 Capital Grants and Contributions 259,188 182,021 140,618 150,510 83,681 99,586 96,660 80,020 40,099 131,479 Total Business-Type Activities
Program Revenues 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 1,388,465 Total Primary Government
Program Revenues 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 1,945,913 Net Revenues (expenses):

Governmental Activities (367,765) (342,225) (388,749) (417,633) (502,968) (495,076) (516,798) (439,249) (246,398) (464,512) Business-Type Activities 431,597 321,277 243,749 166,906 147,107 204,657 181,088 91,878 194,288 (1,271,963) Total Net Expenses 63,832 (20,948) (145,000) (250,727) (355,861) (290,419) (335,710) (347,371) (52,110) (1,736,475) General Revenues and Other Changes in Net Position:

Governmental Activities:

Taxes:

Property 203,770 183,719 180,989 200,766 191,514 199,576 211,007 220,665 225,820 234,386 Sales 63,443 59,097 64,177 67,658 99,528 133,523 138,598 129,095 150,887 174,257 Utility Users 38,026 38,691 38,419 37,079 35,858 36,639 34,898 33,767 38,546 40,349 Other 46,446 41,504 45,517 47,746 46,837 51,558 51,066 39,449 40,098 56,868 Franchise Taxes 25,243 26,175 25,915 24,911 25,912 20,308 18,126 16,481 23,734 20,813 Grants and Contributions not
Restricted to Specific Programs 150 - - - - - - - - - Unrestricted Investment Earnings 3,417 3,688 6,061 13,182 3,581 4,761 14,172 11,426 3,496 1,495 Gain (Loss) on Sales of Capital Assets - - - - - - - (2) - - Capital Asset Transfers 4,786 2,365 - - - - - (37) - - Transfers 21,490 14,210 21,661 16,855 11,930 25,954 32,704 26,881 (5,284) 13,607 Total Governmental Activities 406,771 369,449 382,739 408,197 415,160 472,319 500,571 477,725 477,297 541,775 Business-type Activities:

Unrestricted Investment Earnings 5,557 6,365 8,887 10,802 7,714 13,357 43,503 34,336 1,469 11,461 Capital Asset Transfers (4,786) (2,365) - - - - - 37 - - Transfers (21,490) (14,210) (21,661) (16,855) (11,930) (25,954) (32,704) (26,881) 5,284 (13,607) Total Business-type Activities (20,719) (10,210) (12,774) (6,053) (4,216) (12,597) 10,799 7,492 6,753 (2,146) Total Primary Government 386,052 359,239 369,965 402,144 410,944 459,722 511,370 485,217 484,050 539,629 Change in Net Position
Government activities 39,006 27,224 (6,010) (9,436) (87,808) (22,757) (16,227) 38,476 230,899 77,263 Business-type Activities 410,878 311,067 230,975 160,853 142,891 192,060 191,887 99,370 201,041 (1,274,109) Total Primary Government 449,884$ 338,291$ 224,965$ 151,417$ 55,083$ 169,303$ 175,660$ 137,846$ 431,940$ (1,196,846)$ 176
See accompanying Independent Auditors’ Report

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General Fund:

Nonspendable 2,043$ 6$ 2$ 102$ 500$ 1,375$ 1,424$ 1,503$ 2,127$ 1,632$ Restricted 2,311 4,266 4,308 4,498 4,469 4,807 5,009 5,864 2,836 2,921 Committed 5,711 61,079 62,598 63,568 64,539 67,640 69,440 50,708 76,543 77,711 Assigned 119,542 49,531 42,953 38,482 31,947 59,463 50,495 75,789 107,658 148,586 Unassigned 8,130 3,397 2,170 3,934 1,926 3,072 138 2,066 (16,483) - Total General Fund 137,737 118,279 112,031 110,584 103,381 136,357 126,506 135,930 172,681 230,850 Other Governmental Funds:

Nonspendable 8,009 8,012 2,846 2,577 2,613 1,324 2,406 2,377 2,416 2,587 Restricted 293,567 289,497 173,096 173,562 180,084 174,541 199,781 201,777 219,947 251,580 Committed 1,362 1,362 1,422 1,422 1,414 1,414 1,414 1,414 1,414 1,200 Assigned 24,433 36,476 39,197 26,710 36,582 37,067 57,443 65,823 94,482 88,422 Unassigned (30,112) (17,646) (11,819) - - - - - - (25,276) Total Other Governmental Funds 297,259 317,701 204,742 204,271 220,693 214,346 261,044 271,391 318,259 318,513 Total All Governmental Funds 434,996$ 435,980$ 316,773$ 314,855$ 324,074$ 350,703$ 387,550$ 407,321$ 490,940$ 549,363$ (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
2013 2014 2015 2016 2008 2018 2019 2020 2021 2022
$ in Thousands
Fiscal Year
Governmental Fund Balance
General Fund and All Other Governmental Funds
2013-2022
Total Fund Balance General Fund Other Governmental Funds 176 177
See accompanying Independent Auditors’ Report
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenues:

Taxes:

Property 214,816$ 183,885$ 179,999$ 201,207$ 191,808$ 199,336$ 210,656$ 220,665$ 226,143$ 234,391$ Sales 63,443 59,097 64,177 67,658 99,528 133,523 138,598 129,095 150,887 174,257 Utility Users 38,026 38,691 38,419 37,079 35,858 36,639 34,898 33,767 38,546 40,349 Other Taxes 46,446 41,504 45,517 47,746 46,837 51,558 51,066 39,449 40,098 56,868 Franchise Fees 25,243 26,175 25,915 24,911 25,912 20,308 18,126 16,481 23,734 20,813 Licenses and Permits 19,941 22,341 23,329 25,456 24,926 26,076 42,728 48,803 47,010 53,489 Fines and Forfeitures 16,394 16,166 15,988 16,292 16,184 15,946 17,674 16,354 14,395 17,670 Use of Money and Property 58,441 56,687 41,816 40,991 33,815 39,419 48,033 39,543 33,846 27,601 From Other Agencies 181,039 191,423 166,988 170,780 187,872 197,570 235,841 290,748 42,857 389,394 Charges for Services 28,292 29,042 28,428 29,482 33,533 41,034 46,987 44,621 41,676 48,011 Other Contributions 1,385 341 556 249 194 137 - - - - Other 18,577 10,693 17,615 13,167 19,907 17,599 19,944 10,236 11,444 17,471 Total Revenues 712,043 676,045 648,747 675,018 716,374 779,145 864,551 889,762 670,636 1,080,314 Expenditures:

Legislative and Legal 9,673 11,373 9,604 11,420 11,522 13,378 13,458 13,108 16,537 17,128 General Government 17,785 17,951 18,116 21,793 23,285 25,426 39,002 40,577 41,833 40,812 Public Safety 288,979 300,519 297,901 307,065 353,456 360,879 383,222 369,052 423,769 407,198 Public Health 39,297 41,273 42,108 42,819 44,530 47,658 52,487 69,773 84,751 101,002 Community and Cultural 185,378 158,122 237,433 152,005 160,985 173,542 180,390 188,806 222,778 261,439 Public Works 65,484 66,498 70,921 74,580 73,103 82,450 71,989 61,459 67,115 74,608 Oil Operations 4,722 4,309 3,512 2,352 2,563 2,945 2,774 2,572 2,446 2,979 Total Current Expenditures 611,318 600,045 679,595 612,034 669,444 706,278 743,322 745,347 859,229 905,166 Capital Improvements 26,199 36,427 27,139 38,629 45,693 47,935 90,370 73,355 102,712 102,680 Debt Service:

Principal 16,358 18,836 18,601 18,717 20,564 28,439 23,356 20,072 22,159 23,503 Interest 23,776 21,044 22,499 16,763 16,156 15,361 14,155 13,679 11,970 10,153 Debt Administration Fees 542 57 178 434 90 29 27 24 26 506 Total Expenditures 678,193 676,409 748,012 686,577 751,947 798,042 871,230 852,477 996,096 1,042,008 (Deficiency) of Revenues
over (under) Expenditures 33,850 (364) (99,265) (11,559) (35,573) (18,897) (6,679) 37,285 50,140 38,306 Other Financing Sources (Uses):

Proceeds from Sale of Capital Asset - - - - - - - 11,062 1,539 1,180 Issuance of Refunding Debt 54,186 1,012 155,820 13,150 - 2,306 26,458 - 19,765 25,411 Premium (Discount) on Debt Issuance - - 6,700 1,045 - - - - 4,170 2,123 Payment to Refunded Bonds
(57,611) - (179,330) - - - (15,020) - (26,300) (25,057) Cost of Issuance - - (1,505) - - - (411) - (410) - Transfers In 114,615 106,128 91,363 60,641 104,983 125,473 130,312 126,196 228,486 133,452 Transfers Out (87,032) (105,577) (92,990) (65,195) (60,191) (82,253) (97,813) (154,772) (193,771) (116,992) Total Other Financing Sources 24,158 1,563 (19,942) 9,641 44,792 45,526 43,526 (17,514) 33,479 20,117 Net Change in Fund Balances 58,008$ 1,199$ (119,207)$ (1,918)$ 9,219$ 26,629$ 36,847$ 19,771$ 83,619$ 58,423$ Debt Service as a Percentage of

6.1% 6.0% 5.6% 5.4% 5.0% 5.6% 4.4% 4.0% 3.6% 3.3%
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:

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
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 2022 234,391 174,257 5,413 40,349 14,578 32,590 4,287 505,865 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
$540,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Tax Revenues by Source
Property Taxes Sales and Use Oil Production Utility Users Business License Transient Lodging Other 178 179
See accompanying Independent Auditors’ Report
Taxable Total
Fiscal Less: Assesse d Direct Tax
Year-end Secured Unsecured Exem ptions Value Rate
2013 45,184,614$ 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% 2022 68,114,455 3,865,716 1,831,667 73,811,838 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
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 2022 1.000000 - 0.121072 0.024882 0.003500 1.149454 Note:

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 2022 Fiscal Year 2013
Assessed Assessed
Taxpayer Valuation Valuation
CF Alpha and Golf Prop Co LLC 255,067$ 0.41 % GCC Long Beach LLC 213,460 0.34
Douglas Park Associates III & IV LLC 173,647 0.28 2009 CUSA Community Owner LLC 163,610 0.26 140,537$ 0.34 % John Hancock Life Insurance 153,455 0.25
TABC Inc. 138,046 0.22
707 East Ocean Boulevard LLC 135,332 0.22
Equity One LLC 129,308 0.21
IMT Capital IV Gallery LLC 129,045 0.21
LB Oceanaire Development LLC 127,258 0.20
PPF AMLI 245 West Broadway LLC 116,783 0.19
W GL Ocean Avenue LB Holdings 115,762 0.19
Terra Funding Shoreline Square 115,176 0.18
DP3 Sub 1 & 2 LLC 111,030 0.18
2300 Redondo Holdings LLC 94,874 0.15
Tesoro Logistics Operations LLC 93,021 0.15 Long Beach Center LLC 89,985 0.14
GS Long Beach LLC 89,981 0.14
HCI 333 East Ocean Owner LP 88,719 0.14
404 Pine LP 83,006 0.13
The Boeing Company 396,342 0.95
AES Alamitos LLC 219,500 0.53
Legacy Partners II LB World Trade LLC 153,840 0.37 BOP Landmark Square Co. LLC 123,053 0.29
GRE Shoreline Square LP 96,993 0.23
Noble Utah Long Beach LLC 92,828 0.22
Linwood Avenue LP 84,347 0.20
Molina Center LLC 81,000 0.19
Long Beach Generation LLC 64,100 0.15
HEI Long Beach LLC 62,059 0.15
Arco Terminal Services Corp. 61,792 0.15
City Place Long Beach LLC 60,870 0.15
Alamitos Bay Partnership 57,913 0.14
Sunstone Ocean LLC 55,901 0.13
Pacific Pipeline System LLC 52,835 0.13
Lyon West Gateway LLC 52,211 0.12
EQR Fresca 2009 LP 51,468 0.12
Plain West Coast Terminals LLC 49,232 0.12 Los Altos Gateway LLC 49,227 0.12
2,616,565$ 4.19 % 2,006,048$ 4.80 %
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
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% 2022 111,169 107,794 97.0% 4,376 112,170 100.9% 7,181 6.5% Notes: 1
2 Excludes motor vehicle and vehicle license fees in-lieu taxes, interests, penalties and Los Angeles County administrative cost.

General Fund1
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
$90,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General Fund Levies and Collections
Total Tax Levy
Current Tax
Collections
182 183
See accompanying Independent Auditors’ Report
Pension Ta x Financed Other Total
Revenue Obligation Allocation Notes Purchase Long-Ter m Governmental Bonds Bonds Bonds Payable Obligations Obligations Activities 93,410$ 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 44,676 319,864 664,015 75,899 - 182,304 7,569 38,943 313,765 618,480 66,580 - 165,340 7,233 47,068 307,576 593,797 Financed Total
Revenue Notes Purchase Business-type
Bonds Payable Obligations Activities
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
1,519,722 513,207 30,105 2,063,034

Total
Primary Per
Government Capita
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
2,849,907 4.208% 6,160
2,797,114 4.384% 5,993
2,656,831 4.567% 5,767
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

Business-type Activities
Governmental Activities
2022
2021
2020
2013
2014
2015
2016
2018
2019
2017
Fiscal
Year-end
2021
2014
2015
2016
2018
2020
2017
City of Long Beach
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
(In Thousands, Except Per Capita Amount)
Income
2013
2019
2022
2017
of Personal
2018
2013
2014
2020
2019
2021
Percentage
2016
2022
2015
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) 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 2022 - 165,340 15,022 150,318 21% 326.29 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
2021-22 Assessed Valuation: $64,588,433 Estimated Outstanding Overlapping
DIRECT DEBT: Debt
City of Long Beach
Lease Revenue Bonds 66,580$ -$ 66,580$ Tax Allocation Bonds 165,340 - 165,340 Notes Payable 7,233 - 7,233 Financed Purchase Obligations 47,068 - 47,068 Total Direct Debt 286,221$ -$ 286,221$ OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable
Cerritos Community College District 0.367 % 445,233$ 443,394$ 1,839$ Coast Community College District 0.001 920,781 920,772 9 Compton Community College District 2.601 104,372 101,580 2,792 Long Beach Community College District 85.851 596,390 82,886 513,504 Los Angeles Community College District 0.050 4,600,730 4,598,798 1,932 ABC Unified School District 1.138 59,638 58,871 767 Compton Unified School District 0.024 230,206 230,153 53 Long Beach Unified School District 85.852 1,299,755 180,627 1,119,128 Los Angeles Unified School District 0.061 10,237,310 10,231,987 5,323 Paramount Unified School District 9.170 180,936 163,655 17,281 Metropolitan Water District 1.975 20,175 19,777 398 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT (1) 18,695,526$ 17,032,500$ 1,663,026$ OVERLAPPING GENERAL FUND OBLIGATION DEBT:

Los Angeles County General Fund Obligations 3.785 % 2,664,122$ 2,563,578$ 100,544$ Los Angeles County Superintendent of Schools Certificates of Participation 3.785 3,403 3,275 128 Compton Unified School District Certificates of Participation 0.024 26,870 26,864 6 Los Alamitos Unified School District Certificates of Participation 0.009 34,077 34,073 4 Los Angeles Unified School District Certificates of Participation 0.061 108,570 108,514 56 Paramount Unified School District Certificates of Participation 9.170 25,050 22,657 2,393 County Sanitation District No. 1 Certificates of Participation 1.219 983 971 12 County Sanitation District No. 2 Certificates of Participation 0.188 1,518 1,515 3 County Sanitation District No. 3 Certificates of Participation 85.913 1,153 162 991 County Sanitation District No. 8 Certificates of Participation 2.738 601 585 16 County Sanitation District No. 19 Certificates of Participation 29.396 273 191 82 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT 2,866,620$ 2,762,385$ 104,235$ OVERLAPPING TAX INCREMENT DEBT (Successor Agency) : 100.000 % 155,910$ -$ 155,910$ TOTAL GROSS OVERLAPPING COMBINED DEBT 21,718,056$ 19,794,885$ 1,923,171$ 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) - - 117 TOTAL NET OVERLAPPING COMBINED DEBT 21,718,056$ 19,794,885$ 1,923,054$ TOTAL NET DIRECT AND OVERLAPPING COMBINED DEBT 22,004,277$ 19,794,885$ 2,209,275$ 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, 2022 (In Thousands)
Debt Exclusions
(1)
186
See accompanying Independent Auditors’ Report
Fiscal Year
2013 2014 2015 2016 2017
Assessed valuation 47,952,110$ 50,498,496$ 51,678,154$ 52,898,656$ 55,662,248$ Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 11,988,028 12,624,624 12,919,539 13,224,664 13,915,562 Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 1,798,204 1,893,694 1,937,931 1,983,700 2,087,334 Total net debt applicable to limit:

General obligation bonds - - - - - Legal debt margin 1,798,204$ 1,893,694$ 1,937,931$ 1,983,700$ 2,087,334$ Total debt applicable to the limit
as a percentage of debt limit 0% 0% 0% 0% 0%
Fiscal Year
2018 2019 2020 2021 2022
Assessed valuation 58,634,492$ 61,889,133$ 65,445,552$ 67,573,359$ 71,980,171$ Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 14,658,623 15,472,283 16,361,388 16,893,340 17,995,043 Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 2,198,793 2,320,842 2,454,208 2,534,001 2,699,256 Total net debt applicable to limit:

General obligation bonds - - - - - Legal debt margin 2,198,793$ 2,320,842$ 2,454,208$ 2,534,001$ 2,699,256$ 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 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 2022 144 ,115 89,010 55,105 27 ,420 82,525 16,040 28,084 44,124 1.9 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 2022 122 ,595 94,864 27,731 1,249 28,980 3,300 592 3 ,892 7.4 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 Op erating Income Available fo r Times Year-end Revenue Expenses (1)(2) Income (Loss) (1) Debt Service Principal (3) Interest Total Coverage 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 2022 50,037 39,686 10,351 5,647 15,998 3,310 6,309 9,619 1.7 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 2022 56,129 33,843 22,286 1,230 23,516 1,808 737 2,545 9.2 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 2022 26,438 17,242 9,196 4,987 14,183 1,900 5,338 7,238 2.0 Notes:
(1)
(2)
(3)
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)
Senior Airport Bonds Series 2009 and Senior Airport Bonds Series 2010 were refunded by the Senior Airport Revenue Refunding Bond Series 2022A, 2022B, and 2022C.

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
Tidelands 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 (3) Interes t Total Coverage 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 - 46,929 77,171 (30,242) 99 (30,143) 8,360 3,544 11,904 - 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 2017 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 5.4 479,577 166,496 313,081 27,340 340,421 35,530 31,058 66,588 5.1 Notes:
(1)
(2)
(3)
Source: City of Long Beach, Department of Financial Managemen 2018
Revenue Bond Coverage
Operating expenses exclude depreciation and amortization; non-operating income excludes interest expense. 2020
2022
2021
2018
2019
2020
2021
2022
2013
2014
2017
City of Long Beach
Pledged Revenue Coverage
The Long Beach Aquarium of the Pacific Lease Revenue Refunding Bonds Series 2012 was refunded by the Tidelands Revenue Refunding Bond Series 2022.

Debt Service Requirements
Harbor Fund
2019
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
2015
2016
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)
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 20,460 43,836 69,708 8.9
460,682 (6) 21,038 45,667 67,573 4.6 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. 2013
2017
2019
2020
2015
2016
2021
2018
2014
2022
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 12,049 5.10% 1 10,389 4.31% 2 City of Long Beac h 5,395 2.28% 4 5,028 2.09%
3 Long Beach Memorial Medical Cente r 4,950 2.09% 2 5,693 2.36% 4 Veteran Affairs Medical Cente r 3,524 1.49% 6 2,413 1.00% 5 California State University Long Beach (CSULB) 3,336 1.41% 5 2,679 1.11% 6 Long Beach City College 3,321 1.41% 7 2,137 0.89%
7 The Boeing Compan y 2,019 0.85% 3 5,042 2.09%
8 St. Mary Medical Cente r 1,547 0.65% 9 1,200 0.50%
9 CSULB Research Foundation 1,261 0.53% 8 1,464 0.61%
10 Molina Healthcare Inc 1,119 0.47% 10 841 0.35%
Sources:
(1) Department of Financial Management Accounting and Business License (2) State of California Employment Development Department Labor Market Info for 2013 and 2022 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 2013
City of Long Beach
Principal Employers
Current Year and Nine Years Ago
Fiscal Year 2022
192

Intentionally Left Blank

192 193
See accompanying Independent Auditors’ Report

Function 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Legislative and Legal 129 130 130 122 140 136 141 141 148 135 General Government (1) 382 398 415 513 534 556 607 718 609 592 Public Safety 1,765 1,757 1,843 1,698 1,738 1,729 1,862 1,862 1,638 1,585 Public Health 263 249 257 252 259 287 272 272 484 533 Community and Cultural (1) 1,020 1,046 1,121 1,006 1,040 855 1,008 1,008 874 910 Public Works 273 275 258 263 310 305 297 213 329 359 Gas Utilty 202 201 198 201 209 199 183 183 191 189 Water Utility 223 217 220 224 224 248 266 266 245 237 Airport 88 88 91 97 98 103 89 89 92 99 Solid Waste Management 177 181 183 177 187 183 198 198 198 177 Towing 22 26 26 26 26 27 27 27 30 28 Tideland Oil Revenue 15 15 15 16 17 15 17 17 13 13 Harbor 469 491 529 527 536 514 509 509 533 538 Total 5,028 5,074 5,286 5,122 5,318 5,157 5,476 5,503 5,384 5,395 (1) Restated 2013 and 2014 as Library Services was included as part of General Government and should have been classified as Community and Cultural Source: City of Long Beach, Department of Financial Management as of September 30, 2022 City of Long Beach
Last Ten Fiscal Years
Full-Time Equivalent City Government Employees by Function Fiscal Year

Intentionally Left Blank
194
See accompanying Independent Auditors’ Report
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Function 2013 2014 2015 2016 2017
Public Safety:

Police priority one calls response time in minutes 4.35 4.69 4.90 4.60 4.80 Violent crime rate - per 1,000 residents 5.85 4.37 4.28 5.79 6.40 Fire on-scene arrival for emergency calls within six minute 55.1% 50.0% 46.3% 43.4% 41.7% Public Health:

Percentage of beach days that are safe for swimming in summer 94% 97% 95% 94% 90% Homeless population ratio vs. total population (1) 0.93% 0.75% 0.51% 0.51% 0.51% Community and Cultural
Public library computer session log-ons N/A N/A 222,360 218,717 254,974 Parks, recreation programs - youth and teen attendance 636,796 760,641 779,641 835,358 892,556 Public Works:

Number of trees trimmed 24,668 23,500 23,839 19,500 23,112 Curbs and alleys swept in miles 150,804 156,302 153,527 154,300 141,132 Sidewalk repaired in square feet 382,536 551,597 363,476 333,039 296,865 Storm drain catch basins cleaned 3,004 5,771 5,800 5,800 5,800 Gas Utility:

Gas consumption in sales dollars-total 68,229,000$ 72,544,000$ 62,281,000$ 64,382,000$ 78,467,000$ Gas consumption in cubic feet ( In 000's) 9,092,000 8,183,000 7,689,000 8,542,000 9,237,000 Average daily gas consumption (MCF) 24,910 22,421 21,065 23,404 25,307 Gas mains installed/replaced/relocated in feet (2) 108,646 110,900 40,589 22,556 40,737 Gas meters installed/removed/replaced 6,093 3,529 4,440 29,873 34,465 Water Utility:

Water daily demand in thousand gallons 53,079 52,389 47,441 46,417 45,869 Water annual demand in thousand gallons 19,373,993 19,122,012 17,315,820 16,942,297 16,742,192 Available supply total in thousand gallons 21,538,947 21,019,736 19,000,372 19,412,932 19,045,926 Sewer Utility:

Sewer mains cleaned in miles 535 498 492 405 113 Sewer mains and laterals repaired in number of jobs 241 213 224 215 169 Airport:

Number of commercial passengers enplaned 1,497,503 1,433,273 1,276,679 1,327,001 1,793,753 Number of commercial passengers deplaned 1,492,430 1,426,830 1,273,232 1,325,537 1,794,245 Number of aircraft landings and take offs 284,193 325,527 300,184 295,007 294,303 Solid Waste Management:

Number of refuse tons collected 187,146 182,452 173,895 187,432 193,622 Number of recycling tons collected 169,264 169,420 161,997 158,852 160,037 SERRF tons of refuse received 470,510 459,160 447,535 417,169 426,430 SERRF energy sold to So Cal Edison megawatt-hours 226,592 223,658 200,994 158,400 201,438 Harbor:

Number of container movements in twenty-foot equivalent unit 6,647,975 6,817,590 7,087,699 6,946,255 7,230,758 Cargo in thousands of metric revenue tons 162,257 165,526 164,274 161,322 168,100 Number of ship calls 3,425 2,752 2,676 2,227 2,149 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 2018 2019 2020 2021 2022 Functio n
Public Safety:

4.50 4.30 4.40 4.60 5.10 Police priority one calls response time in minute s

7.00 5.75 4.96 5.60 5.72 Violent crime rate - per 1,000 resident s

41.1% 38.6% 37.0% 34.0% 33.8% Fire on-scene arrival for emergency calls within six minute Public Health:
88% 89% 86% 92% 90% Percentage of beach days that are safe for swimming in summer

0.39% 0.40% 0.44% 0.26% 0.71% Homeless population ratio vs. total population (1 ) Community and Cultural
225,983 186,873 79,862 12,249 60,860 Public library computer session log-on s 793,226 820,748 4,062 215,621 338,609 Parks, recreation programs - youth and teen attendance Public Works:
21,857 22,055 25,000 19,500 30,000 Number of trees trimme d 142,851 147,316 125,254 128,042 149,796 Curbs and alleys swept in miles 603,504 537,666 306,044 416,167 427,831 Sidewalk repaired in square feet 5,800 5,800 5,800 5,800 55,700 Storm drain catch basins cleane d Gas Utility:
77,999,000$ 98,355,000$ 79,886,282$ 87,908,917$ 111,662,459$ Gas consumption in sales dollars-total 8,802,000 9,116,009 9,113,067 8,941,456 8,397,277 Gas consumption in cubic feet ( In 000's) 24,114 24,975 24,967 24,497 23,006 Average daily gas consumption (MCF ) 17,327 32,032 22,279 24,500 30,100 Gas mains installed/replaced/relocated in fee t 2,944 1,279 1,983 1,459 2,698 Gas meters installed/removed/replace d Water Utility:
47,620 44,478 50,503 45,647 42,616 Water daily demand in thousand gallon s 17,381,120 16,234,549 18,433,521 16,661,155 15,337,807 Water annual demand in thousand gallons 19,172,030 17,439,187 20,238,997 1,983,812 15,565,436 Available supply total in thousand gallons Sewer Utility:
439 477 360 380 343 Sewer mains cleaned in mile s 157 164 162 263 191 Sewer mains and laterals repaired in number of job s Airport:
2,006,292 1,757,499 904,815 767,207 1,576,552 Number of commercial passengers enplaned 2,007,872 1,752,650 914,487 766,260 1,568,060 Number of commercial passengers deplaned 266,892 293,587 294,509 320,601 330,840 Number of aircraft landings and take offs Solid Waste Management:
185,403 192,483 202,620 201,510 189,810 Number of refuse tons collected 133,932 40,955 39,481 42,719 31,143 Number of recycling tons collecte d 359,752 385,541 378,016 386,047 371,746 SERRF tons of refuse received 165,702 182,342 181,000 191,160 189,108 SERRF energy sold to So Cal Edison / CAISO megawatt-hours Harbor:
8,000,929 7,747,251 7,660,975 9,500,860 9,631,901 Number of container movements in twenty-foot equivalent unit 180,593 172,961 168,574 198,118 202,766 Cargo in thousands of metric revenue tons 2,278 2,095 2,237 2,561 2,698 Number of ship call s 196
See accompanying Independent Auditors’ Report
Fiscal Year Fiscal Year Fiscal Year Fiscal Year
Function 2013 2014 2015 2016
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 161 162 164 168 Parks and golf courses in acres 3,121 3,123 3,122 3,124 Number of libraries 12 12 12 12 Number of library holdings (books, videos, tapes) 782,571 798,809 808,957 851,614 Number of library circulations 1,391,825 1,391,617 1,205,523 1,233,309

Public Works:

Street in miles 823 823 823 823 Storm drain lines in miles 180 180 180 180 Number of street lights (1) 31,550 31,550 31,337 32,283 Gas Utility:

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

Water mains in miles 912 912 912 912 Number of fire hydrants 6,589 6,604 6,631 6,894 Number of water services 95,607 95,999 95,775 95,749 Sewer Utility:

Sanitary sewers in miles 714 714 714 714 Number of manholes 16,158 16,170 15,129 15,127 Sanitary sewer pump stations 28 28 28 28 Storm drain pump stations 23 23 23 22 Harbor:

Sanitary sewer pump stations 37 37 37 39 Storm drain pump stations 21 23 23 22 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 2017 2018 2019 2020 2021 2022 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:
169 169 169 167 167 166 Number of parks 3,125 3,125 3,126 3,125 3,125 3,122 Parks and golf courses in acres 12 12 12 12 12 12 Number of libraries 795,629 798,760 740,442 728,829 707,151 709,449 Number of library holdings (books, videos, tapes) 1,335,819 1,302,021 1,273,997 966,790 756,037 1,026,106 Number of library circulations

Public Works:
823 823 823 823 823 1,012 Street in miles 180 180 180 180 180 180 Storm drain lines in miles 27,439 32,481 32,502 32,480 35,254 35,254 Number of street lights (1) Gas Utility:
931 916 917 917 917 917 Gas mains in miles (2) Water Utility:
912 912 916 917 917 917 Water mains in miles 6,910 6,953 7,036 7,049 7,054 7,070 Number of fire hydrants 95,667 95,586 95,690 95,731 95,891 96,167 Number of water services Sewer Utility:
715 714 714 715 715 714 Sanitary sewers in miles 15,112 15,122 15,125 15,126 15,132 15,143 Number of manholes 28 28 28 28 28 28 Sanitary sewer pump stations 23 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 Repo
rt
For the fiscal year ended September
30, 2022
Attachment B
Harbor Department Annual Comprehensive Financial Report

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 10–12
Management’s Discussion and Analysis 13–22
Basic Financial Statements:

Statement of Net Position 23–24
Statement of Revenues, Expenses, and Changes in Net Position 25 Statement of Cash Flows 26–27
Notes to Financial Statements 28–55
Required Supplementary Information (Unaudited):

Pension Liability and Related Ratios 56
Schedule of Contributions Miscellaneous Plan 57
Statistical Section (Unaudited)
Financial Trends Information:

Statements of Net Position – Last 10 Fiscal Years – Exhibit 1 58 Changes in Fund Net Position – Last 10 Fiscal Years – Exhibit 2 59 Revenue Capacity Information:

Operating Revenue by Type – Last 10 Fiscal Years – Exhibit 3 60 Debt Capacity Information:

Revenue Bonds Debt Service Coverage – Last 10 Fiscal Years – Exhibit 4 61

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

Tonnage Summary – Last 10 Fiscal Years – Exhibit 5 62
Tonnage by Commodity Group and Vessel Calls – Last 10 Fiscal Years – Exhibit 6 63 Metric Revenue Tons and Container Counts – Last 10 Fiscal Years – Exhibit 7 64 Other Information:

Principal Customers – Exhibit 8 65
Employee Headcount by Division – Last 10 Fiscal Years – Exhibit 9 66 Introduction
Port of

LONG BEACH

THE PORT OF CHOICE
Letter of Transmittal
March 27, 2023
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 accepted 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, 2022. The Department's operations are included in the City's reporting entity as an enterprise fund.

This report consists of management's representations 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, 2022 are free of material misstatement. The independent audit entails examining, on a test basis, 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, 2022 are fairly presented, in conformity with GAAP. The independent auditors' report is presented as the first component of the financial section of this report. 1 415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLS.COM Port of

LONG BEACH

THE PORT OF CHOICE
GMP 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 of 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 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 provided 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 Outlook
The Port 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 container volumes in fiscal year 2022, with 9.6 million twenty-foot-equivalent units (TEUs) moved, or a1 .4% 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. 2 415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLB.COM Port of

LONG BEACH

THE PORT OF CHOICE
The expansion or contraction of foreign trade directly affects local, regional, and national economies.

Increasingly, the Port has been the 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 2022 marked the sixth 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 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.

A key competitive advantage of the Port of Long Beach over other gateways is the ability to accommodate the largest vessels currently in-service and on order. In preparation for the 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.

Capital infrastructure projects currently underway that will position the Port for increased volume and revenue include the following:
• Pier B On-Dock Rail Support Facility: The Pier B on-dock 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. • Supply Chain Information Highway: The Port continues to advance data sharing concepts to maximize efficiency and visibility into cargo movement and has joined with a leading technology firm to create the "Supply Chain Information Highway." This tool will allow all stakeholders to track cargo across the various nodes of transportation. The soft launch of the proof of concept was at the Trans- Pacific Maritime Conference in Long Beach in February 2022. The Port of Miami and the South Carolina Ports Authority joined the Port of Oakland, the Northwest Seaport Alliance and the Utah Inland Port Authority in supporting the digital infrastructure project.

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. 3 415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLB.COM Port of

LONG BEACH

THE PORT OF CHOICE
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 88%, sulfur oxides by 96%, and smog-forming nitrogen oxides by 49% as identified in the 2021 annual air emissions inventory.
• Continued to foster the development of new clean air technologies through the Technology Advancement Program, including zero emission terminal equipment. • Awarded over $110 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 studies 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. 4 415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLB.COM Port of

LONG BEACH

THE PORT OF CHOICE
• Updated the Green Ship Incentive Program to offer the highest incentive level of any port to attract Tier Ill 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 utilizes the Harbor Patrol, a cadre of highly trained public officers who are responsible for security operations and traffic management on the property owned by the Port and any public roadways within its boundaries. The Long Beach Police Department, Port Police Division also provides a dedicated force of police officers who patrol land and water side throughout the port complex.

Supporting the Harbor Patrol and Port Police patrol units is a Command Center within the JCCC that provides domain awareness, information sharing across agencies, and dispatches resources to emergent situations 24 hours a day seven days a week. The Long Beach Fire Department also has four stations within the Harbor District, one with a hazardous materials unit, that provide land and waterside emergency response in addition to two state of the art fire response boats.

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, 2021. This was the 39th consecutive year that the Department has received this prestigious award. In order to be awarded a 5 415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLS.COM Port of

LONG BEACH

THE PORT OF CHOICE
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 for the current reporting period.

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

Respectfully submitted:

Mario Cordero
Executive Director
6 Sam Joum at, CPA
Chief Financial Officer
Managing Director of
Finance and Administration
415 W. Ocean Blvd., Long Beach CA, 90802-6194 I WWW.POLB.COM

7 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Organizational Chart
September 30, 2022
8 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Board of Harbor Commissioners and Senior Management
September 30, 2022
9 Board of Harbor Commissioners
Sharon L. Weissman, President
Bobby Olvera Jr., Vice President
Bonnie Lowenthal, Secretary and Commissioner
Steven Neal, 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
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
Port Planning Division Director, Theresa Dau-Ngo
Engineering Services Bureau Managing Director, Sean Gamette Program Delivery Group Senior Director, Suzanne Plezia
Program Management Division Director, Tasha Higgins
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

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 af filiated with
KPMG International Limited, a private English company limited by guarantee. 10 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 Audit of the Financial Statements
Opinion
We have audited the financial statements of the Harbor Department (the Department) of the City of Long Beach, California (the City), as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the Department as of September 30, 2022, and the changes in its financial position and its cash flows for the year then ended in accordance with U.S. generally accepted accounting principles.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities u nder those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with t he relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matters
Reporting Entity
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 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, 2022, the changes in its financial position, or, where applicable, its cash flows for the year then ended in accordance with U.S. gene rally accepted accounting principles. Our opinion is not modified with respect to this matter.

Adoption of New Accounting Pronouncement
As discussed in Note 5 to the basic financial statements, in fiscal year 2022, the Department adopted, Governmental Accounting Standards Board (GASB) Statement No. 87, Leases. Our opinion is not modified with respect to this matter.

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

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Department’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

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

Required Supplementary Information
U.S. generally accepted accounting principles require that the management’s discussion and analysis and schedules listed under the Required Supplementary Information under the financial section in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of f inancial 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 GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

12 In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Report on Other Legal and Regulatory Requirements
In accordance with Government Auditing Standards, we have also issued our report dated March 27, 2023 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. Tha t 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 27, 2023

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2022
13 (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 years ended September 30, 2022 with selected comparative information for fiscal year ended September 30, 2021. The information presented here should be read in conjunction with the additional information contained in the Department’s financial statements and related notes and the 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 covenants and other requirements
• The statement of revenues, expenses, and changes in net position – Reports the results of all revenues 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 – Reports 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, 2022
14 (Continued)
Analysis of Net Position
The following condensed financial information provides an overview of the Department ’s financial position as of September 30, 2022 and 2021:

Condensed Schedule of Assets, Deferred Outflows,
Liabilities, Deferred Inflows, and Net Position
September 30, 2022 and 2021
(Amounts expressed in thousands)
2022 2021
Assets:

Capital assets, net $ 3,743,718 5,197,575
Current and other assets 847,542 892,741
Total assets 4,591,260 6,090,316
Deferred outflows of resources 45,545 15,989
Total assets and deferred outflows of resources $ 4,636,805 6,106,305 Liabilities:

Current liabilities $ 168,768 338,178
Long-term obligations, net of current portion 1,288,700 1,255,761 Total liabilities 1,457,468 1,593,939
Deferred inflows of resources 9,262 53,642
Total liabilities and deferred inflows of resources $ 1,466,730 1,647,581 Net position:

Net investment in capital assets $ 2,531,127 3,768,983 Restricted:

Capital projects 37,463 37,743
Debt service 14,749 13,717
Unrestricted 586,736 638,280
Total net position $ 3,170,075 4,458,723

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2022
15 (Continued)
Net Position Discussion
The changes in net position over time serve as a useful indicator of the Department’s financial activities and position. As of September 30, 2022, $2.5 billion, or 79.8%, 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, 2022. 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 $52.2 million, or 1.6%, is comprised of $37.5 million in environmental mitigation credits for use on landfill capital projects and $14.7 million reserved for current debt service payments. The remaining balance of $586.7 million, or 18.5%, reflects the unrestricted resources that may be used for ongoing and future operations of the Department.

Current and other assets of $847.5 million, a decrease of $45.2 million from the prior fiscal year was primarily due to the pay down of the outstanding $50 million line of credit, which was partially offset by an increase in due from other governmental agencies.

Capital assets, net of depreciation, decreased by $1.5 billion, or 28.0%, from the prior fiscal year primarily due to the Department transferring the ownership title of the new Gerald Desmond Bridge Replacement “GDBR” (or the Long Beach International Gateway Bridge) to the California Department of Transportation (Caltrans) as a component of the state highway system on March 2022; this resulted in a write-off on the Department’s capital asset. Refer to page 16 and note 4 for additional discussion related to capital assets.

Current liabilities decreased by $169.4 million primarily as a result of a $105 million payment in accrued liability as part of a settlement on the construction contract of the Gerald Desmond Bridge Replacement project, and a $50 million pay-down on the revolving line of credit’s outstanding balance.

Long-term obligations increased by $32.9 million due to a $72.4 million increase in the City’s allocated pension liability driven primarily by a lower than expected return on CalPERS actuarial reporting for the measurement period, the additional $5 million draw-down of the Transportation Infrastructure Finance & Innovation Act (TIFIA) loan, and the offsetting $46.1 million annual principal payment of debt service. Refer to page 16 and notes 11 to 15 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, 2022
16 (Continued)
Capital Assets and Debt Administration
Capital Assets Discussion
The Department’s capital assets, net of accumulated depreciation as of September 30, 2022 and 2021 are as follows (amounts expressed in thousands):
2022 2021
Nondepreciable capital assets:

Land $ 1,371,193 1,313,696
Construction in progress 380,251 441,539
Right-of-way 197,884 197,884
Total nondepreciable capital assets 1,949,328 1,953,119 Depreciable capital assets (net):

Structures and facilities 1,696,134 3,151,019
Furniture, fixtures, and equipment 98,256 93,437
Total depreciable capital assets (net) 1,794,390 3,244,456 Total capital assets, net $ 3,743,718 5,197,575

The capital asset accounts, net of accumulated depreciation totaled $3.7 billion, a net decrease of $1.5 billion from the prior fiscal year, which was primarily due to the aforementioned ownership transfer of the GDBR or the Long Beach International Gateway Bridge to Caltrans. The amount of capital assets transferred out of construction in progress and into service totaled approximately $216 million for the year ended September 30, 2022. Refer to note 4 for additional discussion related to capital assets.

Debt Administration Discussion
The following table summarizes the Department’s debt as of September 30, 2022 and 2021 (amounts expressed in thousands):
2022 2021
Long-term debt (principal and net premiums) $ 673,087 717,592 TIFIA Loan 498,926 495,000
Line of credit — 50,000
Total $ 1,172,013 1,262,592

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2022
17 (Continued)
The Department’s total debt decreased by $90.6 million, or 7.2%. This was primarily due to the $50 million pay-down on the revolving line of credit’s outstanding balance, in addition to the annual debt service principal payments. Refer to notes 12 to 14 for additional discussion related to debt service.

The underlying ratings assigned to the Department’s long term debt are as follows:

Rating Agency Senior Revenue Bonds TIFIA Loan Outlook
Standard & Poor’s AA+ AA Stable
Moody’s Aa2 Aa3 Stable
Fitch AA AA- Stable
Note: Standard & Poor’s upgraded Port’s ratings in December 2022.

The debt service coverage ratio for fiscal year 2022 was 3.93, 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.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2022
18 (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 2022 and 2021:

Condensed Schedule of Revenue, Expenses, and Changes in Net Position Years ended September 30, 2022 and 2021
(Amounts expressed in thousands)
2022 2021
Operating revenues:

Berths and special facilities $ 439,096 408,312
Rental properties 36,875 23,061
Miscellaneous 3,606 3,271
Total operating revenues 479,577 434,644
Operating expenses:

Personnel services 65,176 37,258
Maintenance and operations 62,890 59,145
Interdepartmental services 38,430 38,320
Total operating expenses before depreciation 166,496 134,723 Depreciation 179,771 172,827
Income from operations 133,310 127,094
Nonoperating revenue (expenses):

Interest expense (27,340) (26,431)
Investment loss, net (22,517) (637)
Equity in income from joint venture 1,513 2,243
Other income, net 51,307 3,453
Net nonoperating revenues (expenses) 2,963 (21,372)
Income before capital grants and transfer 136,273 105,722 Transfers to the City (26,213) (21,598)
Transfer to Caltrans (1,486,204) —
Grants 87,496 11,769
Change in net position (1,288,648) 95,893
Total net position – beginning of year 4,458,723 4,362,830 Total net position – end of year $ 3,170,075 4,458,723

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2022
19 (Continued)
Changes in Net Position Discussion
Operating Revenues
Total operating revenues for fiscal year 2022 totaled $479.6 million, an increase of $44.9 million, or 10.3%, from the prior fiscal year, which was primarily attributed to the delivery of 80 additional acres at the Middle Harbor terminal (Pier E), and some updated lease terms at other terminals. In addition, rental property revenue was up $13.8 million from the prior year mostly due to continued strong demand for leased land for container storage.

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

Cargo Volumes
The Port is one of the busiest major gateways 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 li nes.

Cargo volumes, measured in Metric Revenue Tons (MRTs), increased by 2.3% to 202.8 million MRTs versus 198.1 million MRTs in the prior fiscal year. Containerized cargo was unchanged, at 155.2 million MRTs, dry bulk (coke, coal, sulfur, etc.) increased 15.3% to 9.5 million MRTs, break bulk (vehicles, metals, and lumber) increased 16.0% to 1.3 million MRTs, and liquid bulk (petroleum and crude) increased 11.2% to 36.7 million MRTs. The Port continues to invest in capital programs to modernize its terminal facilities and infrastructure to

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2022
20 (Continued)
enhance operational efficiencies 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 1.1% to 9.6 million TEUs. This is another record for the Port on top of a record fiscal year 2021, when 9.5 million TEUs were moved.

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

Change in Net Position
Change in net position for fiscal year 2022 was a loss of $1.3 billion, resulting in a decrease of $1.3 billion from the prior fiscal year. This was primarily due to the asset write-off of $1.5 billion associated with the ownership transfer of the GDBR (Long Beach International Gateway Bridge) to Caltrans as a component of the state highway system on March 2022. Other factors contributing to the net change were higher operating revenue of $44.9 million, offset by higher operating expenses (including depreciation) of $38.7 million, a $20.5 million gain on sale of assets, and $75.7 million increase in grants funding. Additionally, the new Clean Trucks Program, which began in April 2022, collected $21.6 million in fees. The following section provides a further discussion of the operations.
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
FY 2021 FY 2022

50.8% 50.1%

49.2% 49.9%
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, 2022
21 (Continued)
Operating Expense and Other Income and Expense
Total operating expenses (excluding depreciation) for fiscal year 2022 was $166.5 million, $31.8 million higher than the prior fiscal year. Personnel services expense was $65.2 million, $27.9 million higher than prior year primarily due to a $22.9 million increase in the Department’s portion of the City’s managed pension and postretirement healthcare benefits expenses, as well as a $5.2 million increase in salaries and fringe benefits.

Maintenance and operations expense was $62.9 million, $3.7 million higher due to a $4.4 million increase in environmental remediation obligations, and a $1.0 million reduction in miscellaneous maintenance expenses.

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 2022 was $179.8 million, $6.9 million higher than the prior fiscal year primarily from the addition of Pier E structures and facilities.

Interest expense on debt service for fiscal year 2022 was $27.3 million, $0.9 million higher than the prior fiscal year due to the addition of TIFIA loan drawdown.

Investment loss, net is comprised of (1) investment interest income and (2) unrealized loss of $22.5 million. a decline of $21.9 million year-over-year, due to a change in the market value of the investment portfolio.

Other income for fiscal year 2022 totaled $51.3 million, $47.9 million higher than prior fiscal year, primarily due to $21.6 million in fees from the new Clean Trucks Program, a $20.5 million gain on sale of the World Trade Center parking lot, and other tenant cost share contribution for leasehold improvement.

Transfers to the City totaled $26.2 million in fiscal year 2022, $4.6 million higher than prior fiscal year, which is primarily for the City Tidelands Operating Fund to be paid in fiscal year 2023, per the City Charter. Refer to note 9 for additional discussion.

Grant revenue totaled $87.5 million in fiscal year 2022, $75.7 million higher in comparison to the prior fiscal year. Grants are recognized when the collectability is certain on the eligible expenses that are reimbursable under the specific conditions of the grant programs. The largest driver of the increase was a $56.2 million for the GDBR project.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Management’s Discussion and Analysis
September 30, 2022
22 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 had a significant impact on the global supply chain. It resulted in a surge of imported goods throughout most of fiscal year 2022, which was largely fueled by increased consumer spending on goods versus services. As the effects of the pandemic have eased, cargo volumes have moderated closer to pre-pandemic levels. The Harbor Department cannot predict the impact of this, or any future pandemic could have on goods movement.

In addition, the Department cannot predict what impact ongoing or future contract negotiations with the union that represents the Port’s dockworkers will have on cargo volumes, including the potential for labor disruptions.

Notes to Financial Statements
The notes to the Department’s financial statements can be found on pages 28-55 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 website at www.polb.com under the following path: Business -> Finance -> Annual Comprehensive Financial Reports.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Net Position
September 30, 2022
(Dollars in thousands)
Assets and Deferred Outflows
Current assets:

Pooled cash and cash equivalents (note 2) $ 606,194
Trade accounts receivable, net of allowance (note 3) 65,618 Due from other governmental agencies (note 3) 77,506
Other current assets 6,370
Subtotal 755,688
Restricted funds as to use (Harbor Revenue Bonds and other):

Restricted pooled cash and cash equivalents (note 2) 28,186 Total current assets 783,874
Noncurrent assets:

Capital assets (notes 4 and 5):

Land 1,371,193
Construction in progress 380,251
Right-of-way (note 6) 197,884
Structures and facilities 4,160,043
Furniture, fixtures, and equipment 210,132
Less accumulated depreciation (2,575,785)
Net capital assets 3,743,718
Other assets:

Environmental mitigation credits (note 7) 37,463
Investment in joint venture (note 8) 2,187
Other noncurrent assets 24,018
Total other assets 63,668
Total noncurrent assets 3,807,386
Total assets 4,591,260
Deferred outflows of resources (note 17) 45,545
Total assets and deferred outflows of resources $ 4,636,805 See accompanying notes to financial statements.
(Continued)23

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Net Position
September 30, 2022
(Dollars in thousands)
Liabilities and Deferred Inflows
Current liabilities payable from current assets:

Accounts payable and accrued expenses $ 48,434
Due to the City of Long Beach (note 9) 27,527
Compensated absences (note 11) 6,680
Security deposits and unearned revenue 29,610
Liability claims (note 10) 3,750
Total current liabilities payable from current assets 116,001 Current liabilities payable from restricted assets:

Current portion of bonds indebtedness (notes 11 and 12) 37,090 Current portion of loans payable (notes 11 and 13) 2,240 Accrued interests payable 13,437
Total current liabilities payable from restricted assets 52,767 Total current liabilities 168,768
Long-term obligations net of current portion:

Bonded indebtedness (notes 11 and 12) 635,997
Loans payable (notes 11 and 13) 496,686
Due to City of Long Beach (note 11) 3,587
Compensated absences (note 11) 13,578
Environmental remediation liability (notes 11 and 16) 5,909 Net pension liability (notes 11 and 15) 132,583
Net OPEB liability (notes 11 and 15) 360
Total noncurrent liabilities 1,288,700
Total liabilities 1,457,468
Deferred inflows on gain on debt refunding (note 17) 2,403 Deferred inflows of resources (note 17) 6,859
Total liabilities and deferred inflows of resources $ 1,466,730 Net position:

Net investment in capital assets $ 2,531,127
Restricted – capital projects 37,463
Restricted – debt service 14,749
Unrestricted 586,736
Total net position $ 3,170,075
See accompanying notes to financial statements.
24 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Revenues, Expenses, and Changes in Net Position Year ended September 30, 2022
(Dollars in thousands)
Port operating revenues:

Berths and special facilities $ 439,096
Rental properties 36,875
Miscellaneous 3,606
Total port operating revenues 479,577
Port operating expenses:

Personnel services 65,176
Maintenance and operations 62,890
Interdepartmental services 38,430
Total operating expenses before depreciation 166,496
Depreciation 179,771
Total operating expenses 346,267
Income from operations 133,310
Nonoperating revenues, (expenses) net:

Interest expense (27,340)
Investment loss, net (22,517)
Equity in income from joint venture 1,513
Gain on disposal of capital assets 20,546
Discontinued capitalized projects (2,447)
Other income, net 33,208
Total nonoperating expenses, net 2,963
Income before transfers and grants 136,273
Transfers to City (26,213)
Transfers to Caltrans (1,486,204)
Grants 87,496
Decrease in net position (1,288,648)
Total net position – beginning of year 4,458,723
Total net position – end of year $ 3,170,075
See accompanying notes to financial statements.
25 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Cash Flows
Year ended September 30, 2022
(Dollars in thousands)
Cash flows from operating activities:

Cash received from customers $ 481,390
Cash paid to employees (82,520)
Cash paid to suppliers (96,310)
Other income 33,208
Net cash provided by operating activities 335,768
Cash flows from noncapital financing activities:

Transfers to City Tidelands and other funds (22,728)
Net cash provided by noncapital financing activities (22,728) Cash flows from capital and related financing activities:

Grants received 35,408
Interest paid (38,040)
Principal payments made on bonds payable (35,530)
Principal payments made on loans payable (1,074)
Proceeds from loans 5,000
Payments from line of credit (50,000)
Payments for capital acquisitions – personnel costs (11,475) Payments for capital acquisitions – vendors (323,431)
Proceeds from sales of assets 12,047
Proceeds from other receivable 6,859
Net cash used in capital and related financing activities (400,236) Cash flows from investing activities:

Interest received 5,432
Change in value of equity in the City's investment pool (27,943) Return on investment in joint venture 3,000
Net cash used in investing activities (19,511)
Net decrease in cash and cash equivalents (106,707)
Cash and cash equivalents, beginning of year 741,087
Cash and cash equivalents, end of the year $ 634,380
Reconciliation of cash and cash equivalents:

Unrestricted pooled cash and cash equivalents $ 606,194 Restricted pooled cash and cash equivalents 28,186
$ 634,380
See accompanying notes to financial statements.
(Continued)26

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statement of Cash Flows
Year ended September 30, 2022
(Dollars in thousands)
Reconciliation of income from operations to net cash provided by operating activities:

Income from operations $ 133,310
Adjustments to reconcile income from operations to net cash provided by operating activities:

Depreciation 179,771
Other income 33,208
Changes in assets, liabilities, and deferred outflows and inflows of resources:

Accounts receivable and prepaid (1,520)
Accounts payable (25,543)
Accrued liabilities 3,308
Accrued claims and judgments 3,300
Unearned revenues 8,646
Due to other funds 64
Compensated absences 1,814
Deferred outflows of resources (29,556)
Net pension liability and related deferred inflows of resources 29,282 Net OPEB liability (316)
Total adjustments 202,458
Net cash provided by operating activities $ 335,768
Supplemental schedule of noncash capital and financing activities:

Transfers to Caltrans $ 1,486,204
Accrued capital related liabilities 34,688
Accrued transfers to the City’s tidelands fund 23,979
Amortization of bond premium 8,975
Amortization of deferred inflows on debt refunding 1,254 Discontinued capital projects 2,447
See accompanying notes to financial statements
27 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
28 (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, 2022
29 (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, 2022
30 (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) Leases
GASB No. 87 requires recognition of certain lease assets for long-term leases as inflows of resources based on the payment provisions of the lease agreement and the lease receivable. The net present value of future minimum lease payments over the lease term, using a discount rate based on th e stated rate of the lease or the municipal borrowing rate of the City, will be recorded as lease receivable and deferred inflow of resources for the effective lease term. A schedule of periodic amortization amounts of the discounted receivable, related interest revenue, and deferred inflows of resources are recognized over the term of the lease. Lease receivable will be re-measured when there are lease term modifications or terminations, and the related deferred inflow of resources will be adjusted to incl ude as a gain or loss for the difference.

Port as Lessor
The Port’s lease revenue and lease receivable are principally generated from the marine terminal leases. These are regulated leases that provide for preferential area assignments or non -exclusive right-to-use of the premises, at all times subject to federal, state, regional and municipal laws, ordinances and regulations (e.g., including but not limited to States Lands Commission and Federal Maritime Commission); and specific lease terms that include an adherence to a schedule or tariff of all rates, charges, regulations and practices, of the type contained in Tariff No. 4 published in compliance with the regulations of the U.S. Federal Maritime Commission. Other short -term leases such as revocable permits and area assignments are cancelable on a period of 30-180 days based upon notice provided by either party. These type of leases are not within the scope of GASB Statement No. 87 evaluation for adoption.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
31 (Continued)
(j) 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. (k) 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. (l) 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.
(m) 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 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. (n) 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.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
32 (Continued)
Federal or state grants are considered as nonoperating revenue identified as grants in the statement of revenue, expenses, and changes in net position. Grants are recognized when the collectability is certain on the eligible expenses that are reimbursable under the specific conditions of the grant programs. Operating revenue or grant funds that have been received but not earned are identified as unearned revenue in the statement of net position.
(o) 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.
(p) 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 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 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.

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 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 payment, and (c) has attained the minimum retirement age for the employee’s retirement plan Benefits are administered through a third -party provider.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
33 (Continued)
(q) 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.
(r) Recent Accounting Pronouncements
GASB Statement No. 87, Leases: issued in June 2017, effective for reporting periods beginning after June 30, 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. This statement has been evaluated in fiscal year 2022, and it has no material impact on the Department’s financial statements. Refer to note 5 for additional discussion related to regulated leases.

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 additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. This statement has been evaluated in fiscal year 2022, and it has no impact on the Department’s financial statements.

GASB Statement No. 92, Omnibus 2020: issued in January 2020, effective for reporting periods beginning after June 15, 2022. The objectives of this statement are to enhance comparability in accounting and financial reporting by addressing practice issues identified from the implementatio n and application of certain GASB statements. This statement has been evaluated in fiscal year 2022, and it has no impact on the Department’s financial statements.

GASB Statement No. 93, Replacement of Interbank Offered Rates, issued in March 2020, effective for reporting periods beginning after December 31, 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 2022. This statement has been evaluated in fiscal year 2022, 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 15, 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. This statement has been evaluated in fiscal year 2022, and it has no impact on the Department’s financial statements.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
34 (Continued)
GASB Statement No. 96, Subscription-Based Information Technology Arrangements, issued in May 2020, effective for fiscal years beginning after June 15, 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, including 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 15, 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 fiduciary 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 benefits provided through those plans. This statement has been evaluated in fiscal year 2022, and it has no impact on the Department’s financial statements.

GASB Statement No. 99, Omnibus 2022: issued in April 2022, effective dates vary depending on the requirements. The objectives of this statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The Department is currently evaluating the financial impact of this statement.

GASB Statement No. 100, Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62: issued in June 2022, effective for fiscal years beginning after June 15, 2023.

The primary objective of this statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. The statement is effective beginning fiscal year 2024, and the Department is currently evaluating the financial impact of this statement.

GASB Statement No. 101, Compensated Absences: issued in June 2022, effective for fiscal years beginning after December 15, 2023. This statement aligns the recognition and measurement criteria for compensated absences into a unified model of guidance. In addition, the statement amends the disclosure requirements for compensated absences to allow governments to disclose only the net change in the liability for compensated absences. Governments are also no longer required to disclose which governmental funds typically have been used to liquidate the liability for compensated absences.

Early application of this Statement did not have a material impact to the Department's financial statements for the fiscal year ended September 30, 2022.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
35 (Continued)
(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 $ 606,194 28,186 634,380

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, Local Agency Investment Fund (LAIF), repurchase agreements, reverse repurchase agreements, securities lending, asset-backed securities, mortgage-backed securities, and money market mutual funds.

As of September 30, 2022, the City’s majority investment pool has a weighted average maturity of two years or less. At September 30, 2022, the Department had $634.4 million equity in the pool, representing approximately 33.8% of the pool. The following are the actual ratings as of September 30, 2022 for each investment type (in thousands):

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

Money market mutual funds N/A $ 2,135 — 2,135 — —
U.S. Treasury notes N/A 1,439,760 — — 1,439,760 —
Federal agency securities N/A 286,332 — 286,332 — — Corporate notes N/A 78,577 50,986 24,184 3,407 —
LAIF N/A 72,475 — — — 72,475
Total pooled investments $ 1,879,279 50,986 312,651 1,443,167 72,475

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
36 (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 $ 1,439,760 — 1,439,760 —
Federal agency securities 286,332 — 286,332 —
Corporate notes 78,577 — 78,577 —
Total investments at fair value 1,804,669 $ — 1,804,669 — Other investments at fair value:

Local Agency Investment Fund (LAIF) 72,475
Other investments at cost or contract value:

Money market mutual funds 2,135
Total investments $ 1,879,279

(3) Accounts Receivable and Other Receivables
Accounts receivable as of September 30, 2022, included the following (expressed in thousands):

Trade accounts receivable $ 68,088
Less allowance for doubtful accounts (2,470)
Accounts receivable, net $ 65,618

Other receivables as of September 30, 2022 included the following (expressed in thousands):

Due from other governmental agencies:

Federal and state grants $ 77,506
Total due from other governmental agencies $ 77,506

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, 2022
37 (Continued)
(4) Capital Assets
Capital assets’ schedule as of September 30, 2022 is as follows: (expressed in thousands):

Balance, Balance,
October 1, Adjustments/ Placed in September 30,
Description 2021 Additions disposals service 2022
Nondepreciable capital assets:

Purchased land $ 524,416 65,504 (8,007) — 581,913
Constructed land 789,280 — — — 789,280
Construction in progress 441,539 159,570 (4,923) (215,935) 380,251 Right of way (note 6) 197,884 — — — 197,884
Subtotal 1,953,119 225,074 (12,930) (215,935) 1,949,328 Depreciable capital assets:

Structures and facilities 5,489,895 — (1,532,535) 202,683 4,160,043 Furniture, fixtures, and equipment 196,718 900 (738) 13,252 210,132 Subtotal 5,686,613 900 (1,533,273) 215,935 4,370,175 Total capital assets 7,639,732 225,974 (1,546,203) — 6,319,503 Less accumulated depreciation:

Structures and facilities 2,338,876 170,558 (45,525) — 2,463,909 Furniture, fixtures, and equipment 103,281 9,213 (618) — 111,876 2,442,157 179,771 (46,143) — 2,575,785
Net capital assets $ 5,197,575 46,203 (1,500,060) — 3,743,718

Construction in progress at September 30, 2022 includes the following projects (in thousands):

Pier B On-Dock Rail Program $ 104,515
All other programs and projects 275,736
Total $ 380,251

During the year ended September 30, 2022, $4.9 million of Construction in Progress was written off, of which $2.4 million was due to discontinued projects.
(5) Leases
Port as Lessor
The major portion of the Port’s property is leased to others. Such property includes marine terminal land and facilities, plus special-purpose facilities. Marine terminal facilities are leased typically under long-term agreements that provide the tenants with preferential but not exclusive use of the facilities. Most leases relate to shipping services based upon tenants’ usage of the facilities, measuring by their annual revenue or volume activities. The leases and the preferential assignments generally provide for a guarantee annual minimum (GAM) charge to the tenant.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
38 (Continued)
Property under lease at September 30, 2022 consisted of the following (expressed in thousands):

Land $ 851,587
Structures and facilities:

Docks and wharves 826,275
Warehouses and sheds 24,416
Cranes and shiploaders 70,602
Buildings and other facilities 1,020,029
Infrastructure 1,838,473
Historical cost of leased property 4,631,382
Less accumulated depreciation (2,342,600)
Carrying value of leased property $ 2,288,782

Regulated Leases
The Port’s marine terminal leases are considered regulated leases, at all times subject to federal, state, regional and municipal laws, ordinances and regulations (e.g., including but not limited to States Lands Commission and Federal Maritime Commission). As such these leases are not within the scope of GASB Statement No. 87 evaluation.

Operating revenues for these regulated leases was $425.0 million, a $28.2 million ove r the GAM amount of $396.8 million for the year ended September 30, 2022. Assuming these regulated leases will perform throughout their contractual terms, the expected future GAM of lease payments under the current terms is as follows (expressed in thousands):
2023 $ 397,655
2024 403,749
2025 398,082
2026 391,869
2027 339,029
2028–2032 1,078,643
2033–2037 1,012,841
2038–2042 939,713
2043 and thereafter 1,081,971
$ 6,043,552

(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

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
39 (Continued)
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 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 o f environmental mitigation credits will get adjusted as landfill credits are used for the Port’s development.

As of September 30, 2022, the Department has utilized a total of $13.3 million of environmental credits for completed landfill as part of capital projects within the port boundaries to date, of which $280 thousand was incurred in fiscal year 2022. No environmental credit has been acquired in fiscal year 2022. The existing $37.5 million or 224 credits will be used in future projects.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
40 (Continued)
(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 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, 2022 totaled $2.2 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 lawfu l 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 2022, the Department accrued $24.0 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 $3.8 million for fiscal year 2022, 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, 2022 aggregated $27.1 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 $1.5 million has already been advanced to the City. The remaining funds of $30.7 million will be paid to the City as reimbursement for

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
41 (Continued)
actual cost incurred per the MOU terms from fiscal year 2020 through 2023. As of September 30, 2022, 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 is not currently carrying a “Master Builder’s Risk” policy as it does not have current projects that would require it. The program will be renewed as risk arises. The coverage limit for each construction projects that would be placed in this program would be equivalent to the contract’s price. Exclusive of Earthquake coverage the maximum per project amount would be $125.0 million, but could 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, 2022 (in thousands):

Property insurance coverage for fire and other risks $ 1,000,000 Property insurance coverage for new Gerald Desmond Bridge 200,000 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. (iii) Workers Compensation
The Department participates in the City’s self-insured workers’ compensation program. During fiscal years 2022, it made payments to the City’s Insurance Fund totaling $2.2 million for

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
42 (Continued)
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, 2022. 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.

The most recent notice date, August 24, 2022, indicates that there is no projected shortfall for ACTA’s fiscal year ending June 30, 2023.
(c) Gerald Desmond Bridge Replacement Project (GDBR Project) The new Gerald Desmond Bridge Replacement (Long Beach International Gateway Bridge) has been completed and transferred to the California Department of Transportation (Caltrans) as a component of the state highway system on March 2022. The Department has an agreement with Caltrans for maintenance costs of the new GDBR for a 30 year period commencing on the date of the ownership transfer to Caltrans.

The demolition phase on the old bridge started in 2022 and is estimated to be completed in 2024. The old bridge’s main span has been removed, and other remaining structures (approaches, supports, pavement, etc.) are underway. The demolition budget is $59.9 million, and the Department has incurred approximately $25.1 million as of September 30, 2022.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
43 (Continued)
(11) Long-Term Liabilities
Schedule of Changes in Long-term Liabilities (In thousands) Balance, Balance,
October 1, September 30, Due in
Description 2021 Additions Reductions 2022 one year
Revenue bonds $ 628,805 — 35,530 593,275 37,090
Premium 88,787 — 8,975 79,812 —
Total revenue bonds 717,592 — 44,505 673,087 37,090 TIFIA loan 495,000 5,000 1,074 498,926 2,240
Line of credit 50,000 — 50,000 — —
Compensated absences 18,445 1,967 154 20,258 6,680
Net pension liability 60,174 132,583 60,174 132,583 — Net OPEB liability 675 — 315 360 —
Environmental remediation liability 2,600 3,309 — 5,909 — Due to City of Long Beach 4,087 — 500 3,587 —
Total long-term liability $ 1,348,573 142,859 156,722 1,334,710 46,010

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), 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.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
44 (Continued)
(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 2021 Additions Payments * 2022 one year Revenue bonds:
2014B 4/24/2014 — % 2018–27 $ 20,570 11,700 — — 11,700 7,650 2015A 4/16/2015 — 2018–23 44,845 21,430 — 14,390 7,040 7,040 2015B 4/16/2015 — 2023–25 20,130 20,130 — — 20,130 9,775 2015C 7/15/2015 — 2026–32 66,085 66,085 — — 66,085 — 2015D 7/15/2015 — 2033–42 66,865 66,865 — — 66,865 — 2017A 6/28/2017 — 2026–40 101,610 101,610 — — 101,610 — 2017B 6/28/2017 — 2041–43 25,985 25,985 — — 25,985 — 2017C 6/28/2017 — 2043–47 42,660 42,660 — — 42,660 — 2019A 7/11/2019 — 2026–49 161,310 161,310 — — 161,310 — 2020A 2/19/2020 — 2024–27 55,725 55,725 — — 55,725 — 2020B 2/19/2020 — 2021–24 74,940 55,305 — 21,140 34,165 12,625 Total bonds $ 680,725 628,805 — 35,530 593,275 37,090 Unamortized bond premium 88,787 — 8,975 79,812 —
Net total bonds indebtedness $ 717,592 — 44,505 673,087 37,090 * Bonds’ principal payable is annually on May 15, and interest payable is semiannually on May 15 and November 15.

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:
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 30,050 22,586 52,636
2028-2032 86,900 97,093 183,993
2033-2037 90,615 75,094 165,709
2038-2042 115,775 50,019 165,794
2043 and thereafter 128,375 22,898 151,273
$ 593,275 374,870 968,145

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
45 (Continued)
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 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. (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 HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
46 (Continued)
(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.
(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

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
47 (Continued)
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. (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 HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
48 (Continued)
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 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 outflow of resources. (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.

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 outflow of resources. (13) TIFIA Loan Subordinate Indebtedness
On May 2020, the Port entered into a new TIFIA loan agreement (the 2021 TIFIA Loan) for an approved amount up to $500.0 million. Under the 2021 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. The loan 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, 2022, the Department has made three draws on the TIFIA Loan in the total amounted to $500.0 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%.

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
49 (Continued)
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:
2023 $ 2,240 6,286 8,526
2024 2,350 6,267 8,617
2025 2,415 6,220 8,635
2026 2,500 6,198 8,698
2027 2,565 6,167 8,732
2028-2032 14,330 30,331 44,661
2033-2037 28,356 29,278 57,634
2038-2042 52,171 26,713 78,884
2043 and thereafter 391,999 40,307 432,306
$ 498,926 157,767 656,693

(14) Lines of Credit
On April 14, 2022, the Board of Harbor Commissioners approved the renewal of the revolving line of credit provided by MUFG Union Bank, N.A. in an aggregate principal amount not to exceed $250.0 million. On December 2022, this revolving credit agreement is assumed by U.S. Bancorp through its acquisition of MUFG Union Bank, N.A. The tax exempt and taxable interest rates under this agreement is based on the rate equal to the secured overnight financing rate (SOFR) as administered by the Federal Reserve Bank of New York. 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, 2022, the Department has no outstanding balance under this revolving line of credit. (15) 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

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
50 (Continued)
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 Miscellaneous Plan’s provisions and benefits in effect at September 30, 2022, 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 % 6.5 %
Employer 30.580 % 30.580 % 30.580 %
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

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
51 (Continued)
related GASB 68 accounting elements. The Department’s proportionate share totaled 18.9% as of September 30, 2022.
(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, 2022 (measurement date). The Department’s share of the net pension liability for the Miscellaneous Plan was $60.2 million at the beginning of the period and $132.6 million at June 30, 2022. For the measurement period ending June 30, 2020, the Department incurred pension expense of $14.6 million.

As of September 30, 2022, the Department had deferred outflows and deferred inflows related to pensions as follows (in thousands):

Deferred outflows of resources:

Pension contributions after measurement date $ 12,058
CalPERS difference between actual and expected investment returns 22,613 CalPERS change in assumptions 7,886
CalPERS change in proportion 1,541
Total deferred outflows of resources $ 44,098
Deferred inflows of resources:

CalPERS difference between actual and expected investment returns $ — CalPERS differences between actual and expected experience (2,921) CalPERS change in proportion (881)
Total deferred inflows of resources $ (3,802)

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
2023 $ 6,744
2024 5,622
2025 1,911
2026 13,962
Total $ 28,239

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
52 (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, 2022 is as follows:

Miscellaneous
Valuation date June 30, 2021
Measurement date June 30, 2022
Actuarial cost method Entry Age Normal
Actuarial assumptions:

Discount rate 6.90 %
Inflation 2.30 %
Projected salary increase Varies by entry age and service Mortality * Derived using CalPERS’ membership data for all funds * The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries.

For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.

Long-Term Expected Rate of Return – The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
53 (Continued)
expected rate of return was then adjusted to account for assumed administrative expenses of 10 basis points. The expected real rates of return by asset class are as follows:

Assumed asset
Asset class 1 allocation Real return 1
Global Equity – Cap-Weighted 30.00 % 5.00 %
Global Equity – Non-Cap-Weighted 12.00 3.84
Private equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-Backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High yield 5.00 2.27
Emerging market debt 5.00 2.48
Private debt 5.00 3.57
Real assets 15.00 3.21
Leverage (5.00) (0.59)
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study.

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

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 6.90%, compared to a discount rate that is 1.0% age point lower (5.90%) or 1.0% age point higher (7.90%). Amounts shown below are in thousands:

Sensitivity to net pension liability

1.0% Decrease (5.90%) $ 207,338
Current discount rate (6.90%) 132,583

1.0% Increase (7.90%) 70,881

(b) Termination Benefits
As of September 30, 2022, the City has recorded a liability in the Employee Benefits Internal Service Fund of $137 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

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
54 (Continued)
liability takes into account an estimate of future usage, additional leave accumulation and wage increases for both current retirees and active employees.

The $137 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, 2022, the Department has recorded noncurrent liabilities totaling $11.8 million, which represents the Department’s share of these liabilities. (c) 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 excep t 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 year ended September 30, 2022. (16) 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 $5.9 million as of September 30, 2022. This warehouse has a net book value of zero and there is no reasonable expectation of any recovery associated with these remediation efforts. (17) 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, 2022 is as follows (expressed in thousands):

Deferred outflows of resources:

Pension related deferred outflows $ 44,098
OPEB related deferred outflows 654
Change in OPEB allocated proportion 793
Total deferred outflows of resources $ 45,545
Deferred inflows of resources:

Gain on debt refunding $ 2,403
Pension related deferred inflows 3,802
OPEB related deferred inflows 2,978
Change in OPEB allocated proportion 79
Total deferred inflows of resources $ 9,262

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Notes to Financial Statements
September 30, 2022
55 (18) Subsequent Events
Subsequent events have been evaluated through March 27, 2023, which corresponds to the date when the financial statements were available to be issued. There are no subsequent events that require disclosure.

Required Supplementals

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Pension Liability and Related Ratios1
September 30, 2022
Last 10 Years1
(Dollars in thousands)
(Unaudited)
2022 2021 2020 2019 2018 2017 2016
Department’s percentage of total City pension liability 18.9 % 19.1 % 18.4 % 18.3 % 18.7 % 19.2 % 20.9 % Department’s total pension liability $ 132,583 60,174 121,539 113,611 110,982 129,893 124,170 Department covered-employee payroll 57,024 54,483 46,826 47,718 45,236 48,381 47,203 Department pension liability as a percentage of covered payroll 232.5 % 110.4 % 259.6 % 238.1 % 245.3 % 268.5 % 263.1 % Fiduciary net position as a percentage of the pension liability 76.83 % 89.12 % 76.13 % 76.77 % 76.92 % 73.72 % 73.71 % Notes to Schedule:
1 Fiscal year 2015 was the first year of GASB 68 implementation. This table will be completed for a 10-year period as data becomes available.

See accompanying independent auditors’ report.
56 THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Schedule of Contributions
Miscellaneous Plan
September 30, 2022
Last 10 Years1
(Dollars in thousands)
(Unaudited)
2022 2021 2020 2019 2018 2017 2016
Actuarially determined contribution2 $ 15,393 14,952 13,175 11,422 9,963 8,815 8,338 Contributions in relation to the actuarially determined contribution 3 (15,393) (14,952) (13,175) (11,422) (9,963) (8,815) (8,338) Contribution deficiency (excess) $ — — — — — — —
Covered payroll 57,024 54,483 46,826 47,718 45,236 48,381 47,203 Contributions as a percentage of covered payroll 26.99 % 27.44 % 28.14 % 23.94 % 22.02 % 18.22 % 17.66 % Notes to schedule:

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2022 were from the June 30, 2019 funding valuation report public agency valuations.

Valuation Date: 6/30/2019
Actuarial Cost Method Entry Age Actuarial Cost Method
Amortization Method For details, see June 30, 2019 Funding Valuation Report.

Asset Valuation Method Fair Value of Assets. For details, see June 30, 2019 Funding Valuation Report.

Inflation 2.50 %
Salary Increases Varies by entry age and service
Payroll Growth 2.75 %
Investment Rate of Return 7.00%, net of pension plan investment and administrative expenses, including inflation.

Retirement Age The 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 Fiscal year 2015 was the first year of GASB 68 implementation. This table will be completed for a 10-year period as data becomes available. 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.
57 Statistics

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statistical Section
Year ended September 30, 2022
(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 58 Changes in Fund Net Position – Last 10 Fiscal Years – Exhibit 2 59 Revenue Capacity Information:

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

Operating Revenue by Type – Last 10 Fiscal Years – Exhibit 3 60 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 61 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 65
Employee Headcount by Division – Last 10 Fiscal Years – Exhibit 9 66 Exhibit 1

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Statements of Net Position
Last Ten Fiscal Years
(In millions)
(Unaudited)
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Assets and deferred outflows:

Current $ 784 837 793 658 717 690 487 501 453 441 Other 3,807 5,254 5,089 5,039 4,853 4,665 4,550 4,474 4,229 3,612 Deferred outflows 46 16 9 14 21 42 42 22 10 11 Total assets and deferred outflows $ 4,637 6,107 5,891 5,711 5,591 5,397 5,079 4,997 4,692 4,064 Liabilities and deferred inflows:

Current $ 116 238 131 125 315 101 111 100 123 153 Current – restricted* 53 100 520 55 58 65 61 60 67 61 Long term 1,289 1,256 868 1,263 1,115 1,292 1,115 1,215 1,037 672 Deferred inflows 9 54 9 13 22 13 12 15 3 —
Total liabilities and deferred inflows $ 1,467 1,648 1,528 1,456 1,510 1,471 1,299 1,390 1,230 886 Net position:

Net investment in capital assets $ 2,531 3,769 3,791 3,745 3,643 3,492 3,442 3,077 2,975 2,848 Restricted 52 52 52 47 56 51 90 265 199 62
Unrestricted 587 638 520 463 382 383 248 267 289 269 Total net position $ 3,170 4,459 4,363 4,255 4,081 3,926 3,780 3,609 3,463 3,179 Working capital $ 668 599 662 533 402 589 376 401 330 288 Current ratio 4.6 2.5 1.2 3.7 1.9 4.2 2.8 3.1 2.4 2.1 Debt to asset ratio 38.1% 31.3% 30.0% 28.8% 31.0% 31.3% 28.3% 30.9% 29.0% 24.5% * Current liabilities payable from restricted assets.

Source: Finance Division, Harbor Department.

See accompanying independent auditors’ report.
58 Exhibit 2

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Changes in Fund Net Position
Last Ten Fiscal Years
(In millions)
(Unaudited)
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Operating revenue $ 480 435 399 412 402 381 362 355 358 346 Operating expense 347 308 292 279 287 291 292 271 228 188 Income from operations 133 127 107 133 115 90 70 84 130 158 Investment earnings/(loss), net (21) (25) (17) (9) (10) — (15) 39 (12) — Other income/(expense), net 24 3 (6) 3 2 2 5 4 7 1 Transfers to City Tidelands Fund/Other Operating Funds (26) (21) (21) (21) (20) (19) (19) (18) (18) (17) Transfers to Caltrans (1,486) — — — — — — — — — Capital grants 87 12 45 68 68 73 132 121 178 251 Change in net position $ (1,289) 96 108 174 155 146 173 230 285 393 Return on investment (51.0)% 2.5 % 2.8 % 4.6 % 4.3 % 4.2 % 0.1 % 7.4 % 9.4 % 14.4 % Capital expenditures (Includes personnel costs) $ 326 203 265 496 251 252 367 363 552 792 Personnel:

Wages and benefits from operations $ 81 53 76 66 63 60 62 55 48 45 Source: Finance Division, Harbor Department.

See accompanying independent auditors’ report.
59 Exhibit 3

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Operating Revenue by Type
Last 10 fiscal years
(In millions)
(Unaudited)
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Berth and special facilities:

Wharfage $ 392 367 355 367 359 342 323 312 308 297 Dockage 18 18 6 6 7 7 8 11 11 12
Bunkers 1 1 1 1 1 1 1 1 1 1
Special facilities rentals 28 21 18 19 16 13 16 16 14 12 Crane rentals — — — — — — — 2 13 13
Other — 1 1 1 1 1 1 1 1 1
Total berths and special facilities 439 408 381 394 384 364 349 343 348 336 Rental properties 37 23 15 15 14 14 10 10 9 9
Miscellaneous 4 3 3 3 4 3 3 2 1 1
Total operating revenue $ 480 434 399 412 402 381 362 355 358 346 Growth (reduction)% — — — — 5.5 5.6 1.5 (1.1) 3.4 3.6 Special facility revenue by terminal commodity:

Containers $ 349 325 302 311 311 291 275 270 280 268 Liquid bulk 23 22 19 23 17 18 17 17 16 17
Dry bulk 41 37 37 37 37 35 29 29 26 26
Vehicles 19 18 18 17 14 15 15 14 13 12
Steel 6 5 4 5 4 4 8 8 8 8
Lumber 1 1 1 1 1 1 1 1 1 1
Miscellaneous — — — — — — 3 3 3 3
Total special facility revenue $ 439 408 381 394 384 364 348 342 347 335 Source: Finance Division, Harbor Department
See accompanying independent auditors’ report.
60 Exhibit 4

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Revenue Bonds and Loan Debt Service Coverage
Last Ten Fiscal Years
(Millions of Dollars)
(Unaudited)
Maintenance Net Times
Revenues costs revenues Debt service debt service
Fiscal year (a) (b) (a–b) (c) covered
2022 $ 457 166 291 74 3.93
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
(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.
61 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 2022 161,332 — 161,332 39,677 1,756 41,433 202,765 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
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.
62 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
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Total growth Containerized:

In 124,785 124,547 100,669 103,173 108,091 98,941 93,614 95,798 94,310 91,047 910,190 4.32 % Out 30,384 31,110 30,247 29,204 30,823 28,174 29,400 29,307 31,262 30,525 270,052 0.36 % Other break bulk:

In 1,272 1,107 964 1,116 1,243 1,127 1,008 1,039 1,002 854 9,460 3.89 % Out 67 61 60 115 129 61 99 101 92 108 826 1.13 % Liquid bulk:

In 34,022 30,325 26,950 29,310 29,819 30,130 27,971 27,479 26,696 27,398 256,078 1.45 % Out 2,717 2,703 3,074 2,300 2,351 2,497 3,203 3,521 2,995 3,197 25,841 (0.78)% Dry bulk:

In 1,254 894 550 471 445 238 344 209 235 259 3,645 23.20 % Out 8,265 7,371 6,060 7,268 7,692 6,933 5,684 6,820 8,934 8,869 65,631 (0.90)% Total:

In 161,333 156,873 129,133 134,070 139,598 130,436 122,937 124,525 122,243 119,558 1,179,373 3.73 % Out 41,433 41,245 39,441 38,887 40,995 37,665 38,386 39,749 43,283 42,699 362,350 — % Vessel calls* 2,698 2,561 2,237 2,095 2,278 2,149 2,227 2,676 2,752 3,425 22,400 Annual growth/(decline) 5.35 % 14.48 % 6.78 % (8.03)% 6.00 % (3.50)% (16.78)% (2.76)% (19.65)% (84.71)% TEU’s 9,632 9,501 7,661 7,747 8,001 7,231 6,946 7,088 6,818 6,648 67,641 TEU annual growth/(decline) 1.38 % 24.02 % (1.11)% (3.17)% 10.65 % 4.10 % (2.00)% 3.96 % 2.56 % (90.17)% * 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.
63 Exhibit 7

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Metric Revenue Tons and Container Counts
Last 10 fiscal years
(In thousands)
(Unaudited)
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Municipal berths1:

Foreign 126,312 125,923 101,566 104,012 108,811 99,468 93,928 98,464 104,245 101,027 Coastwise/intercoastal 35,020 30,950 27,567 30,058 30,787 30,977 29,009 26,061 17,998 18,477 Total inbound cargo 161,332 156,873 129,133 134,070 139,598 130,445 122,937 124,525 122,243 119,504 Outbound cargo:

Foreign 34,839 34,871 34,061 34,418 36,218 32,923 32,737 33,592 37,067 36,769 Coastwise/intercoastal 4,839 4,466 3,751 3,618 3,516 3,258 3,996 4,843 5,348 5,141 Bunkers 1,756 1,908 1,630 851 1,261 1,474 1,653 1,313 867 843 Total outbound cargo 41,434 41,245 39,442 38,887 40,995 37,655 38,386 39,748 43,282 42,753 Total municipal cargo 202,766 198,118 168,575 172,957 180,593 168,100 161,323 164,273 165,525 162,257 Private berths
1:

Inbound — — — — — — — — — —
Outbound — — — — — — — — — —
Total private cargo — — — — — — — — — —
Grand total 202,766 198,118 168,575 172,957 180,593 168,100 161,323 164,273 165,525 162,257 Container count summary (000’s)2
Loaded inbound TEUs 4,670 4,667 3,761 3,862 4,044 3,698 3,514 3,596 3,523 3,420 Loaded outbound TEUs 1,400 1,456 1,492 1,441 1,564 1,451 1,538 1,528 1,664 1,671 Total loaded 6,070 6,123 5,253 5,303 5,608 5,149 5,052 5,124 5,187 5,091 Full containers annual growth (decline) (5.4)% 8.9 % 1.9 % (1.4)% (1.2)% 1.9 % 15.1 % Total empty 3,562 3,378 2,408 2,444 2,393 2,081 1,894 1,964 1,631 1,557 Empty containers annual growth (decline) 2.1 % 15.0 % 9.9 % (3.6)% 20.4 % 4.8 % 8.6 % Total TEUs 9,632 9,501 7,661 7,747 8,001 7,230 6,946 7,088 6,818 6,648 Annual growth 1.4 % 24.0 % (1.1)% (3.2)% 10.7 % 4.1 % (2.0)% 4.0 % 2.6 % 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.
64 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
Long Beach Container Terminal, LLC 07/2011 06/2051
International Transportation Service, LLC 09/2006 08/2026 Pacific Maritime Services, L.L.C. – Pacific Container Terminal 05/2002 04/2042 SSA Terminals (Pier A), LLC 12/2002 10/2027
Toyota Motor North America, Inc. 01/2009 12/2040
SSA Terminals, LLC – SSA Terminal C60/Matson Navigation 05/2002 04/2022 Pacific Crane Maintenance Company, LLC 07/2022 Month-to-month Metropolitan Stevedore Company 09/2014 09/2034
Oxbow Carbon & Minerals, LLC 09/2014 09/2029
Carson Cogeneration LLC – Tesoro Refining & Marketing Company LLC 06/1983 05/2023 Tesoro Refining & Marketing Company LLC – Tesoro Logistics Operations LLC 01/2012 01/2032 Koch Carbon, Inc. 01/1988 12/2027
SA Recycling, LLC 11/1994 11/2024
Tesoro Refining & Marketing Company LLC 01/2015 12/2034 Jacobsen Pilot Service, Inc. 08/2017 07/2032
CSA Equipment Company, LLC 02/2013 06/2027
Crescent Terminals, Inc. 07/2000 06/2027
Tesoro Refining & Marketing Company LLC 01/1981 12/2022 Olympus Terminals LLC 07/2010 06/2025
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.
65 Exhibit 9

THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH
Employee Headcount by Division
Last 10 fiscal years
(Unaudited)
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Executive administration 18.0 17.0 18.0 18.0 15.0 14.0 18.0 17.0 11.9 9.3 Business development 12.0 10.0 12.0 11.0 12.0 13.0 13.0 11.0 — — Communications 19.0 17.0 19.0 18.0 16.0 14.0 14.0 16.0 15.0 12.8 Construction management 52.0 50.0 48.0 47.0 48.0 45.0 47.0 46.0 — — Design 46.0 48.0 46.0 46.0 46.0 51.0 49.0 48.0 — —
Engineering ———————— 140.7 128.8
Environmental planning 23.0 22.0 23.0 21.0 24.0 21.0 24.0 23.0 — — Finance 29.0 27.0 28.0 23.0 22.0 25.0 25.0 25.0 24.5 24.9 Government relations/affairs 5.0 4.0 4.0 3.0 3.0 4.0 3.0 4.0 4.0 4.0 Human resources 19.0 17.0 19.0 20.0 18.0 16.0 18.0 18.0 17.4 16.3 Information management 25.0 25.0 27.0 24.0 20.0 22.0 22.0 22.0 20.6 20.8 Maintenance 87.0 79.0 81.0 78.0 82.0 90.0 92.0 84.0 76.3 81.1 Port Planning (Master planning & Transportation planning) 10.0 11.0 12.0 14.0 12.0 14.0 11.0 12.0 31.7 30.6 Program delivery 3.0 3.0 3.0 3.0 3.0 3.0 3.0 2.0 — —
Program management 25.0 27.0 25.0 23.0 22.0 27.0 28.0 25.0 — — Project controls 16.0 16.0 16.0 15.0 12.0 11.0 11.0 8.0 — — Real estate 10.0 10.0 9.0 7.0 8.0 9.0 9.0 8.0 8.8 9.0
Risk management 9.0 12.0 11.0 11.0 11.0 9.0 10.0 10.0 8.3 7.6 Security 99.0 84.0 85.0 78.0 84.0 81.0 74.0 79.0 68.0 71.2 Survey 22.0 22.0 21.0 20.0 21.0 22.0 22.0 23.0 — —
Tenant services/trade relations 11.0 11.0 13.0 13.0 13.0 12.0 9.0 9.0 19.3 16.5 Full-time/permanent subtotal 540.0 512.0 520.0 493.0 492.0 503.0 502.0 490.0 446.5 432.9 Growth/decline 5.5 % (1.5)% 5.5 % 0.2 % (2.2)% 0.2 % 2.4 % 9.7 % 3.1 % (3.1)% Part-time/temporary subtotal 8.5 12.0 24.0 13.7 19.0 31.0 29.0 34.0 25.5 29.4 Growth/decline (29.2)% (50.0)% 75.2 % (27.9)% (38.7)% 6.9 % (14.7)% 33.3 % (13.3)% 126.2 % Total number of employees 548.5 524.0 544.0 506.7 511.0 534.0 531.0 524.0 472.0 462.3 Growth/decline 4.7 % (3.7)% 7.4 % (0.8)% (4.3)% 0.6 % 1.3 % 11.0 % 2.1 % 0.5 % 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.
66 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

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
For The Fiscal Year Ended
September 30, 2022

OF THE LONG BEACH WATER DEPARTMENT
A Department of the City of Long Beach, California
Attachment C
Long Beach Water Department Annual Comprehensive Financial Report

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, 2022
CHRISTOPHER J. GARNER
Ge
neral 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, 2022

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 .......................................................................... 4

Financial Statements:

Statements of Ne t Position ............................................................................... 24 Statements of Revenues, Expenses, and Changes in Fund Net Position ........ 26 Statements of Ca sh Flows ................................................................................ 27 Notes to Financia l Statements .......................................................................... 28

ii
Table of Contents
(continued)
Statistical Section (Unaudited)
Page
Financial Trends 53-62
Exhibit
1 Changes in Net Position – Wate r Fund - Last Ten Fiscal Years ................... 55 2 Changes in Net Position – Sewe r Fund - Last Ten Fiscal Years ................... 56 3 Net Position by Component – Wate r Fund - Last Ten Fiscal Years .............. 57 4 Net Position by Component - Sewe r Fund - Last Ten Fiscal Years .............. 58 5 Water Fund Revenue by Type - Last Ten Fiscal Years ................................. 59 6 Sewer Fund Revenue by Type - Last Ten Fiscal Years ................................ 60 7 Water Fund Expenses by Type - Last Ten Fiscal Years ............................... 61 8 Sewer Fund Expenses by Ty pe - Last Ten Fiscal Years ............................... 62 Revenue Capacity 63-70
Exhibit
9 Source of Water (Pumped, Purchased, and Reclaimed)
and Consumption - Last Ten Fiscal Years ................................................ 65 10 Water Rates: Volumetric Rate Charges - Last Ten Fiscal Years ................... 66 11 Water Rate
s: Daily Service Charges by Size - Last Ten Fiscal Years .......... 66 12 Water Rates: Daily Fireline Service Charge by Size ..................................... 67 13 Ten Largest Potable Water Users in the City of Long Beach Current Year and Nine Years Ago ............................................................ 67 14 Ten Largest Reclaimed Water Us ers in the City of Long Beach Current Year and Nine Years Ago ............................................................ 68 15 Sewer Rates: Volumetric Rate Charges & Capacity Charges - Last Ten Fiscal Years ......................................................................... 68 16 Sewer Rates: Daily Service Charges by Size - Last Ten Fiscal Years .......... 69 17 Ten Largest Sewer Users in the City of Long Beach
Current Year and Nine Years Ago ........................................................ 69 iii
Table of Contents
(continued)
Debt Capacity Information 71-76
Exhibit
18 Water Fund Debt Service Cove rage - Last Ten Fiscal Years ........................ 73 19 Sewer Fund Debt Service Cove rage - Last Ten Fiscal Years ....................... 74 20 Water Fund Ratios of Outstanding Debt by Type - Last Ten Fiscal Years .... 75 21 Sewer Fund Ratios of Outstanding Debt by Type - Last Ten Fiscal Years ... 75 Demographic and Economic Information 77-80
Exhibit
22 Demographic Statistics - Last Ten Fiscal Years ............................................ 79 23 Major Employers - Curr
ent Year and Nine Years Ago ................................... 80 24 Number of Employees by Fund ..................................................................... 80 Operating Information 81-86
Exhibit
25 Water Demand - Last Ten Fiscal Years ........................................................ 83 26 Metropolitan Water District’s Rate Changes - Last Ten Fiscal Years ............ 84 27 Water Replenishment District Assessment (Pump Tax) – Last Ten Fiscal Years ........................................................................... 84 28 Operating and Capital Assets Statistics - Water Fund – Last Ten Fiscal Years ........................................................................... 85 29 Operating and Capital Assets Statistics - Sewer Fund – Last Ten Fiscal Years ........................................................................... 85 30 Infrastructure Maintenance and Improvements - Last Ten Fiscal Years ....... 86

DATE March 27, 2023
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, 2022

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, 2022. The Department’s financial statements are also included in the City of Long Beach (the City) Financial Stat ements 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 comprehensi ve framework of internal control that is established for this purpose. Because the cost of internal control should not exceed anticipated be nefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

The accompanying financia l statements have been audi ted 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, 2022. 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 complements this letter of transmittal and should be read in conjunction with it.

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 wate r. 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 pr oviding 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 signi ficant milestones ca me 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 t he 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 456,062 wit h some customers outside the Cit y limits. The Department is not subject to regulation by the California Public Utilities Commission.

LOCAL ECONOMY

Long Beach continues to maximize opportuniti es in today’s global economy by drawing from the strength and adaptability of its local econom y. In the current economic environment, the combination of local, national, and international businesses keeps Long Beach growing to meet the constantly changing needs of city.

Long Beach’s business community continues to grow, thus, the need for housing infrastructure also grows. New residential projects have been approved for construction to meet this need. In addition to city-wi de improvements, there were 50 lane-miles of residential streets rehabilitated, 400 new ADA ramps installed and over 3,000 traffic and street name signs installed by City staff and contractors, which are important to the safety of residents and visitors.

vi
In FY2022, the Department’s customer base is relatively stable and is comprised of ninety percent (90%) residential acco unts, with the remaining ten percent (10%) comprised of commercial, industrial, irrigation and other accounts. The residential accounts comprise approximately sixty-nine percent (69%) of the Department’s total potable water sales.

The City continues its commitment in pr otecting the environment and resources by transitioning to low-polluting public transportation system which uses compressed natural gas and electric power. In addition, the Cit y implements innovative changes throughout its organization to maintain and improve its services. Such improvements include natural gas pipeline leaks survey systems, library s ystem remote services, and airport terminal upgrades and expansions.

Long Beach will continue to face challenges and the Coronavirus Disease 2019 (COVID- 19) pandemic has been a major one. However, the City has been a state and national leader in addressing it and minimizing the impact on the city of Long Beach residents and businesses.

When the World Health Organization (WHO) declared a global pandemic due to the outbreak of the COVID-19 on March 11, 2020, the City took many actions including issuing health orders (the Cit y is one of the few in Ca lifornia with it s own health department) to restrict social gatherings, requi re face coverings when in a business or within six feet of another per son and holding some of the largest COVID-19 vaccination and testing events throughout various City locations. In the face of the financial impacts, there were deferrals of business taxes and fees for those businesses impacted by the pandemic, deferrals of lease payments to the City by impacted tenants, as well as grants and other actions (often support ed by federal financial assistance) to assist businesses and residents. A moratorium on evictions wa s enacted to provide relief to residential tenants facing hardships, temporary relief from parking penalties, and financing options for business and residents having difficulty paying these costs.

In FY2022, the Department continues to recognize the effects on revenue streams of the Coronavirus Disease 2019 (COVID-19) pandemic and has been monitoring the accounts receivables as a portion of these are expected to ultimately become uncollectable and be written off as lost revenue. Also, the Department is monito ring Federal and State legislation which is intended to provide economic relief to customers in the form of assistance in paying past due utility bills. Fu rthermore. the Department is engaging in customer outreach with flexible payment options for customers with past due bills. The economic impact on revenues is not expect ed to be permanent and the Department is continuously searching for new opportunities to reduce the economic hardship endured by its residents and businesses.

Further information on the local economy is pr ovided in the City of Long Beach Annual Comprehensive Financial Report.

vii

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.

Drought Related Developments
Long Beach water demand peaked in 1990, but water demand has been declining ever since. The reduced water demand can be attri buted to a combination of a steady commitment to water conserva tion efforts by the Departm ent and statewide droughts in 1990-1991, 2007-2009, 2015-2016, and 2020-2022, each of which triggered a sharp decrease in water demand. Conservation efforts have in cluded aggressive public outreach and incentive programs for water saving measures. 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 are also offset by a reduction in operating expenses as a result of reduced need for imported water purchases from Metropolitan Water District (MWD).

Additionally, the Department managed discretionary budget expenses to minimize initial budget and rate impacts from reduced consum ption. 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 perc ent (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 jo urney 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 percola tes underground through sand and water beds where it begins a lengthy subsurface journey to Long Beach. High-powered pumps then extract it from 21 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 tabl es. In 1959, to protect this vital source of local water supply, the Board initiated a lawsuit agains t 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

viii
for voluntary reduction of pumpage within the basin to restore and protect the water table and to expedite the above judgment to perm anently 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.

Imported Supplies
Another portion of the City’s potable (drinking) water supply is treated water purchased from MWD. This water orig inates from two sources: th e 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 orig inating from the Oroville Dam and Reservoir and the Sacramento River Delta. The SWP is an intric ate 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 California 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, 2022 (FY2022), the Department se rved approximately 3.1 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 t he Alamitos Barrier, an engineered freshwater pressure ridge and seawater trough constructed to prevent seawater intrusion into the Central Basin and neighboring Orange County Gr oundwater Basin. In 2015, LVLAWTF was expanded, providing the operational flexib ility to meet the needs of th e Alamitos Barrier almost entirely with recycled water, minimizing the need of imported water.

Conservation
The Department has an aggressive water conserva tion program that of fers a variety of opportunities to conserve water across diffe rent 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 fo r water. Several of the D epartment’s programs provide rebates to residential custom ers towards the purchase of water-efficient toilets and washing machines.

Close to half of single-family residential water use is estimated to be for landscape irrigation. The Department has also developed and implemented programs whereby customers can apply for an incentive to replace turf with a California-friendly landscape.

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 wh ich will be expanded to include other CII sectors.

Long Beach Water Department pr omotes 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 Stat e standards. The Department continues to be recognized as a leader in water quality. Our extensive testing and Quality Assurance/Quality 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 laborator ies. 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 11,818 samples and performed 62,090 tests while maintaining certification with the California Department of Health Serv ices and Environmental Protection Agency (EPA).

During fiscal year 2022, the Groundwater Treatment Plant processed approximately 7.5 billion gallons of drinking water. Overall, 15.6 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 Infrastruc ture (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 pr ovide enhanced customer benefits, ultimately allowing for more self-monitoring of water use by customers via an interactive web portal, allowing for more timely 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 2000’s, through an innovative public sector partnership, the Long Beach Water Department along with the Los Angeles Department of Water & Power and the United States Bureau of Reclam ation operated a 300,000 gallon-per-day prototype desalination facility, one of the largest seawater desalination research and development facilities in the United States at the time. 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 Re clamation. The Department continued to operate the under-ocean intake and discharge system to collect data and research the performance of the system until mid-year 2022 in prepa ration of removing the system required by the California Coastal Commission. The Department is currently demolishing the desalination facility with the anticipated removal completed by May 2023.

Conjunctive Use
The Department has also par tnered with MWD and the California Department of Water Resources (DWR) on an innovative groundw ater storage program . The $4.5 million project, which was funded by State of Californi a Proposition 13, stored surplus water in the Central Groundwater Basi n, and has previously, deliv ered 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, 2022, the water distribution system totaled 917 miles of water mains with approximately 90,000 service connections.

During fiscal year 2022, the D epartment replaced 11 ,392 feet of deterio rated cast iron water mains with new ductile iron pipe. This critical replacemen t program addresses upgrading old pipelines, many of which were installed more than 50 years ago.

xi
The Department maintains 646 la rge control valves 20 inches or more in diameter and 23,505 smaller control valves. The Depar tment has a maintenance and replacement program to ensure that contro l valves are operational and t hat they can be turned off or on promptly during emergencie s. The Department responds immediately, 24-hours a day, 365 days a year to water emergencies. With 21 active water wells across Long Beach supplying just over half of the City’s water, well maintenance is another ongoing project for the Department. Rehabilit ation of water wells and stor age 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, 2022, the sanitary sewer collection system totaled 714 miles of sewer pipelines. The Department developed the first City- wide Sewer Master Plan in 1991, which prov ided an initial prioritization of sewer deficiencies to be addressed. The Depar tment 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 infrastructu re rehabilitation and replacement program

The Department continues to develop and impl ement a multi-year Capital Improvement Program to address aging pipeline and lift station infrastructure. In 2021, the Department began another Sewer Master Plan Update Projec t to renew the comprehensive plan for the Department's sanitary sewer system, studying the existi ng sewer infrastructure and aiding in the planning of future operat ions, 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. The Department is currently in the process of finalizing the new Sewer Master Plan Update and is expected to complete the study mid- year 2023.

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 re covered through user charges assessed by meter size, volumetric charges and other miscellaneous charges. The cost of providing sewer service is also recover ed through user and volumetric charges for all water customers who are connected to the Cit y’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 c ontrols designed to provide reasonable assurance regarding the safeguardi ng 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 po licies. 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 co sts 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 revenues and expenditures of the Department. The D epartment'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 D epartment’s financial statements. Instead, they are utilized primarily fo r 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, exc ept in certain areas where they are controlled by individual projects.

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, 2021
Long Beach Water Department
Organizational Chart
Board of Water
Commissioners
Executive Secretary 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
Manager‐Water
Services
Manager‐Support
Services
Director of
Finance
Director of
Administration
Director of Government
and Public Affairs
Manager‐ Sewer
Operations
Manager‐Water
Treatment
Manager‐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
Deputy General
Manager

xvi

LONG BEACH WATER DEPARTMENT

BOARD OF WATER COMMISSIONERS

GLORIA CORDERO PRESIDENT

NAOMI RAINEY VICE PRESIDENT

GINA RUSHING MAGUIRE SECRETARY

FRANK MARTINEZ MEMBER

ROBERT SHANNON MEMBER

STAFF

CHRISTOPHER J. GARNER
General Manager

B. ANATOLE FALAGAN
Assistant General Manager

FINANCIAL SECTION

Intentionally Left Blank

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.

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

Report on the Audit of the Financial Statements
Opinions
We have audited the 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, 2022, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and each major fund for the Department, as of September 30, 2022, 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.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter
As 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 City, as of September 30, 2022, 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 opinions are not modified with respect to this matter.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
2 Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit. x Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. x Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Department’s internal control. Accordingly, no such opinion is expressed. x Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

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

Other Information
Management is responsible for the other information included in the annual comprehensive financial report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. 3 In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Report on Other Legal and Regulatory Requirements
In accordance with Government Auditing Standards, we have also issued our report dated March 27, 2023 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 27, 2023

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

4 As the management of the Long Beach Water Department, a department of the City of Long Beach (the City), we offer readers of t he Long Beach Water De partment’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, 2022. We encourage readers to consider the information presented he re 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 2022 (FY2022) by $424,522 (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 FY2022 by $339,574. This amount includes a total of net investment in capital assets of $332,612, and $1,027 in resources that are subject to restrictions on how they may be used. The Water Fund reported an unrestricted net position of $5,935 in FY2022.

Total Water Fund net position decreased by $8,563 (-2.5%) from the prior fiscal year. The decrease is mostly due to net increases on expenditures during the year.

Sewer Fund. Total Sewer Fund net position totaled $84,948 as of September 30, 2022, an increase of $5,279 (+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 FY2022, the net investment in capital assets and the unrestricted portion of net position totaled $79,066 and $5,578, respectively.

Significant Department Events

A lawsuit filed back in October 2018, against the City of Long Beach (City) alleging that the passage of Utility Revenue Transfer Charter Amendment (Measure M) violated Article XIII of the California Constitution and was unenforceable insofar as it authorized the transfer of funds from the Water and Sewer Funds to the General Fund. In February 2020, the Superior Court of Los Angeles County issued a final ruling, in favor of the plaintiffs, finding Measure M unconstitutional, ordering the return of funds previously transferred under the authority granted by Measur
e M, and prohibiting the future transfer of funds pursuant to Measure M.

In FY2022, the court-ordered payment transfers in the amount of $30,832 from the City were fulfilled. Although not legally required, the Board of Water Commissioners (Board) approved a one-time utility rebate amount not to exceed $30,832, to all current water customers of the Department. The credit to customers applied against customer accounts’ consumption and service charges went in effect in FY2022.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

5 In FY2022, the Department continues to recognize the effects on revenue streams of the Coronavirus Disease 2019 (COVID-19) pandemic and has been monitoring the accounts receivables as a portion of these are expected 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. As a result of this effort, the Department received funds in the amount of $1,195 from the Califo rnia Water and Wastewater Arrearage Payment Program (CWWAPP). This program was initiated by the State of California to offer financial assistance to water and sewer customers to help reduce past-due bill balances that accrued during the pandemic. In FY20 22, the CWWAPP funds received were applied to eligible customer bills. Moreover, the Department continues to engage in customer outreach with flexible payment options for customers with past-due bills.

As changes in the p andemic 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.

Effects of these signific ant 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 Lo ng Beach Annual Co mprehensive Financial Report as of September 30, 2022.

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.

The Statements of Net Position present the Department’s assets, deferred outflows, liabilities, and deferred inflows, 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 Depa rtment’s net position have changed duri ng the most

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

6 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., accounts 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 28-52 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, 2022 , Water Fund as sets and deferred outflows exceeded liabilities and deferred inflows by $339,574, and Sewer Fund assets and deferred outflows exceeded liabilities and deferred inflows by $84,94 8, representi ng an 2.5% decrease in net position over the prior fiscal year for the Water Fund and a 6.6% increase in Sewer Fund net position. Net positions are further categorized by net investment in capital assets, restricted and unrestricted net positions.

As of September 30, 2022, 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 $332,612 and $79,066 of Water F und 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.

The restricted portion of the Department’s net position amounted to $1,027 and $304 for Water Fund and Sewer Fund, respectively. This represents 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 $5,935 as of September 30, 2022, representing a 70.4% decrease compared to FY2021. The Sewer Fund’s unrestricted portion amounted to $5,578, representing a 24.2% increase over FY2021. The unrestricted

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

7 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, 2022 and 2021 are as follows:

2022 2021 Amount %
Assets:

Current and other assets 81,883$ 97,238$ (15,355)$ -15.8% Capital assets 468,757 445,147 23,610 5.3%
Total assets 550,640 542,385 8,255 1.5%
Deferred outflows of resources 17,359 6,511 10,848 166.6% Liabilities:

Current liabilities 34,054 30,180 3,874 12.8%
Noncurrent liabilities 105,086 69,594 35,492 51.0%
Total liabilities 139,140 99,774 39,366 39.5%
Deferred inflows of resources 4,337 21,316 (16,979) -79.7% Net Position:

Net investment in capital assets 411,678 401,510 10,168 2.5% Restricted 1,331 1,745 (414) -23.7%
Unrestricted 11,513 24,551 (13,038) -53.1%
Total net position 424,522$ 427,806$ (3,284)$ -0.8% 2022/2021
Long Beach Water Department
Condensed Schedules of Net Position
September 30, 2022 and 2021
(in thousands)
Variance

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

8 The Department’s financial position is fu rther broken down as follows between the Department’s Water Fund and the Sewer Fund as of September 30, 2022 and 2021:

2022 2021 Amount %
Assets:

Current and other assets 67,539$ 83,340$ (15,801)$ -19.0% Capital assets 379,767 360,205 19,562 5.4%
Total assets 447,306 443,545 3,761 0.8%
Deferred outflows of resources 14,585 5,423 9,162 168.9% Liabilities:

Current liabilities 31,244 27,403 3,841 14.0% Noncurrent liabilities 87,638 55,824 31,814 57.0% Total liabilities 118,882 83,227 35,655 42.8%
Deferred inflows of resources 3,435 17,604 (14,169) -80.5% Net Position:

Net investment in capital assets 332,612 326,635 5,977 1.8% Restricted 1,027 1,441 (414) -28.7%
Unrestricted 5,935 20,061 (14,126) -70.4%
Total net position 339,574$ 348,137$ (8,563)$ -2.5% Water F und
Condensed Schedules of Net Position
September 30, 2022 and 2021
(in thousands)
Variance
2022/2021
2022 2021 Amount %
Assets:

Current and other assets 14,344 $ 13,898 $ 446 $ 3.2% Capital assets 88,990 84,942 4,048 4.8%
Total assets 103,334 98,840 4,494 4.5%
Deferred outflows of resources 2,774 1,088 1,686 155.0% Liabilities:

Current liabilities 2,810 2,777 33 1.2% Noncurrent liabilities 17,448 13,770 3,678 26.7% Total liabilities 20,258 16,547 3,711 22.4%
Deferred inflows of resources 902 3,712 (2,810) -75.7% Net Position:

Net investment in capital assets 79,066 74,875 4,191 5.6% Restricted 304 304 - -
Unrestricted 5,578 4,490 1,088 24.2%
Total net position 84,948$ 79,669$ 5,279$ 6.6% 2022/2021
Sewer Fund
Condensed Schedules of Net Position
September 30, 2022 and 2021
(in thousands)
Variance

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

9 Fiscal Year Ended September 30, 2022 Compared to 2021

Water Fund. Net position decreased by $8,563 (-2.5%) over FY2021. This net decrease is mostly attributable to a loss from operations of $11,483 in FY2022. This decrease was offset by capital grants and contributions fr om various Developers for water distribution system improvements in the amount of $2,920.

Current and other assets decreased by $15,801 (-19.0%) from FY2021, which reflects a decrease in receivables from other government funds in the amount of $31,220 (-99.7%), which is related to the fulf illment of the Measure M payment transfers from the City.

However, this decrease was offset by an increase in pooled cash and cash equivalents by $17,836 (+71.1%), mainly due to a $14,000 drawing on the Second Lien Water Revenue Short-Term Obligation Revolving Line of Credit (Water LOC) to fund water capital projects in FY2022.

Capital assets increased by $19,562 (+5.4%) over the prior year, mainly due to the ongoing capital improvement program such the cast iron water main replac ement, water service installations, well development and rehabilitation, large valve replacements, machinery and equipment purchases, and facility improvements.

Deferred outflows of resources increased by $9,162 (+168.9%) over FY2021. The majority of the net increase in FY2022 is a result of increases in the difference between actual and expected investment returns in the amount of $7,429 (+100.0%) and changes on actuarial assumptions and proportions in the amount of $1 ,836 (+243.2%). In addition, pension contributions after the measurement date increased by $12 (+12.4%) compared to FY2021.

However, this net increase was offset by a decrease of $ 198 (-38.8%) on debt refunding and a decrease of $50 (-14.5%) in change s in actuarial assu mptions on Other Postemployment Benefits (OPEB) costs compared to FY2021. Additional information on deferred outflows related to pensions is provided on Note 5 - Retire ment Program of the Notes to Financial Statements on page 47.

Current liabilities increased by $3,841 (+14.0%) compared to FY2021, mainly due to an increase in accounts payable by $4,371 (+27.9%) rela ting to continued expenditures in operating activities and capital improvement programs. This increase was offset by a decrease of $547 (-35.6%) in employee benefits payables due in FY2022.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

10 Noncurrent liabilities increased by $31,814 (+57.0%) from FY2021, primarily due to the net pension liability increase in the amount of $23,554 (+117.7%) resulting from a significant increase in investment returns in the California Public Employees’ Retirement System (CalPERS) pension plans. In addition, the Department drew $14,000 from the Water LOC to fund water capital projects in FY2022. However, this increase was of fset by annual principal payments on debt and bonds prem ium amortization in FY2022 resulted to a decrease in long-term bond s payable by $3,681 (-36.0% ). Furthermor e, long-term obligations on the equipment financing agreement executed by the Department to finance the AMI project decreased by $1,696 (-8.7%) in FY2022. Additional information is provided on Note 4 - Long-term Liabilities of the Notes to Financial Statements on page 42.

Deferred inflows of resources decreased by $14,169 (-80.5%) over FY2021. This net decrease mainly reflects a total of $15,081 (- 92.1%) decreases in differences between actual and projected experience and OPEB costs. However, this decrease was offset by increases in changes in actuarial assumptions, proportionate share of deferred pension and deferred amount for leases in the amount of $912 (+73.7%) compared to FY2021. Additional information on deferred lease receivable is found on Note 1 – Description of the Department and Summary if Significant Accounting Policies on page 28 and on deferred outflows related to pensions is provided on Note 5 - Retirement Program of the Notes to Financial Statements on page 47.

Sewer Fund. Net position increase d $5,279 (+6.6%) over FY 2021. This in crease is primarily due to revenues in excess of expenses.

Current assets and other assets increased by $446 (+3.2%) over FY2021, mainly due to increases in pooled cash and cash equivalents and in customer accounts receivable by $117 (+1.0%) and $278 (+21.3%), respectively, which reflect increases on sales revenues in FY2022.

Capital assets increased by $4,048 (+4.8%) over FY2021, 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.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

11 Deferred outflows of resource s increased by $1,6 86 (+155.0%) over FY2021. This net increase reflects increases on difference between actual and expected investment returns in FY2022 in the amount of $1,445 (+100%). In addition, the actuarial determined deferred pension costs increased by $268 (+113.56% ) compared to FY2021, due to changes in actuarial assumptions, experience, and funds proportion of the City-wide pension liability. However, these incr eases were offset by decreases in c hanges in actuarial assumptions on OPEB costs in the amount of $14 (-31.8%) and in pension contributions after measurement date by $11 (-1.41%) compared to FY2021. Additional information on deferred outflows related to pensions is provided on Note 5 - Retire ment Program of the Notes to Financial Statements on page 47.

Current liabilities increased by $33 (+1.2%) over FY2021, which is mainly due to an increase in accounts payable amounts by $349 (+31.0%). This was offset by decreases in accrued wages, compensated absences payable, and unearned revenue amounting to $259 (-35.2%).

Noncurrent liabilities increased by $3,678 (+26.7%) from FY2021, primarily due to an increase in the net pension liabilities of $4,373 (+106.7%). However, this increase was offset by a decrease in long-term bonds payable in the am ount of $526 (-6.1%) due to annual principal payments on Series 2016A Bonds. Additional information is provided on Note 4 - Long-term Liabilities of the Notes to Financial Statements in page 42 and on Note 5 - Retirement Program on page 47.

Deferred Inflows of resource s decreased by $2,810 (-75.7 %) over FY2021. This net decrease reflects changes in actuaria l assumptions, differenc es between actual and projected experience and proportionate share of deferred pension in the amount of $2,769 (-80.9%) in FY2022. In addition, the Department recorded a net decrease in OPEB costs in the amount of $41 (-14.3%). Additional information on deferred outflows related to pensions is provided on the Note 5 - Re tirement Program of the Notes to Financial Statements on page 47.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

12 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, 2022 and 2021:

2022 2021 Amount %
Operating Revenues:

Metered sales 80,454 $ 79,591 $ 863 $ 1.1% Reclaimed water sales 4,584 4,888 (304) -6.2% Service charges 49,783 46,062 3,721 8.1% Other services 9,221 6,747 2,474 36.7% Total operating revenues 144,042 137,288 6,754 4.9%
Operating Expenses:

Cost of water 32,211 27,672 4,539 16.4%
Personal services 29,856 18,810 11,046 58.7%
Commercial Services 3,302 2,751 551 20.0%
Maintenance and other 37,903 33,825 4,078 12.1%
Street Impact charges 3,531 4,066 (535) -13.2% Depreciation and amortization 16,572 16,272 300 1.8%
Total operating expenses 123,375 103,396 19,979 19.3%
Operating income 20,667 33,892 (13,225) -39.0%
Nonoperating Income (Expenses):

Interest income 458 382 76 19.9%
Investment loss (2,513) (300) (2,213) 737.7%
Interest expense (1,478) (1,618) 140 -8.7%
Rental income 1,148 1,036 112 10.8%
Payments from/(to) the City - 22,204 (22,204) -100.0% Payments from other governments 1,195 - 1,195 100.0% Credit to customers (23,652) - (23,652) 100.0% Other (2,162) 854 (3,016) -353.2%
Total non-operating income (expense) (27,004) 22,558 (49,562) -219.7% Income (loss) before capital grants and contributions (6,337) 56,450 (62,787) -111.2% Capital grants and contributions 3,053 2,854 199 7.0%
Changes in net position (3,284) 59,304 (62,588) -105.5% Net position - October 1 427,806 368,502 59,304 16.1%
Net position - September 30 424,522$ 427,806 $ (3,284) $ -0.8% 2022/2021
Long Beach Water Department
Condensed Schedules of Revenues, Expenses, and Changes in Fund Net Position F iscal Years Ended September 30, 2022 and 2021
(in thousands)
Variance

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

13 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, 2022 and 2021:

2022 2021 Amount %
Operating Revenues:

Metered sales 74,204 $ 73,876 $ 328$ 0.4% Reclaimed water sales 4,584 4,888 (304) -6.2% Service charges 37,526 34,900 2,626 7.5%
Other services 6,281 5,304 977 18.4%
Total operating revenues 122,595 118,968 3,627 3.0%
Operating Expenses:

Cost of water 32,211 27,672 4,539 16.4%
Personal services 25,350 15,555 9,795 63.0%
Commercial Services 1,827 1,496 331 22.1%
Maintenance and other 33,963 30,052 3,911 13.0% Street Impact charges 1,513 1,948 (435) -22.3% Depreciation and amortization 13,785 13,429 356 2.7% Total operating expenses 108,649 90,152 18,497 20.5%
Operating income 13,946 28,816 (14,870) -51.6%
Nonoperating Income (Expenses):

Interest income 337 271 66 24.4%
Investment loss (1,964) (170) (1,794) 1055.3% Interest expense (1,266) (1,394) 128 -9.2% Rental income 1,148 1,036 112 10.8%
Payments from/(to) the City - 22,204 (22,204) -100.0% Payments from other governments 1,061 - 1,061 100.0% Credit to customers (23,518) - (23,518) 100.0% Other (1,227) 968 (2,195) -226.8%
Total non-operating income (expense) (25,429) 22,915 (48,344) -211.0% Income (loss) before capital grants and contributions (11,483) 51,731 (63,214) -122.2% Capital grants and contributions 2,920 2,665 255 9.6% Changes in net position (8,563) 54,396 (62,959) -115.7% Net position - October 1 348,137 293,741 54,396 18.5% Net position - September 30 339,574$ 348,137$ (8,563)$ -2.5% 2022/2021
Water Fund
Condensed Schedules of Revenues, Expenses, and Changes in F und Net Position F iscal Years Ended September 30, 2022 and 2021
(in thousands)
Variance

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

14 2022 2021 Amount %
Operating Revenues:

Metered sales 6,250$ 5,715$ 535$ 9.4% Service charges 12,257 11,162 1,095 9.8% Other services 2,940 1,443 1,497 103.7% Total operating revenues 21,447 18,320 3,127 17.1%
Operating Expenses:

Personal services 4,506 3,255 1,251 38.4%
Commercial Services 1,475 1,255 220 17.5%
Maintenance and other 3,940 3,773 167 4.4%
Street Impact charges 2,018 2,118 (100) -4.7%
Depreciation 2,787 2,843 (56) -2.0%
Total operating expenses 14,726 13,244 1,482 11.2%
Operating income 6,721 5,076 1,645 32.4%
Nonoperating Income (Expenses):

Interest income 121 111 10 9.0%
Investment loss (549) (130) (419) 322.3%
Interest expense (212) (224) 12 -5.4% Payments from other governments 134 - 134 100.0% Credit to customers (134) - (134) 100.0% Other (935) (114) (821) 720.2%
Total non-operating income (expense) (1,575) (357) (1,218) 341.2% Income before capital grants and contributions 5,146 4,719 427 9.0% Capital grants and contributions 133 189 (56) -29.6% Changes in net position 5,279 4,908 371 7.6%
Net position - October 1 79,669 74,761 4,908 6.6%
Net position - September 30 84,948$ 79,669$ 5,279$ 6.6% 2022/2021
Sewer Fund
Condensed Schedules of Revenues, Expenses, and Changes in Fund Net Position F iscal Years Ended September 30, 2022 and 2021
(in thousands)
Variance

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

15 Sources of Revenues

Sources of revenue for fiscal years 2022 and 2021 are shown on the following charts.

Water Fund

2022 2021

Sewer Fund

2022 2021

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

16 Management Review of the Department’s Revenues

Water Fund

Fiscal Year Ended September 30, 2022 Compared to 2021
Total operating revenues were $122,595, an in crease of $3,627 (+3.0%) over FY2021.

The major elements of this net increase are as follows:
 Metered sales revenue increased by $328 (+0.4%), primarily due to a net increase of

5.5% on water rates in FY20 22. This was offset by a 2, 494 AF (-5.0%) decrease in consumption.
 Reclaimed water sales revenue decreased by $304 (-6.2%) mainly due to a decrease in consumption by 671 AF (-12.0%) compar ed to FY2021. However, this was offset by a 5.5% net increase in reclaimed water rates in FY2022.  Service charges increased by $2,626 (+7.5%) over FY2021 which reflects a net increase of 5.5% on rates during FY2022.
 Revenue from other services totaled $6,281, a net increase of $977 (+18.4%) from the prior year. This is primaril y due to an increa se in reimbursements received by $830 (+377.5%) compared to FY2021, relating to conservation programs such as Lawn-to- Garden Conservation Incentives, Direct Install Gardens and Leak Detection Services.

Capital grants and contributions increased by $255 (+9.6%) compared to FY2021, primarily due to an increase in the amount of $305 (+100.0%) on contributions received in relation to the Port Water System project.

Sewer Fund

Fiscal Year Ended September 30, 2022 Compared to 2021
Total operating revenues increased $3,127 (+17.1%) over FY2021. The key elements of this increase are as follows:
 Metered sales and service charges revenue increased by $535 (+9.4%) and $1,095 (+9.8%) respectively, over FY2021 as a resu lt of a 10% sewer ra te increase. This increase was slightly offset by a 607 AF decrease in volumetric demand in FY2022.  Other services revenue increa sed by $1,497 (+103.7%) over FY2021, 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 decreased by $56 (-29.6%) compared to FY2021, primarily due to a decrease in proceeds received from sewer collection system development agreements with the Department.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

17 Functional Expenses

Functional expenses for the 2022 and 2021 fiscal years are shown on the following charts.

Water Fund

2022 2021

Sewer Fund

2022 2021

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

18 Management Review of the Department’s Expenses

Water Fund

Fiscal Year Ended September 30, 2022 Compared to 2021
Operating expenses totaled $108,649, an in crease of $18,497 (+20.5%) over FY2021.

The major elements attributable to the net increase are as follows:
 In FY2022, purchased water costs and volume increased by $4,539 (+16.4%) and 3,167 AF (+16.6%) respectively. Increased relia nce on imported water was a result of a scheduled shutdown of the Groundwater Treatment plant for repair and maintenance in FY2022.
 Personal services costs in creased by $9,795 (+63.0%) in FY2022, primarily due to increases in pension costs and fringe benefits in the amount of $7,470 (+1,665.3%). In addition, employee salaries, compensat ed absences costs, and overtime costs increased by $2,004 (14.0%) due to increases on negotiated salary range and Cost of Living Allowance (COLA) in FY2022.
 Maintenance and other costs had a net increase of $3,911 (+13.0%) from FY2021. The net increase is primarily attributable to the following factors:
 Materials and other contra ctual services costs incurred for repair, maintenance and daily operations increased by $2,045 (+40.8%) comp ared to FY2021, primarily due to an increase in sales and contract prices and operating activities.

This includes laboratory supplies, fuel, electrical supplies, machinery and equipment parts, advertising services, security services, disposal services and other contractual services.
 Legal fees and services increased by $812 (+3,429.1%) compared to FY2021, mainly due to legal fees paid in relation to the Measure M litigation.  Technology infrastructure services increased by $270 (+27.4%) due to the allocated costs increases compared to FY2021.
 Property and liability insurance costs increased by $693 (+66.1%) compared to FY2021, due to an increase in evaluated share of costs from the City.

FY2022 net nonoperating expense totaled $25,429, a net decrease of $48,344 (-211.0%) over FY2021. The net decrease is primarily due to the following factors:
 Payments from the City decreased by $22, 204 (-100.0%) in FY2022. This is primarily due to non-operating income related to Measure M being fully recognized in FY2021.  Credit to customers costs in creased by $23,518 (+100.0%) in FY2022, mainly due to a one-time utility rebates applied against consumption and daily service charges on all water customers’ utility bills.

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

19  Other expense had a net increase of $2,195 (-226.8%) in FY2022, primarily due a net decrease of $1,897 (-91.0 %) on other non-oper ating revenue rece ived relating to damage claims recoveries and the conclusion of four equal annual payments from the City stipulated in the Settlement and Release Agreement (Agreement) which came into effect on November 8, 2017.
 Investment loss incr eased by $1,794 (+1,055.3%) mainly due to a decrease in income received relating to pooled cash and mark-to-market pooled cash investments.

Sewer Fund

Fiscal Year Ended September 30, 2022 Compared to 2021

Total operating expenses amounted to $14, 726, an increase of $1,482 (+11.2%) over FY2021. This net increase is mostly attributable to the following elements:
 Personal services costs increased by $1, 251 (+38.4%) in FY2022, primarily because of increases in pension costs and fringe benefits in the amount of $1 ,035 (+154.4%). In addition, overtime costs increased by $73 (+18.8%) due to incr eases on negotiated salary range, COLA, and sewer operating activities in FY2022.  Commercial services costs increased by $220 (+17.5%) compared to FY2021, due to an increase in allocated cost s for utility customer supp ort and billing and collection services charges from the City.

FY2022 net nonoperating expense totaled $1,575, a net increase of $1,218 (+341.2%) compared to FY2021. The net increase is primarily due to the following factors:
 Other expense had a net incr ease of $821 (+720.2%) in FY2022, primarily due a net decrease of $1,044 (-80.8%) on other non-operating income received relating to damage claims recoveries and with the conclusion of four equal annual payments from the City stipulated in the Agreement.
 Investment loss increased by $419 (+322.3%) mainly due to a decrease 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, 2022

20 Capital Assets and Debt Administration

Capital assets. The Department’s capital assets (net of accumulated depreciation and amortization) as of September 30, 2022 amounted to $379,767 for the Water Fund and $88,990 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 furn iture. For FY2022, net capital assets increased $19,562 (+5. 4%) and $4,048 (+4.8%) for Water Fund and Sewer Fund, respectively. The net increase is due primarily to machinery and equipment purchases and capitalization of major potabl e 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, 2022 and 2021 (in thousands):

2022 2021 Amount %
Land 11,214 $ 11,214 $ - $ - Water Rights 40 40 - - Patent 815 815 - - Buildings, structures, and facilities 165,106 163,547 1,559 1.0% Distribution/collection systems 616,109 601,956 14,153 2.4% Machinery and equipment 27,560 27,744 (184) -0.7%
Construction in progress 91,766 68,166 23,600 34.6%
Total capital assets 912,610 873,482 39,128 4.5%
Less: accumulated depreciation and amortization (443,853) (428,335) (15,518) 3.6% Total capital assets, net 468,757$ 445,147 $ 23,610 $ 5.3% 2022/2021
Long Beach Water Department
Condensed schedules of Capital Assets
September 30, 2022 and 2021
(in thousands)
Variance

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

21 The Department’s capital assets are furt her broken down as follows between the Department’s Water Fund and the Sewer Fund for the years ended September 30, 2022 and 2021:

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

2022 2021 Am ount %
Land 11,214$ 11,214$ -$ -
Water Rights 40 40 - - Patent 815 815 - - Buildings, structures, and facilities 152,676 151,117 1,559 1.0% Distribution/collection systems 394,618 383,489 11,129 2.9% Machinery and equipment 20,628 20,921 (293) -1.4%
Construction in progress 80,256 60,015 20,241 33.7%
Total capital assets 660,247 627,611 32,636 5.2%
Less: accumulated depreciation and amortization (280,480) (267,406) (13,074) 4.9% Total capital assets, net 379,767$ 360,205$ 19,562$ 5.4% Water Fund
Capital Assets
September 30, 2022 and 2021
(in thousands)
Variance
2022/2021
2022 2021 Amount %
Buildings, structures, and facilities 12,430 $ 12,430 $ - $ - Distribution/collection systems 221,491 218,467 3,024 1.4% Machinery and equipment 6,932 6,823 109 1.6%
Construction in progress 11,510 8,151 3,359 41.2%
Total capital assets 252,363 245,871 6,492 2.6%
Less: accumulated depreciation (163,373) (160,929) (2,444) 1.5% Net capital assets 88,990$ 84,942 $ 4,048 $ 4.8% 2022/2021
Sewer Fund
Capital Assets
September 30, 2022 and 2021
(in thousands)
Variance

LONG BEACH WATER DEPARTMENT

Management’s Discussion and Analysis
September 30, 2022

22 Long-term obligations. As of September 30, 2022, the Department had total outstanding long-term obligations in the amount of $29,595 for the Water Fund and $8,523 for the Sewer Fund. All debt is support ed by Water F und revenues and Sewer Fund revenues. Total Department outstanding debt as of September 30, 202 2 and 2021 is summarized as follows:

2022 2021 Amount %
Equipment Financing obligation:

Equipment Financing obligation-AMI 19,587 $ 21,226 $ (1,639) $ -7.7% Total equipment financing obligation outstanding 19,587 21,226 (1,639) -7.7% Long-term debt:

Revenue refunding bonds 9,645 12,945 (3,300) -25.5% Water Revenue Revolving Line of Credit 14,000 - 14,000 100.0% Long-term debt outstanding, net 23,645 12,945 10,700 82.7% Unamortized bond discount - - - - Add: Unamortized bond premium 363 594 (231) -38.9%
Total long-term debt outstanding 24,008 13,539 10,469 77.3% Total long-term obligations 43,595$ 34,765$ 8,830$ 25.4% Water Fund
Long-Term Obligations
September 30, 2022 and 2021
(in thousands)
Variance
2022/2021
2022 2021 Amount %
Long-term debt:

Revenue refunding bonds 7,570$ 7,960$ (390)$ -4.9% Long-term debt outstanding, net 7,570 7,960 (390) -4.9% Add: Unamortized bond premium 953 1,074 (121) -11.3%
Total long-term obligations 8,523$ 9,034$ (511)$ -5.7% 2022/2021
Sewer Fund
Long-Term Obligations
September 30, 2022 and 2021
(in thousands)
Variance
23 LONG BEACH WATER DEPARTMENT
Management’s Discussion and Analysis
September 30, 2022
The Department maintai
ns AA+ credit ratings from Standard & Poor’s for the Water and Sewer Funds. Additional info rmation on the Department’s long-term obligations can be found in Note 4 - Long-term Liabilities
of the Notes to Financial Statements on page 42.

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, 2023, with budgeted expenditures totali ng approxi mately $156,842, a decrease of $3,041 (- 1.9%) compared to FY 2022. In additi on, Sewer Fund’s budgeted expenditures amounted to $23,188, which decreased by $133 (-0. 6%) in FY 2023.

In FY2023, there were no ra te increases for potable water, reclaimed wate r and sewer collection services compared to FY2022.

Reque
sts
for Information
This financial report is designed to provide a gener al 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.

Water Fund Sewer Fund Total
ASSETS
Current Assets:

Pooled cash and cash equivalents $ 42,935 12,378 55,313 Non-pooled cash equivalents 903 - 903 Interest receivable 4 - 4 Due from other government 877 - 877 Due from the City 101 - 101 Customer accounts receivable 9,222 1,582 10,804 Allowance for doubtful accounts (1,181) (158) (1,339) Material and supplies inventory 7,025 238 7,263 Prepaid expense 2,646 - 2,646 Lease receivable 342 - 342 Restricted assets:

Pooled cash and cash equivalents:

Funds held in trust 1,061 - 1,061 Bond service funds 1,632 304 1,936 Sub-total pooled cash and cash equivalents 2,693 304 2,997 Non-pooled investments 1,972 - 1,972 Total restricted assets 4,665 304 4,969 Total current assets 67,539 14,344 81,883 Noncurrent Assets:

Capital assets:

Land 11,214 - 11,214 Water rights 40 - 40 Patent 815 - 815 Buildings, structures and facilities 152,676 12,430 165,106 Distribution/collection systems 394,618 221,491 616,109 Machinery and equipment 20,628 6,932 27,560 Construction in progress 80,256 11,510 91,766 Total capital assets 660,247 252,363 912,610 Less: Accum
ulated depreciation and amortization (280,480) (163,373) (443,853) Total capital assets, net 379,767 88,990 468,757 Total assets 447,306 103,334 550,640

DEFERRED OUTFLOWS OF RESOURCES
Economics loss from the refunding of debt 313 - 313 Pension contributions after measurement date 3,962 770 4,732 Difference between actual and expected
CalPERS investment returns 7,429 1,445 8,874 Pension changes in assumptions 2,591 504 3,095 OPEB contributions after measurement date 109 20 129 OPEB liability change in proportions 56 12 68 OPEB change in assumptions 95 18 113 OPEB change in experience 30 5 35 Total deferred outflows of resources $ 14,585 2,774 17,359 461,891 106,108 (Continued)

LONG BEACH WATER DEPARTMENT
Statements of Net Position
Business Type Activity - Enterprise
September 30, 2022
24 Water Fund Sewer Fund Total

LONG BEACH WATER DEPARTMENT
Statements of Net Position
Business Type Activity - Enterprise
September 30, 2022

LIABILITIES
Current Liabilities:

Accounts payable $ 20,057 1,475 21,532 Accrued wages payable 124 29 153 Unearned revenue 237 7 244 Accrued compensated absences 2,351 440 2,791 Due to other funds 988 104 1,092 Advances from developers 1,066 215 1,281 Accrued interest payable 194 135 329 Equipment financing obligation due with in one year 1,696 - 1,696 Long-term debt due within one year 3,450 405 3,855 Customer deposits 1,081 - 1,081 Total current liabilities 31,244 2,810 34,054 Noncurrent Liabilities:

Equipment financing obligation, net of current portion 17,891 - 17,891 Long-term debt, net of current portion 20,558 8,118 28,676 Compensated absences 4,501 836 5,337 Total OPEB liability 129 24 153 Net pension liability 43,559 8,470 52,029 Accrued site restoration cost 1,000 - 1,000 Total noncurrent liabilities 87,638 17,448 105,086 Total Liabilities 118,882 20,258 139,140

DEFERRED INFLOWS OF RESOURCES
Pension changes in experience 960 187 1,147 CalPERS change in proportion 864 469 1,333 OPEB change in assumptions 957 180 1,137 OPEB change in proportion 110 45 155 OPEB change in experience 218 21 239 Deferred amount for l
eases 326 - 326 Total deferred inflows of resources 3,435 902 4,337

NET POSITION
Net investment in capital assets 332,612 79,066 411,678 Restricted for:

Bond Service 1,027 304 1,331 Unrestricted 5,935 5,578 11,513 Total Net Position $ 339,574 84,948 424,522 See accompanying notes to financial statements 461,891 106,108 25 Water Fund Sewer Fund Total
Operating Revenues:

Metered sales $ 74,204 6,250 80,454 Reclaimed water sales 4,584 - 4,584 Service charges 37,526 12,257 49,783 Other services 6,281 2,940 9,221 Total operating revenues 122,595 21,447 144,042 Operating Expenses:

Cost of water 32,211 - 32,211 Personal services 25,350 4,506 29,856 Commercial services 1,827 1,475 3,302 Maintenance and other 33,963 3,940 37,903 Street Impact charges 1,513 2,018 3,531 Depreciation and amortization 13,785 2,787 16,572 Total operating expenses 108,649 14,726 123,375 Operating income 13,946 6,721 20,667 Non-operating Income (Expense):

Interest income 337 121 458 Investment loss (1,964) (549) (2,513) Interest expense (1,266) (212) (1,478) Rental income 1,148 - 1,148 Payments from other governments 1,061 134 1,195 Credit to customers (23,518) (134) (23,652) Other (1,227) (935) (2,162) Total non-operating income (expense) (25,429) (1,575) (27,004) Income before capital grants and contributions (11,483) 5,146 (6,337) Capital grants and contributions 2,920 133 3,053 Changes in net position (8,563) 5,279 ( 3,284)
Net position - October 1 348,137 79,669 427,806 Net Position - September 30 $ 339,574 84,948 424,522 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, 2022
26 Water Fund Sewer Fund Total
Cash flows from operating activities:

Cash received from customers $ 124,518 21,058 145,576 Cash paid to employees (26,650) (4,944) (31,594) Cash paid for water (32,609) - (32,609) Cash paid for goods and services (29,636) (5,207) (34,843) Cash paid to the City (1,513) (2,018) (3,531) Other expense (1,412) (1,183) (2,595) Other income 189 2 191
Net cash provided by operating activities 32,887 7,708 40,595 Cash flows from non-capital financing activities:

Cash received from rental income 1,148 - 1,148 Payments received from the City 30,832 - 30,832 Payments received from other governments 1,061 134 1,195 Credit to customers (23,518) (134) (23,652) Net cash (used for)/provided by non-capital financing activities 9,523 - 9,523 Cash flows from capital and related financing activities:

Proceeds from line of credit 14,000 - 14,000 Proceeds from sale of capital assets 98 246 344 Contributions in aid of construction 2,518 133 2,651 Payments for capital acquisitions (33,145) (6,814) (39,959) Principal repayments-bonds (3,300) (390) (3,690) Principal repayments-equipment financing obligation (1,639) - (1,639) Interest payments (1,352) (338) (1,690) Net cash used for capital and related financing activities (22,820) (7,163) (29,983) Cash flows from investing activities:

Receipt of Interest (1,212) (428) (1,640) Net cash use in investing activities (1,212) (428) (1,640) Net increase (decrease) in cash and cash equivalents 18,378 117 18,495 Cash and cash equi
valents, October 1 28,153 12,565 40,718 Cash and cash equivalents, September 30 46,531 12,682 59,213 Reconciliation of operating income to net cash provided by operating activities:

Operating income 13,946 6,721 20,667 Adjustments to reconcile operating income to net cash
provided by operating activities:

Depreciation expense and amortization 13,785 2,787 16,572 Other income (2,473) 136 (2,337) Other expense 1,250 (1,317) (67) Decrease in pension, OPEB and compensated absences (608) (311) (919) Decrease in prepaid expense 2,404 - 2,404 Decrease (increase) in customer accounts receivable 1,814 (276) 1,538 Increase in due from City of Long Beach (87) - (87) Increase in material and supplies inventory (468) (53) (521) Increase in accounts and retainage payable 4,367 348 4,715 Decrease in accrued wages payable (692) (127) (819) Increase (decrease) in unearned revenue 57 (113) (56) Decrease in due to City of Long Beach (547) (87) (634) Increase in customer deposits 139 - 139 Total adjustments 18,941 987 19,928 Net cash provided by operating activities $ 32,887 7,708 40,595 See accompanying notes to financial statements

LONG BEACH WATER DEPARTMENT
Statements of Cash Flows
Business Type Activity - Enterprise
Year ended September 30, 2022
27 LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

28 Note 1 - Description of the Department and Summary of Significant Accounting Policies

Description of the Department

The Long Beach Water Department (the Depar tment) was established in 1911 through adoption of the City Charter of the City of Long Beach, Califor nia (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 714 miles of sewer mains, 15,143 manholes, and 26 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 dist ribution from two sources. Historically, approximately half of the City’s water is purchas ed from the Metropolit an 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, 2022, the Department delivered ov er 3.1 billion gallons of reclaimed water to various users in the City.

Reporting Entity

The Department’s financial activities are considered to be enterprise oper ations 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 accompanying Department financial statements include th e Water and Sewer Fund operations of the City of Long Beach. The stat ements of the Department are intended to present the financial position, and changes in financ ial 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, 2022, 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, 2022
(in thousands of dollars)

29 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 ec onomic resources measurement focus utilizing the accrual basis of accounting. Revenues are recognized in the accounting period in which they are ear ned, 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 Governmental 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, 2022.

In June of 2017, the GASB issued Statement No. 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. It 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 Statement is effective for fiscal years beginning after June 15, 2021, and all reporting periods thereafte r. As a result of the impl ementation of GASB Statement No. 87, lease receivable and deferred inflows of resources as of October 1, 2021 were each restated by $652, with no impact to the beginning net position.

In May of 2019, GASB i ssued Statement No. 91, Conduit Debt Obligations. The primary objectives of this Statement are to provide a single met hod of reporting conduit debt obligations by issuers and elim inate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associ ated with conduit debt obligations, and (3) related note disclosures. This Statement is e ffective for reporting periods beginning after December 15, 2021, and all reporting periods thereafter. Early application of this Statement did not have a material impact to the Departm ent’s financial statements for the fiscal year ended September 30, 2022.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

30 In January of 2020, GASB is sued Statement No. 92, Omnibus 2020. The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. The Statement is effective for reporting periods after June 15, 2021, and all reporting periods thereafter.

Application of this Statement did not have a material impact to the Department’s financial statements for the fiscal year ended September 30, 2022.

In April 2022, GASB iss ued Statement No. 99, Omnibus 2022. The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementat ion and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The requirements related to extension of the use of LIBO R, accounting for Supplemental Nutrition Assistance Program (SNAP) distributions, disclosures of nonmonetary transactions, pledges of future revenues by pledging governments, clarification of certain provisions in Statement No. 34, as amended, and terminology updates related to St atement No. 53 and St atement No. 63 are effective upon issuance. Application of these requirements of this Statement did not have a material impact to the Department’s financial statements for the fiscal year ended September 30, 2022.

In June 2022, GASB iss ued Statement No. 101, Compensated Absences. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and m easurement guidance for compensated absences. The Statement is effective for fiscal years beginni ng after December 15, 2023, and all reporting periods thereafter. Early application of this St atement did not have a material impact to the Department’s financial statements for the fiscal year ended September 30, 2022.

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

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, 2023.

In March of 2020, GASB is sued Statement No. 94, Public-Private and Public-Public Partnerships and Availabi lity 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.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

31 In April 2022, GASB issued Statement No. 99, Omnibus 2022. The requirements related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. The require ments related to fin ancial guarantees and the classification and reporting of derivative inst ruments within the scope of Statement No. 53 are effective for fiscal years beginning after June 15, 2023, and all reporting periods thereafter. This Statement is effective for the Department's fiscal year ending September 30, 2023.

In June 2022, GASB issued Statement No. 100, Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62. This Statement is effective for the Department's fiscal year ending September 30, 2024.

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 ot her 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, 2022, the Water Fund and Sewer Fund had equity in the Pool of $45,628 and $12,682, respectively, which represents approximately 2.35% and 0.65%, respectively, for a total departmental equity of $58,310 or 3.00% of the Pool.

The Department’s share of the Pool is stated at fair value. For a complete description of the Pool and its underlying investment s, 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. Thes e cash equivalents are reported at amortized cost in the accompanying financial statements.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

32 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 pr ice) 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 in itial, 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 capitalize d. The costs of replacement expenditures are expensed as incurred. Upon retire ment 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).

Depreciation of capital assets is provided by the straight-line method based on the estimated service lives of the properties, as follows:

Buildin
gs, 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

Lease Receivable
The Department is a lessor for noncancellable l eases of land and buildings and recognizes a lease receivable and a deferred inflow of resources.

At the commencement of a leas e, the Department measures the lease receivable at the present value of payments expected to be rece ived over the course of the lease term.

Subsequently, the lease receiv able is reduced by the principa l portion of lease payments

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

33 received. The deferred inflow of resources is measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date.

Subsequently, the deferred inflow of resources is recognized as revenue over the lease term.

Key estimates and judgments related to leases in which the Department is lessor are as follows:
• The Department recognizes lease receivables with an initial, individual value of $500 or more.
• The Department uses its estimated implicit rate or incremental borrowing rate as the discount rate for leases, whichever is applicable.
• The lease term includes the noncancellable period of the lease. • Projected lease revenues included in the measurement of the lease receivable are comprised of fixed payments required per the lease terms. • Extension options are included in the leas e term unless it is reasonably certain that they will not be exercised.
• Leases with rent payments that depend on an index or rate , such as the Consumer Price Index or market rate, are initially m easured using the index or rate as of the commencement of the lease term.
• Leases with periodic percentage rent increases or flat rate rent increases that are specified in the lease terms are included in the measurement of the lease receivable.

The Department monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease receiv ables and deferred inflows of resources if certain changes occur that are expected to si gnificantly affect the amount of the lease receivables.

Land rentals

The Department owns approximately 820 acres of land, approximately 80 acres of which is rented for commercial purposes. All nine land rental agreements are cancellable, with various terms ranging from 1 to 42 years. Within the various terms, the minimum future rentals for these agreements total to $10,278. As of Sept ember 30, 2022, the Department recorded a total rental income of $1,148.

Capital grants and contributions

Advances received from developers for constr uction 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 conce ssion arrangement and assets constructed by

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

34 developers and contributed to the Department are capitalized at fa ir value at the date of acquisition which equates to the acquisition cost.

Revenue Recognition

Operating revenues include revenues derived from the sale of wa ter, from providing sewer service, and from other activities closely rela ted to providing water and sewer service.

Principal revenues are derived from volumetr ic 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. Billings 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. Payments from/(to) the City are transfers made to the City.

Employee Benefits, Compensated Absences and Termination Benefits

At September 30, 2022, the Department has recorded compens ated absences of $8,128 ($6,852 for Water and $1,276 for Sewer) of wh ich short-term amounts totaled to $2,791 ($2,351 for Water and $440 for Sewer) and long-term balances of $5,337 ($4,501 for Water and $836 for Sewer). Compensated absences include accrued but unused vacation and holiday benefits and accumulated sick and termination benefits.

Vacation, holiday and sick benefits are rec ognized 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 a nd 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 c onvert 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 additi onal pension benefits from California Public Employees’ Retirement System (CalPERS) or to participate in the City’s Retired Employee

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

35 Health Insurance Program (REHIP) until the si ck 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 heal th, dental, and long-te rm 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 G ASB 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, 2022. The liability is being funded over time through burden rates, applied as a percentage of current productive salaries.

Pension Plan and Postretirement Benefits

All full-time Department employees are mem bers of the City’s Mi scellaneous 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 note 5).

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 addi tions to/deductions from Miscellaneous Plan’s fiduciary net position have been determined on the same basis as they are reported by the Miscellane ous 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 thes e 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 Net Po sition reports a separate section for deferred outflows of resources. This separate financial statement element, Deferred Outflows of Resources, represent a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

36 In addition to liabilities, the Statement of Net Position reports a separate section for deferred inflows of resources. The separate financia l element, Deferred Inflows of Resources, represent an acquisition of net assets that applies to future period(s) and so will not be recognized as an inflow of resources (reven ue) 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’ compensation, property, and tort liability. The City and the Department’s management believe that suffic ient funds are being accumula ted in the City’s Insurance Internal Service Fund (Insurance Fund) to m eet losses as they arise. The Department contributes to the Insurance Fund through pay roll 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 provis ions in third-party contracts, have been implemented to minimize risk losses.

Estimates

The preparation of the Department’s financial statements in conformity with the U.S. generally accepted accounting principles r equires management to ma ke estimates and assumptions that affect certain reported am ounts 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 ac quisition, construction, or improvement of those a ssets 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.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

37 Current Environment – Coronavirus Disease 2019 (COVID-19)

On March 11, 2020, t he World Health Organi zation declared a glo bal pandemic due to an outbreak caused by a respiratory disease called Coronavirus Disease 2019 (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.

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. In FY2022, the Department received funds from the CWWAPP program in the amount of $1,061 an d $134, for Water and Sewer Fund respectively, and applied to eligible customer bills.

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 California 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. In FY2022, the City executed a court- ordered transfer of $30,832 to the Department within 180 days from the final ruling. In May 2022, the Board of Water Commissioners approved a one-time bill credit of the entire amount of $30,832 back to the Department’s customers. As of September 30, 2022, the customer bill credits used amounted to $22,457 and the remaining balance of $8,375 has not been used by customers.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

38 Note 2 - Cash Equivalents and Investments

The Department’s unrestrict ed and restricted cash equival ents and investments are as follows:

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, repur chase 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, 2022, the City’s Investment Pool has weighted average maturity of 1.65 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

1.62 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.

Unrestricted Restricted
Total Investments
& Cash
Equivalent
Equity in the City of Long Beach's investment pool 42,935$ 2,693 45,628 Non-pooled cash equivalents 903 - 903 Investments - U.S. Treasury Notes - 1,972 1,972 Total cash and investments 43,838$ 4,665 48,503 Water Fund
Unrestricted Restricted
Total Investments
& Cash
Equivalent
Equity in the City of Long Beach's investment pool 12,378$ 304 12,682 Total cash and investments 12,378$ 304 12,682 Sewer Fund
Sewer Fund

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

39 Note 3 – Capital Assets

Capital assets at September 30, 2022 were as follows:

Balance Deletions, Balance
September 30, Retirements September 30,
Water Fund 2021 Additions and Transfers 2022
Capital assets, not being depreciated:

Land 11,214 - - 11,214 Construction in progress 60,015 34,459 (14,218) 80,256 Water Rights 40 - - 40 Total capital assets, not being depreciated 71,269 34,459 (14,218) 91,510 Capital assets, being depreciated:

Buildings, structures and facilities 151,117 1,559 - 152,676 Patents 815 - - 815 Distribution/collection systems 383,489 11,417 (288) 394,618 Machinery and equipment 20,921 231 (524) 20,628 Total capital assets, being depreciated 556,342 13,207 (812) 568,737 Less accumulated depreciation for:

Buildings, structures and facilities (77,968) (4,250) - (82,218) Patents (613) (41) - (654) Distribution/collection systems (170,194) (8,117) 187 (178,124) Machinery and equipment (18,631) (1,377) 524 (19,484) Total accumulated depreciation (267,406) (13,785) 711 (280,480) Total capital assets, being depreciated, net 288,936 (578) (101) 288,257 Total Water Fund capital assets, net 360,205 33,881 (14,319) 379,767 Balance Deletions, Balance
September 30, Retirements September 30,
Sewer Fund 2021 Additions and Transfers 2022
Capital assets, not being depreciated:

Construction in progress 8,151 6,403 (3,044) 11,510 Total capital assets, not being depreciated 8,151 6,403 (3,044) 11,510 Capital assets, being depreciated:

Buildings, structures and facilities 12,430 - - 12,430 Distribution/collection system s 218,467 3,024 - 221,491 Machinery and equipment 6,823 452 (343) 6,932 Total capital assets, being depreciated 237,720 3,476 (343) 240,853 Less accumulated depreciation for:

Buildings, structures and facilities (3,013) (278) - (3,291) D istribution/collection system s (153,191) (2,024) - (155,215) Machinery and equipment (4,725) (485) 343 (4,867) Total accumulated depreciation (160,929) (2,787) 343 (163,373) Total capital assets, being depreciated, net 76,791 689 - 77,480 Total Sew er Fund capital assets, net 84,942 7,092 (3,044) 88,990

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

40 In FY2022, the Department capitalized enhancem ents to several facilities and structures, which amounted to $1,559 for Water Fund. T hese improvements included water reservoir tank roofing and interior linin g installation and well facili ties security enhancements. In addition, the Department completed numerous projects as part of ongoing improvements to its current water distribution system and sewer collection system, which totaled $11,417 for the Water Fund and $3,024 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 r eplacement, Well rehabilit ation, and Sewer Pipe rehabilitation. The Department also purchased machinery and equipment which totaled $231 for the Water Fund and $452 for the Sewer Fund. These machinery and equipment purchases included utility vehicles, water distribution and sewer collection pump and a camera van for closed-circuit television (CCTV) monitoring of sewer mains and lateral pipes.

Balance Deletions, Balance
September 30, Retirements September 30,
Combined Total 2021 Additions and Transfers 2022
Capital assets, not being depreciated:

Land 11,214 - - 11,214 Construction in progress 68,166 40,862 (17,262) 91,766 Water Rights 40 - - 40 Total capital assets, not being depreciated 79,420 40,862 (17,262) 103,020 Capital assets, being depreciated:

Buildings, structures and facilities 163,547 1,559 - 165,106 Patents 815 - - 815 D istribution/collection system s 601,956 14,441 (288) 616,109 Machinery and equipment 27,744 683 (867) 27,560 Total capital assets, being depreciated 794,062 16,683 (1,155) 809,590 Less accumulated depreciation for:

Buildings, structures and facilities (80,981) (4,528) - (85,509) Patents (613) (41) - (654) Distribution/collection systems (323,385) (10,141) 187 (333,339) Machinery and equipment (23,356) (1,862) 867 (24,351) Total accumulated depreciation (428,335) (16,572) 1,054 (443,853) Total capital assets, being depreciated, net 365,727 111 (101) 365,737 Total Department capital assets, net 445,147 40,973 (17,363) 468,757

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

41 Construction in Progress

Construction in progress at September 30, 2022 includes the following projects:

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, 2022, completed projects were transferred from Construction in progress as follows:

Project Water Fund Sewer Fund
Water Main Replacement Program 9,072$ -$ Water Reservoir Improvements 1,790 - Water Well Dev elopment and Rehabilitation 12,869 - Water System Facility Improv ements 40,646 - Reclaimed Water System 2,319 -
Sewer Main Replacement Program - 5,353 Sewer Lift Stations Rehabilitation - 4,607 Other Projects 13,560 1,550
Total Combined Construction in Progress 80,256$ 11,510$ Water Fund Sewer Fund
Transfers to Capital Assets 12,977$ 3,024
Transfers to Expense 1,241 20
Total 14,218$ 3,044
Total

LONG BEACH WATER DEPARTMENT
Notes to Financial Statements
September 30, 2022
(in thousands of dollars)
42 Note 4 – Long-term Liabilities
The bonds are payable from and secured by net revenues of the Department.

Second Lien Water Revenue 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 refi nancing was to take Beginning of End of Due within
September 30, 2022 year Additions Reductions year one year 2010 Water Revenue Refunding Bonds 8,250$ - (2,590) 5,660 2,715 2012 Water Revenue Refunding Bonds 4,695 - (710) 3,985 735 12,945 - (3,300) 9,645 3,450
Add 2010 unamortized bond premium 292 - (150) 142 -
Add 2012 unamortized bond premium 302 - (81) 221 - Total long-term debt 13,539 - (3,531) 10,008 3,450
Compensated Absences 7,006 12,464 (12,618) 6,852 2,351 Net Pension Liability 20,005 23,554 - 43,559 -
Total OPEB Liability 282 - (153) 129 -
Equipment financing obligation 21,226 - (1,639) 19,587 1,696 Water Revenue Revolving Line of Credit - 14,000 - 14,000 - Accrued site restoration cost 1,000 - - 1,000 -
Total 63,058$ 50,018 (17,941) 95,135 7,497
Beginning of End of Due within
September 30, 2022 year Additions Reductions year one year 2016 Sewer Revenue Refunding Bonds 7,960$ - (390) 7,570 405 7,960 - (390) 7,570 405
Add 2016 unamortized bond premium 1,074 - (121) 953 - Total long-term debt 9,034 - (511) 8,523 405
Compensated Absences 1,430 2,351 (2,505) 1,276 440
Net Pension Liability 4,097 4,373 - 8,470 -
Total OPEB Liability 58 - (34) 24 -
Total 14,619$ 6,724 (3,050) 18,293 845
Wat
er Fund
Sewer Fund

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

43 advantage of historically low fixed bond rates and provide the Departmen t with 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 t he Senior Lien trust indentures pursuant to which the Department previously i ssued 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 irre vocably 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 coven anted under the Master 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 Li en Bonds and any Subordinate Obligations, including the Series 2012A Bonds.

Water Revenue Refunding Bonds - Series 2010A

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 out standing Series 1997A Water Revenue Refunding Bonds at a redemption premium of 2% over par value, (b) fund a reserv e fund for the Series 2010A Bonds, and (c) pay the cost of issuing t he 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. Pr incipal payments are due May 1, commencing on May 1, 2012.

The remaining Series 1997A Bonds maturing 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, 2022
(in thousands of dollars)

44 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 refundi ng and is reported in the Statement of Net Positon as a separate category under Deferred Outflows of Re sources. 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 ma turity as the old debt. The Refunded Series 1997A Bonds were refunded in order to take advantage of lo wer 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 Obligatio ns are secured by a first lien upon and pledge of all of the net revenues of the entire water system (t he Water Enterprise Fund) of the City of Long Beach. Net revenues are defi ned 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 Obligation 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-Te rm Obligations pursuant to the Master Subordinate Trust Indenture, th e Fourth Supplemental Subordi nate Trust Indenture, and a Credit Agreement with JPMorgan Chase Bank, Na tional Association, t he 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. The department has requested for an extension of two additional years up to May 19, 2025. 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-fourth s 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, 2022, and for the year then ended, there was a $14 million draw on the Water LOC.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

45 Equipment Financing Obligation-Automated Metering Infrastructure (AMI)

On November 1, 2018, the Board of Water Commissioners authorized the Long Beach Water Department to proceed with execution of an equipment financing agreement and related financing documents with Banc of America Public Capital Corp , for the financing of the Advanced Metering Infrastructure (AMI) Pr oject, in an amount not to exceed $36,000, including cost of issuance, principal and interest, payable over a fifteen-year period.

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 equipment financing agreement with B anc of America Public Capital Corporation to finance the AMI Project. The equipment financing agreement was executed and funded on December 20, 2018. The total purchase price wa s $27,400, at an interest ra te of 3.35%. In FY2022, the Department paid a total of $2,326 ($1,639 principal and $687 interest) in rental payments.

Senior Sewer Revenue Refunding Bonds - Series 2016A

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, commenc ing 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 init ial 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 Obligatio ns 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 operati on of the Sewer Enterprise less operation and maintenance costs. The Board, on behalf of the City, has covenant ed under the Senior Indenture to set rates and charges for sewer service to its custom ers 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.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

46 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 Service 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 5,660 $ 423 3,985 534 9,645 957 10,602 Water Fund
Series 2010 Bonds Series 2012 Bonds Total
Fiscal Year Total Debt
Ending Sept 30 Principal Interest Service
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 1,938 388 2,326
2028-2032 10,512 902 11,414
Total 19,587$ 3,457 23,044
Water Fund - Equipment Financing Obligation
Fiscal Year Total Debt
Ending Sept 30 Principal Interest Service
2023 405 $ 323 728
2024 420 307 727
2025 435 290 725
2026 455 273 728
2027 475 255 730
2028-2032 2,740 900 3,640
2033-2036 2,640 270 2,910
Total 7,570$ 2,618 10,188
Sewer Fund
Series 2016A Bonds

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

47 Note 5 - Retirement Program

Plan Description – Public Employees’ Retirement System (CalPERS)

The Department contributes to the CalPERS agent multiple-employer defined benefit pension plan. The City is consid ered the employer and the Depa rtment is a department of the City. The plan functions as a cost shari ng plan for the Department. The Department’s employees are enrolled in t he City Miscellaneous Plan. CalPERS provides retirement benefits to plan members and beneficiaries. CalP ERS 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 permane nt 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 to tal 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 employ er 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 c hange 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 th e year, with an additional am ount to finance any unfunded accrued liability. The City is required to cont ribute the difference between the actuarially determined rate and the contribution rate of employees.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

48 The Plans’ provisions and benefits in effect at September 30, 2022, are summarized in the following table:

Allocation Methodology

The City used a calculated percentage based on the Department's share of the pensionable compensation to the City’s total pensionable compensation amounts for each plan, to provide the Department's net pension liability and related GASB 68 accounting elements. The Department's calculated percentage was 7.4% (6.2% for Water and 1.2% for Sewer) for the Plan.

Net Pension Liability, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources 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 position. Net p ension liability is measured as of June 30, 2022 (measurement date), using t he actuarial valuation repor t as of June 30, 2021. At September 30, 2022, the City reported net pension liability of $701.9 million for the Plan.

The Department's net pension liability for the Plan was $52.0 million ($43.5 million for Water and $8.5 million for Sewer) as of September 30, 2022.

For the year ended June 30, 2022 (the measurement date) , the Department reported pension expense of $5.7 million ($4.8 million for Water and $0.9 million for Sewer).

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 30.58% 30.58% 30.58%
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

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

49 As of September 30, 2022, the Department had deferred outflows of resources and deferred inflows of resources related to pensions as follows:

Exclusive of deferred outflows of resources related to contributions after measurement date of $4.7 million ($3.9 million for Water and $0.8 million for Sewer), the net amount of deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in future pension expense is as follows:

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

Pension contributions after measurement date 3,962 $ 770 4,732 Net difference between actual and expected investment returns 7,429 1,445 8,874 CalPERS change in assumptions 2,591 504 3,095 Total deferred outflows of resources 13,982$ 2,719 16,701 Deferred inflows of resources:

Differences between actual and expected experience 960$ 187 1,147 Change in proportion 864 469 1,333 Total deferred inflows of resources 1,824$ 656 2,480 Water Sewer Total
1,274$ 69 1,343
1,708 209 1,917
628 122 750
4,586 893 5,479
8,196$ 1,293 9,489
Measurement
Period Ending
June 30
2023
2024
2025
2026

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

50 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:

Discount Rate

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

In determining the long-term expec ted rate of return, CalPERS took into account long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 basis points.

Miscellaneous
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry Age Actuarial Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Salary Increase Varies by entry age and service
Mortality
1 1 The mortality table used was developed based on CalPERS' specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre- retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

51 The expected real rates of return by asset class are as follows:

The discount rate used to measure the total pens ion liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from the City will be made at statutorily required rates, actuar ially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments wa s applied to all periods of projected benefit payments to determine the total pension liability.

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 6. 90%, compared to a discount rate that is 1 percentage point lower (5.90%) or 1 percentage point higher (7.90%):

Asset Class 1
Assumed Asset
Allocation Real Return 2
Global Equity - Cap-Weighted 30.00 % 4.54 %
Global Equity - Non-Cap-Weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-Backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High Yield 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Ma nagement study.

Net Pension Liability/(Asset) Water Sewer Total
1% Decrease (5.90%) 68,120 $ 13,246 81,366 Current Discount Rate (6.90%) 43,559 8,470 52,029 1% Increase (7.90%) 23,288 4,528 27,816

LONG BEACH WATER DEPARTMENT

Notes to Financial Statements
September 30, 2022
(in thousands of dollars)

52 Note 6 - 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 repr esentatives 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 info rmation 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, 2022 amount to $9,112 and $528 for the Water Fund and Sewer Fund, respectively.

Note 7 – Subsequent Events

A General Municipal Election was held on November 8, 2022, which contained Ballot Measure BB, amending the City Charter to merge the existing water, sewer, and gas utilities into a singly publicly-owned utility, governed by the existing independent Water/Utility Commission. Voters passed the Measure by simp le majority and the City Council certified the election results at its meeting on Decem ber 13, 2022. Operati ons as a merged single utility began in January 2023.

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

55 (Unaudited) Exhibit 1
Total Total Operating Total Capital Changes
Fiscal Year Operating Operating Income Non-Operating grants and in Ended Revenue (1) Expense (Loss) Income (Expense) contributions Net Position 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 9/30/2022 122,595 108,649 13,946 (25,429) 2,920 (8,563) 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)

56 (Unaudited) Exhibit 2
Total Total Operating Total Capital Changes
Fiscal Year Operating Operating Income Non-Operating grants and in Ended Revenue (1) Expense (Loss) Income (Expense) contributions Net Position 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 (3) 18,872 14,474 4,398 391 549 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 9/30/2022 21,447 14,726 6,721 (1,575) 133 5,279 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. (3) Total Operating Expense and Operating Income (Loss) data updated.

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

57 (Unaudited) Exhibit 3
Unrestricted
Fiscal Year Net Investment in Restricted Net Position Total Ended Capital Assets Net Position (deficit) Net Position 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 9/30/2022 332,612 1,027 5,935 339,574 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)

58 (Unaudited) Exhibit 4
Fis cal Year Net Inves tment in Res tricted Unres tricted Total Ended Capital Assets Net Position Net Position Net Position 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 9/30/2022 79,066 304 5,578 84,948 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)

59 (Unaudited) Exhibit 5
OPERATING NON-OPERATING (2)
Payments
Total from the city/ Total
Fiscal Year Metered Service Other Operating Interest Investment Rental Other other Non-Operatin g Ended Sales (1) Charges Services Revenue Income Income Income Income governments Income 9/30/2013 64,347 20,363 7,239 91,949 166 - 1,087 196 - 1,449 9/30/2014 67,818 21,548 10,821 100,187 118 8 1,158 36 - 1,320 9/30/2015 61,995 22,061 15,419 99,475 140 83 1,256 62 - 1,541 9/30/2016 63,658 23,121 10,871 97,650 248 51 1,027 - - 1,326 9/30/2017 64,721 24,599 8,063 97,383 301 - 811 - - 1,112 9/30/2018 64,490 27,325 7,358 99,173 461 - 905 1,429 - 2,795 9/30/2019 62,943 29,121 7,225 99,289 1,022 496 942 1,283 - 3,743 9/30/2020 71,141 32,807 9,143 113,091 526 171 1,043 1,636 - 3,376 9/30/2021 78,764 34,900 5,304 118,968 271 - 1,036 968 30,832 33,107 9/30/2022 78,788 37,526 6,281 122,595 337 - 1,148 - 1,061 2,546 Notes: (1) Metered Sales is net of Provision for doubtful accounts expense. (2) Non-Operating Revenue data updated.

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)

60 (Unaudited) Exhibit 6
OPERATING NON-OPERATING (1)
Payments
Other Total from the city/ Total
Fis cal Year Service Operating Operating Interes t Inves tment other Other Non-Operating Ended Charges Revenue Revenue Income Income governments Income Income 9/30/2013 10,477 6,834 17,311 21 - - 2 23 9/30/2014 10,637 7,316 17,953 22 1 - - 23 9/30/2015 10,916 6,987 17,903 32 20 - 2 54 9/30/2016 11,428 6,927 18,355 80 14 - 5 99 9/30/2017 11,870 8,079 19,949 95 - - - 95 9/30/2018 11,372 7,500 18,872 184 - - 577 761 9/30/2019 11,082 8,048 19,130 334 234 - 341 909 9/30/2020 11,147 6,778 17,925 254 109 - 2 365 9/30/2021 11,162 7,158 18,320 111 - - - 111 9/30/2022 12,257 9,190 21,447 121 - 134 - 255 Note: (1) Non-Operating Revenue data updated.

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)

61 (Unaudited) Exhibit 7

OPERATING
Maintenance Payments
and Other Depreciation Total to the city/ Total
Fiscal Year Cost Personal Operating & Amortization Operating Interest Investment Other Credit to other Non-Operating Ended of Water Services Expens es Expens e Expens es Expens e Los s Expens es Cus tomer s governments Expenses 9/30/2013 29,753 18,309 28,155 9,566 85,783 363 108 3,130 - - 3,601 9/30/2014 34,378 17,822 29,566 10,226 91,992 587 6 943 - - 1,536 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 91,893 161 214 227 - - 602 9/30/2018 29,927 22,500 30,086 12,553 95,066 123 251 - - 254 628 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 1,394 170 - - 8,628 10,192 9/30/2022 32,211 25,350 37,303 13,785 108,649 1,266 1,964 1,227 23,518 - 27,975 Note: (1) Non-Operating Expenses data updated.

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)
NON-OPERATING (1)

62 (Unaudited) Exhibit 8
OPERATING NON-OPERATING (1)
Maintenance
and Other Total Bond Total
Fis cal Year Pers onal Operating Depreciation Operating Interes t Inves tment Credit to Other Is s uance Non-Operating Ended Services Expenses Expense Expenses Expense Loss Customer s Expenses Costs Expenses 9/30/2013 4,122 9,246 1,797 15,165 2 10 - 772 - 784 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 63 - 1,021 21 1,182 9/30/2018 4,206 7,732 2,490 14,428 146 126 - 98 - 370 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 13,244 224 130 - 114 - 468 9/30/2022 4,506 7,433 2,787 14,7 26 212 549 134 935 - 1,830 Note: (1) Non-Operating Expenses data updated.

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

65 (Unaudited) Exhibit 9

SOURCE OF SUPPLY CONSUMPTION
Average Average
Fiscal Year Potable Water Reclaimed Total Daily Demand Peak Day Daily Sales Ended Pumped Purchased Water Supply Potable Water (1) Distribution Per Capita Population 9/30/2013 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 9/30/2022 7,511,582 8,097,006 3,173,886 18,782,474 42,763 55,900 113 456,062 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)

66 (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 10/1/2021 2.631 5.036 7.349 2.544 2.160 2.160 6/1/2022 2.564 4.908 7.162 2.479 2.105 2.105 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 bill ed 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 10/1/2021 0.752 1.115 2.023 3.113 6.561 11.094 24.704 51.013 76.415 96.373 141.732 6/1/2022 0.733 1.087 1.972 3.034 6.394 10.812 24.077 49.717 74.474 93.926 138.133 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
67 (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 10/1/2021 0.445 0.895 1.674 4.459 9.266 16.498 26.519 56.278 6/1/2022 0.434 0.872 1.631 4.346 9.031 16.079 25.846 54.849 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 6,937$ 3,070 6.41 % Gov ernment 1 4,500$ 4,431 7.67 % Education 2 1,437 493 1.03 Education 2 968 702 1.21 Utility 3 1,022 590 1.23 Utility 3 765 710 1.23 Education 4 872 445 0.93 Education 4 540 471 0.81 Utility 5 634 360 0.75 Utility 5 496 456 0.79 Healthcare 6 585 287 0.60 Utility 6 487 438 0.76 Healthcare 7 574 319 0.67 Gov ernment 7 465 317 0.55 Utility 8 529 282 0.59 Healthcare 8 321 291 0.50 Education 9 273 62 0.13 Healthcare 9 307 266 0.46 Manufacturing 10 238 130 0.27 Cruise Line 10 208 190 0.33 Total Ten Largest Users 13,101 6,038 12.61 Total Ten Largest Users 9,057 8,272 14.31 Total All Other Users 98,629 41,863 87.39 Total All Other Users 72,612 49,528 85.69 Total City 111,730$ 47,901 100.00 Total City 81,669$ 57,800 100.00 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

CURRE NT YE AR AND NINE YE ARS AGO
Fiscal Year 2013Fis cal Year 2022
68 (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 4,545 47.99 % Water Resource Management 1 1,847 27.80 % Oil Production 2 1,538 16.24 Golf Course 2 1,421 21.39 Golf Course 3 1,378 14.55 Gov ernment 3 1,353 20.36 Government 4 1,123 11.86 Oil Production 4 1,073 16.15 Education 5 163 1.72 Education 5 188 2.83 Education 6 153 1.62 Golf Course 6 156 2.35 Memorial Park 7 147 1.55 Memorial Park 7 131 1.97 Memorial Park 8 110 1.16 Education 8 121 1.82 Education 9 92 0.97 Memorial Park 9 93 1.40 Property Management 10 34 0.36 Education 10 89 1.34 Total Ten Largest Users 9,283 98.02 Total Ten Largest Users 6,472 97.41 Total All Other Users 187 1.98 Total All Other Users 172 2.59 Total City 9,470 100.00 Total City 6,644 100.00 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 2022 Fiscal Year 2013
(Unaudited) Exhibit 15
Effective
Date Volumetric Rate Charges (1) Capacity Charges (2)
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 10/1/2021 0.393 121.390 6/1/2022 0.393 121.390 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 dev elopments 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
69 (Unaudited) Exhibit 16
Effective
Date 3/4" (1) 1" 1-1/2" 2" 3" 4" 6" 8" 10" 12" 16"
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 10/1/2021 0.248 0.366 0.961 1.658 3.862 5.587 15.565 16.499 25.540 32.212 47.376 6/1/2022 0.248 0.366 0.961 1.658 3.862 5.587 15.565 16.499 25.540 32.212 47.376 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 1 466$ 1,125 3.07 % Government 1 301$ 1,212 2.89 % Education 2 284 318 0.87 Education 2 175 387 0.92 Education 3 121 438 1.19 Education 3 90 443 1.05 Healthcare 4 89 285 0.78 Healthcare 4 54 258 0.61 Education 5 60 61 0.17 Gov ernment 5 47 186 0.44 Hotel 6 36 62 0.17 Residential Community 6 24 108 0.26 Healthcare 7 33 104 0.28 Hotel 7 23 57 0.14 Government 8 31 43 0.12 Residential Community 8 20 87 0.21 Manufacturing 9 29 57 0.16 Manufacturing 9 19 110 0.26 Manufacturing 10 28 130 0.35 Manufacturing 10 18 78 0.19 Total Ten Largest Users 1,177 2,623 7.16 Total Ten Largest Users 771 2,926 6.97 Total All Other Users 17,330 34,041 92.84 Total All Other Users 16,009 39,076 93.03 Total City 18,507 $ 36,664 100.00 Total City 16,780$ 42,002 100.00 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 2022 Fiscal Year 2013

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

73 (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) Expenses (2) Income (Expens e) (3) Service Principal Interest Service (4) Coverage 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 17,184 765 (5) 17,949 (5) 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 3,637 (5) 21,166 (5) 2,930 965 3,895 5.43 (5) 9/30/2020 113,091 97,712 15,379 3,394 (5) 18,773 (5) 3,050 848 3,898 4.82 (5) 9/30/2021 118,968 76,723 42,245 2,105 (5) 44,350 (5) 3,170 725 3,895 11.39 (5) 9/30/2022 122,595 94,864 27,731 (1,703) 26,028 3,300 592 3,892 6.69 Bond Issues: Water Revenue Refunding Bonds - 1997 Series A, 2010 Series A, & 2012 Series A Average Coverage, ten years 5.32
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, payments fr om(to) the city/other governments, credit to customers, capital grants and contributions 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) Net Non-operating Income (Expense), Amount Available for Debt Service & Times coverage data updated.

Source: Department'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)

74 (Unaudited) Exhibit 19
Amount
Total Net Net Available Total
Fis cal Year Operating Operating Operating Non-Operating for Debt Debt Times Ended Revenue (1) Expenses (2) Income Income (Expens e) (3) Service Principal Interest Service (4) Coverage 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 (133) (5) 7,786 (5) 375 354 729 10.68 9/30/2022 21,447 11,939 9,508 (1,363) 8,145 390 339 729 11.17 Average Coverage, ten years 25.13
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, payment s from(to) the city/other governments, credit to customers, capital grants and contributions 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) Net Non-operating Income (Expense), Amount Available for Debt Service & Times coverage data updated.

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)

75 (Unaudited) Exhibit 20
Water Revenue Equipment Discounts, Percentage
Fiscal Year Revolving Financing premiums, of Personal Per Ended Series 1997 Series 2010 Series 2012 Line of Credit Obligation & adjustments Total Income (1) Capita (1) 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 9/30/2022 - 5,660 3,985 14,000 19,587 363 43,595 0.21% 0.096 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 Percentage
Fiscal Year Refunding Bonds Sewer Revolving of Personal Per Ended Series 2016A Line of Credit Premium Total Income (1) Capita (1) 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 9/30/2022 7,570 - 953 8,523 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

79 (Unaudited) Exhibit 22
Fiscal Year Estimated Personal Income Per Capita Unemployment Ended Population (1) (4) (in millions) (2) (4) Personal Income (2) (4) Rate (3) 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 20,460 43,836 8.9% 9/30/2022 456,062 (5) 20,827 45,667 4.6% 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 accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

DEMOGRAPHIC STATISTICS

LAST TEN FISCAL YEARS

80 (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 12,049 5.10% 1 10,389 4.31% City of Long Beach 2 5,395 2.28% 4 5,028 2.09%
Long Beach Memorial Medical Center 3 4,950 2.09% 2 5,693 2.36% Veteran Affairs Medical Center 4 3,524 1.49% 6 2,413 1.00% California State University Long Beach 5 3,336 1.41% 5 2,679 1.11% Long Beach City College 6 3,321 1.41% 7 2,137 0.89%
The Boeing Company 7 2,019 0.85% 3 5,042 2.09%
St. Mary Medical Center 8 1,547 0.65% 9 1,200 0.50%
California State Univ Long Beach Research Foundation 9 1,261 0.53% 8 1,464 0.61% Molina Healthcare Inc 10 1,119 0.47% 10 841 0.35%
Sources: (1) Department of Financial Management Accounting and Business License (2) State of California Employment Development Department Labor Market Info for 2013 and 2022.

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 2022 Fiscal Year 2013
Employer
(Unaudited) Exhibit 24
Fiscal Year
Ended Water Fund Sewer Fund Total
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
9/30/2022 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

83 (Unaudited) Exhibit 25
Potable Water
Total
Fiscal Year Potable Reclaimed Total
Ended Pumped Purchased Demand Water Demand
9/30/2013 31,074 28,383 59,457 6,644 66,101 9/30/2014 28,024 30,660 58,684 5,824 64,508 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 60,859 9/30/2022 23,052 24,849 47,901 9,740 57,641 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)

84 (Unaudited) Exhibit 26
Effective
Date
Non-
Interruptible
Treated Water
Percent Change
Non-
Interruptible
Treated Water
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
1/1/2022 1,143 3.5
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
7/1/2013 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
7/1/2022 411.00 4.3
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
85 (Unaudited) Exhibit 28
Reclaimed Sys tem
Fis cal Year
Ended
Number of Active
Groundwater
wells
Miles of water
mains
Number of
active water
se rvice
Number of fire
hydrants
Number of water
sa mple s
collected
Number of
tests
performed Miles of Pipeline
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
9/30/2022 21 917 89,705 7,070 11,818 62,090 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
se w e r
pipelines
Number of
se w e r
manholes
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
9/30/2022 26 714 15,143
Source: Department's records
See accompanying independent auditors' report

LONG BEACH WATER DEPARTMENT

OPERATING AND CAPITAL ASSETS STATISTICS - SEWER FUND

LAST TEN FISCAL YEARS
86 (Unaudited) Exhibit 30
Fiscal Year
Ended
Cast Iron
Water Mains
Replaced
(in feet)
Fire Hydrants
Repaired
Water
Meters
Repaired (2)
Sewer Mains &
Laterals
Repaired (1)
Sewer
Mains
Cleaned
(in miles)
Sewer
Manholes
Chemically
Treated
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 9/30/2022 11,392 76 3,478 191 343 7,630 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
Attachment D
Long Beach Transit Annual Comprehensive Financial Report

Long Beach Transit
A component unit of the City of Long Beach, California
for the years ending June 30, 2022 and 2021.

All text pages of this report are made from 100% Recycled Fiber and manufactured Carbon Neutral Plus with 100%
renewable green electricity
FY 2022 Comprehensive
Annual Financial Report
Prepared by the Finance and Budget Department
Lisa Patton, Executive Director/ VP

Long Beach Transit

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEARS ENDED JUNE 30, 2022 AND 2021

TABLE OF CONTENTS
Introductory Section
Letter of Transmittal i
Reporting Entity ii
Services ii
Accomplishments and Major Initiatives v
Key Performance Indicator Results vii
Factors Affecting Financial Condition x
Financial Policies xi
Recognition xiv
Acknowledgements xv
Organizational Chart xvii
Principal Officials xviii
Financial Section
Independent Auditors’ Report 1
Management's Discussion and Analysis 4
Financial Highlights 4
Overview of the Financial Statements 4
Financial Statement Analysis 5
Capital Assets 11
Economic Factors and Next Year's Financial Plan 12 Statements of Net Position 14
Statements of Revenues, Expenses and Changes in Net Position 16 Statements of Cash Flows 17
Statements of Fiduciary Net Position 19 Statements of Changes in Fiduciary Net Position 20 Notes to Financial Statements 21
(1) Summary of Significant Accounting Policies 21
(2) Cash and Investments 24
(3) Operating Subsidies 30
(4) Accounts Receivable 31
(5) Unearned Revenue 32
(6) Estimated Liability for Insurance Claims 33
(7) Deferred Compensation 34
(8) Capital Assets 35
(9) Subsidy Deferral 36
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TABLE OF CONTENTS
(Continued)
(10) Commitments and Contingencies 37
(11) Employee Benefits 40
(12) Labor Agreements 41
(13) Pension Benefits 41
(14) Note Payable 53
(15) Subsequent Events 53
Required Supplementary Information 54
Schedule of Changes in Net Pension Liability and Related Ratios Schedule of Contributions
Statistical Section
Exhibits
Financial Trends
1 Net Position by Component 62
2 Operating Expenses by Type 62
3 Changes in Net Position 63
4 Capital Expenditures by Type 64
Revenue Capacity
5 Operating Subsidy Sources 65
6 Fare Recovery Percentage 65
7 Fare History 66
Demographic and Economic Information
8 Demographic Statistics 67
9 Principal Employers 68
Operating Information
10 Key Performance Indicators 69
11 Customer Satisfaction Trends 70
12 Fixed Route Statistics 71
13 Dial-A-Lift Statistics 72
14 Water Taxi Statistics 73
15 Schedule of Insurance in Force 74
16 Summary of Service Frequency and Hours of Operation 76 Pension Information
17 Employer and Employee Pension Contributions 77
18 Pension Revenues by Source and Expenses by Type 78
Grant Information
19 Capital Grant History, Federal 79
20 Capital Grant History, State 80
21 Capital Grant History, Local 81
Introduction

Long Beach Transit

December 20, 2022

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, 2021 to June 30, 2022.

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, prepare d 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 Manage ment’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.

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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 the 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 Execut ive Directors/Vice Presidents heading Finance and Budget; Maintenance and Infrastructure; Information Technology; Organizational Development and Administration; Transit Service Delivery and Planning; and Customer Relations and Communications. LBT’s organi zational 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 the 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 14 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 its 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)
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Fixed-Route Bus Service

LBT provides fixed-route bus service to a 110 -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 an d Seal Beach. This service currently covers 35 routes.

Of the 35 fixed routes operated by LBT, 22 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 lane s 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 De partment 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 operating and maintenance facility located at 6860 Cherry St. in North Long Beach (LBT2). In addition to 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, prov iding 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 complimentary 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 temporarily suspended due to the COVID-19 pandemic.

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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, dispatched and operated by the contractor. In fiscal year (FY) 2022, there were 20,578 boardings on Dial-A-Lift.

Water Taxi Service (AquaBus and AquaLink)

Long Beach attractions like the 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 operate s 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.

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 Expres s offers residents who would not ordinarily use transit an opportunity to experience transit and is particularly beneficial to LBT’s senior 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 Express. Additionally, each year, LBT supports the Grand Prix of Long Beach and other large -scale, special events by providing supplemental service where needed.

Commuter Express (UCLA)

Since 2019, LBT has offered 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 2021 through June 2022, organized by Strategic Priority.

Improve Safety and Service Quality
Expanded Service to the City of Carson (Sept. 2021)
As a result of the COVID -19 pandemic, the City of Carson made the decision to suspend its transportation service, the Carson Circuit, to ensure the safety of its customers during the pandemic.

The City took that opportunity to c onsider alternate transportation service options to support a broader section of its community. On September 23, 2021, LBT's Board of Directors authorized the President and CEO to enter into a service agreement with the City of Carson to provide fixed -route bus services. The new service expanded transportation access to Carson residents, connecting major hubs such as California State University, Dominguez Hills (CSUDH), the Harbor UCLA Medical Center and the SouthBay Pavilion as well as provided connections to key activity centers and destinations in the City of Carson.

Implementation of Route 141/Artesia Blvd. (Jun. 2022)
In June 2022, LBT assumed LA Metro's Route 130 on Artesia Blvd between Artesia Station and Los Cerritos Center in order to provide customers with a direct transit route between major connection points within the City of Long Beach as well as connecting the City of Cerritos to LA Metro's A Line.

LBT Corporate Office Modernization (Ongoing)
LBT has taken several major steps to moderniz e and improve the corporate office, located at 4801 Airport Plaza Drive, Long Beach CA, 90815. The following is a list of initiatives that were approved by LBT's Board of Director's in FY 2022:

 Building Automation (Aug. 2021)
 Construction Administrative Services (Sept. 2021)
 Network Infrastructure (Sept. 2021)
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 Roofing Services (Nov. 2021)
 Elevator Modernization (Feb. 2022)
 Access Control System (Apr. 2022)

Exercise Financial Accountability
Returned to Fare Collection (Sept. 2021)
Due to COVID -19, LBT implemented several service changes and suspended fare collection.

Beginning on September 19, 2021, LBT resumed fare service for all fixed routes. In efforts to promote safety, customers were encouraged to pay fare with a Transit Access Pass (TAP) card or use the TAP app instead of cash. To aid with the return of fare collection, LBT offered promotional discounts on regular 30-day, five-day and one-day passes through March 2022.

Launched Phase 1 of GoPass (Nov. 2021)
On November 2, 202 1, LBT's Board of Directors approved the adoption of the Fareless System Initiative (FSI), also known as the GoPass Program. This program, under Phase 1, allows eligible students attending participating school districts to have unlimited access to LBT's fi xed-route services as well as all other participating transit agencies. Students are able to ride with the use of a free TAP card that is distributed only through the schools and are required to register online.

Purchased Five Zero-Emission Electric Commuter Buses (ZEB) (Mar. 2022) 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 2022 Board of Directors meeting, LBT was approved to purchase five, 45 foo t electric commuter buses and charging infrastructure. The purchase of the additional commuter buses will provide LBT's customers with transportation services to jobs and educational opportunities through the utilization of public transit. The first of the five ZEBs will be expected to be delivered in fiscal year 2024.

Foster Employee Engagement
Reached Two-Year Agreements with ATU and AFSCME (Jul. 2021) On July 26, 2021, ATU Local 1277 and AFSCME District Council 36 Supervisory Unit, respectively, ratified new two-year Labor Agreements with LBT. The contracts are effective from July 1, 2021 to June 30, 2023. 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.

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 Procurement Training
 Cybersecurity Online Training
 De-Escalation Training for Operators
 Leadership/Management Training for Supervisors
 Microsoft 365 Teams Training

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Enhance Customer Experience
Installation of 30 Solar-Powered LED Electronic Signage (eSigns) (Dec. 2021) On December 9, 2021, LBT's Board of Directors approved the manufacturing, delivery and installation of 30 solar-powered LED electronic signage (eSigns) passenger information systems for bus stops along Santa Fe Avenue. These eSigns relay important information about LBT's services by providing accurate and reliable information to its customers. This information includes real-time route schedules, route detours and emergency safety messages.

Installation of Eight Bus Shelters in Downtown Long Beach (Mar. 2022) On March 24, 2022, LBT's Board of Directors approved the procurement, delivery and installation of eight bus stop shelters with benches, including both shelter -mounted and pole -mounted LED electronic signage (eSigns) for locations in downtown Long Beach. T hese bus shelters were added to aid the City of Long Beach's efforts to improve accessibility and to enhance customer experiences in the downtown area for all transit patrons.

Promote Community and Industry Focus
Extension of Discounted Pass Program (Jun. 2022)
In conjunction with Los Angeles County Metropolitan Transportation Authority (Metro), LBT established the discounted pass program for six months after LBT returned to fare collection. In January 2021, a surge of the COVID-19 Omicron variant negatively impacted LBT’s customers and also reversed the course in reclaiming LBT’s ridership back to pre -pandemic levels. LBT extended the discounted pass program, continuing to provide economic relief to customers who rely on LBT’s services while also promoting transit usage to pre-pandemic levels.

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 communicat e and present the performance results to evaluate trends and identify action plans for improvement. The following are examples of LBT's KPIs and selected results for FY 2022 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 completi ng its trip. The overall MDBF increased in FY 2022 from 3,988 to 4,794 miles. This marks the highest MDBF in the last ten fiscal years.

LBT achieved this by completing at least 95% of all scheduled preventative maintenance inspections on time.

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Ridership
While ridership has not reached pre -pandemic levels, LBT continues to connect communities and move (more) people, making everyday life better. In FY 2022 service level reached 81.4% of pre - pandemic levels. Ridership increased from 14.1 million FY 2021 to 1 7.4 million in FY 2022.

Re-Expanding 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 initiative, LBT offered discounted fares for the 1-day, 5-day, and 30-day regular passes. These discounts were available to the public starting September 19, 2021, when LBT first started enforcing farces, and continued until the end of the fiscal year. In April 2022, LBT partnered with LA Metro and Long Beach Unified School District to offer free rides to all K - 12 students through a pilot program called GoPass. The fare recovery ratio reached 6.69% in FY 2022, even though fares were not enforced until late September. This is a tremendous increase from FY 2021, which was 0.17%.

Long Beach Transit

Challenges
Increase in 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. While adhering to social distancing guidelines lines, LBT continued to perform Safety Blitzes where the Transit Service Delivery Supervisors met with their Operators to promote the safety topic of the month. However, due to an increase in vehicles on the road as businesses began to reopen, students returning to campus , and employees returning to offices, LBT’s accidents per 100K platform miles increased from 0.95 in FY 2021 to

1.27 in FY 2022.

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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 service. In FY 2022, unplanned absences remained high, though they decreased slightly from 17.42% to 16.07% . COVID-19 contributed to absences as employees needed to take unplanned time off to care for themselves or for family members.

Factors Affecting Financial Condition

General Economic Conditions
The U.S. and California economies have recovered significantly from the impacts of the COVID - 19 pandemic. However, there is growing potential for a recession in the face of high and persistent inflation and a tightening labor market. In terms of employment, California’s unemployment rate as of August 2022 was 4.1%, down from a high of 16% in April 2020. The University of California, Los Angeles (UCLA) Anderson Forecast projects that unemployment will continue to decrease gradually but then begin to increase as a consequence of slower economic growth and a weakening economy.

Source: UCLA Anderson Forecast - September 2022 Economic Forecast

Unemployment in Los Angeles County was slightly higher than that of the state , at 4.9% as of August 2022. Sectors where employment remains significantly below pre-pandemic levels in the County include government, leisure and hospitality, and education services. Similar to the County, unemployment in Long Beach was 5.2% as of August 2022. The tightening labor market hinders LBT's ability to expand its workforce. Personnel constraints are likely to continue being a challenge for the Agency in the near-term.

Long Beach Transit

Along with the tight labor market, there has also been significantly high inflation. The persistence of inflation has been a driving narrative in the economy, d ue in large part to international supply chain disruptions. In August 2022, prices in Los Angeles County are up 7.6% from a year prior.

While inflation is beginning to slow, it still remains a significant factor affecting the economy and the Agency. As a consequence of inflation, LBT has seen an increase in its operating expenses.

LBT aims to balance these expenses with revenue sources, including subsidies. LBT receives subsidies from the County based on a formula allocation of sales tax revenues collecte d. High inflation contributes, at least in the short term, to an increase in taxable sales b ecause prices are higher. Taxable sales in the state have increased beyond pre -pandemic levels and are forecasted to remain consistent over the next year, according to the UCLA Anderson Forecast. This is a positive forecast for the Agency's subsidy revenue. However, mounting fears of a recession could have a negative impact on consumer behavior and impact sales taxes and Agency subsidies going forward.

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 operations 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 received 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 a ddition to capital assets and net 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 flee t, equipment and infrastructure. The projects included in the capital program are those with initial project values exceeding $10,000 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:

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 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 prioritized 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.

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 it s 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; and  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 obligation s.

Procurement Policy
LBT's procurement policy is established to ensure open, full and competitive participation 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 Long Beach Transit

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and award goods and services up to $200,000. 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.

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 economic 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. Interest payments toward the note are recorded operating expenses.

Risk Management Policy
It is LBT's policy to be 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.

Long Beach Transit
xiv

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 maintained to fully fund the estimated liabilities. Additional information on LBT's risk management activity can be found on page 33 in note (6) of the notes to the accompanying financial statements.

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 32nd 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, 2021. 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 Comptroller

Manager, Finance Manager, Accounting

Manager, Capital Programs Budget Analyst

Financial Analyst Administrative Assistant, Finance

xvi

Long Beach Transit

xvii

xviii

Board of Directors

Michael Clemson Chair of the Board

David Sutton Vice Chair

Abigail Mejia Secretary/Treasurer

Colleen Bentley Director

Raul Anorve Director

Vacant Director

Lea Eriksen City Representative - Non-Voting, City of Long Beach

Joshua Hickman 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

Financial

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors of
Long Beach Public Transportation Company

Opinion

We have audited the accompanying financial statements of the business-type activities and fiduciary net position of Long Beach Public Transportation Company (the Company), as of and for the years ended June 30, 2022 and 2021, and the related notes to the financial statements, which collectively comprise the Company's basic financial statements as listed in the table of contents.

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 fiduciary net position of the Company as of June 30, 2022 and 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

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

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that raise substantial doubt shortly thereafter.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and, therefore, is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

1 In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expres sing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis (MD&A) as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements as a whole. The accompanying supplemental informational schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

2 Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2022 on our consideration of the Company’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 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 Company’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 Company’s internal control over financial reporting and compliance.

Long Beach, California
December 20, 2022
3 Long Beach Transit
Intentionally Left Blank
Management's Discussion
and Analysis

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 2022, 2021 and 2020. 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-xviii of this report.

FINANCIAL HIGHLIGHTS

 Passenger fares earned in FY 2022 were $7.08 million, an increase from $154 thousand in FY 2021.

This increase was due to resuming fare collection after it was temporarily suspended in response to the COVID-19 pandemic.
 Subsidies for FY 2022 were $94.48 million, an increase from $91.99 million in FY 2021. This increase was largely due to an increase in county sales tax revenues as the economy recovered from the COVID-19 pandemic.
 Operating expenses in FY 2022 were $115.62 million, an increase from $110.76 million in FY 2021.

The increase in expenses was driven by the increase in cost for fuel, materials and supplies, and services.
 Fuel expenses in FY 2022 were $5.45 million, an increase from $3.20 million in FY 2021, due to an increase in usage as well as in fuel prices.
 Capital acquisitions in FY 2022 were $25.31 million, compared to $27.49 million in FY 2021.  Net position at the end of FY 2022 is $ 85.75 million compared to $73.25 million at the end of FY 2021. Total a ssets increased by $19.40 million and deferred outflows of resources increased by $8.70 million, while total liabilities increased b y $27.20 million and deferred inflows of resources decreased by $11.59 million.
 Total net pension liability increased to $32.19 million in FY 2022, compared to $1 3.87 million in FY 2021. This increase of $18.32 million consists of increases of $5.14 million and $13.18 million for the Salaried and Contract Plans, respectively. The increase was due to the pension investments performing below the rate of return assumption of the Plans for FY 2022.

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 n et 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 rel ated 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).

4 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 14-20 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 21-60 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 $85.75 million at the close of FY 2022, an increase from $73.25 million at the close of FY 2021.

Long Beach Transit's
Condensed Summary of Net Position

Year Ended

2022 2021 2020
Assets
Current assets $ 67,291,608 $ 64,590,635 $ 64,349,013 Other noncurrent assets 30,596,605 22,890,271 28,184,651 Capital assets, net 105,347,906 96,356,715 83,144,218 Total assets 203,236,119 183,837,621 175,677,882

Deferred outflows of resources 16,026,996 7,325,749 14,957,584

Liabilities
Current liabilities 75,167,366 71,809,117 66,478,825 Noncurrent liabilities 54,525,021 30,685,138 57,150,511 Total liabilities 129,692,387 102,494,255 123,629,336

Deferred inflows of resources 3,824,529 15,418,522 -

Net position
Net investment in capital assets 102,135,121 91,604,336 83,144,218 Restricted 300,492 303,855 526,717
Unrestricted (16,689,414) (18,657,598) (16,664,805)
Total net position $ 85,746,199 $ 73,250,593 $ 67,006,130

5 Long Beach Transit

Management’s Discussion and Analysis (continued)

Assets. Current assets increased to $67.29 million in FY 2022 from $64.59 million in FY 2021, an increase of $2.70 million. This increase is largely due to the increase in accounts receivable of $1.56 million.

Subsidies and capital grants receivable make up the majority of the increase in accounts receivable. Current assets in FY 2021 increased to $64.59 million in FY 2021 from $64.35 million in FY 2020, an increase of $241 thousand. This increase is largely due to the increases in accounts receivable of $1.47 million. Similarity to FY 2022, subsidies and capital grants receivable make up the majority of the increase in accounts receivable.

Other noncurrent assets, which are Agency investments and leased assets, decreas ed to $30.60 million from $22.89 million in FY 2021. Agency investments decreased in FY 2022, from $22.89 million in FY 2021.

Net capital assets totaled $105.35 million in FY 2022, compared to $96.36 million in FY 2021, an increase of $8.99 million. This increase is due to capital acquisitions in F Y 2022, the largest being the purchase of new battery-electric buses. In FY 2021, net capital assets increased by $13.22 million compared to FY 2020.

This increase was a result of capital acquisitions, the largest being the purchase of the corporate offic e building.

Deferred Outflows of Resources. Deferred outflows of resources increased in FY 2022 to $16.03 million from $7.33 million in FY 2021, an increase of $8.70 million. In FY 20 21 there was a decrease of $7.3 3 million from $14.96 million in FY 2020 . 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 $75.17 million in FY 2022 from $71.81 million in FY 2021, an increase of $3.36 million. The increase was due in part to increases in accounts payable ($1.77 million) and subsidy deferral ($680 thousand). Accounts payable increased due to higher invoice accruals, including accruals for Dial-A-Lift services and corporate office tenant improvements. The subsidy deferral represents Prop A, Measure M, and STA funding which are planned for use in the next fiscal year. In FY 2021, current liabilities increased by $5.33 million due to increases in accounts payable and subsidy deferral.

Noncurrent liabilities increased to $54.5 3 million in FY 2022 from $30.69 million in FY 2021, an increase of $23.84 million. The increase is due t o the increase in net pension liability ($18.33 million), offset by decreases in unearned revenue ($2.42 mi llion) and note payable ($1.54 million). Unearned revenue represents grants allocated for capital projects that have not yet been expended. In FY 2 021, noncurrent liabilities decreased by $26.46 million from $57.15 million in FY 2020 due to decreases in net pension liability and unearned revenue.

In FY 2021, LBT executed a promissory note in the purchase of a commercial office building to be used as the Agency's corporate office. The outstanding balance of the note is reflected in current liabilities and noncurrent liabilities in the financial statement. More information on the note payable can be found in note (14) of the notes accompanying the financial statements.

Deferred Inflows of Resources. Deferred inflows of resources decreased in FY 2022 to $3.82 million from $15.42 million in FY 2021, a decrease of $11.60 million. In FY 2021 there was an increase of $15.42 million.

Changes in deferred i nflows 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.

6 Long Beach Transit

Management’s Discussion and Analysis (continued)

Net Position. Total net position at the end of FY 2022 is $85.75 million, an increase from $73.25 million in FY 2021. Net position is calculated as assets and deferred outflows of resources less liabilities and deferred inflows of resources. LBT's net position includes $102.04 million invested in capital assets and $16.69 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.

Long Beach Transit's
Condensed Summary of Revenues, Expenses, and Changes in Net Position Year-Ended
2022 2021 2020
Operating revenues:

Passenger fares and
special events $ 7,138,072 $ 155,130 $ 10,692,706 Advertising 843,340 649,678 978,484
Other revenue 1,133,274 1,183,017 2,381,571
Total operating revenues 9,114,686 1,987,825 14,052,761 Nonoperating revenues:

Subsidies 94,483,188 91,986,813 82,029,003
Investment return, net (673,484) 287,251 1,848,019 Total nonoperating revenues 93,809,704 92,274,064 83,877,022 Total revenues 102,924,390 94,261,889 97,929,783

Operating expenses:

Transportation 50,067,770 50,691,529 54,678,389
Maintenance 29,986,862 25,714,741 24,288,404
Administration 20,783,244 20,071,273 21,160,394
Depreciation 14,782,360 14,278,928 15,739,478
Total operating expenses 115,620,236 110,756,471 115,866,665 Change before capital grants (12,695,846) (16,494,582) (17,936,882) Capital grants 25,309,346 22,739,045 7,814,792
Change in net position 12,613,500 6,244,463 (10,122,090) Total net position, July 1 73,250,593 67,006,130 77,128,220 GASB 87 (117,894) - -
Total net position, June 30 $ 85,746,199 $ 73,250,593 $ 67,006,130

Operating revenues.  In FY 2022, overall total operating revenue increased to $9.11 million compared to $1.99 million in FY 2021. This was an increase of 358%. This increase was due to LBT reinstating fare collection, which started on September 19, 2021. I n FY 2022, businesses began to reopen, more students were returning to campus, and employees resumed commuting to work.

In an effort to make purchasing passes easier for students, LBT made it possible for six high schools in the Long Beach Unified School District (LBUSD) to sell LBT 30-day student passes directly on campus. A new 150-day (or semester long) student pass for California State University Long Beach (CSULB) was also introduced. CSULB students were able to purchase and load the pass directly onto their mobile cell phones.

7 Long Beach Transit

Management’s Discussion and Analysis (continued)

In January 2022, LBT began a fareless initiative pilot program (commonly known as GoPass) with the Los Angeles Metropolitan Transportation Agency (MTA), LBUSD, and Long Bea ch City College (LBCC) to allow students to ride LBT for free. LBCC students were able to use their GoPass starting February 6, 2022, while LBUSD students started using their GoPass on April 1, 2022. The GoPass program saw great usage during the remaining portion of the fiscal year as any student enrolled in a school district or community college participating in the GoPass program was able to ride LBT for free.

To help the community rebound from the effects of the COVID -19 pandemic, LBT discounted the 1 -day regular pass, the 5 -day regular pass, and the 30 -day regular pass from the resumption of fare collection in September 2021 and throughout the remainder of the fiscal year.

From September 17, 2021, to May 22, 2022, customers were able to enjoy weekend service (Friday, Saturday, and Sunday) aboard the AquaLink. Starting May 25, 2022, through the end of the fiscal year and into the subsequent fiscal year, the AquaLink was available to customers 7 days a week. New fareboxes were installed on the AquaLinks to help make collecting fares easier. LBT also introduced a new mobile ticketing option which allowed customers to purchase their tickets through their mobile cell phone. The new fareboxes, along with handheld validation and credit card processing devices were used to validate customers using the app.

In FY 2021, revenues were heavily affected by the COVID -19 pandemic. While LBUSD welcomed back their students to campus, LBCC and CSULB limited the number of students returning to face-to-face classes.

Rear-door boarding was enforced on all buses for the safety of the bus operators and the customers. Moreover, fare collection was not enforced and there were no special event services. Overall total operating revenues decreased in FY 2021 to $1.99 million compared to $14.05 million in FY 2020, which was an 85.9% decrease. 8 Long Beach Transit

Management’s Discussion and Analysis (continued)

Advertising revenue improves as we emerge from the pandemic. In FY 2022 advertising revenue was $843 thousand, an increase compared to $650 thousand in FY 2021. During the pandemic and throughout FY 2022, LBT’s contract to earn a guaranteed minimum annual revenue for advertisements was placed on hold until the end of the pand emic. 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 $1.13 million in FY 2022, a decrease from $1.18 million in FY 2021, mainly due to a decrease in fuel tax credits. In fiscal years 2022, 2021, and 2020, LBT received fuel tax credits totaling $1.09 million, $1.15 million, and $2.35 million respectively. A significant amount of the fuel credits were due to federal alternative fuel tax credits. The Inflation Reduction Act of 2022 extended the Alternative Fuels Tax Credit for three years beginning retroactively January 2022 through December 31, 2024. The alternative fuel tax credit rate is $0.50 per gallon or diesel gallon equivalent.

Nonoperating revenues. Subsidies in FY 2022 totaled $94.48 million or 91.8% of total revenues. This represents an increase from $91.99 million in FY 2021, a difference of $2.49 million. This increase was largely due to increases in county sales tax re venues as the economy recovered from the COVID -19 pandemic. In FY 2021, there was an increase in subsidies of $9.96 million largely due to federal Coronavirus relief funds.

There was a loss in interest returns of $673 thousand in FY 2022, a decrease compared to $287 thousand in interest income in FY 2021, due to a decrease in market value of individually held bonds. In FY 2021 there was a decrease in interest income earnings, down from $1.85 million in FY 2020, due to lower interest income from investments.

Total Revenues. Overall, in FY 2022 revenues totaled $102.92 million, an increase from $94.26 million in FY 2021. This is a result of the increases in operating revenue and non-operating revenue discussed above.

In FY 2021, there was a decrease in total revenue from $97.93 million in FY 2020.

9 Long Beach Transit

Management’s Discussion and Analysis (continued)

Operating expenses. Operating expenses before depreciation increased in FY 2022 to $100.84 million from $96.48 million in FY 2021, an increase of $4.36 million. The increase is primarily due to an increased cost of fuel and materials and supplies.

Total labor costs excluding benefits increased by 8.2%, to $47.81 million in FY 2022 from $44.19 million in FY 2021 due to wage and service level increases. Health benefit costs decreased by $223 thousand due to lower premiums.

The gradual restoration of transit service combined with the rise in market fuel cost reflected an increase of $2.25 million in fuel costs for FY 2022 compared to FY 2021. The average fuel prices were also higher throughout FY 2022 compared to FY 2021.

The Agency has managed to control operating costs and did not lay-off any of its employees during FY 2022.

In FY 2021, operating expenses before depreciation decreased to $96.48 million from $100.13 million in FY 2020. This decrease of $3.65 million was primarily due to cost reductions in daily transportation operations stemming from reduced services in response to the COVID-19 pandemic.

Capital Grants. In FY 2022 capital grants amounted to $25.31 million, an increase from $22.74 million in FY 2021. Depreciation expense totaled $14.78 million in FY 2022, compared with $14.28 million in FY 2021. Depreciation expense increased by $503 thousand.

10 Long Beach Transit

Management’s Discussion and Analysis (continued)

Long Beach Transit's
Capital Assets (net of depreciation)

Year-Ended
2022 2021 2020
Land $ 14,275,000 $ 14,275,000 $ 14,275,000
Buildings and improvements 27,111,968 28,348,615 7,166,706 Fleet 52,769,307 46,277,445 54,148,498
Communications systems 992 992 992
Fare collection system 394,532 474,395 629,852
Office, shop and garage equipment 2,597,037 3,222,842 1,802,847 Customer amenities 1,265,261 1,846,494 2,344,204 Construction in progress 6,933,810 1,910,932 2,776,119 Total capital assets, net of depreciation $ 105,347,907 $ 96,356,715 $ 83,144,218

Capital Assets. LBT had $23.77 million in new capital acquisitions during FY 2022, a decrease of $3.72 million when compared to FY 2021. In FY 2022, assets have been purchased with federal, state and local grants awarded to the Agency.

LBT’s investment in capital assets as of June 30, 2022 amounted to $105.35 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 9.3% in FY 2022, from $96.36 million in FY 2021.

Major capital acquisitions in FY 2022 included the purchase of battery electric buses, mid-life rehabilitation of buses, corporate office building improvements, and information systems u pgrades. In FY 2021, capital acquisitions amounted to $27.49 million, with major acquisitions including the purchase of a corporate office building, mid-life rehabilitation of buses and information systems upgrades.

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 2022 included the following:

 New BYD Buses, $13.14 million
 Mid-life rehabilitation of buses, $3.66 million
 LBTCO Network, $954 thousand
 LBTCO Tenant Improvements, $921 thousand
 New BEB New Flyer Pilot Bus, $803 thousand
 ION Emitters, $542 thousand
 Routine replacement of engines, transmissions, and bus components, $535 thousand  TVIC Renovation Project, $391 thousand
 LBTCO Building Automation System, $365 thousand
 MS365 Deployment Intranet, $226 thousand
 LED Solar Signs for bus stops, $223 thousand

11 Long Beach Transit

Management’s Discussion and Analysis (continued)

LBT’s investment in capital assets as of June 30, 2021, amounted to $96.36 million (net of accumulated depreciation). The Agency had $27.49 million in new capital acquisitions durin g the year, an increase of $19.68 million, when compared to FY 2020.

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

Additional information on LBT’s capital assets can be found in note (8) in the notes to the Agency's financial statements on page 35 of this report.

ECONOMIC FACTORS AND NEXT YEAR’S FINANCIAL PLAN

The overall economy has been deeply impacted by the COVI D-19 pandemic and the associated closures.

Some aspects of the economy have started to recover but consumer spending and travel patterns are changed since before the pandemic. These changes and 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 2023 in the face of these uncertainties.

A history of strong financial planning and stewardship has allowed LBT to weather the 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 2023.

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 to make sustainable decisions.

Amid modified services and rebuilding from 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 2023.

The FY 2023 financial plan focuses on navigating towards the next normal and incrementally expanding service that have been reduced during the pandemic. Addition ally, the FY 2023 plan emphasizes employee recruitment and retention which will play a vital role in the Agency's ability to expand 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 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 2023 financial plan incorporates the relocation to this new facility as well as facility improvements identified in the Facility Master Plan.

12 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 du ration and renewal of the agreements. The agreements were ratified in FY 2022 and are effective through 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 2023 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 2022 f or FY 2023 totals $119.08 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.

13 Financial Statements

Long Beach Transit
Statements of Net Position
June 30, 2022 and 2021

2022 2021
ASSETS
Current Assets:

Cash and cash equivalents (note 2) $ 53,052,250 $ 52,615,290 Accounts receivable (note 4) 9,668,676 8,110,218
Materials and supplies inventory 3,209,890 2,716,573 Prepaid expenses 1,360,792 1,148,554
Total current assets 67,291,608 64,590,635

Noncurrent Assets:

Investments (note 2) 21,779,394 22,890,271
Leased assets 8,817,211 -
Capital assets (note 8)
Land 14,275,000 14,275,000
Construction-in-progress 6,933,810 1,910,932
Total capital assets (note 8) 21,208,810 16,185,932 Capital assets, net of accumulated depreciation:

Buildings and improvements 27,111,968 28,348,615
Fleet 52,769,306 46,277,445
Communications systems 992 992
Fare collection system 394,532 474,395
Office, shop and garage equipment 2,597,037 3,222,842 Customer amenities 1,265,261 1,846,494
Total capital assets, net of accumulated depreciation 84,139,096 80,170,783 Total noncurrent assets 135,944,511 119,246,986
Total assets 203,236,119 183,837,621

DEFERRED OUTFLOWS OF RESOURCES
Net difference of changes related to pension liability 16,026,996 7,325,749 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 219,263,115 $ 191,163,370

The notes to the financial statements are an integral part of these statements.

14 Long Beach Transit
Statements of Net Position, Continued
June 30, 2022 and 2021

2022 2021

LIABILITIES
Current Liabilities:

Accounts payable $ 5,964,523 $ 4,194,835
Accrued payroll expenses 1,242,191 981,869
Compensated absences payable (note 11) 3,391,167 3,265,004 Note payable, current portion (note 14) 1,203,109 1,124,341 Sick leave benefits (note 11) 238,470 179,221
Subsidy deferral (note 9) 42,859,428 42,179,845
Estimated liability for insurance claims (note 6) 20,268,478 19,884,002 Total current liabilities 75,167,366 71,809,117
Noncurrent Liabilities:

Unearned revenue (note 5) 6,050,418 8,470,897
Note payable, net of current portion (note 14) 2,009,677 3,628,038 Lease liability 9,053,484 -
Sick leave benefits (note 11) 5,219,105 4,720,485
Net pension liability (note 13) 32,192,337 13,865,718 Total noncurrent liabilities 54,525,021 30,685,138
Total liabilities 129,692,387 102,494,255

DEFERRED INFLOWS OF RESOURCES
Net difference of changes related to pension liability 3,824,529 15,418,522

NET POSITION
Net investment in capital assets 102,135,121 91,604,336 Restricted for:

Capital procurement 300,492 303,855

Unrestricted (16,689,414) (18,657,598)
Total net position 85,746,199 73,250,593
TOTAL LIABILITIES AND NET POSITION $ 219,263,115 $ 191,163,370

The notes to the financial statements are an integral part of these statements.

15 Long Beach Transit
Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2022 and 2021

2022 2021
Operating revenues:

Passenger fares $ 7,077,072 $ 154,380
Special events 61,000 750
Advertising 843,340 649,678
Other revenue 1,133,274 1,183,017
Total operating revenues 9,114,686 1,987,825
Operating expenses:

Transportation 50,067,770 50,691,529
Maintenance 29,986,862 25,714,741
Administration 20,783,244 20,071,273
Depreciation (note 8) 14,782,360 14,278,928
Total operating expenses 115,620,236 110,756,471
Operating loss (106,505,550) (108,768,646)
Nonoperating revenues (expenses):

Subsidies (note 3) 94,483,188 91,986,813
Investment return, net (673,484) 287,251
Total nonoperating revenues 93,809,704 92,274,064
Change in net position before capital grants (12,695,846) (16,494,582)

Capital grants 25,309,346 22,739,045
Change in net position 12,613,500 6,244,463
Total net position, July 1 73,250,593 67,006,130
Restatement - GASB 87 (117,894) -
Total net position, June 30 $ 85,746,199 $ 73,250,953

The notes to the financial statements are an integral part of these statements.

16 Long Beach Transit

Statements of Cash Flows
Years Ended June 30, 2022 and 2021

2022 2021
Cash flows from operating activities:

Cash received from customers $ 9,584,937 $ 2,909,226 Cash paid to employees for services (47,808,454) (44,185,548) Cash paid to other suppliers of goods or services (52,719,445) (47,209,585)

Net cash used for operating activities (90,942,962) (88,485,907)

Cash flows provided by noncapital financing activities:

Operating subsidies received 94,498,976 92,406,268

Cash flows from capital and related financing activities:

Proceeds (use of proceeds) from sale of capital assets 32,284 (77,682) Purchase of capital assets (25,309,345) (22,739,045)
Capital grant contributions received 21,770,180 12,576,386

Net cash used for capital
and related financing activities (3,506,881) (10,240,341)

Cash flows provided by investing activities:

Net proceeds and gains from investments 11,470,537 10,858,657 Purchase of investments (10,359,660) (5,564,353)
Interest received on cash and investments (723,050) 426,752

Net cash provided by investing activities 387,827 5,721,056

Net change in cash and cash equivalents 436,960 (598,924)

Cash and cash equivalents, July 1 52,615,290 53,214,214

Cash and cash equivalents, June 30 (note 2) $ 53,052,250 $ 52,615,290

The notes to the financial statements are an integral part of these statements.

17 Long Beach Transit

Statements of Cash Flows, Continued
Years Ended June 30, 2022 and 2021

Reconciliation of Operating Loss to
Net Cash Used for Operating Activities 2022 2021

Operating loss $ (106,505,550) $ (108,768,646)

Adjustments to reconcile operating loss to net cash
used for operating activities:

Depreciation expense 14,782,360 14,278,928
(Increase) decrease in accounts receivable
from operations 470,391 1,278,620
(Increase) decrease in materials and supplies inventory (493,317) (192,061) (Increase) decrease in prepaid expenses (212,238) 816,698 (Increase) decrease in deferred outflows of resources (8,701,247) 7,631,835 Increase (decrease) in accounts payable 1,773,077 1,428,801 Increase (decrease) in accrued payroll expenses,
compensated absences payable, and
sick leave benefits 944,354 2,490
Increase (decrease) in net pension liability 18,326,619 (20,834,703) Increase (decrease) in estimated liability for
insurance claims 384,476 453,609
Increase (decrease) in lease liability (117,894)
Increase (decrease) in deferred inflows of resources (11,593,993) 15,418,522

Total adjustments 15,562,588 20,282,739

Net cash used in operating activities $ (90,942,962) $ (88,485,907)

Noncash investing, and capital financing activities:

During the years ended June 30, 2022 and 2021, the Agency had noncash capital asset additions of $2,693,569 and $5,711,640 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.

18 Long Beach Transit

Statements of Fiduciary Net Position
Years Ended June 30, 2022 and 2021

Pension Trust Funds
2022 2011

Assets

Cash $ 876,060 $ 2,684,006

Accounts Receivable:

Contribution receivable - 312,500

Investments, at fair value
Equity mutual funds 31,450,588 81,708,720
Bond mutual funds 15,722,872 27,783,307
Private equity 53,889,334 - Corporate bonds - 6,570,540 Government bonds - 538,814 Total investments 101,062,794 116,601,381

Total assets $ 101,938,854 $ 119,597,887

Net position restricted for pensions $ 101,938,854 $ 119,597,887

The notes to the financial statements are an integral part of these statements.

19 Long Beach Transit

Statements of Changes in Fiduciary Net Position
Years Ended June 30, 2022 and 2021

Pension Trust Funds
2022 2021

Additions:

Contributions:

Employer contributions $ 4,693,906 $ 6,167,491
Employee contributions 2,493,206 3,024,413
Total contributions 7,187,112 9,191,904

Investment gain (loss):

Interest 122,907 782,776
Dividends and capital gains 1,732,634 3,399,062
Net unrealized gain (loss) on investments (29,159,184) 15,532,976 Net realized gain on investments 14,533,703 3,772,483 Total investment gain (loss), net (12,769,940) 23,487,297

Deductions:

Expenditures:

Pension benefits 11,556,717 7,665,131
Direct administrative costs 48,904 271,724
Other administrative costs 470,584 359,966
Total expenditures 12,076,205 8,296,821

Net increase (decrease) in plan net position (17,659,033) 24,382,380

Net position restricted for pension, beginning of year 119,597,887 95,215,507

Net position restricted for pension, end of year $ 101,938,854 $ 119,597,887

The notes to the financial statements are an integral part of these statements. 20 Long Beach Transit

Notes to Financial Statements
June 30, 2022 and 2021
(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 t he 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 le gal 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 a ccounting. 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 D eferred 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 assets) 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 assets) 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 out flows, 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 req uiring the use of estimates include determination of useful lives of capital assets, liability for insurance claims, accrued sick leave and defined benefit plan assumptions.

21 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, 2022 and 2021 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 $10,000 and having an estimated useful life of more than one year. Prior to July 1, 2021, the threshold was an initial value of more than $5,000. The definition was changed as of FY 2022. 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 2022.

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, interest payments are recorded 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.
22 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 a re 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 June 2017, GASB issued Statement No. 87, Leases for reporting periods beginning after June 15, 2021.

This statement aims to increase the transparency of the agency's lease liabilities by establishing a single model for lease accounting and requiring al l leases to be reported on the statement of net position as capital or financing leases.

Future Pronouncements

In May 2020, GASB issued Statement 96 defining Subscription -Based Information Technology Arrangements (SBITAs). This statement requires the agency to record a right-to-use subscription intangible assets and corresponding subscription liability. This pronouncement is effective for fiscal years beginning after June 15, 2022. Management is currently in the process of determining the impact of thi s statement on the financial statements.

Subsequent Events

Management has evaluated the impact of any subsequent events through December 20, 2022, the date on which the accompanying financial statements were available to be issued for the year ended June 30, 2022. 23 Long Beach Transit

Notes to Financial Statements (continued)
(2) Cash, Cash Equivalents and Investments

Cash, cash equivalents and investments consist of the following as of June 30:
2022 2021
Cash on hand $ 19,866 $ 10,218
Deposits with financial institutions 6,804,138 1,178,781 Cash equivalents 46,228,246 51,426,291

Total cash and cash equivalents 53,052,250 52,615,290

Investments 21,779,394 22,890,271
Total cash, cash equivalents and investments $ 74,831,644 $ 75,505,561

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 2022 and FY 2021, 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 Ju ne 30, 2022 and 2021, respectively.

24 Long Beach Transit

Notes to Financial Statements (continued)

(2) Cash, Cash Equivalents and Investments (continued)

Weighted
Type 2022 Average
Maturity (Yrs)
Cash Equivalents
Local Agency Investment Fund (LAIF) $ 45,606,553 0.85 Fidelity Municipal Money Market 621,693 N/A
Total Cash Equivalents $ 46,228,246

Corporate Bonds
Intel Corp ST NT 2.700% Due 12/15/2022 699,748 0.5 Nike Inc Bond 2.250% Due 05/01/2023 696,535 0.8
Apple Inc. 2.400% Due 05/03/2023 696,710 0.8
Microsoft Corp. 2.875% Due 02/06/2024 698,243 1.5
Home Depot Inc. 3.750% Due 02/15/2024 707,427 1.6
UnitedHealth Group Inc. 2.375% Due 08/15/2024 685,538 2.0 Toyota Motor Cr Corp. 1.800% Due 02/13/2025 667,919 2.5 Visa Inc. 3.150% Due 12/14/2025 692,118 3.2
Bershire Hathaway Inc. 3.125% Due 03/15/2026 686,721 3.4 Corporate Bonds Total $ 6,230,959

Government Bonds
Fannie Mae 2.000% Due 10/05/2022 1,499,295 0.3
United States Treas Note 2.000% Due 10/31/2022 1,499,340 0.3 United States Treas Note 2.000% Due 11/30/2022 1,997,040 0.4 United States Treas Note 2.625% Due 02/28/2023 1,998,820 0.7 Federal Home Loan Banks 2.750% Due 12/13/2024 1,987,660 2.4 Freddie Mac 1.500% Due on 02/12/2025 1,443,090 2.4 United States Treas Note 1.125% Due 02/28/2025 1,905,460 2.6 Federal Farm CR BKS Bond 0.600% Due 12/09/2025 459,800 0.02 Federal Farm CR BKS Bond 0.900% Due 06/15/2026 922,110 0.02 Federal Farm CR BKS Bond 0.870% Due 09/01/2026 1,835,820 0.1 Government Bonds Total $ 15,548,435
Total Investment Value $ 21,779,394

As of June 30, 2022 and 2021, there were $101,285 and $89,152, respectively, of accrued bond interest which are included in accounts receivable.

Weighted average maturity represents earlier of date of bond maturation or date of call option.

25 Long Beach Transit

Notes to Financial Statements (continued)

(2) Cash, Cash Equivalents 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 Depo Inc. 3.750% Due 02/15/2024 754,152 2.5
Intel Corp. 2.70% Due 12/15/2022 724,472 1.4
Microsoft Crop. 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 2.5 United Health 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

26 Long Beach Transit

Notes to Financial Statements (continued)

(2) Cash, Cash Equivalents 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 ha ve 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, 2022.

Investment Type Rating
Corporate Bonds
Intel Corp ST NT 2.700% Due 12/15/2022 A+
Nike Inc Bond 2.250% Due 05/01/2023 AA-
Apple Inc. 2.400% Due 05/03/2023 AA+
Microsoft Corp. 2.875% Due 02/06/2024 AAA
Home Depot Inc. 3.750% Due 02/15/2024 A
UnitedHealth Group Inc. 2.375% Due 08/15/2024 A+
Toyota Motor Cr Corp. 1.800% Due 02/13/2025 A+
Visa Inc. 3.150% Due 12/14/2025 AA-
Bershire Hathaway Inc. 3.125% Due 03/15/2026 AA

Investment Type Rating
Government Bonds
Fannie Mae 2.000% Due 10/05/2022 AA+
United States Treas Note 2.000% Due 10/31/2022 AA+
United States Treas Note 2.000% Due 11/30/2022 AA+
United States Treas Note 2.625% Due 02/28/2023 AA+
Federal Home Loan Banks 2.750% Due 12/13/2024 AA+
Freddie Mac 1.500% Due on 02/12/2025 AA+
United States Treas Note 1.125% Due 02/28/2025 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 CR BKS Bond 0.870% Due 09/01/2026 AA+

27 Long Beach Transit

Notes to Financial Statements (continued)

(2) Cash, Cash Equivalents 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 s ecurities 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 fol lowing 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 d eed 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 indi rect 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 hie rarchy 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.

28 Long Beach Transit

Notes to Financial Statements (continued)

(2) Cash, Cash Equivalents and Investments (continued)

The Agency has the following recurring fair value measurements as of June 30, 2022 and 2021:

 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, 2022

(Level 1) (Level 2) (Level 3) Total

Money Market $ 621,693 $ 621,693 Corporate Bonds 6,230,959 6,230,959 Government Bonds 15,548,435 15,548,435 State of California Local
Agency Investment Fund 45,606,553 45,606,553

Total assets at fair value None $ 68,007,640 None $ 68,007,640

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

29 Long Beach Transit

Notes to Financial Statements (continued)

(3) Operating Subsidies

Subsidies from the following sources were earned during the years ended June 30:

2022 2021

Proposition A Local Return, City of Long Beach $ 6,610,018 $ 6,190,887 Proposition A, County of Los Angeles 15,623,473 10,148,508 Proposition C, County of Los Angeles 6,091,528 5,408,081 Measure R, County of Los Angeles 10,301,721 7,903,883 Measure M, County of Los Angeles 10,201,986 6,243,110 TDA, STA, STA-SB1 and LCTOP, State of California 29,367,503 25,747,982 Preventive Maintenance, Federal - 500,000
CARES Act, Federal - 29,203,837
CRRSA Act, Federal 14,159,497 -
City of Carson 1,350,820 -
Local Municipalities 684,298 635,943
Other sources 92,344 4,582

Total $ 94,483,188 $ 91,986,813

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 $6,610,018 in FY 2022.

Measure R, approved by county voters in November 2008, provides a half -cent sales tax for transportation improvements. In November 20 16, 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.

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 Operat ions 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 Reduct ion 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.

In accordance with the FTA regulations, th e 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

30 Long Beach Transit

Notes to Financial Statements (continued)

(3) Operating Subsidies (continued)

financial statements. The FTA funds 100% of the costs and FTA local match requirement is met by utilizing Transportation Development Credits.

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 alloc ated and used $29,203,837 to fund operating expenses in FY 2021.

On December 27, 2020, the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) was signed into law, which includes $900 billion in supplemental appropriations for COVID -19 relief, $14 billion of which was allocated to support the transit industry during the COVID-19 public health emergency.

LBT was allocated $26.67 million of CRRSAA funds and used $14,159,497 to fund operating expenses in FY 2022.

Other local monies are reimbursement for service hours supplied to eight surrounding cities. In FY 2022, the City of Carson’s reimbursement totaled $1.35M following a 2021 contract for services. Additionally, 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:

2022 2021

Trade receivables $ 918,734 $ 1,142,599
Interest 198,971 149,405
Capital grants receivable 4,372,328 3,250,866
Proposition A funds due from City 2,529,568 1,943,770 STA 545,982 853,595
STA-SB1 407,669 642,345
Other receivables 695,424 127,638

Total $ 9,668,676 $ 8,110,218

31 Long Beach Transit

Notes to Financial Statements (continued)

(5) Unearned Revenue

At June 30, 2022 and 2021, the balances of unearned revenue were as follows:
2022 2021

Capital grant funds $ 5,967,156 $ 8,423,308
Other 83,262 47,589
Total unearned revenue $ 6,050,418 $ 8,470,897

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. 32 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 2022 and FY 2021.

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 2022 and FY 2021.

The level of risk retention is dictated by the insu rance 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 o n 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, 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

Reserves:

New claims 339,578 630,586 970,164

Adjustments to existing claims 994,236 4,499,760 5,493,996

Payouts (2,411,586) (3,668,098) (6,079,684)

Estimated liabilities at June 30, 2022 $ 5,132,051 $ 15,136,427 $ 20,268,478

33 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.

34 Long Beach Transit

Notes to Financial Statements (continued)

(8) Capital Assets

Capital asset activity for the years ended June 30, 2022 and 2021 was as follows:

Balance at Adjustments/ Balance at
June 30, 2021 Transfers Increases Decreases June 30, 2022 Capital assets not
being depreciated:

Land $ 14,275,000 $ - $ - $ - $ 14,275,000 Construction in progress 1,910,932 (1,338,934) 6,361,812 - 6,933,810 Total capital assets not
being depreciated 16,185,932 (1,338,934) 6,361,812 - 21,208,810

Capital assets being
depreciated:

Buildings and improvements 77,407,478 146,978 703,095 - 78,257,551 Fleet 169,411,434 848,635 15,867,379 (6,381,319) 179,746,129 Communications systems 7,462,121 - - - 7,462,121 Fare collection system 9,340,489 - - - 9,340,489 Office, shop and garage
equipment 30,891,268 343,321 617,480 (7,553,911) 24,298,158 Customer amenities 17,485,294 - 223,786 - 17,709,080 Total capital assets
being depreciated 311,998,084 1,338,934 17,411,740 (13,935,230) 316,813,528

Less accumulated depreciation:

Buildings and improvements (49,058,863) - (2,086,720) - (51,145,583) Fleet (123,133,989) - (10,224,152) 6,381,319 (126,976,822) Communications systems (7,461,129) - - - (7,461,129) Fare collection system (8,866,094) - (79,863) - (8,945,957) Office, shop and
garage equipment (27,668,426) - (1,586,606) 7,553,911 (21,701,121) Customer amenities (15,638,800) - (805,019) - (16,443,819) Total accumulated
depreciation (231,827,301) - (14,782,360) 13,935,230 (232,674,431) Total capital assets
being depreciated, net 80,170,783 1,338,934 2,629,380 - 84,139,097

Total capital assets, net $ 96,356,715 $ - $ 8,991,192 $ - $ 105,347,907

35 Long Beach Transit

Notes to Financial Statements (continued)

(8) Capital Assets (continued)

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

(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, 2022 and 2021, the Agency had remaining Prop A subsidy funding of $32,301,688 and $31,686,744, respectively, to be utilized in future fiscal years.

As of June 30, 2022, the Agency maintained STA funds of $1,085,407, which was the same amount as of June 30, 2021. STA-SB1 funds remaining amounted to $1,614,890 as of June 30, 2022, which was the same amount as of June 30, 2021. The Agency had Measure M funds of $7,857,443 and $7,792,804 as of June 30, 2022 and 2021, respectively. These funds are to be used to fund operations in future fiscal years.

36 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 financia l 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, 2022. 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 contingenc y balances; therefore, actual costs may be lower than shown.

Vendor Project Amount Expected
Completion
Smart Auto & Coach Detailing Bus Detailing services and Window $ 654,644 July 2022 Complete Coach Works 2013 GILLIG REHAB year 1 and 2 of 3 $ 2,552,607 August 2022 United Healthcare Medical Employee Benefits $ 10,500,000 August 2022 United Healthcare Dental Employee Benefits $ 538,000 August 2022 United Healthcare Vision Employee Benefits $ 119,000 August 2022 United Healthcare of California Life Insurance - Employee Benefits $ 292,156 August 2022 8x8, INC. Hosted Service for Telephone support $ 297,769 September 2022 La Canada Design Group LBTCO Phase 1B - Design Development $ 365,302 September 2022 Nth Generation Computing Inc Cybersecurity monitoring and mediation $ 234,360 September 2022 CDW-G LLC MS EA License $ 152,711 September 2022
City of Long Beach Police Police Services - 10/1/21-9/30/22 $ 2,410,592 September 2022 Mission Linen Supply Uniform and Materials $ 163,310 September 2022 Complete Coach Works 2013 GILLIG REHAB year 3 of 3 $ 1,404,519 October 2022 Zaretsky Engineering Solutions LBTCO Building Automation System Upgrade $ 365,552 October 2022 Cummins Pacific LLC L9-280 Cummins Engines $ 171,008 November 2022 Sirius Computer Solutions, Inc Network Switch at LBTCO $ 168,210 November 2022 Global Diversified Voltage ATS - Costs of Labor, Material and equipment $ 214,538 December 2022 Dorado Design and Contruction LBT1 BEB Charging StatioNS $ 295,204 December 2022 BYD Motors, Inc. 14 BYD BEB Buses $ 1,493,976 December 2022 Mccray's Enterprises Bus repair #1835 $ 109,041 December 2022 Spectrum Charter Communications 3 years of internet connection through 12/2022 $ 218,345 December 2022 Transit Information Products Option year two of contract 16-014 $ 200,000 December 2022 Swiftly Inc. On time performance Module $ 214,247 January 2023 Urban Elevator Service CA, LLC LBTCO Elevator Modernization Project $ 846,564 January 2023 37 Long Beach Transit

ADP Commercial LLC Install access control system at LBTCO $ 315,787 January 2023 Letner Roofing Company LBTCO Roof Replacement Project $ 426,000 February 2023 New Flyer of America 20 BEB buses 35' $ 20,592,300 February 2023 ND Construction Co, Inc Bus Shelter at Downtown LBT $ 656,225 April 2023 IBI Group IT consulting service for LBTACO move $ 155,000 June 2023 The Center for Transportation Charge Technology and Management $ 130,000 June 2023 Carl Warren & Co. Liability and Subrogation Third Party $ 509,059 June 2023 Catalina Express Water Taxi Services Aug 2022 to July 2023 $ 872,011 July 2023 Intueor Consulting, Inc. ERP_EAM Technical Consultant $ 1,030,420 August 2023 Empyrean Benefit Solutions, Inc. Employee Benefits $ 100,000 September 2023 Fidelity Security Life Insurance Fidelity Security Life Insurance Co. $ 119,000 September 2023 BYD Motors, Inc. 5 BEB Commuter Buses $ 6,590,338 October 2023 New Flyer of America Heliox 50kw Mobile Chargers $ 102,941 October 2023 Clean Energy CNG station maintenance services $ 1,180,724 October 2023 New Flyer of America Heliox Charging Stations for NF Buses: $ 1,631,894 December 2023 Delta Motor Co. Inc. Hybrid Reconditioning Project Base $ 448,067 December 2023 Commune Communication Communications, Creative Services $ 612,000 December 2023 Downtown Long Beach Alliance Year 1- 3 CY2021 TVIC Restroom Host $ 687,935 January 2024 Innovative Pest Solutions Pest Control $ 154,680 May 2024 City Terrace Service Inc. Towing Services Contract $ 179,970 June 2024 Merrimac Energy Group Gasoline Fuel FY22 thru FY24 $ 7,945,955 June 2024 SC Fuels Diesel Fuel FY22 thru FY24 $ 207,657 June 2024 Transpro Consulting, LLC TransDash Annual Subscription $ 111,334 June 2024 Trapeze Software Group, Inc TransitMaster Annual Software $ 559,294 September 2024 Universal Protection Service LP Security Guard Services - Three years $ 3,992,153 October 2024 CTI Environmental, Inc. Owners Rep Services $ 560,592 December 2024 The Goodyear Tire & Rubber Co. Tire Servies $ 2,141,201 January 2025 Giro, Inc. Hastus Software Maintenance and Support $ 535,924 January 2026 Global Paratransit Inc. DAL Services $ 6,884,581 February 2026 Athens Administrators Workers Comp Third-Party Adminstrator $ 1,333,921 January 2027 38 Long Beach Transit

Long Beach City CouncilApril 18, 2023

Long Beach City Council
April 18, 2023