Montebello City Council
March 22, 2023

CITY OF MONTEBELLO

CITY COUNCIL

REGULAR MEETING

WEDNESDAY, MARCH 22, 2023 AT 6:00 PM

CITY HALL COUNCIL CHAMBERS
1600 WEST BEVERLY BOULEVARD

MONTEBELLO, CALIFORNIA

CITY COUNCIL
David N. Torres, Mayor
Scarlet Peralta, Mayor Pro Tem
Angie M. Jimenez, Councilmember
Salvador Melendez, Councilmember
Georgina Tamayo, Councilmember

CITY MANAGER
René Bobadilla

CITY TREASURER
David Matanga

CITY ATTORNEY
Arnold M. Alvarez-Glasman

CITY CLERK
Christopher Jimenez

DEPARTMENT HEADS
Assistant City Manager
Fire Chief
Police Chief
Director of Finance
Director of Human Resources
Director of Planning/Community Development
Director of Public Works
Director of Recreation and Community Services
Director of Transportation
Director of Public Affairs and Information Technology
Arlene Salazar
Fernando Pelaez
Paul Espinosa
Michael Solorza
Nicholas Razo
Joseph Palombi
James Enriquez
David Sosnowski
Adrianna Kendricks
Michael Chee

March 22, 2023: City Council Meeting Page 2 of 7

NOTICES
This City Council Meeting ("Council") will be held in person and will meet at City Hall – City Council Chambers, 1600 West Beverly Boulevard, Montebello, California. The meeting will be live streamed and can be watched on the City’s website and YouTube Channel via the following link: https://www.montebelloca.gov, and may also be viewed on Spectrum Public Access Channel 3 for all Spectrum cable subscribers.

AMERICANS WITH DISABILITIES ACT: In compliance with the Americans with Disabilities Act (ADA) any person with a disability who requires special accommodations in order to participate in a meeting should contact the Administration Office at (323) 887-1437 Monday-Thursday from 7:30 a.m.-5:30 p.m. Please call 48 hours prior to the meeting to ensure that reasonable arrangements can be made to provide accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II 1203). If you require translation services, please contact the City Clerk’s office 72 hours before this meeting. Si necesita servicios de traducción, comuníquese con la Oficina del Secretario Municipal 72 horas antes de esta reunión. 如果您需要翻译服务，请在会议前 72 小时联系市书记员办公室.

RULES OF DECORUM:

As established by Resolution No. 23-17, adopted on February 22, 2023: Speakers shall not engage in willful conduct which interrupts the meeting or interferes with the orderly conduct of the meeting. Any speaker who becomes boisterous while addressing the Council or who otherwise disrupts the orderly conduct of the Council business shall be called to order by the Mayor. If the conduct continues, the Mayor may bar the speaker from speaking and/or attending the meeting. Any disruption of the meeting shall be addressed in a manner consistent with AB 1100. The sergeant-of-arms shall enforce the rules of decorum and remove and/or arrest any person upon the direction of the Presiding Officer, or upon his or her own discretion, as applicable.

PUBLIC COMMENTS:

In-Person: For those interested in participating during the Public Comment period(s) or public testimony period for Public Hearings of the City Council meetings, you may address the City Council in person only the day of the meeting.

Speakers will be required to fill out a speaker card provided at the door and submit it to City Clerk staff prior to each Public Comment announcement period. Staff will number and call each speaker card in the order received. Closed Session begins at 6:00 p.m. and Regular Session begins immediately thereafter; if there is no Closed Session, Regular Session will begin at 6:00 p.m.

AGENDA MATERIALS: The agenda and/or agenda packet are available for public inspection at City’s website at:

Agendas, Minutes, and Videos,

March 22, 2023: City Council Meeting Page 3 of 7

IN CONSIDERATION OF OTHERS, PLEASE TURN OFF, OR MUTE, ALL CELL PHONES AND PAGERS

THANK YOU FOR YOUR COOPERATION

OPENING CEREMONIES

CALL TO ORDER - 6:00 P.M.

ROLL CALL

ANNOUNCEMENT OF CLOSED SESSION ITEMS

PUBLIC COMMENTS ON CLOSED SESSION ITEMS
At this time, the public may submit a speaker card to the City Clerk staff for Closed Session items, prior to the beginning of this statement. Speakers will be called in the order received. Please be aware that the maximum time allotted for members of the public to speak on Closed Session items shall not exceed three (3) minutes per person. State Law prohibits the City Council from taking action or entertaining extended discussion on a topic not listed on the agenda. Please show courtesy to others and direct all of your comments to the Mayor and City Council.

CLOSED SESSION
The City Attorney shall provide a briefing on the item listed for Closed Session as follows:

1. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION Government Code Section 54956.9(d)(2)
Significant exposure to litigation in one matter related to a claim presented by Infrastructure Engineering

2. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION Government Code Section 54956.9(d)(4)
Consideration of initiation of litigation in one case

3. CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION
Government Code Section 54956.9(d)(1)
a. Concerned Residents v. City of Montebello – Los Angeles Superior Court Case No. 23STCP00290 b. Neighbors for Elections Now v. City of Montebello – Los Angeles Superior Court Case No. 23STCV01567

4. CONFERENCE WITH LABOR NEGOTIATORS
Government Code Section 54957.6
Agency Negotiators: René Bobadilla, Nicholas Razo
Employee Groups: Various City employee groups, including but not limited to MPOA & MPMA

5. PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Government Code Section 54957(b)(1)
Title: City Manager

REGULAR SESSION - IMMEDIATELY FOLLOWING CLOSED SESSION

CLOSED SESSION REPORT

INVOCATION

PLEDGE OF ALLEGIANCE

March 22, 2023: City Council Meeting Page 4 of 7

CORRECTIONS TO THE AGENDA - CITY MANAGER

CEREMONIAL ITEMS/PRESENTATIONS

6. RECOGNITION DANIEL CASTILLO-LALYRE FOR OUTSTANDING PERFORMANCE IN THE LOS ANGELES COUNTY OFFICE OF EDUCATION ACADEMIC DECATHLON 2023

7. SGVCOG MONTEBELLO PROJECT UPDATE

8. MCAP QUARTERLY REPORT UPDATE

9. STATE OF POLICE SERVICES

10. WOMEN’S HISTORY MONTH

11. COVID-19 MEMORIAL DAY, MARCH 6, 2023

PUBLIC COMMENTS ON NON-AGENDA ITEMS (30 MINUTES)
At this time, the public may submit speaker card(s) to the City Clerk staff, for both agenda and non-agenda items, prior to the beginning of this statement; Public Hearing items do not require a speaker card.

The City Council will address non-agenda items during this section and speakers will be called in the order received. Those persons not accommodated during this 30-minute period will have an opportunity to speak under “Public Comments – Continued”, after all scheduled matters have been considered. Public Hearing, Regular Business and/or Consent Calendar items will be addressed at the time that matter of business is heard, in the order received.

Please be aware that the maximum time allotted for members of the public to speak shall not exceed three (3) minutes per speaker. State Law prohibits the City Council from taking action or entertaining extended discussion on a topic not listed on the agenda. Please show courtesy to others and direct all of your comments to the Mayor and City Council.

STAFF COMMUNICATIONS ON ITEMS OF COMMUNITY INTEREST

REGULAR BUSINESS

12. RECEIVE AND FILE THE FISCAL YEAR 2021-22 ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR)

RECOMMENDATION: It is recommended that the City Council:

1. Receive and file the Fiscal Year 2021-22 Annual Comprehensive Financial Report (ACFR); and,

2. Take such additional, related action that may be desirable.

CONSENT CALENDAR
All matters listed under the Consent Calendar are considered to be routine. Any items a member wishes to discuss, including any items the public submitted speaker cards for, should be designated at this time. All other items may be approved in a single motion. Such approval will also waive the reading of any Ordinance.

13. SECOND READING AND ADOPTION OF ORDINANCE NO. 2463 AMENDING SECTIONS 2.30.010 AND

2.30.130 OF THE MONTEBELLO MUNICIPAL CODE TO REINSTATE THE CIVIL SERVICE COMMISSION AND CHAPTER 2.44 OF THE MONTEBELLO MUNICIPAL CODE TO REINSTATE THE TRAFFIC AND

SAFETY COMMISSION

RECOMMENDATION: It is recommended that the City Council:

March 22, 2023: City Council Meeting Page 5 of 7

1. Conduct a second reading and adopt Ordinance No. 2463, with waiver of a full reading, to amend Sections 2.30.010 and 2.30.130 of the Montebello Municipal Code to reinstate the Civil Service Commission and Chapter 2.44 of the Montebello Municipal Code to reinstate the Traffic and Safety Commission; and

2. Take such additional, related, action that may be desirable.

14. NOTICE OF COMPLETION – ANNUAL CONCRETE REPAIR PROGRAM CDBG PROJECT (FY 2020-21), CP NO. 885

RECOMMENDATION: It is recommended that the City Council:

1. Accept the Annual Concrete Repair Program, Community Development Bock Grant (CDBG) Project (CP No. 885), as completed by CT&T Concrete Paving Inc.; and

2. Approve recommended “Changes in Work” for the project (Attachment A) in the amount of $193,069; with the final contract amount with CT&T Concrete Paving, Inc. of $373,320; and

3. Approve the Final Total Project Budget and Expenditures including change orders (Attachment B); and

4. Authorize the City Clerk to execute, verify and file the Notice of Completion with Los Angeles County Registrar-Recorder (Attachment C); and

5. Authorize the City Manager to release the retention payment of $18,666 due to CT&T Concrete Paving Inc. following the mandatory waiting period from the date the Notice of Completion is recorded; and

6. Take such additional, related action that may be desirable.

15. TOLA STREET PREFERENTIAL PARKING DISTRICT – SET PUBLIC HEARING DATE

RECOMMENDATION: It is recommended that the City Council:

1. Set the Public Hearing Date for the City Council meeting on April 10, 2023 to consider the designation of a Preferential Parking District; and

2. Take such additional, related action that may be desirable.

16. AUTHORIZATION TO ISSUE A REQUEST FOR PROPOSALS (RFP NO. 23-9) FOR AN ENVIRONMENTAL

ENGINEER TO CONDUCT A COMPREHENSIVE REVIEW OF THE BROWNFIELD AREA/CHAPIN ROAD

LANDFILL AND PERFORM ADDITIONAL ANALYSIS AS NEEDED

RECOMMENDATION: It is recommended that the City Council:

1. Approve Issuing a Request for Proposals ("RFP") and authorize solicitation of proposals for a qualified Environmental Engineer or firm to conduct a comprehensive review of the Brownfield Area/Chapin Road Landfill and perform additional analysis as needed; and

2. Take such additional, related action that may be desirable.

17. AWARD PROFESSIONAL SERVICES AGREEMENT NO. 4079 FOR PARKS AND RECREATION GUIDE PRODUCTION (RFP NO. 23-5) TO MCGREGOR SHOTT, INC.

RECOMMENDATION: It is recommended that the City Council:

1. Award Professional Services Agreement No. 4079 to McGregor Shott, Inc. in an amount not-to-exceed Thirty Thousand Dollars ($30,000) annually for Parks and Recreation Guide production; and

2. Authorize the City Manager to take actions necessary to execute and finalize an agreement on behalf of the City of Montebello; and

3. Take such additional, related action that may be desirable.

18. APPROVE A PROFESSIONAL SERVICES AGREEMENT, NO. 4080, WITH R&S OVERHEAD DOORS OF COMMERCE, INC., FOR PREVENTATIVE MAINTENANCE AND DOOR REPAIR SERVICES AT THE

TRANSPORTATION FACILITY

RECOMMENDATION: It is recommended that the City Council:

March 22, 2023: City Council Meeting Page 6 of 7

1. Approve Professional Services Agreement, No. 4080, with R&S Overhead Doors of Commerce, Inc. (R&S Overhead Doors), for a three-year (3) term, for a total not-to-exceed amount of Eighty-Five Thousand, Two Hundred and Seventy-Three Dollars ($85,273), for preventative maintenance and door repair services at the City of Montebello Transportation Facility; and

2. Authorize the City Manager and/or his designee to approve change orders for up to fifteen percent (15%) of the total agreement amount; and

3. Take such additional, related action that may be desirable.

19. ADOPT RESOLUTION NO. 23-22 AUTHORIZING THE CITY OF MONTEBELLO TO APPLY TO THE

FEDERAL TRANSIT ADMINISTRATION (FTA) FOR FUNDING TO PURCHASE ZERO-EMISSION BUSES

UNDER THE LOW OR NO EMISSION GRANT PROGRAM AND THE GRANTS FOR BUSES AND BUS

FACILITIES PROGRAM

RECOMMENDATION: It is recommended that the City Council:

1. Adopt Resolution No. 23-22 authorizing the City of Montebello to apply to the Federal Transit Administration (FTA) for funding to purchase zero-emission buses under the Low or No Emission Grant Program (Low-No Program), in the amount of $6,925,000; and

2. Authorize the City of Montebello to apply to the FTA for funding to purchase zero-emission buses under the Grants for Buses and Bus Facilities Program (Bus and Bus Facilities Program); in the amount of $6,925,000; and

3. Take such additional, related action that may be desirable.

20. APPROVAL OF STATE HOMELAND SECURITY PROGRAM (SHSP) FUNDS UTILIZATION

RECOMMENDATION: It is recommended that the City Council:

1. Approve the use of grant funding awarded to the Police Department by the U.S. Department of Homeland Security, State Homeland Security Program (SHSP) through Homeland Security Grant Program directly to the California Governor’s Office of Emergency Services (Cal OES), in the amount of $57,000; and

2. Authorize the City Manager to execute the subrecipient agreement; and

3. Amend the Fiscal Year 2022-23 budget and increase appropriations by $57,000 in Account No. 265- 8016-2021-6010.10 (Grants, SHSP, FY 2020-21, Machinery & Equipment [expenditures]), and $57,000 in Account No. 265-99-4198.12 (Grants, Misceaneous Grants - SHSP [revenue]); and

4. Take such additional, related action that may be desirable.

21. PAYMENT OF BILLS: ADOPT RESOLUTION NO. 23-23 APPROVING THE CITY WARRANT REGISTER OF DEMANDS DATED MARCH 22, 2023

RECOMMENDATION: It is recommended that the City Council:

1. Adopt Resolution No. 23-23 approving the Warrant Register dated March 22, 2023.

22. APPROVAL OF MINUTES: JANUARY 11, 2023 CITY COUNCIL, PUBLIC FINANCING AUTHORITY, AND SUCCESSOR AGENCY JOINT REGULAR MEETING; JANUARY 18, 2023 SPECIAL CITY COUNCIL MEETING; JANUARY 25, 2023 SPECIAL CITY COUNCIL MEETING; AND JANUARY 25, 2023 CITY

COUNCIL AND PUBLIC FINANCING AUTHORITY JOINT REGULAR MEETING

RECOMMENDATION: It is recommended that the City Council:

1. Approve said minutes as written.

PUBLIC COMMENTS - CONTINUED

AB 1234 TRAVEL REPORTS
Members will provide a brief report on meetings attended at the expense of the local agency as required by Government

March 22, 2023: City Council Meeting Page 7 of 7

Code Section 53232.3(d).

COUNCIL/AGENCY ORALS
Announcements and requests for future agenda items.
• Angie M. Jimenez, Councilmember
• Salvador Melendez, Councilmember
• Georgina Tamayo, Councilmember
• Scarlet Peralta, Mayor Pro Tem
• David N. Torres, Mayor

CLOSED SESSION - CONTINUED

ADJOURNMENT
The City of Montebello will adjourn to the next Regular Meeting on April 10, 2023 at 6:00 p.m. which can be live streamed at https://www.montebelloca.gov (Click on Live Stream).

I, Alicia Fernandez, Senior Deputy City Clerk for the City of Montebello, hereby certify that a copy of this agenda has been posted on or before Sunday, March 19, 2023 no later than 6:00 p.m.

Alicia Fernandez, Senior Deputy City Clerk

EXIHIBIT - CITY OF MONTEBELLO FORECASTED CITY COUNCIL AGENDA *Please note, the attached exhibit is a draft version that is to be used for reference purposes only; agenda items, information, and dates are subject to change. The exhibit will be placed at the end of the Agenda Packet.

• City of Montebello Forecasted City Council Agenda

ITEM # 12

CITY OF MONTEBELLO

CITY COUNCIL AGENDA STAFF REPORT

TO: Honorable Mayor and City Council Members

FROM: René Bobadilla, P.E., City Manager

BY: Michael Solorza, Director of Finance

SUBJECT: RECEIVE AND FILE THE FISCAL YEAR 2021-22 ANNUAL

COMPREHENSIVE FINANCIAL REPORT (ACFR)

DATE: March 22, 2023

RECOMMENDATION(S):

It is recommended that the City Council:

1. Receive and file the Fiscal Year 2021-22 Annual Comprehensive Financial Report (ACFR); and,

2. Take such additional, related action that may be desirable.

FISCAL IMPACT:

The action of receiving and filing the ACFR for the period ending June 30, 2022 does not have a fiscal impact.

BACKGROUND/DISCUSSION:

Each year the City produces an Annual Comprehensive Financial Report (ACFR) that presents audited financial results as of June 30 of the prior fiscal year. Staff is presenting the ACFR for the fiscal year ended June 30, 2022. The City engages a third-party audit firm (PUN Group) to review all financial transactions, produce various statements, ensure compliance with Governmental Accounting Standards Board (GASB) statements, assist staff in compiling the ACFR document, sample transactions, review internal controls, and provide an opinion on the accuracy and validity of the financial statements.

The auditors have provided an “un-qualified” opinion for the Fiscal Year 2021-22 report. In other words, this is a “clean” audit with no significant findings that would cause the auditors to render a “qualified” opinion:

CITY COUNCIL AGENDA REPORT - MEETING OF MARCH 22, 2023

“In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.”

The ACFR is a document that tells “what happened” in the prior fiscal year, as opposed to a budget which is a plan for the upcoming fiscal year. There are statements, notes and financial schedules of required information that provide the reader a comprehensive view of revenues, expenses, assets, liabilities, cash and investments, debt, pension liabilities, and other financial data across the entire organization. There are also statistical tables which present a more complete (non-financial) picture of Montebello.

The Transmittal Letter (Attachment A) and Management Discussion and Analysis (MD&A) (Attachment B) provide extensive detail and discussion of the financial statements and are included in the final published ACFR document. They are included as attachments to this report for review and detail and to ensure the public has access to these summaries by promoting financial transparency. The extensive Notes section included in the ACFR is useful in providing a more complete explanation of the various financial aspects of the City, adding descriptions and explanations to the myriad schedules and tables. The ACFR in its entirety can be found on the City's website: www.montebelloca.gov.

This agenda report provides a summary of the document and does not replace a thorough review and understanding of the entire ACFR.

ENVIRONMENTAL:

N/A

ANALYSIS:

The ACFR presents information by type of fund, with the two most significant “buckets” being Governmental Activities and Business-type Activities. Governmental Activities includes not just the General Fund, but special funds such as Gas Tax, Proposition A, Proposition C, Housing Successor Agency, Retirement Fund, and the various (non- Transit) Grant Funds. Business-type Activities includes Transit, Golf Course, Water, Hilton Garden Inn and the Home2Suites.

Included in the financial statements for both Governmental and Business-type funds is not only revenue and expenditures, but liabilities related to bond debt, pension and retiree medical liabilities, assets such as land, buildings and equipment, and other useful information designed to give the reader a clear picture of the City’s overall financial condition. The following pages provide a discussion of major items found in the complete

CITY COUNCIL AGENDA REPORT - MEETING OF MARCH 22, 2023

ACFR document (which can be found in its entirety on the City’s website: www.montebelloca.gov).

Government-wide Overview
Overall, across the entire organization, total revenues (Governmental and Business-type combined) for FY 2021-22 were $163.4 million, compared to $136.4 million in FY 2020- 21, a 19.77% increase year-over-year. The largest dollar increases to revenue were in the “Sales Tax,” “Charges for Services,” “Capital Grants” and “Operating Grants” categories.

The largest City-wide revenues came from four sources: charges for services (e.g. business license fees, building permits, hotel charges and bus fares) at $43.6 million, operating grants and contributions (e.g. allocations of funds derived from Los Angeles County Metropolitan Transportation Authority Local Return Funds Propositions A and C, and Measures R and M, as well as asset forfeiture funds contributed from the Justice Department and US Treasury) at $43.3 million, property taxes at $21.1 million, and sales taxes at $25.4 million. Property taxes includes the property taxes derived from the 1946 voter approved initiative to provide restricted revenue to pay for the retirement benefit costs of City employees, which is recorded in a separate fund from the General Fund.

Total Citywide expenses before transfers were $124.1 million, a decrease of approximately $2.7 million compared to the preceding fiscal year. Total citywide expenses decreased across several program areas: Public Safety ($22.9 million) and Transit ($13.9 million); offset by increases to Public Works ($13.3 million) and Parks and Recreation ($4.0 million). The cost of serving residents for the year (across Governmental and Business-type Activities) includes: $31.8 million for Public Safety (Police and Fire), $16.1 million for Public Works), $29.3 million for Transit (Montebello Bus Lines), $13.9 million in General Government, and $5.4 million for Parks, Recreation and Culture.

Business-Type Activities
The City’s Transit operation (Montebello Bus Lines) is the largest component of the Business-type Activities group. In addition, there are the Golf Course, Water, Hilton Garden Inn and Home2Suites operations recorded in "Business-type Activities".

The Transit System reported operating revenues of $28.539 million, a $3.930 million increase (15.97%) when compared to FY 2020-21. Charges for Services were up $731 thousand, primarily due to the return to normal bus operations as pandemic restrictions were lifted. There were also increases in Federal and State transit assistance and Local Return Funds (Metro) funding. Operating expenses in FY 2021-22 were $27.846 million, a $13.873 million decrease from the prior fiscal year. The $13.761 million decrease in Salaries and Benefits year over year was responsible for the total decrease in expenses.

Net position (i.e., assets net of liabilities) increased by $15.202 million.

The City’s Golf Course operating revenue was essentially unchanged year over year: $2.945 million as of June 30, 2022 vs. $2.967 million the prior year. Operating expenses increased by $167 thousand. As a result, the Golf fund ended the fiscal year with a net income before transfers in of $210 thousand.

CITY COUNCIL AGENDA REPORT - MEETING OF MARCH 22, 2023

The Hilton Garden Inn reflected operating net income of $540 thousand, a vast improvement over the net loss of $1.023 million in the pandemic impacted FY 2020-21.

The net income (surplus) is attributable to the recovering economy and the return of leisure and business travelers, leading to a direct increase in total occupancy. Operating revenues increased $3.285 million, and operating expenses increased by $1.722 million. Total change in net position was a positive $271 thousand.

The Montebello Home2Suites reflected operating net income of $4.596 million, an increase from FY 2020-21 of $1.850 million -- which was impacted due to the pandemic. Operating revenue was $12.050 million, a significant increase over FY 2020- 21 revenue of $8.358 million. As the economy recovers from the pandemic, a return to leisure and business travel has positively impacted the hotel’s operations. Total net position increased by $2.280 million.

Governmental Activities
Governmental Activities includes the General Fund, as well as myriad special funds that record activity related to road repair and maintenance (Gas Tax, SB1/RMRA, Local REturn Funds such as Proposition C, Measure M, etc.); assistance to low- and moderate- income households (CDBG, HOME), retirement expenses (Retirement Fund), debt service, public safety (Asset Forfeiture), and numerous public works, public safety and related grant activities.

Total governmental activities revenues increased by $11.931 million (14.20%). This is mainly due to increases in three revenue categories: Charges for Services ($4.013 million), Operating Grants ($6.043 million) and Sales Taxes ($3.109 million).

Sales tax revenues were the largest portion of total governmental activities revenues (26.45%). Sales tax revenues increased by $3.109 million, to $25.379 million as of June 30, 2022. Property tax revenues were the second largest revenue source for governmental activities (22.03%). This includes the 1946 voter-approved retirement portion of property tax (e.g., property tax override). Property tax revenues decreased slightly by $280 thousand (-1.31%). Charges for services were the third largest source of revenue for governmental activities (19.19%). Charges for services in governmental funds include licenses and permits, fines and forfeitures, waste collection, etc. Compared to the prior fiscal year, this program revenue increased by approximately $4.103 million, or 27.87%.

The cost of providing all governmental activities in 2022 was $75.829 million, an increase in expenses of $7.873 million (11.59%) when compared to June 30, 2021. There were increases and decreases to different categories, causing the overall net increase.

General Government and Public Works increased $11.496 million and $13.329 million respectively, offsetting a decrease of $22.975 million in Public Safety.

The General Fund is the City's main operating fund. It is used to account for revenues and expenditures necessary to perform basic government functions that are not accounted for through other special revenue and grant funds. These are the typical services residents see daily: police and fire service, street maintenance, community

CITY COUNCIL AGENDA REPORT - MEETING OF MARCH 22, 2023

services programming, etc. As of June 30, 2022, the General Fund realized an increase in fund balance of $7.131 million, to a total of $14.7 million. Fund Balance is now 22.0% of Operating Revenues.

The key factors positively impacting fund balance of the General Fund for FY 2021-22 are as follows:
• General Fund operating revenues (i.e., taxes, charges for services, licenses and permits, etc.) increased by $10.790 million (19.23%) from the prior year, which is primarily due to the overall increase in sales tax ($3.109 million), Licenses and Permits ($2.037 million) and Intergovernmental ($5.215 million). The increase in sales tax is due to two primary reasons: the recovering economy as pandemic related restrictions ease and consumers remain active in the retail economy; and the continued local improvement of the recently enacted (March 2020) Measure H Transaction and Use Tax revenue stream. The increase to Intergovernmental revenue is from the recognition of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF).
• General Fund expenditures decreased year-over-year by $3.406 million. There were year-over-year savings in some areas (i.e., General Government, Public Works, Public Safety) which offset increases in Parks and Recreation and Housing and Community Development. Capital related expenses in the General Fund were also less in FY 2021-22 when compared to the prior year.

Economic Overview
The financial statements and commentary found in the prior two ACFR’s have been dominated by the impacts of the Coronavirus pandemic. For the results as of June 30, 2022, these impacts have lessened and there appears to be a return to “pre-pandemic” economic and financial activity. Overall, the local Montebello economy appears to be healthy, as evidenced by continued strong sales and transaction and use tax performance. Also, the City’s two hotels are performing well, seeing occupancy rates at or near levels last seen in 2019.

For most of FY 2021-22, the discussion surrounding the economy focused on inflation, and the various causes of the generationally high inflation rate and methods used by the Federal Reserve to temper its impacts on the economy. Hand-in-hand with the inflation discussion has been predictions of if and or when a recession would hit the U.S. economy.

A recent Deloitte Insights economic update stated “Is a recession on the horizon? That’s been a key question for the US economy for the past six months. So far, its safe to say that the recession is mostly in people’s minds.” This statement is based on actual economic activity – as measured by job gains, industrial production and retail sales – remaining strong and indicating growth. External forces and pressures such as the war in Ukraine or market problems in China do not impact the United States as much as other nations. While these major issues undoubtedly impact millions around the world, the US economy is not as exposed to these problems as some analysts assume.

CITY COUNCIL AGENDA REPORT - MEETING OF MARCH 22, 2023

The Deloitte Insights analysis goes on to say the real case for recession involves the Federal Reserve’s actions to slow the economy. Many analysts see the increase in the Fed funds rate leading to a recession. However, comparing current Fed funds rate increases to those of the early 1980’s, the rate of increase has been slower. And while the increase to the Fed funds rate in the early 1980’s did lead to recessions, “it took a lot more tightening than we’ve seen so far this time around.” Moreover, the case can be made that the US economy may be less sensitive to interest rates than in prior years.

Regardless of these impact’s overall effect on the economy, many analysts see a recession in 2023 as more than likely. The key question is how deep and prolonged such a recession could be. Given the impact consumers have on the economy – nationally, regionally and most importantly locally – it is prudent to focus on retail activity as an indicator of both short and long-term economic growth. Consumer spending could return to pre-pandemic patterns: less on durable goods and more on services. One forecast shows durable goods spending levelling off in 2023 and beyond, with a steady increase in services spending, that could surpass spending on non-durables.

These forecasts still show a steady increase in spending in these areas, even if the pandemic trend of spending in durables levels off. The key point is that consumers will continue to spend at levels above those seen pre-pandemic. That is important to Montebello, since 36.6% of General Fund revenue comes from sales tax. So long as retail activity remains robust – even as inflation continues to be elevated – the City can count on healthy sales tax revenue. It should be noted that out-year sales tax projections are tempered, indicating growth rates under two percent (2.0%) for the next three to five years.

For this and other reasons, it is imperative that Montebello’s economic development activities promote projects that expand the City’s sales tax base. Looking ahead, there is much to be excited about in Montebello in this area, with several projects underway in FY 2022-23 that will contribute to the City’s long-term economic health and viability. The issuance of $15.140 million in lease revenue bonds in September, 2022 will usher in a new era for the City’s public golf course. These proceeds will be used to completely reconstruct the existing golf course, creating a championship 9-hole course, a 6-hole “executive” course, and adding lights for the ability to play golf during evening hours. This project will help the Golf Course reduce – even eliminate – the subsidy required from the General Fund.

Connected to the Golf Course Renovation Project is the construction of a Topgolf facility on 15 acres of the existing golf course property. This project will be funded with the $55.4 million in lease revenue bonds issued in December, 2022. In a unique financing arrangement, the Public Financing Authority issued the bonds, with a sub-lease and guaranty tied to the issuance that requires Topgolf to pay the annual debt service. The completed Topgolf facility will be a three-story entertainment and event center, featuring 102 hitting bays, a restaurant, meeting space and a pro shop. In addition to the commitment to pay annual debt service, Topgolf will pay an annual lease for the use of City property. In addition, the facility will generate sales tax revenue, which will help boost overall General Fund revenue.

CITY COUNCIL AGENDA REPORT - MEETING OF MARCH 22, 2023

In addition to these exciting capital projects and economic development initiatives, the City finally received approval from the Public Utilities Commission (PUC) to sell its water system. The PUC decision was finalized in December 2022, and escrow closed n February 2023. The sale of the water system to San Gabriel Valley Water Company (SGVWC) concludes a long saga of the City attempting to sell its water system. The State Auditor, in its December 2018 report, recommended the City pursue the sale, and the October 2021 follow-up repot noted this recommendation and continued to support the sale. The $15.8 million in proceeds the City received will help boost its General Fund reserves in FY 2022-23.

As noted in the preceding pages, the General Fund reserves increased to $14.716 million as of June 30, 2022. The proceeds from the sale of the water system will more than double these reserves, allowing the City to begin following its adopted GASB 54 compliant reserve policies (first adopted in June, 2020).

In FY 2021-22, the City began much needed work to upgrade its information technology infrastructure. This project will be funded using a portion of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) revenue the City received between May 2021 and 2022. The total $16.59 million in CSLFRF revenue received by Montebello has been categorized as “revenue loss,” as permitted by U.S. Treasury Interim Final and Final Rules. This much needed funding has allowed the City to fast-track the technology upgrade, improving security, storage and productivity hardware and software. The project will continue in subsequent fiscal years, with completion anticipated sometime in FY 2023-24.

These are just a few highlights of the many projects underway in Montebello that are aimed at improving residents’ lives and helping to put the City on a long-term path to financial stability and sustainability. Some other projects that either began or were continued into FY 2021-22 are the following:

• Issuance of $15.140 million in bonds to fully renovate and rejuvenate the City’s public golf course
• Issuing bonds to construct a Topgolf on 15 acres of the City’s public golf course • Substantial completion of “Paving the Way” projects that improved residential street and road conditions
• Major repairs to the City’s aging sewer system
• Expansion of the Montebello Community Assistance Program (MCAP), aimed at helping the City’s unhoused population
• Approval of a Housing Element by the State’s Housing and Community Development Department, making Montebello only the second city in Los Angeles County to have a current approved plan
• Significant progress on the City’s General Plan update, the first in almost fifty years • Completion of a park and facilities needs assessment study and master plan • Completion of significant facility repair and upgrade projects, eliminating years of deferred maintenance on key City facilities
• Introduction of improved purchasing and procurement guidelines

CITY COUNCIL AGENDA REPORT - MEETING OF MARCH 22, 2023

• Receiving the Government Finance Officers Association (GFOA) award for budget preparation for the third time in the history of the City

Management and the City Council continue to be dedicated to improving Montebello’s long-term financial sustainability. Pursuing projects that are externally and internally focused – capital and infrastructure projects as well as organizational improvements – will strengthen Montebello’s ability to weather changes in the economy as well as the “next pandemic,” in whatever form that may appear.

SUMMARY:

Recieve and file the ACFR and related presentation.

ATTACHMENT(S)

1. Attachment A - Transmittal Letter, 03_22_2023

2. Attachment B - MD and A, 03_22_2023

3. Attachment C - Montebello Annual Comprehensive Financial Report, 2022

NEXT STEPS:

N/A

City of Montebello, California
Annual Comprehensive Financial Report
Fiscal Year Ended
June 30, 2022

City of Montebello

Montebello, California

Annual Comprehensive Financial Report

For the Year Ended June 30, 2022

Prepared by:

Finance Department

City of Montebello
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022

Table of Contents

Page

INTRODUCTORY SECTION (Unaudited)

Letter of Transmittal ................................................................................................................................................ i Organization Chart ................................................................................................................................................ ix Officials of the City of Montebello, California ...................................................................................................... x

FINANCIAL SECTION

Independent Auditors’ Report on the Financial Statements ............................................................................ 1

Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ................... 5

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position .................................................................................................... .................... 27 Statement of Activities ...................................................................................................... ...................... 28

Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet ................................................................................................................ .................... 36 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide St atement of Net Position .................................................................. 39 Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................... 40 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Chang es in Fund Balances to the
Government-Wide Statement of Activ ities and Changes in Net Position .................................. 42

Proprietary Fund Financial Statements:

Statement of Net Position .................................................................................................... ............. 46 Statement of Revenues, Expenses, and Changes in Net Position ..................................................... 50 Statement of Cash Flows ...................................................................................................... ............ 52

Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position .......................................................................................... ....... 59 Statement of Changes in Fiduciary Net Position .............................................................................. 60

Index to Notes to the Basic Financial Statements .......................................................................................... 63 Notes to the Basic Financial Statements ...................................................................................... .................. 65

City of Montebello
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022

Table of Contents (Continued)

Page

FINANCIAL SECTION (Continued)

Required Supplementary Information (Unaudited):

Budgetary Comparison Sc hedule – General Fund ....................................................................................... 119 Budgetary Comparison Sc hedule – Retirement Fund .................................................................................. 120 Budgetary Comparison Schedule – Transporta tion and Street Improvement Funds ................................... 121 Notes to the Budgetary Comparison Schedule ............................................................................................ 123 Schedule of Changes in Net Pension Liability and Related Ratios – CalPERS Miscellaneous Plan .......... 124 Schedule of Contributions – Pensions – CalPERS Miscellaneous Plan ...................................................... 126 Schedule of Changes in Net Pension Liability a nd Related Ratios – CalPERS Safety Plan ....................... 128 Schedule of Contributions – CalPERS Safety Plan .............................................................................. ....... 130 Schedule of Changes in Net Other Postemploym ent Benefits Liability and Related Ratios – Other Postemployment Benefit Plan ..................................................................................................... 132

Supplementary Information:

Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:

Public Financing Auth ority Debt Service Fund .............................................................................. 135 Nonmajor Governmental Funds:

Combining Balance Sheet ..................................................................................................... ................ 139 Combining Statement of Revenues, Expend itures, and Changes in Fund Balances ............................. 142 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:

Supplemental Law Enforcem ent Special Revenue Fund ................................................................ 145 Park Development Special Revenue Fund ...................................................................................... 146 Drug Enforcement Special Revenue Fund ...................................................................................... 147 Air Quality Special Revenue Fund ........................................................................................... ...... 148 Justice Assistance Grants Special Revenue Fund ........................................................................... 1 49 Grants Special Revenue Fund ................................................................................................ ......... 150 CDBG Special Revenue Fund .................................................................................................. ...... 151 HOME Special Revenue Fund .................................................................................................. ...... 152 TDA Article 3 Special Revenue Fund ......................................................................................... ... 153 George Miller Estate Donation Special Revenue Fund .................................................................. 154 Measure W Speci al Revenue Fund ................................................................................................. 155 Measure A Special Revenue Fund ............................................................................................. ..... 156 Housing Successor Agency Special Revenue Fund ........................................................................ 157

All Transportation and Street Im provement Special Revenue Funds:

Combining Statement of Balance Sheet ......................................................................................... ....... 160 Combining Statement of Revenues, Expend itures, and Changes in Fund Balances ............................. 162 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:

Gas Tax Special Revenue Fund ...................................................................................................... 164 Road Maintenance & Rehabilitation Special Revenue Fund .......................................................... 165 Prop A Local Special Revenue Fund .............................................................................................. 166 Prop C Local Special Revenue Fund ........................................................................................... ... 167 Measure R Local Special Revenue Fund ........................................................................................ 168 Measure M Local Special Revenue Fund ....................................................................................... 169

City of Montebello
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022

Table of Contents (Continued)

Page

STATISTICAL SECTION (Unaudited)

Description of Statistical Section Contents ........................................................................................................ 173 Financial Trends .......................................................................................................................................................

Net Position by Component - Last Ten Fiscal Years ............................................................................ 174 Change in Net Position - Expenses and Program Revenues - Last Ten Fiscal Years ........................... 176 Change in Net Position - General Re venues - Last Ten Fiscal Years ................................................... 178 Fund Balances of Governmental Funds - Last Ten Fiscal Years .......................................................... 180 Change in Fund Balances of Governmental Funds – Last Ten Fiscal Years ........................................ 182 Governmental Activities Tax Revenues by Source - Last Ten Fiscal Years ......................................... 184 Revenue Capacity
Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ................ 185 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years ................................................... 186 Principal Property Taxpayers – Current Year and Nine Fiscal Years Ago ........................................... 188 Property Tax Levies and Collecti ons – Last Ten Fiscal Years .............................................................. 189 Debt Capacity
Ratios of Outstanding Debt by Ty pe - Last Ten Fiscal Years ............................................................... 190 Ratios of General Bonded Debt Outsta nding - Last Ten Fiscal Years .................................................. 193 Direct and Overlapping Debt .................................................................................................. ............... 194 Legal Debt Margin Information - Last Ten Fiscal .............................................................................. .. 195 Pledged Revenue Bond Coverage
Golf Revenue Bonds - Last Ten Fiscal Years ................................................................................... .... 196 Demographic and Economic Information
Demographic and Economic Statistics - Last Ten Fiscal Years ............................................................ 197 Principal Employers - Current Fiscal Year and Ten Fiscal Years Ago ................................................. 198 Operating Information
Full-Time and Part-Time City Employees by Function - Last Ten Fiscal Years .................................. 199 Operating Indicators by Function - Last Ten Calendar Years ............................................................... 200 Capital Asset Statistics by Func tion - Last Ten Fiscal Years ................................................................ 201

o
f Gardena
Management’s Discussion and Analysis

This page intentionally left blank.

M MONTEBELLO..,, ... ,•

CITY OF MONTEBELLO

DEPARTMENT OF FINANCE
March 2, 2023
Honorable Mayor and Members of the City Council:

The Annual Comprehensive Financial Report (ACFR) of the City of Montebello for the fiscal year ended June 30, 2022 is submitted as prepared by the City's Finance Department. The report is published to provide the City Council, community and other interested parties detailed financial and operational information about the City for the previous fiscal year. The financial statements are audited by a third-party accounting firm, providing assurance to the public that the City's financial reporting and associated operations meet or exceed generally accepted accounting and auditing standards.

The ACFR is presented in three sections: the Introductory Section, the Financial Section, and the Statistical Section. The Management Discussion and Analysis (MD&A) is the most useful for
readers of the ACFR to find a general overview of the City's financial condition at year-end, providing highlights of significant changes or key events impacting year-end financial results.

Responsibility for both the accuracy of the financial report and the completeness and fairness of the presentation rests with the City. To the best of our knowledge, the information presented is accurate in all material aspects and includes all disclosures necessary to enable the reader to gain an understanding of the City's financial activities.

The City prepared the ACFR using the financial reporting requirements outlined in the Governmental Accounting Standards Board (GASB) Statement No. 34. This statement requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management Discussion and Analysis (MD&A) section. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors in the
financial section of the ACFR.

The City requires that its financial statements be audited by an independent, accredited auditing firm on an annual basis. This requirement has been satisfied, and the auditor's opinion is included in the financial section of this report.

In addition, the City is required to undergo an annual single audit to conform to the provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles,
and Audit Requirements for Federal Awards (Uniform Guidance). This requirement has also been satisfied, with the single audit published separately as a stand-alone document.

THE FINANCIAL REPORTING ENTITY
This report includes activity of all funds of the City, with presentation in the ACFR being done on a major
vs. other funds basis. All funds have their appropriations approved by the governing body

1600 West Beverly Boulevard• Montebello, California 90640-3932 • {323)-887-1200 i

M MONTEBELLO
� ... '

CITY OF MONTEBELLO

DEPARTMENT OF FINANCE
(i.e., City Council) through the annual budget development process. In addition to the General Fund, other governmental and enterprise funds are utilized to record financial activity. Each fund is appropriated annually, and includes the General Fund, Proposition A, Proposition C, Measure M, Measure R, HOME, Community Development Block Grant (CDBG), Gas Tax, Grants (non­ Transit), Asset Forfeiture, Grants (Transit), Debt Service, Retirement, Asset Forfeiture, etc.

Revenue and expenditures are appropriated through the budget process, with the FY 2021-22 budget (all funds) adopted at a regular City Council meeting in June 2021, and amended as needed throughout the fiscal year.

The City of Montebello provides a full range of municipal services including police and fire protection, street maintenance, transit (Montebello Bus Lines) planning and community development, parks and recreation services, financial planning, treasury management, information technology, human resources, engineering and general administration.

Montebello also operates several enterprise funds, which include a municipal golf course, a transportation system (Montebello Bus Lines), and two hotels (i.e., Hilton Garden Inn and Home2Suites ). Enterprise funds are financed from user charges (e.g., green fees, room charges, bus fares, etc.) and revenue from other governmental agencies (e.g., Los Angeles County Metropolitan Transportation Authority funding for fixed transit lines), as applicable. It should be noted that the City will be finalizing the sale of its water system in the subsequent fiscal year (FY 2022-23). Subsequent financial reports and ACFRs will include appropriate updates once the sale is completed.

ACCOUNTING SYSTEM
The modified accrual basis of accounting is followed for governmental fund types and the accrual basis of accounting is followed for proprietary and fiduciary fund types. In reviewing and developing the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute assurance regarding:
• The safeguarding of assets against losses from unauthorized use or disposition and the reliability of financial records for preparing financial statements and maintaining accountability for assets.
• The concept of reasonable assurance recognizes that the cost control procedures should not exceed the benefits likely to be derived and that the evaluation of costs and benefits require estimates and judgment by management.
• All internal control evaluations occur within the above framework.

As discussed more fully below, management has made a concerted effort to improve internal controls by updating the Municipal Code, creating and implementing new procedures and policies, and generally ensuring internal policies and procedures are efficient while not sacrificing requisite safeguards against fraud, waste and abuse.
1600 West Beverly Boulevard• Montebello, California 90640-3932 • (323}-887-1200 ii

M MONTEBELLO... ...

CITY OF MONTEBELLO

DEPARTMENT OF FINANCE

BUDGETARY CONTROL
In addition to internal accounting controls, the City also maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with the City's budget policy approved by the City Council as incorporated in the budget adoption resolution. Appropriations of the General Fund, special revenue funds, debt service funds, and capital project funds are included in the annual approved budget. The City's adopted budget document includes detailed information about the approval process. A budget calendar, various budget schedules and related policies can be found in that document.

Budgetary control is maintained at a functional level by division within the department through the use
of object level accounting as actual expenditures are compared to appropriations. As purchase
orders are approved, appropriations are encumbered. Encumbrances and expenditures, which would cause an overrun of appropriations, require an approved budget transfer, which is reviewed and approved by the Director of Finance, pursuant to the Annual Budget Resolution and the Municipal Code. The City's Capital Improvement Program (CIP) is adopted at the same time as the operational budget and includes various street and infrastructure improvement projects. Any action to increase total appropriations requires approval by a majority vote of the City Council.

IMPROVEMENTS TO INTERNAL CONTROLS
The City responded positively and decisively to the 2021 State Auditor's update report (published in October 2021, Report #2021-807). The 2021 audit report was a follow up to the 2018 report and was mandated by State Government Code to be completed. Both audit reports - published by the State Auditors "High Risk Agency" group - provided numerous recommendations for improving different areas of management and internal controls. The 2021 update report focused primarily on the City's purchasing and procurement processes and made recommendations for improvements.

Over the span of the last five years - dating back to the initial 2018 audit report - the City has put into
place numerous new procedures and policies directly aimed at responding to the audit reports' recommendations. The City's municipal code chapters dealing with purchasing and procurement were updated in March 2019 and again in February 2022 - utilizing best practice language found in neighboring cities' municipal code and aimed at improving and professionalizing Montebello's procurement practices. In addition, citywide purchasing training has been conducted on numerous occasions since 2019. Several new administrative policies were developed that addressed the areas of weakness identified by the State Auditor (i.e., petty cash, credit cards, hotel financial reporting, etc.), while other existing policies were updated to incorporate recommendations from the audit reports.

As required, management provides status reports to the City Council at regular meetings, which are then forwarded to the State Auditor to show the City's progress towards meeting the audit report recommendations. These "corrective action plans" serve as the primary method the City

1600 West Beverly Boulevard • Montebello, California 90640-3932 • (323)-887-1200 iii

_,,,_•"',ii,--...�-., ..,\ \1 ·c
.,· \.' .Al I·'·
.L "'-�� �\
;:::-,,�-:.,.
·�;_. .... ·. :;'�
M MONTEBELLO,. "'

CITY OF MONTEBELLO

DEPARTMENT OF FINANCE
uses to communicate progress to the State Auditor. As of May 2022, the State Auditor has indicated satisfaction of the majority of recommendations included in the 2021 report.

Staff continues to focus on the remaining four recommendations outstanding and anticipates meeting the State Auditor's threshold for satisfying all remaining recommendations by the end of FY 2022-23. The improvements made in organizational management and internal controls indicate that Montebello is making positive strides in ensuring future financial stability, as well as putting into place internal controls that ensure public funds are managed and spent wisely.

ADOPTION OF FORMAL RESERVE POLICIES
Besides improvements to internal controls - through the publication and operationalization of updated policies - the City is demonstrating its commitment to fiscal sustainability by the adoption of General Fund reserve policies. The City Council first adopted comprehensive reserve policies in June 2020, as part of the City's operating and capital budget. These policies are incorporated into the adopted budget document and are presented annually for review and approval by the City Council, which has been done since 2020.

Having such written policies in place indicates to third parties (i.e., credit rating agencies) that Montebello has a clear plan for how to manage General Fund reserves - spendable and non­ spendable. Fully compliant with GASB 54, the policies establish distinct reserve categories for various uses:
• Economic Uncertainties
• Unfunded Liabilities
• Equipment/Technology Replacement and Upgrade
• Capital Improvement (Unfunded/Un-programmed)
• Deferred Maintenance
• Insurance - Risk Management
• Economic Sustainability
Each reserve category sets aside a specific amount - either a fixed dollar amount or an amount calculated as a percentage of prior year operating revenues. The policy, per GASB 54, makes "commitments" or "assignments," and describes the method by which each reserve can be utilized. Furthermore, the policy includes the method for replenishing the various reserve buckets, should they be used and fall below the pre-scribed amounts.

Since adoption, the City's General Fund reserve balance has not been sufficient to operationalize the reserve policies. However, as was seen with the financial results as of June 30, 2022, fund balance
continues to grow. Ending fund balance in the General Fund was $14.716 million, a $7.131 million increase from the prior year. Comprising 22.0% of operating revenues, the fund balance is nearly at a level for the reserve policy categories to be in operation. Based on current forecasts, Staff anticipates making the GASB 54 commitments and assignments as of June 30, 2023.

1600 West Beverly Boulevard
• Montebello, California 90640-3932 • {323)-887-1200
iv

M MONTEBELLO
.,,, .. I , "

CITY OF MONTEBELLO

DEPARTMENT OF FINANCE

GENERAL INFORMATION AND ECONOMIC OUTLOOK
The City of Montebello was incorporated on October 16, 1920 and is progressing positively into its second century of existence. The City is a general law city and functions under the City Council­ Manager form of government. The City is governed by a legislative body of five City Councilmembers elected by district (as of November 2022) and serving staggered, four-year terms, with the Mayor and Mayor Pro-Teem selected by fellow Councilmembers. The City Clerk and
City Treasurer are also elected to four- year terms. The City Manager and City Attorney are appqinted by the City Council.

Montebello is located nine miles east of the Los Angeles Civic Center, with access to three freeways - the Santa Ana 5 Freeway to the south, the Pomona 60 Freeway to the north, and the San Gabriel River 605 Freeway to the east. The City has a population of approximately 64,000 living in an area of 8.2 square miles. The City is a balanced community with industrial, residential, and commercial areas.

Fiscal
Year 2021-22 continued to be driven by the impacts of the coronavirus pandemic and the social and economic effects related to the public response to containing the virus' spread - albeit a more
positive trend as restrictions eased or ended and life (social and economic) began to return to pre-pandemic patterns. The local Montebello economy proved itself resilient, as sales tax showed strong growth, and the City's two hotels' occupancy rates returned to pre-pandemic levels.

Early in the pandemic (Spring and Summer, 2020), various State and County stay at home orders - implemented to "flatten the curve" and protect the public - negatively impacted sales tax generating retail operations throughout the City for FY 2019-20 and into FY 2020-21. With sales tax comprising thirty-eight percent of General Fund revenue (FY 2021-22 adopted budget), any impacts - positive or negative - directly impact the organization as a whole and its ability to fund operations. Actual sales tax (all sources) for FY 2021-22 was $25.379 million, versus a budget of $20. 765 million. The FY 2021-22 results compare positively to the prior year, with sales tax up $3.109 million year-over-year.

In addition to general retail
activity performing better than originally forecast, the City benefitted from the 2020 voter approved additional ¾ cent transaction and use tax. Measure H was approved by over 60% of Montebello voters in the March 2020 special election. The revenue from this additional transaction and use tax began flowing to City coffers July 1, 2020. Another sales tax category that continues to perform well is the "county pool" share Montebello receives. Consumer habits changed during the pandemic, with retail activity moving more to on-line purchases. This retail behavior - coupled with the positive impacts of State law requiring remittance of sales tax by online retailers - made the "county pool" share of sales tax the fastest growing segment of the 1 % Bradley-Burns sales tax revenue stream.

The second
largest share of General Fund revenue is property tax, comprising twenty-six percent of revenue (measured by FY 2021-22 adopted budget). Property tax saw a slight increase of 1600 West Beverly Boulevard• Montebello, California 90640-3932 • {323)-887-1200 v

M MONTEBELLO
... • : I ��

CITY OF MONTEBELLO

DEPARTMENT OF FINANCE
$480
thousand compared to FY 2020-21. Assessed value continues to grow, with net taxable value of all property in Montebello at $7.055 billion for FY 2021-22, a 5.1% increase from the previous year. (Net taxable value increased another 5.0% for FY 2022-23, to $7.405 billion.) The median home value for a detached single family residential property in Montebello for the second quarter of 2022 was $774,000, a 19.1% increase from the same quarter in the previous year.

Since the start of calendar year 2017 through the end of 2022, median home values in Montebello have averaged a 7.4% annual increase (from $525,000 to $750,000).

Recent
interest rate hikes - driven by the Federal Reserve's push to combat inflation - has dampened the housing market as mortgage lending rates increase along with the Fed funds rate.

Total full value sales for the fourth quarter of 2022 dropped when compared to the same quarter of 2021. While activity appears to be falling, median price remains elevated, off slightly from the second quarter 2022 high of $774,000, to $750,000 in the fourth quarter of 2022.

In FY 2021-22 the City recognized over six million dollars of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). The recognition of this revenue lead to an overall increase of $5.215 million in Intergovernmental General Fund revenue (when compared to FY 2020-21). The City utilized the "revenue loss" category contained in ARPA, and detailed in US Treasury Interim Final and Final Rules published in May 2021 and January 2022. Montebello received $16.59 million in CSLFRF revenue between May 2021 and May 2022.

Based on the revenue loss calculation outlined in the Interim Final and Final Rules, the City has chosen to utilize the entire CSLFRF award as "revenue loss." The CSLFRF revenue is allowing the
City to improve its technology security, network and storage backbone, invest in its aging sewer system, purchase public safety and public works vehicles, and fund other capital infrastructure investments that have been deferred for decades.

License and Permit revenue realized a $2.037 million gain year-over-year. This increase can be attributed to two primary reasons: an improved economy that has property owners pulling building and associated permits for repairs and upgrades; and the residential construction related to Metro Heights. This new development, which will realize approximately 1,200 residential units once completed, has contributed substantial
license and permit revenue to the General Fund over the last two fiscal years. While this revenue is "one-time" in nature - it will cease once the units are completed - it nonetheless helps the General Fund revenue bottom line. As the residential units are completed, they will be added to the property tax rolls, further increasing the City's assessed value and contributing additional property tax revenue to the General Fund.

On
the expense side of the ledger, total expenditures were $3.405 million less in FY 2021-22 when compared to FY 2020-21. There were puts and takes among all expenditure categories.

The
largest decrease was in Capital Outlay, with FY 2021-22 expenditures of $2.074 million compared to $9.014 million the prior year. The single largest change in Capital Outlay was the completion of a citywide energy efficiency project in FY 2020-21, with no associated expenditures in
the current fiscal year. There were also several vehicle purchases completed in FY 2021-22,

1600 West Beverly Boulevard• Montebello, California 90640-3932 • (323)-887-1200 vi

M MONTEBELLO
A ... I I '!

CITY OF MONTEBELLO

DEPARTMENT OF FINANCE
as well as real estate purchases (acquisitions) which did not have similar expenditures in FY 2021-22.

Public Safety (Fire and Police) saw a $614 thousand increase in expenditures, to $33.256 million.

The majority of these expenditures are personnel related, providing for the City's police officers and firefighters and associated staffing levels. In addition, there are supplies, equipment and vehicle expenses: new patrol vehicles, turnouts, hoses, ladders, medical supplies, dispatch software, radio/dispatch fees, etc. that are utilized when providing emergency response to the community.

The $827 thousand decrease General Government expenditures is primarily from a drop in pandemic related expenses. In FY 2020-21, the City spent $407 thousand on various contracts related to the pandemic - additional cleaning and janitorial services, COVID-19 testing, etc. This amount dropped to $23 thousand in FY 2021-22. There was a reduction of $349 thousand in janitorial, medical and related supplies and equipment that were necessary to respond to the Coronavirus threats in prior fiscal years, and to improve employee health and safety. As the COVID-19 threat diminishes, so does the need for specialty supplies, services and equipment necessary to mitigate the Coronavirus impacts.

Parks and Recreation saw a year-over-year increase of $351 thousand. The majority of this increase was from increased part-time wages. The increase to the State's minimum wage, combined with additional and expanded community special events drove costs up in this expenditure area. Along with the expanded offering of special events, overall supplies expenditures increased from the prior year as well.

Moreover, as of the date of this ACFR, the City S&P issuer credit rating (ICR) is "A+", with the underlying credit rating on the City's outstanding lease revenue bonds is "A", with a "stable" outlook. These latest ratings were reaffirmed when the City issued $15.140 million in Lease Revenue Bonds, Series 2022A, which will be used to refurbish and reconstruct the City's public golf course. The outlook for all ratings is "stable." It should note that the "A+" ICR reflects S&P's view of the City's general creditworthiness.

ACCOMPLISHMENTS AND ACHIEVEMENTS
Montebello has made tremendous strides by improving its financial standing and overall operations in recent years, and this progress continued in Fiscal Year 2021-22. In addition to improvements in internal controls, responding to the State Auditor findings, adopting a General Fund budget with a surplus for the third year in a row, extinguishing existing unfunded liability, some of the many positive accomplishments this past year include:
• Issuance of $15.140 million in bonds to fully renovate and rejuvenate the City's public golf course
• Providing conduit financing to construct a Topgolf on 15 acres of the City's public golf course, with guarantees for Topgolf to pay the annual debt service

1600 West Beverly Boulevard• Montebello, California 90640-3932 • (323)-887-1200 vii

M MONTEBELLO
� ...

CITY OF MONTEBELLO

DEPARTMENT OF FINANCE
• Substantial completion of "Paving the Way" projects that improved residential street and road conditions
• Major repairs to the City's aging sewer system
• Expansion of the Montebello Community Assistance Program (MCAP), aimed at helping the City's unhoused population
• Approval of a Housing Element by the State's Housing and Community Development Department (HCD), making Montebello only the second city in Los Angeles County to have a current approved plan
• Significant progress on the City's General Plan update, the first in over forty years • Completion of a park and facilities needs assessment study and master plan • Completion of significant facility repair and upgrade projects, eliminating years of deferred maintenance on key City facilities
• Introduction of improved purchasing and procurement guidelines • Receiving the Government Finance Officers Association (GFOA) award for budget preparation for the second time in the history of the City (with the FY 2022-23 budget receiving this award as well)
These and other accomplishments have helped set Montebello on the right path towards fiscal sustainability and operational stability. The following pages provide technical information related to the City's accounting system, budgetary control, cash and investments, etc. Greater detail is available in the MD&A, the various notes to the financial statements, required supplementary information (RSI) and statistical sections.

ACKNOWLEDGEMENTS
The preparation of the City's Annual Comprehensive Financial Report could not have been accomplished without the dedicated services of the entire Finance Department, as well as assistance from each of the operating departments. I want to specifically thank the lead Accountant in this endeavor, Van Dao for her commitment to ensuring the ACFR was completed accurately and on-time. The City's independent auditor - The Pun Group - provided invaluable assistance and expert advice in completing the ACFR.

I also want to thank the City Council, the Executive Management Team and City staff for their interest and support of the financial operations of the City and helping ensure Montebello thrives financially and operationally.

Michael Sol a
Director of Finance

1600 West Beverly Boulevard• Montebello, California 90640-3932 • (323)-887-1200 viii

City of Montebello
Citywide Organizational Chart
FY 2021-22
Montebello Residents
City Council
Director
Finance
Assistant City
Manager City AttorneyCity Manager
City Clerk City Treasurer
Fire Chief Police Chief
Director
Parks and Recreation
Director
Transit
Director
Human Resources -
Information Technology
Director
Public Works
Director
Community
Development
i[

Director of Parks and Recreation Director of Finance
Joseph Palombi Nick Razo
Director of Community Development Director of Human Resources David Sosnowski Michael Solorza
Chief of Police Fire Chief
James Enriquez Lupita Ibarra
Director of Public Works Director of Transit
René Bobadilla
City Manager
Arlene Salazar
Assistant City Manager
Paul Espinosa Fernando Pelaez
Rafael Gutierrez, City Treasurer
City of Montebello
Fiscal Year 2021-22
Annual Comprehensive Financial Report (ACFR)

CITY COUNCIL
Kimberly A. Cobos-Cawthorne, Mayor
Angie M. Jimenez, Mayor Pro Tem
David N. Torres, Councilmember
Scarlett Peralta, Councilmember
Salavador Melendez, Councilmember

ELECTED OFFICIALS
Christopher Jimenez, City Clerk
x

200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707

INDEPENDENT AUDITORS’ REPORT

To the Honorable Mayor and Members of the City Council
of the City of Montebello
Montebello, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Montebello, California (the “City”), as
of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referre d to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2022, and the resp ective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

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

Responsibilities of Management for the Financial Statements

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

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

To the Honorable Mayor, and Members of the City Council of the City of Montebello
Montebello, California

2 Auditors’ Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whet her the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS 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, fo rgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are consider ed material if there is a substantial likelihood that, individually or in the aggregate, they would influence th e judgment made by a reasonable user based on the financial statements.

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 res ponsive 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 purpo se of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.

 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

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

Required Supplementary Information

Accounting principles generally accepted in the United Stat es of America require that the Management’s Discussion and Analysis, the Budgetary Comparison Schedules, the Sc hedule of Changes in Net Pension Liability and Related Ratios, the Schedule of City’s Proportionate Share of the Net Pension Liability and Related Ratios, the Schedules of Contributions – Pensions, the Schedules of Changes in Net Other Postemployment Benefits Liability and Related Ratios, and the Schedules of Contributions – Other Postem ployment Benefits on pages 5 through 21 and 117 through 132 be presented to supplement the basic financial statements . Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropria te operational, economic, or historical context. We have applied certain limited pr ocedures to the Required Supplementary Information in accordance with auditing standards generally accepted in the United States of Am erica, which consisted of inquiries of management about the methods of preparing the inform ation 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 expr ess an opinion or provide a ny assurance on the information because the limited procedures do not provide us with su fficient evidence to express an opinion or provide any assurance.

To the Honorable Mayor, and Members of the City Council of the City of Montebello
Montebello, California

3 Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Combining and Individual Fund Financial Statements are presented for purposes of additional analysis and are not a required part of the basic financial statemen ts. 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 basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the Combining and Individual Fund Financial Statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Management is responsible for the othe r information included in the annual re port. The other information comprises the Introductory and Statistical Sections but does not include the basic financial statements and our auditor's 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.

In connection with our audit of the basi c financial statements, our responsibility is to read the other information and consider whether a material inconsistenc y 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.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards , we have also issued our re port dated March 2, 2023, on our consideration of the City’s internal control over financia l 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 City’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 City’s internal control over financial reporting and compliance.

Santa Ana, California
March 2, 2023

o
4 This page intentionally left blank.

City of Montebello
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2022

5 The following section represents Management’s Discussion and Analysis (MD&A). It is intended to provide narrative overview and analysis on the City’s financial performance for the fiscal year ended June 30, 2022. Readers are encouraged to consider the information presented here in conjunction with the accompanying letter of transmittal and financial statements.

Overview of the Financial Statements

The City's basic financial statements consist of three components: 1) Government-wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Basic Financial Statements. The Statistical section at the end of this report provides supplementary information in addition to the basic financial statements. Government-wide Financial Statements are prepared using accrual accounting method to demonstrate the City’s operational accountability, while the Fund Financial Statements are based on modified-accrual accounting method to demonstrate its budgetary accountability. Reconciliations of the Fund Financial Statements to the Government-wide Financial Statements are provided to explain to readers the differences created by this integrated approach.

Government-wide Financial Statements

The Government-wide Financial Statements provide a broad overview of the City's finances, in a manner similar to a private- sector business. The statements present information about the functions of the City principally supported by taxes and intergovernmental revenues (governmental activities). The governmental activities of the City include general government (i.e., administration, finance, human resources, elected officials, etc.) public safety, public works, parks and recreation, and housing and community development. Business-type activities of the City include water, golf course, transportation and hotel operations. These statements include all assets of the City as well as all liabilities (including long-term debt).

Additionally, certain eliminations have occurred as prescribed by the statement in regard to inter-fund activity, payables, and receivables.

The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities. These statements include all assets and liabilities of the City using the accrual basis of accounting, which is similar to the accounting used by most private sector companies. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

The government-wide financial statements can be found immediately following this discussion and analysis.

Fund Financial Statements

The Fund Financial Statements include statements for three categories of activities: Governmental Funds, Proprietary Funds and Fiduciary Funds. The governmental activities are prepared using the current financial resources measurement focus and the modified accrual basis of accounting.

A Fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounti ng to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds. Governmental funds are used to account for essentially the same functions reported as Governmental Activities in the government-wide financial statements. Howeve r, unlike the government-wide financial statements, governmental fund financial statements focus on near term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

6 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Government-wide Financial Statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains various individual governmental funds. Information is presented separately in the Governmental Funds Balance Sheet, and in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances, for the General Fund, the Retirement Special Revenue Fund, the Public Financing Authority Debt Service Fund, and the Housing Successor Special Revenue Fund, all of which are considered to be major funds. Data from other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these other governmental funds is provided in the form of combining statements elsewhere in this report. As a result of Assembly Bills 1X26 and 1484, Redevelopment Agency assets and liabilities are no longer a part of the governmental funds of the City and are now reported in the Fiduciary Fund section of the financial statements.

The City adopts an annual appropriated budget for all of its individual funds, including the major funds as listed above. The basic financial statements include a budgetary comparison statement for the General Fund. The budgetary comparison statement has been provided to demonstrate compliance with this budget.

The basic governmental fund financial statements can be found immediately following the government-wide financial statements.

Proprietary Funds. Proprietary funds are generally used to account for services for which the City charges external customers, or other units of the City. Proprietary funds provid e the same type of information as shown in the government- wide statements, only in more detail. The City maintains the following two types of proprietary funds.

• Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the operations of water, golf course, transit system, Montebello Hilton and Home2suites Hotels.

• Internal service funds are used to report activities that provide internal services for the City. The City uses internal service funds to account fo r workers' compensation and general liab ility. Because internal service funds predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report.

Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government.

Fiduciary funds are not reflected in the government-wide fina ncial statements because the resources of those funds are not available to support the City's own programs. The basic fiduciary fund financial statements can be found immediately following the basic proprietary fund financial statements and include the assets and liabilities of the Successor Agency Fiduciary Fund.

Notes to financial statements

The notes to financial statements provide additional information that is essential to a full understanding of the data provided in the Government-wide and Fund Financial Statements. The notes to the basic financial statements can be found immediately following the Required Supplementary Information.

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

7 Other information

The combining statements referred to earlier in connection wi th other governmental funds and internal service funds are presented for all other Special Revenue Funds, all other Debt Service Funds, all other Capital Projects Funds, and all Internal Service Funds. These combining fund statements and schedules of revenues, expenditures and changes in fund balance - budget and actual for individual funds – can be found immediately following the notes to financial statements.

Note: The numbers shown on the MD&A are either expressed in multiples of one thousand or million dollars while percentages are rounded to the nearest tenth or whole number . Hence, there may be slight differences between numbers on the MD&A and the numbers on the Basic Financial Statements.

Financial Highlights

The following are entity-wide financial highlights, covering both Governmental and Business-type activities:

• On June 30, 2022, the City’s total net position was approximately $30.484 million dollars, an increase (improvement) of $39.035 million compared to the negative $8.551 million as of June 30, 2021. The City’s unrestricted net position, at a negative $142.496 million, improved (decreased) by $44.225 million dollars over the prior fiscal year.

• Total revenues from all sources were $164.093 million while total expenses were $125.058 million. Of the total revenues, program revenues totaled $120.201 million while general revenues totaled $43.892 million, net of transfers.

• The City’s General Fund revenue and other financing sources exceeded expenses by $7.131 million in the Fiscal Year 2021-22. The General Fund unassigned fund balance was $9.844 million at the end of the fiscal year, an increase of $4.969 million from FY 2020-21. Total fund balance as of June 30, 2022, was $14.716 million, up from $7.585 million the prior year.

• General Fund total revenues, including transfers in and proceeds from the sale of assets as June 30, 2022, was $70.585 million, $11.698 million higher than budget. This is due to an overall increase in sales and property tax revenues, as well as the recognition of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF).

• The General Fund expenditures as of June 30, 2022, including transfers out, were $2.790 million under budget primarily due to lower-than-expected Public Safety, Public Works, Housing and Community Development and Capital Outlay expenses.

• The Transit enterprise fund ended Fiscal Year 2021-22 with a total net position of $28.663 million, a $15.202 million increase from the prior fiscal year.

• The City’s Hilton Garden Inn ended the fiscal year wi th $540 thousand in operating income (surplus), which increased total net position by $271 thousand – to negative $84 thousand from $355 thousand the prior fiscal year.

• The Home2Suites ended the fiscal year with $4.595 million in operating income (surplus), increasing net position by $2.280 million – improving total net position to negative $1.724 million from negative $4.005 million the prior year.

These Financial Highlights, as well as other points, are discussed in greater detail in the body of this discussion and analysis, as well as the Notes to the Financial Statements. The following pages provide greater, in-depth detail on Government-wide financials, as well as Governmental and Business-type activities.

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

8 Government-wide Financial Analysis

The government-wide financial statements provide both long- term and short-term information about the City's overall financial position. This analysis addresses the financial statements of the City as a whole. The statement of net position includes all of the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources. The City’s net position is a useful measurement of its financial health. Net position can be tracked over time to assess whether the City’s financial health is improving or deteriorating. However, reader s will need to consider other nonfinancial factors, such as changes in the City’s property tax base, the condition of the City ’s infrastructure, and the level of public safety services to assess the overall health of the City.

The table below is the “Statement of Net Position,” and provides net position information broken out by Governmental and Business-type activities, with totals and a comparison to amounts as of June 30, 2022:

2021 2021
2022 (As Restated) 2022 2021 2022 (As Restated)
Assets:

Current and other assets 155,801$ 95,492$ 54,607$ 32,885$ 210,408$ 128,377$ Capital assets 104,617 102,330 106,337 103,686 210,954 206,016 Total assets 260,418 197,822 160,944 136,571 421,362 334,393 Deferred outflows of resources 11,718 12,854 2,347 3,528 14,065 16,382 Liabilities:

Long-term liabilities 208,001 205,816 114,154 117,940 322,155 323,756 Other liabilities 22,239 21,074 6,041 8,960 28,280 30,034 Total liabilities 230,240 226,890 120,195 126,900 350,435 353,790 Deferred inflows of resources 41,115 3,801 13,393 1,735 54,508 5,536 Net Position:

Net investment in c apital assets 79,728 76,851 34,949 30,182 114,677 107,033 Restricted 45,666 59,934 12,637 11,203 58,303 71,137 Unrestricted (124,613) (156,800) (17,883) (29,921) (142,496) (186,721) Total net position 781$ (20,015)$ 29,703$ 11,464$ 30,484$ (8,551)$ City of Montebello
Statement of Net Position
June 30
(in thousands)
G overnmental Activities Business-type Activities Total

As mentioned in the “Financial Highlights” section above, the City’s total net position was $30.484 million as of June 30, 2022, an increase (improvement) of $39.035 million compared to the negative net position of $8.551 million in FY 2020-21. Included in the City’s net position is $114.677 million net investment in capital assets (e.g., land, buildings, machinery and equipment, infrastructure, improvements other than buildings, and construction in progress); less any related debt used to acquire those assets that remain outstanding. Capital assets, net of accumulated depreciation, increased by $4.939 million, while current and other assets increased $82.031 million.

The City uses capital assets to provide services to resident s and the community at large; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Any remaining amount is restricted to spending agreements originated by law, contract, or other agreements with external parties.

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

9 Highlights of the key elements impacting the City’s net position for the fiscal year ended June 30, 2022, are as follows:

• Governmental Activities total revenues before transfers exceeded total expenses by $20.803 million, including transfers of negative $7 thousand, the total positive change to net position was $20.796 million.

• Business-type Activities total revenues before transfers exceeded total expenses by $18.232 million, with the change in net position after transfers a positive $18.239 million.

• Total Citywide expenses before transfers were $125.058 million, a decrease of approximately $2.704 million (-2.12%) compared to the preceding fiscal year.

• Total Citywide revenues before transfers were $164.094 million, an increase of $27.664 million (20.28%) compared to June 30, 2021.

• Revenues are classified into program and general revenues. Total program revenues (Governmental and Business-type activities combined) were approximately $120.201 million, which are used to offset program expenses under each functional activity and are comprised of charges for se rvices, operating and capital grants. General revenues of approximately $43.892 million are used to offset the additional expenses net of program revenues and are comprised primarily of taxes (i.e., property, sales, franchise, etc.).

• The overall increase of 20.36% in total revenues ($27.766 million) for the City was primarily due to increases in sales tax ($3.109 million), Charges for Services ($11.811 million), Capital Grants ($5.032 million) and Operating Grants ($9.152 million).

• The largest City-wide revenues came from four sources: char ges for services (e.g. business license fees, building permits, hotel charges and bus fares) at $43.575 million, operating grants and contributions (e.g. allocations of funds derived from Los Angeles County Metropolitan Transportation Authority Local Return Funds Propositions A and C, and Measures R and M, as well as asset forfeiture funds contributed from the Justice Department and US Treasury) at $43.327 million, property taxes at $6.565 milli on, and sales taxes at $25.379 million. Property taxes exclude the property taxes derived from the 1946 voter approved initiative to provide restricted revenue to pay for the retirement benefit costs of City employees, which is recorded in a separate fund from the General Fund.

• Revenue from charges for services increased by $11.811 million (37.18%), property tax increased by $89 thousand (1.37%), sales taxes increased by $3.109 million (13.96%) and Operating grants and contributions increased 24.59% ($6.363 million).

• Total citywide expenses decreased by $2.703 million, the net impact of decreases in Public Safety ($22.975 million) and Transit ($13.998 million); offset by increases to Public Works ($13.329) million and Parks and Recreation ($4.035 million).

• The cost of serving residents for the year (across Governmental and Business-type Activities) includes: $31.790 million for public safety (police and fire); $16.052 million for public works; $29.280 million for transit (Montebello Bus Lines); $13.983 million in general government; and $5.407 million for parks, recreation and culture.

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

10 The “Summary of Changes in Net Position” table below provides additional detail on changes to revenues, expenses and net position for the years ending June 30, 2021, and 2022.

2021 2021
2022 (As Reclassified) 2022 2021 2022 (As Reclassified) Revenues
Program revenues:

Charges for services 18,412$ 14,399$ 25,163$ 17,365$ 43,575$ 31,764$ Operating grants and contributions 32,243 25,777 26,342 23,233 58,585 49,010 Capital grants and contributions 2,162 1,207 15,879 11,802 18,041 13,009 General revenues:

Sales taxes 25,379 22,270 - - 25,379 22,270 Property taxes 6,565 6,476 - - 6,565 6,476 Other taxes 10,562 10,032 - - 10,562 10,032 Other revenues 2,071 3,289 - - 2,071 3,289 Investment earnings (762) 459 77 18 (685) 477 Total revenues 96,632 83,909 67,461 52,418 164,093 136,327 Expe nse s
General government 13,983 2,487 - - 13,983 2,487 Public safety 31,790 54,765 - - 31,790 54,765 Public works 16,052 2,723 - - 16,052 2,723 Parks, culture, and recreation 5,407 1,372 - - 5,407 1,372 Housing and community development 2,347 644 - - 2,347 644 Transit - 29,280 43,278 29,280 43,278 Golf course - - 2,735 2,870 2,735 2,870 M ontebello Hilton - - 5,089 3,367 5,089 3,367 Home2suites - - 9,782 7,993 9,782 7,993 Water - - 2,343 2,297 2,343 2,297 Interest on long-term debt 5,549 5,252 - - 5,549 5,252 Unallocated infrastructure depreciation 701 713 - - 701 713 Total expenses 75,829 67,956 49,229 59,805 125,058 127,761 Change in net position before transfers 20,803 15,953 18,232 (7,387) 39,035 8,566 Transfers (7) (518) 7 518 - - Chang e in net position after transfers 20,796 15,435 18,239 (6,869) 39,035 8,566 Net position - beginning of year, as restated (20,015) (35,450) 11,464 18,333 (8,551) (17,117) Net position - end of year 781$ (20,015)$ 29,703$ 11,464$ 30,484$ (8,551)$ See Note 16 Prior Period Adjustments affecting the restatement of Net Position City of M ontebello
Summary of Changes in Net Position
(in thousands)
Governmental Activities Business-type Activities Total

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

11 Governmental Activities

• As reflected in the Statement of Activities schedule above, Governmental activities increased the City's total net position (after transfers) by $20.796 million, a 34.73% increase from June 30, 2021.

Key factors of this change in governmental activities include the following:

Revenues:

The pie chart below shows the relative percentage each major category of revenue (p rogram and general) comprises of the $96.632 million in total Governmental Activities revenue.

• Total governmental activities revenues increased by $12.7 23 million (15.16%). This is mainly due to increases in three revenue categories: Charges for Services ($4.013 million), Operating Grants ($6.466 million) and Sales Taxes ($3.109 million).

• Sales tax revenues were the largest portion of total governmental activities revenues (26.26%). Sales tax revenues increased by $3.109 million, to $25.379 million as of June 30, 2022.

• Property tax revenues were the second largest revenue source for governmental activities (22.25%). This includes the 1946 voter-approved retirement portion of property tax (e.g., property tax override). Property tax revenues exclude the property tax override increased slightly by $89 thousand (1.37%).

• Charges for services were the third largest source of revenue for governmental activities (19.05%). Charges for services in governmental funds include licenses and permits, fines and forfeitures, waste collection, etc. Compared to the prior fiscal year, this program revenue increased by approximately $4.013 million, or 27.87%.

Charges for services

19.05%
Operating grants
and contributions

33.37%
Capital grants and
contributions

2.24%
Sales taxes

26.26%
Property taxes

6.79%
Other taxes

10.93%
Other revenues

2.14%
Governmental Activities Revenue
FY 2021-22

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

12 Expenses:

The cost of providing all governmental activities in 2022 was $75.829 million, an increase in expenses of $7.873 million (11.59%) when compared to June 30, 2021. There were increa ses and decreases to different categories, causing the overall net increase. General Government and Public Works increased $11.496 million and $13.329 million respectively, offsetting a decrease of $22.975 million in Public Safety.

Program revenues of $52.817 million offset a portion of the $75.829 million in G overnmental Activities expenses, with general revenues used to offset $23.013 million of governmen tal activities expenses consider ed “public benefit.” This portion of expenses is funded by general revenues – which ar e primarily derived from taxes (i .e., sales, property, transient occupancy, etc.).

Business-type Activities

The City operates the following business-type activities: Transit System (i.e., Monteb ello Bus Lines), Golf Course, Hilton Garden Inn, Home2Suites, and Water Utility . The City’s Transit System is the larg est business-type operation (as defined by operating expenses), followed by Home2Suites, the Hilton Garden Inn, the Golf Course and the Water Fund.

Business-type activities increased the City’s net position before transfers by $18.239 million, an increase of $25.109 million as compared to the prior year, primarily a result of an increase in revenue ($15. 043 million) and a d ecrease in expenses ($10.576 million).

Total revenues for business-type activities were $67.461 million, compared to $52.418 million in the previous fiscal year, constituting a 28.70% increase. The overall change is due to a $7.798 million increase in Charges for Services, a $4.077 million increase in Capital Grants and an increase of $3.109 million in Operating Grants.

General
government

18.44%
Public safety

41.92%
Public works

21.17%
Parks, culture,
and recreation

7.13%
Housing and
community
development

3.10%
Interest on
long-term debt

7.32%
Governmental Activities Expenses
FY 2021-22

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

13 The pie chart below shows the ratio that various program revenues comprise of the total amount of Business-type Activities revenue. Approximately 37.30% of revenue came from Charges for Services, which was generated from bus fares, special contracts, revenue from hotel room fees and golf course green fees, while the remaining 62.70% comes from State and Federal subsidies in the form primarily of Transit related grants and related revenue from Federal, State and local (i.e., Los Angeles County Metropolitan Transportation Authority) agencies.

Business-type Activities expenses decreased $10.576 million in FY 2021-22 when compared to the prior fiscal year. The pie chart below shows the composition that each operation comprises of total Business-type expenses:

Charges for
services

37.30%
Operating grants
and contributions

39.05%
Capital grants and
contributions

23.54%
Investment
earnings

0.11%
Business-Type Revenue
FY 2021-22
Transit

59.48%
Golf course

5.56%
Montebello Hilton

10.34%
Home2suites

19.87%
Water

4.76%
Busines-Type Expenses
FY 2021-22

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

14 • The Transit System reported operating revenues of $ 28.539 million, a $3.930 million increase (15.97%) when compared to FY 2020-21. Charges for Services were up $731 thousand, primarily due to the return to normal bus operations as pandemic restrictions were lifted. There were also increases in Federal and State transit assistance and Local Return Funds (Metro) funding. Operating expenses in FY 2021-22 were $27.846 million, a $13.873 million decrease from the prior fiscal year. The $13.761 mil lion decrease in Salaries and Benefits year over year was responsible for the total decrease in expenses. Net position increased by $15.202 million.

• The City’s Golf Course’s operating revenue was essentially unchanged year over year: $2.945 million as of June 30, 2022 vs. $2.967 million the prior year. Operatin g expenses decreased by $167 thousand. As a result, the Golf Fund ended the fiscal year with a net income (surplus) before transfers in of $210 thousand.

• The Hilton Garden Inn reflected operating net income of $540 thousand, a vast improvement over the net loss of $1.023 million in FY 2020-21. The net income (surplus) is attributable to the recovering economy and the return of leisure and business travelers, leading to a direct increase in total occupancy. Operating revenues increased $3.285 million, and operating expenses increased by $1.722 million. Total change in net position was a positive $271 thousand.

• The Montebello Home2Suites reflected operating net income of $4.596 million, an increase from FY 2020-21 of $1.850 million. Operating revenue was $12.050 million, a significant increase over FY 2020-21 revenue of $8.358 million. As the economy recovers from the pandemic, a return to leisure and business travel has positively impacted the hotel’s operations. Total net position increased by $2.280 million.

• The City’s Water Fund increased its net position by $269 thousand, ending FY 2021-22 with total net position of $1.692 million. It should be noted that the California Public Utilities Commission (PUC) approved the sale of the City’s water system in December, 2022. The City expects the sale to be completed in FY 2022-23. Future financial statements will reflect the sale and closing out of this fund.

Governmental Funds Financial Analysis (Reporting the City’s most Significant Funds)

Governmental Funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information may be useful in assessing the City's financing requirements, in particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

As of June 30, 2022, the City's governmental funds (i.e., major funds such as the General Fund, Retirement Fund, Local Return Funds, etc.) reported total combined ending fund balan ces of $74.694 million, an increase of $10.800 million as compared with the prior fiscal year. All governmental fund balances are either non-spen dable, restricted, committed, assigned, or unassigned pursuant to GASB 54.

Non-spendable indicates they are fund balances tied to inventorie s, prepaid expenses and property held for sale. The restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation. These restrictions of fund balance are to indicate that portions of fund balance are not available for new spending, because they have already been committed to 1) finance Special Revenue Fund expenditures, 2) pay debt service, or 3) finance ongoing capital projects.

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

15 Amounts in the committed fund balance are constrained for specific purposes that are internally imposed by the government through formal written action of the City Council. Amounts in the assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. The City has not designated committed or assigned fund balances as of June 30, 2022 (see next paragraph for further explanation).

Unassigned fund balance is the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications.

It should be noted that updated comprehensive reserve policies were originally adopted by the City Council in June 2020 and have been presented for formal adoptio n as part of the budget process every fi scal year since. These reserve policies created commitments and assignments in line with GASB 54, de tailing specific uses for the commitments or assignments such as “Economic Uncertainty” or “Capital Projects.: These new policies, and the assignment of portions of the General Fund’s fund balance, will be fully implemented once total fund balance levels have risen to a point where the reserve categories can be fully funded. A complete copy of the reserve policies can be found in the City’s adopted budget.

General Fund is the City's main operating fund. It is used to account for revenues and expenditures necessary to perform basic government functions that are not accounted for through other special revenue and grant funds. These are the typical services residents see daily: police and fire service, street maintenance, community services programming, etc.

The table below presents a comparison of General Fund revenu es, expenditures, and fund balance. The General Fund saw an increase in fund balance of $7.131 million. Fund Balance is now 22.0% of Operating Revenues.

2022 2021 Amount %
Operating revenues 66,904$ 56,114$ 10,790$ 19% Operating expenditures 63,454 66,860 (3,406) -5% Excess of revenues over (under) expenditures 3,450 (10,746) 7,384 -69% Net operating transfers 3,637 3,099 538 17% Proceeds from capital lease/sale of assets 44 5,785 (5,741) -99% Surplus 7,131 (1,862) 8,993 -483% Beginning fund balance 7,585 9,447 (1,862) -20% Ending fund balance 14,716$ 7,585$ 7,131$ 94% City of Montebello
G eneral Fund
As of June 30
(in thousands)
Change

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

16 The key factors positively impacting fund balance of the General Fund for FY 2021-22 are as follows:

• General Fund operating revenues (i.e., taxes, charges for services, licenses and permits, etc.) increased by $10.790 million (19.23%) from the prior year which is primarily due to the overall increase in sales tax ($3.109 million), Licenses and Permits ($2.037 million) and Intergovernmental ($5.215 million). The increase in sales tax is due to two primary reasons: the recovering economy as pandemic related restrictions ease and consumers remain active in the retail economy; and the continued local improve ment of the recently enacte d (March 2020) Measure H Transaction and Use Tax revenue stream. The increase to Intergovernmental revenue is from the recognition of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF).

• General Fund expenditures decreased year-over-year by $3.406 million. There were year-over-year savings in some areas (i.e., General Government, Public Works, Public Safety) which o ffset increases in Parks and Recreation and Housing and Community Development. Capital related expenses in the General Fund were also less in FY 2021- 22 when compared to the prior year.

The table below provides detail of General Fund revenue by major category for FY 2021-22 and FY 2020-21 for comparison purposes:

Variance
with Final
Budget Variance
2022 Positive 2021 with Prior
Original Final Actual (Negative) Actual Year
Revenues
Sales taxes 20,765$ 20,765 $ 25,379$ 4,614$ 22,270$ 3,109$ Property taxes 14,293 14,293 14,195 (98) 13,715 480 Other taxes 610 610 631 21 477 154 Franchise taxes 2,163 2,163 2,301 138 2,316 (15) Licenses and permits 6,101 6,101 7,806 1,705 5,769 2,037 Fines and forfeitures 2,250 2,250 2,512 262 2,312 200 Investment income 225 225 (869) (1,094) 77 (946) Intergovernmental 8 8 6,311 6,303 1,096 5,215 Charges for services 7,806 7,806 8,077 271 6,317 1,760 Proceeds from sale of property - - 44 44 - 44 Other revenue 558 558 560 2 1,763 (1,203) Total revenues 54,779$ 54,779 $ 66,947$ 12,168$ 56,112 $ 10,835 $ Budge
ted Amounts
City of Montebello
General Fund
As of June 30
(In thousands)

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

17 Retirement Fund is reserved for the payment of retirement expenses (both Normal Cost and Unfunded Accrued Liability) for all employees of the City. The Retirement Fund is financed by the retirement portion of the property tax revenue (i.e., property tax override) pursuant to a 1946 voter approved initiative to provide for the retirement benefit costs of City employees. The City’s Retirement Fund increased fund balance by $3.436 million as of June 30, 2022, to a total of $21.047 million. The largest expense is he $11.041 million in Transfer s Out related to the reimbursement of General Fund pension costs and payment of debt service on the $153.4 million in Pension Obligation Bonds issued in 2020.

Transportation and Street Improvement Funds category is used to account for the activity of Los Angeles County Metropolitan Transportation Authority (Metro) Local Return Funds and State of California Gas Tax funds. This is a new presentation of these funds for FY 2021-22, combining activity to better illustrate the revenue and expenses related to street and roads funds. During the year ended June 30, 2022, fund balance decreased by $430 thousand. The combination of operating expenses – utilized for capital and maintenance projects – and Transfers Out – utilized to record debt service on the Sales Tax Revenue Bonds Series 2019ABC -- exceeded operating revenues.

Public Financing Authority Debt Service Fund is used to account for the accumulation of resources required for the payment of interest and principal on all revenue bonds issued by the Public Financing Authority. As of June 30, 2022 fund balance decreased slightly by $6 thousand. This fund is designed to act as a conduit for payment of debt service: expenses generally equal Transfers In (revenue).

Capital Asset and Debt Administration

Capital Assets

The City's capital assets for its governmental and business-type activities as of June 30, 2022 amounted to $210.954 million, net of accumulated depreciation, a $5.627 million increase ov er the prior year. Capital assets include land, buildings, improvements, machinery and equipment, park facilities, roads, highways, and bridges. The table below provides a year- over-year comparison of capital assets (net of depreciation) , broken out by Governmental Activities and Business-type Activities:

2021 2021
2022 2021 2022 (As Restated) 2022 (As Restated)
Land 2,731$ 2,378$ 6,307$ 6,307$ 9,038 $ 8,685$ Rights of way 14,392 14,392 - - 14,392 14,392 Construction in progress 25,208 32,503 13,431 4,920 38,639 37,423 Buildings and improvements 41,605 30,872 70,715 73,268 112,320 104,140 M achinery and equipment 7,546 8,319 15,884 18,502 23,430 26,821 Infrastructure 13,135 13,866 - - 13,135 13,866 104,617$ 102,330$ 106,337$ 102,997$ 210,954$ 205,327$ City of Montebello
Sum m ary of Capital Assets, Net of Depreciation
As of June 30
(in thousands)
Governmental Activities Business-type Activities Total

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

18 The capital asset classes include:

• Sewer system, including sewer pipes, pumping stations, manholes, and laterals;

• Storm drain system, including storm drain pipes, flood control channels, and catch basins;

• Streets, including pavement, curb and gutter, sidewalks, medians, greenways, block walls and traffic signals;

• Buildings, including building remodels, building lighting systems, building equipment, and building roofs; and

• Parks, including associated structures and infrastructure assets.

Major capital asset transactions during the current fiscal year included the following additions to values:

• Purchased a new property for $352 thousand (612 W. Whittier) • Completion of portions of the bond financed “Paving the Way” project added $2.9 million in asset value (re-paved/re- built streets and roadways increased overall asset value) • Completion of the Montebello Blvd project added $8.4 million in capital asset value

Additional information on the City's capital assets can be found in Note 5 to the basic financial statements section of this report.

Long-Term Debt

At the end of Fiscal Year 2021-22, the City had total debt outstanding of $322.155 million, a decrease of $1.602 million compared to the prior year.

The outstanding debt includes $102.692 million of revenue bonds and $143.015 of pension obligation bonds. Claims payable of $27.445 million is a $3.844 million increase over the prior year. Compensated absences also increased, by $2.595 million of a total of $6.867 million. The City’s Other Postemployment Benefit Obligation (OPEB) amount – as determined by the updated GASB 75 valuation – increased to $33.697 million from $30.359 million.

The table below provides an overview and comparison of the various types of long-term debt:

2021 2021
2022 (As Restated) 2022 2021 2022 (As Restated)
Revenue bonds, net 32,659$ 35,014$ 70,033$ 71,761$ 102,692$ 106,775$ Pension bonds, net 104,873 108,679 38,142 39,526 143,015 148,205 Claims payable 27,445 23,601 - - 27,445 23,601 Notes payable 6,742 7,803 863 1,099 7,605 8,901 Capital lease obligation 784 1,403 50 240 834 1,643 Compensated absences 5,592 2,977 1,275 1,295 6,867 4,272 Other postemployment
benefit obligation 29,906 26,339 3,791 4,020 33,697 30,359 Sub total 208,001 205,816 114,154 117,940 322,155 323,757 Less current portion 16,569 16,162 4,558 3,968 21,127 20,130 Noncurrent portion 191,432$ 189,655$ 109,596$ 113,972$ 301,028$ 303,627$ City of Montebello
Sum m ary of Long-term Debt
As of June 30
(in thousands)
Governmental Activities Business-type Activities Total

Additional information on the City's long-term debt can be found in Note 6 to the basic financial statements section of this report.

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

19 Credit Rating

As of the date of this ACFR, the City S&P issuer credit rating (ICR) is “A+”, with the underlying credit rating on the City’s outstanding lease revenue bonds is “A”, with a “stable” outlook. These latest ratings were reaffirmed when the City issued $15.140 million in Lease Revenue Bonds, Series 2022A, which will be used to refurbish and reconstruct the City’s public golf course. The outlook for all ratings is “stable.” It should be noted that the “A+” ICR reflects S&P’s view of the City’s general creditworthiness.

Organizational and Economic Overview

The financial statements and commentary found in the prior two ACFR’s has been dominated by the impacts of the Coronavirus pandemic. For the results as of June 30, 2022, th ese impacts have lessened and there appears to be a return to “pre-pandemic” economic and financial activity. Overall, the local Montebello economy appears to be healthy, as evidence by continued strong sales and transaction and use tax performance. Also, the City’s two hotels are performing well, seeing occupancy rates at or near levels last since in 2019.

For most of FY 2021-22, the discussion surrounding the economy focused on inflation, and the various causes of the generationally high inflation rate and methods used by the Federal Reserve to temper its impacts on the economy. Hand-in- hand with the inflation discussion has been predictions of if and or when a recession would hit the U.S. economy.

A recent Deloitte Insights economic update stated “Is a recession on the horizon? That’s been a key question for the US economy for the past six months. So far, its safe to say that the recession is mostly in people’s minds.” This statement is based on actual economic activity – as measured by job gains, industrial production and retail sales – remaining strong and indicating growth. External forces and pressures such as the war in Ukraine or housing market problems in China do not impact the United States as much as other nations. While these major issues undoubtedly impact millions around the world, the US economy is not as exposed to these problems as some analysts assume.

The Deloitte Insights analysis goes on to say the real case fo r recession involves the Federal Reserve’s actions to slow the economy. Many analysts see the increase in the Fed funds rate leading to a recession. However, comparing current Fed funds rate increases to those of the early 1980’s, the rate of increase has been slower. And while the increase to the Fed funds rate in the early 1980’s did lead to recessions, “it took a lot more tightening than we’ve seen so far this time around.” Moreover, the case can be made the US economy may be less sensitive to interest rates than in prior years.

Regardless of these impact’s overall effect on the economy, many analysts see a recession in 2023 as more than likely. The key question is how deep and prolonged su ch a recession could be. Given the im pact consumers have on the economy – nationally, regionally and most importantly locally – it is prudent to focus on retail activity as an indicator of both short and long-term economic growth. Consumer spending could return to pre-pandemic patterns: less on durable goods and more on services. One forecast shows durable goods spending levelling off in 2023 and beyond, with a steady increase in services spending, that could surpass spending on non-durables.

These forecasts still show a steady increase in spending in these areas, even if the pandemic trend of spending in durables levels off. The key point is that consumers will continue to spend, at levels above those seen pre-pandemic. That is important to Montebello, since 36.6% of General Fund revenue comes from sales tax. So long as retail activity remains robust – even as inflation continues to be elevated – the City can count on healthy sales tax revenue. It should be noted that out-year sales tax projections are tempered, indicating growth rates under two percent (2.0%).

For this and other reasons, it is imperative that Montebello’s economic development activities promote projects that expand the City’s sales tax base. Looking ahead, there is much to be excited about in Montebello in this arena, with several projects underway in FY 2022-23 that will contribute to the City’s long-term economic health and viability.

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

20 The issuance of $15.140 million in lease revenue bonds in September, 2022 will usher in a new era for the City’s public golf course These proceeds will be used to completely reconstruct the existing golf course, creating a championship 9-hole course, a 6-hole “executive” course, and adding lights for the ability to play golf during evening hours. This project will help the Golf Course reduce – even eliminate – the subsidy required from the General Fund.

Connected to the Golf Course Renovation Project is the constr uction of a Topgolf facility on 15 acres of the existing golf course property. This project will be funded with the $55.4 mi llion in lease revenue bonds issued in December, 2022. In a unique financing arrangement, the Public Financing Authority issued the bonds, with a sub-lease and guaranty tied to the issuance that requires Topgolf to pay the annual debt service. The completed Topgolf facility will be a three-story entertainment and event center, featuring 102 hitting bays, a restaurant, meeting space and a pro shop. In addition to the commitment to pay annual debt service, Topgolf will pay an annual lease for the use of City property. In addition, the facility will generate sales tax revenue, which will help boost overall General Fund revenue.

In addition to these exciting capital projects and economic development initiatives, the City finally received approval from the Public Utilities Commission (PUC) to sell its water system. The PUC decision was fina lized in December 2022, and escrow is estimated to close in February 2023. The sale of the water system to San Gabriel Valley Water Company (SGVWC) concludes a long saga of the City attempting to se ll its water system. The State Auditor, in its December 2018 report, recommended the City pursue the sale, and the Octo ber 2021 follow up repot noted this recommendation and continued to support the sale. The $15.8 million in proceeds the City will receive will help boost its General Fund reserves in FY 2022-23.

As noted in the preceding pages, the General Fund’s fund balance increased to $14.716 million as of June 30, 2022. The proceeds from the sale of the water system will more than double these reserves, allowing the City to begin following its adopted GASB 54 compliant reserve policies (first adopted in June, 2020).

In FY 2021-22, the City began much needed work to upgrade its information technology infrastructure. This project will be funded using a portion of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) revenue the City received between May 2021 and 2022. The total $16.59 million in CSLFRF revenue received by Montebello has been categorized as “revenue loss,” as permitted by U.S. Treasury Interim Final and Final Rules. This much needed funding has allowed the City to fast-track the technology upgrade, improving security, storage and productivity hardware and software. The project will continue in subsequent fiscal years, with completion anticipated sometime in FY 2023-24.

 These are just a few highlights of the many projects underway in Montebello that are aimed at improving residents’ lives and helping to put the City on a long-term path to financial stability and sustainability. Some other projects that either began or were continued into FY 2021-22 are the following: Issuance of $15.140 million in bonds to fully renovate and rejuvenate the City’s public golf course
 Issuing bonds to construct a Topgolf on 15 acres of the City’s public golf course  Substantial completion of “Paving the Way” projects that improved residential street and road conditions  Major repairs to the City’s again sewer system
 Expansion of the Montebello Community Assistance Program (MCAP), aimed at helping the City’s unhoused population
 Approval of a Housing Element by the State’s Housing and Community Development Department, making Montebello only the second city in Los Angeles County to have a current approved plan  Significant progress on the City’s General Plan update, the first in over forty years  Completion of a park and facilities needs assessment study and master plan  Completion of significant facility repair and upgrade projects, eliminating years of deferred maintenance on key City facilities
 Introduction of improved purchasing and procurement guidelines  Receiving the Government Finance Officers Association (GFOA) award for budget preparation for the second time in the history of the City

City of Montebello
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

21 Management and the City Council continue to be dedicated to improving Montebello’s long-term sustainability. Pursuing projects that are externally and internally focused – capital and infrastructure projects as well as organizational improvements – will strengthen Montebello’s abilities to weather changes in the economy as well as the “next pandemic,” in whatever form that may appear.

Requests for Information

This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report can be answered by visiting the City’s website at www.montebeloca.gov.

22 This page intentionally left blank.

BASIC FINANCIAL STATEMENTS
23

This page intentionally left blank.
24

GOVERNMENT-WIDE

FINANCIAL STATEMENTS
25

This page intentionally left blank.
26

Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments 62,724,376$ 17,794,854 $ 80,519,230 $ Taxes receivable 5,600,887 - 5,600,887 Accounts receivable 5,396,004 11,875,942 17,271,946 Interest receivable 112,522 - 112,522 Notes receivable 495,693 - 495,693 Due from other governments 4,979,426 - 4,979,426 Prepaid items 346,129 413,464 759,593 Inventories - 1,405,122 1,405,122 Internal balances 7,146,134 (7,146,134) - Total current assets 86,801,171 24,343,248 111,144,419 Noncurrent assets:

Restricted cash and investments 15,186,067 12,682,854 27,868,921 Land held for resale 1,679,368 - 1,679,368 Net pension assets 52,134,867 17,580,885 69,715,752 Capital assets:

Non-depreciable assets 42,330,867 19,737,407 62,068,274 Depreciable assets (net of depreciation) 62,286,529 86,599,231 148,885,760 Total capital assets, net 104,617,396 106,336,638 210,954,034 Total noncurrent assets 173,617,698 136,600,377 310,218,075 Total assets 260,418,869 160,943,625 421,362,494

DEFERRED OUTFLOWS OF RESOURCES
Pension related deferred outflows of resources 6,247,861 1,629,574 7,877,435 Other postemployment benefits related deferred outflows if resources 5,335,951 676,388 6,012,339 Unamortized loss on defeasance of debt 134,111 40,963 175,074 Total deferred outflows of resources 11,717,923 2,346,925 14,064,848

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 3,936,004 3,504,485 7,440,489 Accrued interest 844,561 370,834 1,215,395 Deposits payable - 134,182 134,182 Due to other governments 7,381 2,750 10,131 Unearned revenue 17,452,022 2,028,961 19,480,983 Long-term liabilities, due within one year 16,569,110 4,557,912 21,127,022 Total current liabilities 38,809,078 10,599,124 49,408,202 Noncurrent liabilities:

Long-term liabilities, due in more than one year 161,525,505 105,804,790 267,330,295 Net other postemployment benefits liability 29,905,997 3,790,901 33,696,898 Total noncurrent liabilities 191,431,502 109,595,691 301,027,193 Total liabilities 230,240,580 120,194,815 350,435,395

DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding of debt - 529,498 529,498 Pension related deferred inflows of resources 38,749,254 12,563,853 51,313,107 Other postemployment benefits related deferred inflows of resources 2,365,627 299,868 2,665,495 Total deferred inflows of resources 41,114,881 13,393,219 54,508,100

NET POSITION
Net investment in capital assets 79,727,948 34,948,689 114,676,637 Restricted for:

Retirement 21,046,898 - 21,046,898 Community development 9,212,429 - 9,212,429 Public safety 965,996 - 965,996 Capital projects 214,580 - 214,580 Transportation 13,854,886 - 13,854,886 Debt service 371,706 12,636,555 13,008,261 Total restricted 45,666,495 12,636,555 58,303,050 Unrestricted (deficit) (124,613,112) (17,882,728) (142,495,840) Total net position (deficit) 781,331$ 29,702,516 $ 30,483,847 $ City of Montebello
Statement of Net Position
June 30, 2022
27

Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Governmental activities:

General government 13,983,490 $ 4,823,331 $ 1,602,604 $ 550 $ 6,426,485$ Public safety 31,790,604 4,576,406 18,668,562 705,696 23,950,664 Public works 16,052,469 4,680,288 8,504,120 49,373 13,233,781 Parks, recreation, and culture 5,406,906 220,152 2,739,257 194,517 3,153,926 Housing and community development 2,346,627 4,111,335 728,456 1,211,892 6,051,683 Unallocated infrastructure depreciation 700,608 - - - - Interest and fiscal charges 5,548,594 - - - - Total governmental activities 75,829,298 18,411,512 32,242,999 2,162,028 52,816,539 Business-type Activities:

Transit system 29,280,305 2,201,947 26,342,293 15,879,414 44,423,654 Golf course 2,735,232 2,945,485 - - 2,945,485 Montebello Hilton 5,088,673 5,357,504 - - 5,357,504 Home2Suites 9,782,114 12,050,342 - - 12,050,342 Water utility 2,343,193 2,607,898 2,607,898 Total business-type activities 49,229,517 25,163,176 26,342,293 15,879,414 67,384,883 Total 125,058,815 $ 43,574,688 $ 58,585,292 $ 18,041,442 $ 120,201,422 $ Program Revenues
City of Montebello
Statement of Activities
For the Year Ended June 30, 2022
28

Governmental Business-Type
Functions/Programs Activities Activities Total
Governmental activities:

General government (7,557,005) $ - $ (7,557,005)$ Public safety (7,839,940) - (7,839,940) Public works (2,818,688) - (2,818,688) Parks, recreation, and culture (2,252,980) - (2,252,980) Housing and community development 3,705,056 - 3,705,056 Unallocated infrastructure depreciation (700,608) - (700,608) Interest and fiscal charges (5,548,594) - (5,548,594) Total governmental activities (23,012,759) - (23,012,759) Business-type Activities:

Transit system - 15,143,349 15,143,349 Golf course - 210,253 210,253 Montebello Hilton - 268,831 268,831 Hotel2Suites - 2,268,228 2,268,228 Water utility - 264,705 264,705 Total business-type activities - 18,155,366 18,155,366 Total (23,012,759) 18,155,366 (4,857,393)
General revenues:

Taxes:

Property taxes 6,565,336 - 6,565,336 Sales tax 25,378,979 - 25,378,979 Franchise taxes 2,300,508 - 2,300,508 Transient occupancy tax 340,195 - 340,195 Property tax in lieu of vehicle license fee 7,629,793 - 7,629,793 Other taxes 290,889 - 290,889 Total taxes 42,505,700 - 42,505,700 Investment (loss) income (761,829) 77,003 (684,826) Other revenues 2,071,400 - 2,071,400 Transfers (6,627) 6,627 -
Total general revenues and transfers 43,808,644 83,630 43,892,274 Changes in net position 20,795,885 18,238,996 39,034,881 Net position (deficit):

Beginning of year, as restated (Note 16) (20,014,554) 11,463,520 (8,551,034) End of year 781,331$ 29,702,516$ 30,483,847$ Net (Expense) Revenue and
Changes in Net Position
City of Montebello
Statement of Activities (Continued)
For the Year Ended June 30, 2022
29

This page intentionally left blank.
30

FUND FINANCIAL STATEMENTS
The Fund Financial Statements only present individual major funds, while nonmajor funds are combined in a single column. Major funds are generally defined as having significant activities or balances in the current year. 31

This page intentionally left blank.
32

GOVERNMENTAL FUND FINANCIAL STATEMENTS
33

This page intentionally left blank.
34

MAJOR GOVERNMENTAL FUNDS
The funds described below were determined to be Major Funds. Individual nonmajor funds may be found in the Supplementary Information Section.

GENERAL FUND
The General Fund is the primary operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The major revenue sources of this fund include property tax, sales tax, transient occupancy tax, business license tax, utility users tax and charges for services. These revenues support the general operations of the City, which include police, fire, street maintenance, parks, recreation, planning and general government. In addition, the General Fund finances many capital improvements each year.

PUBLIC FINANCING AUTHORITY DEBT SERVICE FUND
Montebello pays debt service on bond issues and lease payments for equipment. This fund records various debt related expenses.

Funds are transferred into this fund (Transfers In) and debt service is recorded when paid.

RETIREMENT FUND SPECIAL REVENUE FUND
The City of Montebello voters twice approved a Property Tax Override (PTO) in 1946 and again in 1976 (affirmation vote) to be utilized to pay for retirement related pension costs (i.e., PERS related expenditures). Ordinance No 2148 (1996) codified the tax rate at $0.197875 per $100 of assessed valuation (Municipal Code Section 3.28.020). The revenue from the property tax override can only be used to pay for retirement system related expenses. The revenue is utilized to pay for unfunded actuarial liability (UAL), normal costs, and effective FY 2020-21, debt service on Pension Obligation Bonds.

TRANSPORTATION AND STREET IMPROVEMENT SPECIAL REVENUE FUNDS To account for the all transportation and street repair maintenance funds that were previously reported separately as Gas Tax Special Revenue Fund, Road Maintenance and Rehabilitation Special Revenue Fund, Prop A Local, Special Revenue Fund, Prop C Local Special Revenue Fund, Measure R Local Special Revenue Fund, and Measure M Local Special Revenue Fund. A combining statement of these funds is shown in the supplementary information. 35

Debt Service
Fund
Transportation
and Street Public
Retirement Improvement Financing
General Fund Fund Funds Authority
ASSETS
Cash and investments 19,131,893 $ 20,396,902 $ 14,282,547 $ - $ Accounts receivable 2,042,338 - 229,476 - Interest receivable 112,522 - - - Taxes receivable 4,949,073 649,996 - - Notes receivable - - - - Due from other funds 5,555,019 - - 376,060 Due from other governments 34,737 - - - Advances to other funds 3,159,680 - - - Prepaid items 195,722 - 28,970 - Property held for resale 682,538 - - - Restricted assets:

Cash and investments held by fiscal agents 374,594 - 14,786,770 24,703 Total assets 36,238,116$ 21,046,898 $ 29,327,763 $ 400,763 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable and accrued liabilities 2,912,815 $ - $ 657,137$ - $ Due to other funds 1,475,000 - - 29,057 Due to other governments 7,381 - - - Unearned revenues 17,126,666 - - - Total Liabilities 21,521,862 - 657,137 29,057 Deferred Inflows of Resources:

Unavailable revenues - - - - Total deferred inflows of resources - - - - Fund Balances:

Nonspendable 4,037,940 - 28,970 - Restricted 374,594 21,046,898 28,641,656 371,706 Committed 459,491 - - - Unassigned (deficit) 9,844,229 - - - Total fund balances 14,716,254 21,046,898 28,670,626 371,706 Total liabilities, deferred inflows of
resources, and fund balances 36,238,116$ 21,046,898 $ 29,327,763 $ 400,763 $ Special Revenue Funds
City of Montebello
Balance Sheet
Governmental Funds
June 30, 2022
36

Other
Nonmajor Total
Governmental Governmental
Funds Funds
ASSETS
Cash and investments 1,778,386$ 55,589,728$
Accounts receivable 3,120,294 5,392,108
Interest receivable - 112,522
Taxes receivable 1,818 5,600,887
Notes receivable 495,693 495,693
Due from other funds 1,475,000 7,406,079
Due from other governments 4,944,689 4,979,426 Advances to other funds - 3,159,680 Prepaid items 121,437 346,129
Property held for resale 996,830 1,679,368 Restricted assets:

Cash and investments held by fiscal agents - 15,186,067 Total assets 12,934,147$ 99,947,687$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable and accrued liabilities 349,457$ 3,919,409$ Due to other funds 1,915,568 3,419,625
Due to other governments - 7,381 Unearned revenues 325,356 17,452,022
Total Liabilities 2,590,381 24,798,437
Deferred Inflows of Resources:

Unavailable revenues 455,405 455,405
Total deferred inflows of resources 455,405 455,405 Fund Balances:

Nonspendable 121,437 4,188,347
Restricted 10,029,884 60,464,738
Committed - 459,491
Unassigned (deficit) (262,960) 9,581,269
Total fund balances 9,888,361 74,693,845
Total liabilities, deferred inflows of
resources, and fund balances 12,934,147$ 99,947,687 $ City of Montebello
Balance Sheet (Continued)
Governmental Funds
June 30, 2022
37

This page intentionally left blank.
38

Total fund balances reported on the governmental funds balance sheet 74,693,845$ Capital assets used in governmental activities are not current assets or provides financial resources and therefore are not reported in the Governmental Funds. 104,617,396 Internal service funds are not governmental funds. However, they are used by management to charge the costs of certain activities, such as insurance and central services and maintenance to individual governmental funds. Currently due assets and liabilities of these funds are therefore included in Governmental Activities in the following line items in the Statement of Net Position. (20,326,439) Revenues earned but not available to pay for current expenditures for governmental funds are reported as unavailable revenue in the Governmental Funds Balance Sheet. 455,405 Compensated absences were not due and payable in the current period; therefore, they were not reported in the governmental fund balance sheets, net of $(3,777) reported in Internal Service Funds. (5,588,405) Net pension liabilities and the related deferred outflows and inflows of resources were not due and payable in the current period; therefore, they were not reported in the governmental fund balance sheets:

Deferred outflows of resources 6,247,861
Net pension assets 52,134,867
Deferred inflows of resources (38,749,254) 19,633,474 Net other postemployment benefits liability and the related deferred outflows and inflows of resources were not due and payable in the current period; therefore, they were not reported in the governmental fund balance sheets:

Deferred outflows of resources 5,335,951$
Net other postemployment benefits liability (29,905,997) Deferred inflows of resources (2,365,627) (26,935,673)

Long-term debts and related payables were not due and payable in the current period; therefore, they were not reported in the governmental fund balance sheets:

Bonds and loans payable, net of premium and discount (145,057,822) Unamortized loss on defeasance of debt 134,111
Interest payable (844,561) (145,768,272)
Net position (deficit) of governmental activities: 781,331$ Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds above because of the following:

City of Montebello
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2022
39

Debt Service
Fund
Transportation
and Street
Retirement Improvement Public Financing
General Fund Fund Funds Authority
REVENUES:

Taxes 42,505,700 $ 14,569,128 $ - $ - $ Intergovernmental 6,311,326 - 7,799,136 - Licenses and permits 7,806,258 - - - Fines and forfeitures 2,512,256 - - - Use of money and property (869,471) 98,079 84,531 543 Charges for services 8,077,509 - - - Other revenue 560,220 - - 1,506,936 Total revenues 66,903,798 14,667,207 7,883,667 1,507,479 EXPENDITURES:

Current:

General government 7,508,181 191,001 - - Public safety 33,255,910 - - - Public works 11,882,266 - 780,492 - Parks, recreation, and culture 4,711,686 - - - Housing and community development 2,370,064 - - - Capital outlay 2,073,997 - 5,396,999 - Debt service:

Principal 1,254,815 - - 5,876,027 Interest and fiscal charges 397,418 - - 5,170,131 Total expenditures 63,454,337 191,001 6,177,491 11,046,158

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 3,449,461 14,476,206 1,706,176 (9,538,679) OTHER FINANCING SOURCES (USES):

Transfers in 3,637,348 - - 9,532,529 Transfers out - (11,040,588) (2,135,916) - Proceeds from sale of assets 44,300 - - - Total other financing sources (uses) 3,681,648 (11,040,588) (2,135,916) 9,532,529 NET CHANGE IN FUND BALANCES 7,131,109 3,435,618 (429,740) (6,150) FUND BALANCES:

Beginning of year, as restated (Note 16) 7,585,145 17,611,280 29,100,366 377,856 End of year 14,716,254$ 21,046,898$ 28,670,626$ 371,706$ Special Revenue Funds
City of Montebello
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2022
40

Other
Nonmajor Total
Governmental Governmental
Funds Funds
REVENUES:

Taxes -$ 57,074,828$
Intergovernmental 5,147,910 19,258,372
Licenses and permits - 7,806,258 Fines and forfeitures - 2,512,256 Use of money and property 13,947 (672,371) Charges for services - 8,077,509 Other revenue 52,397 2,119,553
Total revenues 5,214,254 96,176,405
EXPENDITURES:

Current:

General government: - 7,699,182 Public safety 1,916,718 35,172,628
Public works 869,375 13,532,133
Parks and recreation 810,546 5,522,232
Housing and community development 284,597 2,654,661 Capital outlay 192,310 7,663,306
Debt service:

Principal 425,000 7,555,842
Interest and fiscal charges 46,595 5,614,144 Total expenditures 4,545,141 85,414,128

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 669,113 10,762,277
OTHER FINANCING SOURCES (USES):

Transfers in - 13,169,877
Transfers out - (13,176,504)
Proceeds from sale of assets - 44,300 Total other financing sources (uses) - 37,673 NET CHANGE IN FUND BALANCES 669,113 10,799,950 FUND BALANCES:

Beginning of year, as restated (Note 16)
9,219,248 63,893,895
End of year 9,888,361$ 74,693,845$
City of Montebello
Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Governmental Funds
For the Year Ended June 30, 2022
41

Net change in fund balances - total governmental funds: 10,799,950$ Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities, the portion of the cost attributed to capital assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. The remaining amounts are expensed and allocated to the programs they support.

The capital outlay expenditures $ 7,961,454
Depreciation expense (3,408,289)
Net effect of disposal of capital assets (2,265,654) 2,287,511 Revenues in the Government-Wide Statement of Activities that do not provide current financial resources and are not reported as revenue in the governmental funds. 455,405 Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long- term liabilities in the Statement of Net Position. Repayment of debt principal is an expenditure in the governmental funds, but in the Statement of Net Position the repayment reduces long-term liabilities.

Repayment of debt principal 7,555,842
Interest and amortization expense 65,550 7,621,392 The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds:

Pension credit, net of contribution made after measurement date 9,277,991 OPEB expense, net of contribution made after measurement date (600,440) Compensated absences (2,614,819) 6,062,732
Internal Service Funds are used by management to charge the costs of insurance activities to individual funds. The portion of the net revenue (expense) of these Internal Service Funds arising out of their transactions with governmental funds is reported with governmental activities, because they service those activities. (6,431,105)
Chan
ge in net position of governmental activities 20,795,885$ City of Montebello
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities For the Year Ended June 30, 2022
Amounts reported for governmental activities in the Statement of Activities are different because of the following:
42

PROPRIETARY FUND FINANCIAL STATEMENTS
43

This page intentionally left blank.
44

HOME2SUITES FUND
This fund is used to account for revenues and expenses related to the operations of the Montebello Home2Suites Hotel.

This City owned hotel opened in 2018 and is operated by a management company. It is a full-service hotel that caters to the long-term business traveler.

WATER UTILITY FUND
This fund is used to account for the revenue and expenses of the Water Fund. The City contracts with a third-party, the San Gabriel Valley Water Company ("SGVWC"), for the operation and maintenance of this utility. In May 2020 the City received approval to move forward with the sale of its water system to SGVWC. The Public Utilities Commission ("PUC") gave final approval of the sale in November 2021. It is anticipated that the sale will be completed by June 30, 2023. All activities necessary to provide such service are accounted for in this fund including, but not limited to administration, operations, maintenance, financing, billing and collections.

MONTEBELLO HILTON FUND
This fund is used to account for revenues and expenses related to the operations of the Montebello Hilton (i.e., Hilton Garden Inn). This City owned hotel has been in operation since 2004 and is operated by a management company. It is a full service hotel that offers a full range of amenities: business center, meeting rooms, bar/restaurant, swimming pool, etc. It is adjacent to the City's eighteen-hole championship golf course.

MAJOR PROPRIETARY FUNDS
Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise.

The intent of the City is that the cost of providing goods and services be financed primarily through user charges.

The concept of majo
r funds extends to Proprietary Funds. The City has identified the funds below as major proprietary funds.

TRANSIT SYSTEM FUND
This fund is used to account for all revenues and expenses related to the operations of the City's transit service. The City of Montebello operates a bus line: Montebello Bus Lines. This fund is utilized to track revenue and expenditures for all operations. The revenue recorded in this fund is comprised of fares, Local Return Funds (LA County Metro) and Federal funds. Operating expenses include salaries and benefits of bus operators and mechanics, fuel, supplies for bus repairs, and other related expenditures.

GOLF COURSE FUND
This fund is used to account for all revenues and expenses related to the operations of the Montebello Municipal Golf Course. The City owns and operates an eighteen hole championship Golf Course, in operation since 1926. This enterprise fund accounts for the operations of the golf course: staff, maintenance, repairs, etc. In addition, the fund accounts for revenue and operating expenses of the Quiet Cannon, an event and conference space that is owned by the City but operated by a management company.
45

Transit Golf Montebello
System Course Hilton Home2Suites Water
ASSETS
Current assets:

Cash and investments 15,350,137$ -$ 277,514$ 1,270,809$ 896,394$ Accounts receivable 9,966,661 212,638 772,292 740,731 183,620 Inventories 1,336,597 66,175 480 1,870 - Prepaid items 71,882 - 129,980 211,602 - Restricted:

Cash and investments with fiscal agents 55,070 - 2,263,460 10,364,324 - Total current assets 26,780,347 278,813 3,443,726 12,589,336 1,080,014 Noncurrent assets:

Net pension assets 17,580,885 - - - - Capital assets:

Nondepreciable 15,554,952 3,581,034 566,421 - 35,000 Depreciable 101,016,821 13,455,748 19,715,754 49,083,848 3,137,430 Accumulated depreciation (74,605,641) (9,931,757) (8,419,244) (4,601,611) (2,252,117) Total capital assets, net 41,966,132 7,105,025 11,862,931 44,482,237 920,313 Total noncurrent assets 59,547,017 7,105,025 11,862,931 44,482,237 920,313 Total assets 86,327,364 7,383,838 15,306,657 57,071,573 2,000,327

DEFERRED OUTFLOWS OF RESOURCES
Pension related 1,629,574 - - - - Other postemployment benefits related 676,388 - - - - Deferred charges on refunding - 40,963 - - - Total deferred outflows of resources 2,305,962 40,963 - - - (Continued)
City of Montebello
Statement of Net Position
Proprietary Funds
June 30, 2022
Business-type Activities - Enterprise Funds
46

Governmental
Business-type Activities -
Activities - Internal Servic e
Enterprise Funds Fund
Total Self-insurance
ASSETS
Current assets:

Cash and investments 17,794,854$ 7,134,648 $
Accounts receivable 11,875,942 3,896
Inventories 1,405,122 -
Prepaid items 413,464 -
Restricted:

Cash and investments with fiscal agents 12,682,854 - Total current assets 44,172,236 7,138,544
Noncurrent assets:

Net pension assets 17,580,885 -
Capital assets:

Nondepreciable 19,737,407 -
Depreciable 186,409,601 -
Accumulated depreciation (99,810,370) -
Total capital assets, net 106,336,638 -
Total noncurrent assets 123,917,523 -
Total assets 168,089,759 7,138,544

DEFERRED OUTFLOWS OF RESOURCES
Pension related 1,629,574 -
Other postemployment benefits related 676,388 - Deferred charges on refunding 40,963 - Total deferred outflows of resources 2,346,925 - (Continued)
City of Montebello
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2022
47

Transit System Golf Montebello Water
Fund Course Hilton Home2Suites Fund

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 1,117,265 244,824 1,112,922 937,377 92,097 Interest payable 115,575 11,535 34,000 206,954 2,770 Deposits payable - 400 30,486 71,621 31,675 Due to other funds - 3,986,454 - - - Due to other governments - - - 2,750 - Unearned revenue 2,028,961 - - - - Compensated absences, due within one year 880,294 - - - - Claims payable, due within one year - - - - - Bonds and notes payable, due within one year 1,453,083 409,535 650,000 1,165,000 - Total current liabilities 5,595,178 4,652,748 1,827,408 2,383,702 126,542 Noncurrent liabilities:

Advances from other funds - - 2,300,000 859,680 - Compensated absences, due in more than one year 394,594 - - - - Claims payable, due in more than one year - - - - - Bonds and notes payable, due in more than one year 37,325,804 1,616,517 10,733,313 55,553,005 181,557 Net other postemployment benefits liability 3,790,901 - - - - Total noncurrent liabilities 41,511,299 1,616,517 13,033,313 56,412,685 181,557 Total liabilities 47,106,477 6,269,265 14,860,721 58,796,387 308,099

DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding - - 529,498 - - Pension related 12,563,853 - - - - Other postemployment benefits related 299,868 - - - - Total deferred inflows of resources 12,863,721 - 529,498 - -

NET POSITION
Net investment in capital assets 41,375,645 5,119,936 (49,880) (12,235,768) 738,756 Restricted for debt service 8,771 - 2,263,460 10,364,324 - Unrestricted (deficit) (12,721,288) (3,964,400) (2,297,142) 146,630 953,472 Total net position 28,663,128$ 1,155,536$ (83,562)$ (1,724,814)$ 1,692,228$ (Continued)
Business-type Activities - Enterprise Funds
City of Montebello
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2022
48

Governmental
Business-type Activities -
Activities - Internal Servic e
Enterprise Funds Fund
Total Self-insurance

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 3,504,485 16,595 Interest payable 370,834 -
Deposits payable 134,182 -
Due to other funds 3,986,454 -
Due to other governments 2,750 -
Unearned revenue 2,028,961 -
Compensated absences, due within one year 880,294 3,777 Claims payable, due within one year - 6,696,705 Bonds and notes payable, due within one year 3,677,618 - Total current liabilities 14,585,578 6,717,077 Noncurrent liabilities:

Advances from other funds 3,159,680 -
Compensated absences, due in more than one year 394,594 - Claims payable, due in more than one year - 20,747,906 Bonds and notes payable, due in more than one year 105,410,196 - Net other postemployment benefits liability 3,790,901 - Total noncurrent liabilities 112,755,371 20,747,906 Total liabilities 127,340,949 27,464,983

DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding 529,498 -
Pension related 12,563,853 -
Other postemployment benefits related 299,868 - Total deferred inflows of resources 13,393,219 -

NET POSITION
Net investment in capital assets 34,948,689 - Restricted for debt service 12,636,555 -
Unrestricted (deficit) (17,882,728) (20,326,439) Total net position 29,702,516$ (20,326,439)$
(Concluded)
City of Montebello
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2022
49

Transit Golf Montebello
System Course Hilton Home2Suites Water
OPERATING REVENUES:

Charges for services 2,092,340 $ 2,940,434 $ 5,256,495 $ 11,968,958 $ 2,607,898 $ Operating subsidies:

Proposition "A" discretionary 5,681,362 - - - - Proposition "C" discretionary 3,812,459 - - - - Measure M 3,592,001 - - - - Measure R 3,604,280 - - - - Federal and state transit assistance 9,652,191 - - - - Total operating subsidies: 26,342,293 - - - - Other 104,707 5,051 101,009 81,384 - Total operating revenues 28,539,340 2,945,485 5,357,504 12,050,342 2,607,898 OPERATING EXPENSES:

Salaries and benefits expense (credit) 13,550,771 (261,683) 1,176,667 1,769,105 1,116 Materials and supplies 3,098,640 27,756 209,443 - - Food and beverage - - 446,424 548,968 - Repairs and maintenance 136,811 205 - 15 - Utilities 319,575 950,729 242,266 310,714 187,749 Insurance claims and premiums 2,100,000 - 79,200 94,568 - Contractual services 1,981,382 1,349,987 415,037 951,532 1,983,319 Franchise fees - - 162,276 537,571 - Depreciation 4,330,533 233,298 430,301 1,227,097 5,680 Administrative expense 1,953,337 357,080 1,060,461 2,007,223 160,602 Other expenses 374,753 5,766 595,623 7,832 - Total operating expenses 27,845,802 2,663,138 4,817,698 7,454,625 2,338,466 Operating income (loss) 693,538 282,347 539,806 4,595,717 269,432 NONOPERATING REVENUES (EXPENSES):

Investment income 58,265 - 2,240 12,142 4,356 Interest and fiscal charges (1,434,503) (72,094) (270,975) (2,327,489) (4,727) Gain on sale of assets 4,900 - - - - Total nonoperating revenues (expenses) (1,371,338) (72,094) (268,735) (2,315,347) (371) Income before contribution and transfers (677,800) 210,253 271,071 2,280,370 269,061 CONTRIBUTIONS AND TRANSFERS:

Federal and state capital grants 15,879,414 - - - - Transfers in - 6,627 - - - Total contributions and transfers 15,879,414 6,627 - - - Change in net position 15,201,614 216,880 271,071 2,280,370 269,061 NET POSITION:

Beginning of year 13,461,514 938,656 (354,633) (4,005,184) 1,423,167 End of year
28,663,128$ 1,155,536$ (83,562)$ (1,724,814)$ 1,692,228$ (Continued)
Business-type Activities - Enterprise Funds
City of Montebello
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2022
50

Governmental
Business-type Activities -
Activities - Internal Servic e
Enterprise Funds Fund
Total Self-insurance
OPERATING REVENUES:

Charges for services 24,866,125$ 8,528,226 $
Operating subsidies:

Proposition "A" discretionary 5,681,362 -
Proposition "C" discretionary 3,812,459 -
Measure M 3,592,001 -
Measure R 3,604,280 -
Federal and state transit assistance 9,652,191 - Total operating subsidies: 26,342,293 -
Other 292,151 -
Total operating revenues 51,500,569 8,528,226
OPERATING EXPENSES:

Salaries and benefits 16,235,976 -
Materials and supplies 3,335,839 -
Food and beverage 995,392 -
Repairs and maintenance 137,031 -
Utilities 2,011,033 -
Insurance claims and premiums 2,273,768 14,474,506 Contractual services 6,681,257 484,825
Franchise fees 699,847 -
Depreciation 6,226,909 -
Administrative expense 5,538,703 -
Other expenses 983,974 -
Total operating expenses 45,119,729 14,959,331 Operating income (loss) 6,380,840 (6,431,105) NONOPERATING REVENUES (EXPENSES):

Investment income 77,003 -
Interest and fiscal charges (4,109,788) -
Gain on sale of assets 4,900 -
Total nonoperating revenues (expenses) (4,027,885)
-
Income before contribution and transfers 2,352,955 (6,431,105) CONTRIBUTIONS AND TRANSFERS:

Federal and state capital grants 15,879,414 -
Transfers in 6,627 -
Total contributions and transfers 15,886,041 - Change in net position 18,238,996 (6,431,105)
NET POSITION:

Beginning of year 11,463,520 (13,895,334)
End of year 29,702,516$ (20,326,439)$
(Concluded)
City of Montebello
Statement of Revenues, Expenses, and Changes in Net Position (Continued) Proprietary Funds
For the Year Ended June 30, 2022
51

Transit Golf Montebello
System Course Hilton Home2Suites Water

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users 8,714,866$ 2,739,875$ 5,064,274$ 11,517,872$ 2,658,540$ Payments to suppliers (10,408,896) (2,474,882) (4,299,656) (6,249,139) (2,348,587) Payments to employees (17,011,769) (162,840) (1,177,294) (1,735,000) 329 Operating subsidies received from Federal and State 26,114,585 - - - - Claims and insurance paid - - - - - Cash flows provided by (used in)
operating activities 7,408,786 102,153 (412,676) 3,533,733 310,282

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Principal payment on pension obligation bonds (1,384,173) - - - - Interest paid on pension obligation bonds (1,412,735) - - - - Interfund receipts - - - 862,430 - Interfund payments (219,255) 1,619,544 (378,454) (1,076,515) - Transfers in - 6,627 - - - Cash flows provided by (used in)
noncapital financing activities (3,016,163) 1,626,171 (378,454) (214,085) -

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Federal and State capital grants 15,879,414 - - - - Acquisition of capital assets (8,349,823) (1,211,034) (6,940) - - Proceed from sale of assets 4,900 - - - - Debt principal repayment (215,443) (443,892) - (1,110,000) (76,307) Interest paid (48,964) (75,775) (408,000) (2,545,519) (4,240) Cash flows provided by (used in) capital
and related financing activities 7,270,084 (1,730,701) (414,940) (3,655,519) (80,547)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment earning 58,265 - 2,240 12,142 4,356 Cash flows provided by investing activities 58,265 - 2,240 12,142 4,356 Net increase (decrease) in cash and
investments 11,720,972 (2,377) (1,203,830) (323,729) 234,091 CASH AND INVESTMENTS:

Beginning of year 3,684,235 2,377 3,744,804 11,958,862 662,303 End of year 15,405,207$ -$ 2,540,974$ 11,635,133$ 896,394$ CASH AND INVESTMENTS:

Cash and investments (as restated) 15,350,137$ -$ 277,514$ 1,270,809$ 896,394$ Cash and investments with fiscal agents 55,070 - 2,263,460 10,364,324 - Total cash and investments 15,405,207$ -$ 2,540,974$ 11,635,133$ 896,394$ (Continued)
City of Montebello
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2022
Business-type Activities - Enterprise Funds
52

Transit Golf Montebello
System Course Hilton Home2Suites Water
Reconciliation of operating income (loss) to
net cash provided by (used in) operating activities:

Operating activities:

Operating income (loss) 693,538$ 282,347 $ 539,806$ 4,595,717$ 269,432$ Adjustments to reconcile operating income
(loss) to net cash flows provided by (used in)
operating activities:

Depreciation 4,330,533 233,298 430,301 1,227,097 5,680 (Increase) decrease in:

Accounts receivable 6,517,819 (205,610) (310,158) (603,709) 50,642 Inventories 32,843 4,106 (480) (82) - Prepaid items (21,177) - (91,510) (178,143) - Net pension assets (16,636,432) 29,444 - - 330 Pension related deferred outflows of
resources 1,284,944 90,862 - - 1,019 Other postemployment benefits related
deferred outflows of resources (261,260) 59,975 - - - Increase (decrease) in:

Accounts payable and accrued liabilities (360,058) 211,214 (997,563) (1,578,386) (16,588) Deposit payable - - 16,928 71,239 - Unearned revenue (227,708) - - - - Compensated absences (4,336) (15,300) - - - Claims payable - - - - - Net other postemployment benefits liability 278,303 (507,479) - - - Pension related deferred inflows of
resources 11,896,510 (20,805) - - (233) Other postemployment benefits related
deferred inflows of resources (114,733) (59,899) - - - Cash flows provided by (used in) operating
activities 7,408,786$ 102,153 $ (412,676) $ 3,533,733$ 310,282$ (Continued)
Business-type Activities - Enterprise Funds
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2022
City of Montebello
53

Governmental
Business-type Activities -
Activities - Internal Servic e
Enterprise Funds Fund
Total Self-insurance

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users 30,695,427$ 8,528,226$ Payments to suppliers (25,781,160) (490,274)
Payments to employees (20,086,574)
Operating subsidies received from Federal and State 26,114,585 - Claims and insurance paid - (10,631,125) Cash flows provided by (used in)
operating activities 10,942,278 (2,593,173)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Principal payment on pension obligation bonds (1,384,173) - Interest paid on pension obligation bonds (1,412,735) - Interfund receipts 862,430 -
Interfund payments (54,680) -
Transfers in 6,627 -
Cash flows provided by (used in)
noncapital financing activities (1,982,531) -

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Federal and State capital grants 15,879,414 -
Acquisition of capital assets (9,567,797) -
Proceed from sale of assets 4,900 -
Debt principal repayment (1,845,642) -
Interest paid (3,082,498) -
Cash flows provided by (used in) capital
and related financing activities 1,388,377 -

CASH FLOWS FROM INVESTING ACTIVITIES
Investment earning 77,003 -
Cash flows provided by investing activities 77,003 - Net increase (decrease) in cash and
investments 10,425,127 (2,593,173)
CASH AND INVESTMENTS:

Beginning of year 20,052,581 9,727,821
End of year 30,477,708$ 7,134,648$
CASH AND INVESTMENTS:

Cash and investments (as restated) 17,794,854$ -$
Cash and investments with fiscal agents 12,682,854 - Total cash and investments 30,477,708$ -$
(Continued)
City of Montebello
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2022
54

Governmental
Business-type Activities -
Activities - Internal Servic e
Enterprise Funds Fund
Total Self-insurance
Reconciliation of operating income (loss) to
net cash provided by (used in) operating activities:

Operating activities:

Operating income (loss) 6,380,840$ (6,431,105)$
Adjustments to reconcile operating income
(loss) to net cash flows provided by (used in)
operating activities:

Depreciation 6,226,909 -
(Increase) decrease in: -
Accounts receivable 5,448,984 -
Inventories 36,387 -
Prepaid items (290,830) -
Net pension assets (16,606,658) -
Pension related deferred outflows of
resources 1,376,825 -
Other postemployment benefits related
deferred outflows of resources (201,285) -
Increase (decrease) in:

Accounts payable and accrued liabilities (2,741,381) (5,449) Deposit payable 88,167
Unearned revenue (227,708) -
Compensated absences (19,636) -
Claims payable - 3,843,381
Net other postemployment benefits liability (229,176)
Pension related deferred inflows of
resources 11,875,472 -
Other postemployment benefits related
deferred inflows of resources (174,632) -
Cash flows provided by (used in) operating
activities 10,942,278$ (2,593,173) $
(Concluded)
City of Montebello
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2022
55

This page intentionally left blank.
56

FIDUCIARY FUNDS
Redevelopment Successor Agency Private Purpose Trust Fund – This fund was established to account for assets held by the Redevelopment Successor Agency pending distribution to the appropriate taxing entities after the payment of enforceable obligations that were in effect as of the signing of Assembly Bill X1 26.

The City maintains two types of fiduciary funds: agency funds and private purpose trust funds. These funds are presented separately from the Entity-wide and Fund financial statements.

Custodial funds account for assets held by the City as agent for individuals, governmental entities, and other organizations.

A private purpose trust fund is used to report all trust arrangements, other than those properly reported in pension trust funds or investment trust funds, under which principal and income benefit individuals, private organizations or other governments. A summary description of the City’s fund is as follows:
57

This page intentionally left blank.
58

Successor
Agency
Private-Purpose Custodial
Trust Fund Fund
ASSETS:

Cash and investments 19,226,231$ 1,081,341 $
Accounts receivable 2,733 -
Interest receivable 26,234 -
Notes receivable 3,831,900 -
Due from the other governments 8,016 2,115 Land held for resale 1,627,486 -
Restricted assets:

Cash with fiscal agents 1,996,774 -
Capital assets, net 10,793,236 -
Total assets 37,512,610 1,083,456
DEFERRED OUTFLOWS OF RESOURCES:

Unamortized loss on defeasance of debt 143,052 - Total deferred outflows of resources 143,052 1,083,456 LIABILITIES:

Current liabilities:

Accounts payable and accrued liabilities 17,705 - Deposits payable 50,000 -
Accrued interest 200,138 -
Due to other governments 4,967,239 12,187
Bonds payable, due in one year 4,294,333 -
Noncurrent liabilities:

Bonds payable, due in more than one year 14,680,817 - Total liabilities 24,210,232 12,187

NET POSITION
Held in trust for individuals, organizations, and other governments 13,445,430$ 1,071,269$ Statement of Fiduciary Net Position
City of Montebello
Fiduciary Funds
June 30, 2022
59

City of Montebello
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2022
Successor
Agency
Private-Purpose Custodial
Trust Fund Fund
ADDITIONS:

Redevelopment property trust tax fund 7,040,722 $ - $ Contributions - 97,148
Investment income (129,865) 116
Other income 188,430 -
Total additions 7,099,287 97,264
DEDUCTIONS:

Contractual services 29,263 -
Payments for retiree benefits - 164,700 General and administrative 35,118 2,716
Depreciation expense 228,550 -
Interest expense 1,007,461 -
Loss on disposal of property 2,100,000 -
Other deduction 40,508 139,005
Total deductions 3,440,900 306,421
CHANGE IN NET POSITION 3,658,387 (209,157)
NET POSITION:

Beginning of year, as restated (Note 16) 9,787,043 1,280,426 End of year 13,445,430$ 1,071,269 $
60

61 NOTES TO THE BASIC FINANCIAL STATEMENTS

62 This page intentionally left blank.

City of Montebello
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2022

63 Page

Note 1 – Summary of Significant Accounting Policies ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 65 A. Financial Reporting Entity ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 65 B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 66 C. Cash, Cash Equivalents, and Investments ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 70 D. Fair Value Measurement ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 70 E. Land Held for Resale ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 71 F. Inventory and Prepaid Items ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 71 G. Capital Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 71 H. Deferred Outflows and Inflows of Resources ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 72 I. Compensated Absences ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 72 J. Pensions ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 72 K. Postemployment Benefits Other than Pensions (“OPEB”) ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 73 L. Net Position ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 73 M. Fund Balances ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 74 N. Property Taxes ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 74 O. Use of Estimates ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 75 P. Implementation of new GASB Pronouncements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 75

Note 2 – Cash and Investments ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 76 A. Deposits ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 77 B. Investments Authorized by California Govern ment Code and the City’s Investment Policy ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 77 C. Disclosures Relating to Interest Rate Risk ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 78 D. Disclosures Relating to Credit Risk ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 79 E. Custodial Credit Risk ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 79 F. Fair Value Measurement ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 80 G. Investment in State Investment Pool ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 80

Note 3 – Interfund Receivables, Payables, and Transfers ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 81 A. Due To/From Other Funds ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 81 B. Advances To/From Other Funds ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 81 C. Interfund Transfers ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 82

Note 4 – Notes Receivable ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 82 A. Governmental Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 82 B. Fiduciary Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 83

Note 5 – Capital Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 84 A. Governmental Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 84 B. Business-Type Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 85 C. Fiduciary Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 86

Note 6 – Long-Term Debt ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 87 A. Governmental Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 87 B. Business-Type Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 92 C. Fiduciary Fu
nd ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 97 D. Advances from City of Montebello ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 100

Note 7 – Self Insurance ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 100

City of Montebello
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2022

64 Page

Note 8 – Hotel Management Agreements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 100

Note 9 – Defined Benefit Pension Plan ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 101 A. General Information About the Pension Plan ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 101 B. Pension Liability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 102 C. Changes in the Net Pension Liability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 104 D. Pension Expenses and Deferred Outflows a nd Inflows of Resources Related to Pensions ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 106

Note 10 – Other Postemployment Benefits (“OPEB”) ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 108

A. General Information About the Other Postemployment Benefit Plan ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 108 B. Net OPEB Liability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 110 C. Changes in the Net OPEB Liability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 110 D. OPEB Expense and Deferred Inflows and Outflows of Resources Related to OPEB ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 111

Note 11 – Net Investment in Capital Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 112

Note 12 – Fund Balance Classifications ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 113

Note 13 – Stewardship, Compliance and Accountability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 114

Note 14 – Commitments ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 115

Note 15 – Contingencies ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 115

Note 16 – Prior Period Adjustments ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 115

Note 17 – Subsequent Events ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 116

City of Montebello
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022

65 Note 1 – Summary of Significant Accounting Policies

The basic financial statements of the City of Montebello, California, (the “City”) have been prepared in accordance with accounting principles generally accepted in the Un ited States of America (“U.S. GAAP”) as applied to governmental agencies. The Government al Accounting Standards Board (“GASB ”) is the accepted standard setting body for establishing governmental accounting and financial re porting principles. The following is a summary of the significant policies:

A. Financial Reporting Entity

The City was incorporated on October 16, 1920 as a ge neral law City, utilizing th e City Council/City Manager form of government and provides the following services: ge neral government, police, fire, street maintenance, parks, recreation, planning, public transit, golf course, two hotels, and water utility services.

Component Units

The financial statements includes the financial activities of the City of Montebello, the primary government, and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization's governing body and the City is able to impose its will on that organization, or there is a financial benefits or financial burden relationship. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City) and there is a financial burden or benefit component to the relationship. In certain cases, other organizations are included as component units if the nature and significance of their operational and financial relationship with the City are such that th eir exclusion would cause the City's financial statements to be misleading or incomplete.

Management determined that the following component unit should be blended based on the criteria above:

Montebello Public Improvement Corporation (“MPIC”)
The Montebello Public Improvement Corporation was formed in June 1990 as a nonprofit corporation. MPIC was formed for the purpose of acquisition and construction of various projects in the City under a financing agreement.

The MPIC is not active.

Montebello Public Financing Authority ( the “Authority”) The Montebello Public Financing Authority was establishe d pursuant to a Joint Exerci se of Powers Agreement, dated September 2, 1997, entered into by the City and the former Redevelopment Agency for the purpose, among others, of issuing bonds to be used to provide financial assistance to its members. The activities of the Authority are reported in the Debt Service and Capital Projects Funds. In August 2014, the Montebello Parking Authority replaced the Successor Agency as one of the principals in the Montebello Public Financing Authority.

Water System Improvement Corporation (“WSIC”)
The Water System Improvement Corporation was formed in July 1972. The WSIC was formed for the purpose of rendering assisting the City in acquisition or improvement to the City's Water System facilities. The WSIC is not active.

Separate financial statements are not prepared for these blended component units.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

66 Note 1 – Summary of Significant Accounting Policies (Continued)

A. Financial Reporting Entity (Continued)

Successor Agency to the Montebello Redevelopment Agency (the “Successor Agency”)

Prior to its dissolution on February 1, 2012, the former Montebello Redevelopment Agency’s (the “Agency”) financial activity was reported as a component unit of the City. The primary purpose of the Agency was to eliminate blighted areas by encouraging developm ent of residential, commercial, i ndustrial, recreational, and public facilities.

Pursuant to the provisions of AB 1x26, the former Montebello Redevelopment Agency was dissolved and the Successor Agency to the Dissolved Montebello Redevelopment Agency (“Successor Agency”) was created.

Accordingly, all of the assets, liabilities and obligations of the former redevelopment agency were transferred to the Successor Agency and the Housin g Successor Special Revenue Fund (“Housing Fund”) of the City on February 1, 2012.

The City of Montebello currently ser ves as the Successor Agency to the former redevelopment agency that is responsible for revenue collection, maintaining the bo nd reserves, disposing of excess property and fulfilling the obligations of the dissolved Agency. The City Council serves as the Successor Agency’s governing board.

Financial information for the Successor Agency is presented as a private-purpose trust fund.

B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Government-Wide Financial Statements

The government-wide financial stat ements are reported using the “ economic resources” measurement focus and the accrual basis of accounting, as are the proprietary f und financial statements. Under the economic resources measurement focus, all assets and deferred outflows of resources and liabilities and deferred inflows of resources (whether current or noncurrent) are included in the St atement of Net Position. Operating statements present increases (revenues) and decreases (expenses) in total net position. 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.

The Statement of Net Position and the Statement of Ac tivities report information about the reporting government as a whole, except for its fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government (including its bl ended component units) is reported separately from discretely presented component un its for which the primary government is financially accountable. The City has no discretely presented component units. As a general rule, the effect of interfund activity has been eliminated from the government- wide financial statements. Exceptions to this general rule are payments- in-lieu of taxes where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the government's enterprise activities and various functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

67 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

Government-Wide Financial Statements (Continued)

The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given functi on or segment and 2) grants and contributions that are restricted to meeting the operational or capital requi rements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues.

Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between govern mental and business-type activities have not been eliminated. The following interfund activities have been eliminated:

 Due from and to other funds
 Advances to and from other funds
 Transfers in and out

Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange include property taxes, grants, entitlements, and donations. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all the eligibility requirements have been satisfied.

When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed.

Governmental Fund Financial Statements

A Balance Sheet and a Statement of Revenues, Expenditu res and Changes in Fund Balances are presented for all major governmental funds and aggregated nonmajor f unds. Accompanying schedules are presented to reconcile and explain the differences in fund balances as presented in these statements, to the net position presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria.

Governmental fund financial statements are reported using the “current financial resources” measurement focus and the modified accrual basis of accounting. Under th e current financial resources measurement focus, only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "a vailable spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, th ey are said to present a summary of sources and uses of "available spendable resources" during a period. Noncurrent portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. However, special reporting treatments are used to indicate that they should not be considered "available spendable resources" since they do not represent net current assets. Recognition of governmental fund type revenue represented by noncurrent receivables is deferred until they become current receivables. Noncurrent portions of other long-term receivables are offset by fund balance nonspendable accounts.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

68 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

Governmental Fund Financial Statements (Continued)

Under the modified accrual basis of accounting, revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.

Expenditures generally are recorded when a liability is incurred, except for principal and interest on general long- term liabilities, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquis itions are reported as expenditures in governmental funds.

Proceeds of general long-term liabilities are reported as other financing sources.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as reve nues of the current fiscal period with the exception of interest not expected to be received within 60 days. On ly the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City.

The City reports the following major governmental funds:

The General Fund is the primary operating fund of the City. It is used to account for all revenues and expenditures that are not required to be accounted for in another fund.

The Retirement Special Revenue Fund is used to account for the accumulation of resources required for costs associated with the City’s defined benefit retirement program, provided through a contractual relationship with the California Public Employees Retirement System (CalPERS) . The City of Montebello voters twice approved a Property Tax Override (PTO) in 1946 and again in 1976 (affirmation vote) to be utilized to pay for retirement related pension costs (i.e., PERS related expenditures). Ordinance No 2148 (1996) codified the tax rate at $0.197875 per $100 of assessed valuation (Municipal Code Section 3.28.020). The revenue from the property tax override can only be used to pay for retirement system related expe nses. The revenue is utilized to pay for unfunded actuarial liability (UAL), normal costs, and effective fiscal year 2020 – 2021, debt service on Pension Obligation Bonds.

The Transportation and Street Improvement Special Revenue Funds is used to account for the all transportation and street repair maintenance funds that were previous ly reported separately as Gas Tax Special Revenue Fund, Road Maintenance and Rehabilitation Special Revenue Fund, Prop A Local, Special Revenue Fund, Prop C Local Special Revenue Fund, Measure R Local Special Revenue Fund, and Measure M Local Special Revenue Fund.

The Public Financing Authority Debt Service Fund is used to account for the accumulation of resources required for payment of interest and principal on all Public Financing Authority revenue bonds.

Proprietary Fund Financial Statements

Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net pos ition. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

69 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

Proprietary Fund Financial Statements (Continued)

Proprietary funds distinguish operating revenues and expenses from nonopera ting items. Operating revenues and expenses generally result from providing services and pro ducing and delivering goods in connection with a proprietary fund's principal ongoing operations. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

The City reports the following major proprietary funds:

The Transit System Enterprise Fund is used to account fo r all revenues and expenses related to the operations of the City's transit service. The City of Montebello operates a bus line: Montebello Bus Lines. This fund is utilized to track revenue and expenditures for all operations. The revenue recorded in this fund is comprised of fares, Local Return Funds (LA County Metro) and Federal funds. Operating expenses include salaries and benefits of bus operators and mechanics, fuel, supplies for bus repairs, and other related expenditures. Fund 270 records Transit related grant awards and Fund 202 records the portion of the Road Maintenance and Rehabilitation Act (SB1) funding for transit agencies known as "State of Good Repair."

The Golf Course Enterprise Fund is used to account for all revenues and expenses related to the operations of the Montebello Municipal Golf Course. The City owns and operates an eighteen hole championship Golf Course, in operation since 1926. This enterprise fund accounts for the operations of the golf course: staff, maintenance, repairs, etc. In March, 2020, the C ity changed operators of the golf cour se. In addition, the fund accounts for revenue and operating expenses of the Quiet Cannon, an event and conference space that is owned by the City but operated by a third party.

The Montebello Hilton Enterprise Fund is used to account for revenues and expenses related to the operations of the Montebello Hilton (i.e., Hilton Garden Inn). This C ity owned hotel has been in operation since 2004 and is operated by a third-party. It is a full- service hotel that offers a full range of amenities: business center, meeting rooms, bar/restaurant, swimming pool, etc. It is adjacent to the City's eighteen-hole championship golf course.

The Home2Suites Enterprise Fund is used to account for revenues and expenses related to the operations of the Montebello Home2Suites. This City owned hotel opened in 2018 and is operated by a third-party. It is a full-service hotel that caters to the long-term business traveler. Occupancy rates traditionally have been in the 90% range (pre- pandemic).

The Water Utility Enterprise Fund is used to account for the revenues and expenses of the Water Fund. The City owns a water utility. The City contracts out to a third-party, the San Gabriel Valley Water Company ("SGVWC"), for the operation and maintenance of this utility. In May 2020, the City r eceived approval to move forward with the sale of its water system to SGVWC. The Public Utilities Commission (“PUC”) gave final approval of the sale in November 2021. It is anticipated that the sale will be completed by June 30, 2023. All activities necessary to provide such service are accounted for in this fund including, but not limited to administration, operations, maintenance, financing, and billing collections.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

70 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

Proprietary Fund Financial Statements (Continued)

Additionally, the City reports the following proprietary fund types:

The Internal Service Fund is used to account for the financing of special activities that provide services within the City. These activities include self-insurance services. Montebello is a member of CSAC and acquires liability and workers compensation insurance through an independent broker and utilizes a Third-Party Administrator to administer all claims (liability and workers compensation). Related expenses are recorded in this Internal Service Fund.

Fiduciary Funds

Fiduciary fund financial statements in clude a statement of fiduciary net position and a statement of changes in fiduciary net position. The City’s fiduciary fund represents a private purpose trust fund and a custodial fund. The fiduciary funds are accounted for on the full accrual basi s of accounting where the assets associated with the activity are controlled by the City and the assets are not derived 1) solely from the government’s own-source revenues or 2) from government-mandated nonexchange transactions or voluntary nonexchange transactions.

The City reports the following two types of fiduciary funds:

The Successor Agency Private-Purpose Trust Fund is a fi duciary fund type used by the City to report trust arrangements under which principal and income be nefit other governments. The former Montebello Redevelopment Agency activity is now recorded in this fund. The State of California Department of Finance (DOF) approves enforceable obligations that are funded using fo rmer tax increment (i.e., property tax) revenue. All revenue and expense activity related to the Successor Agency's approved enforceable obligations are recorded in this fund.

The Custodial Fund is used to account for the resources (d eposits) held by the City in a fiduciary capacity for individuals, governmental entities, and others. The City maintains various accounts, where it collects and maintains funds, but is only the custodian of such funds. For example, the City provides for police and fire personnel to contribute a percentage of income to a retiree health account. These funds are held in an account in this fund and ultimately transferred to a third party. There are other accounts where the City acts as custodian.

C. Cash, Cash Equivalents, and Investments

The City pools idle cash from all funds for the purpose of increasing income through investment activities. For purposes of the Statement of Cash Flows, the proprietary funds consider all cash and investments with original maturities of 90 days or less to be cash or cash equivalents. In addition, cash invested in the City's cash management pool is considered to be cash equivalents.

D. Fair Value Measurement

Investments, unless otherwise specified, recorded at fair value in the financial statements, are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

71 Note 1 – Summary of Significant Accounting Policies (Continued)

D. Fair Value Measurement (Continued)

The three levels of the fair value measurement hierarchy are described below:

 Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

 Level 2 – Inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities through corroboration with market data at the measurement date.

 Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use pricing the assets or liabilities at the measurement date.

E. Land Held for Resale

Land held for resale is carried at the lower of cost or estimated net realizable value.

F. Inventory and Prepaid Items

Inventories are valued at cost on a first-in, first-out basis. The City follows the consumption method for inventory control. Inventory items are reported as expenditures/expenses when consumed.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements by using purchase method.

A nonspendable fund balance has been reported in the govern mental funds to show that inventories and prepaid items do not constitute “available spendable resources,” even though they are a component of current assets.

G. Capital Assets

Capital assets (including infrastructure) are recorded at cost where historical records are available and at an estimated original cost where no historical records exist. Contributed capital assets are valued at their acquisition value. Generally, capital asset purchases in excess of $5,000 are capitalized if they have an expected useful life of one year or more.

Capital assets include additions to public domain (infrastructure), certain improvements including pavement, curb and gutter, sidewalks, traffic control devices, streetlight s, sewers, bridges, and right-of-way corridors within the City. The City has valued and recorded all infrastructure asset data as of June 30, 2022.

Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method in the government-wide financial statements and in the f und financial statements of the proprietary funds.

Depreciation is charged as an expense against opera tions and accumulated depreci ation is reported on the respective statement of net position. The lives used for depreciation purposes of each capital asset class are:

Assets Years
Buildings and improvements 10 to 50
M achinery 5 to 30
Equipment 5 to 10
Infrastructure 20 to 50

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

72 Note 1 – Summary of Significant Accounting Policies (Continued)

H. Deferred Outflows and Inflows of Resources

The statement of financial position reports separate sections for deferred outflows of resources and deferred inflows of resources, when applicable.

Deferred Outflows of Resources represent a consumption of net assets that applies to future periods. The City reports pension and other benefits (“OPEB”) contributions after the measurement date and deferred losses related to pensions, OPEB, and debt refunding in this category.

Deferred Inflows of Resources represent an acquisition of net assets that applies to future periods. The City reports unavailable revenues, deferred gains related to pensions, OPEB, and debt refunding in this category.

I. Compensated Absences

It is the City's policy to permit employees to accumulate limited amounts of earned but unused vacation and sick leave benefits, which will be paid to employees upon separation from City service. In governmental fund types, the cost of vacation and sick leave benefits are recognized when payments are made to employees. Proprietary fund types accrue vacation and sick leave benefits in the period they are earned.

General fund is typically used to liquidate compensated absences for governmental funds.

J. Pensions

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

General Fund and special revenue funds are typically used to liquidate pension liabilities for governmental funds.

The following time frames are used for pension reporting:

Valuation Date June 30, 2020
Measurement Date June 30, 2021
Measurement Period July 1, 2020 to June 30, 2021

Gains and losses related to changes in total pension lia bility and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inac tive, and retired) as of the beginning of the measurement period.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

73 Note 1 – Summary of Significant Accounting Policies (Continued)

K. Postemployment Benefits Other than Pensions (“OPEB”)

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB and OPEB expense, information about the fiduciary net position of the City’s OPEB Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments, which are reported at amortized cost.

General Fund and special revenue funds are typically used to liquidate OPEB liabilities for governmental funds.

The following timeframes are reported OPEB reporting:

Valuation Date June 30, 2021
Measurement Date June 30, 2021
Measurement Period July 1, 2020 to June 30, 2021

Gains and losses related to changes in total OPEB li ability and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future O PEB expense. Gains and losses are amortized on a straight- line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.

L. Net Position

In the government-wide financial statements, net positions are categorized as follows:

 Net Investment in Capital Assets consists of net pos ition consists of capital a ssets, net of accumulated depreciation, reduced by the outstanding balances of retention payable and debt that are attributable to the acquisition, construction, or improvement of those assets, and related deferred outflows and inflows of resources, net of unspent debt proceeds.

 Restricted Net Position consist of assets, net of any related liabilities, which have had restrictions imposed on them by external creditors, grantors, contributors, or laws or regulations of other governments or law through constitutional provisions or enabling legislati on. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first and then unrestricted resources, as they are needed.

 Unrestricted Net Position consist of net position that do not meet the definition of net investment in capital assets or restricted net position.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

74 Note 1 – Summary of Significant Accounting Policies (Continued)

M. Fund Balances

In the governmental fund financial statements, fund balances are classified as following:

 Nonspendable - Amounts that cannot be spent either because it is not in spendable form or because of legal or contractual constraints.

 Restricted - Amounts that are constrained for spec ific purposes, which are externally imposed by providers, such as creditors, or amounts constrai ned due to constitutional provisions or enabling legislation.

 Committed - Amounts that are constrained for specif ic purposes that are internally imposed by the government through formal action of the City Council and does not lapse at year-end.

 Assigned - Amounts that are intended to be used fo r specific purposes and that are neither considered restricted or committed. Fund balance may be assigned by City Council or by an official or body to which the City Council delegates the authority.

 Unassigned - All amounts not included in other classifi cations. The general fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than general fund, if expenditures incurred for specific purposes ex ceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal contracts that prohibit doing this. Additionally, the City would first use committed, then assigned, and lastly, unassigned amounts of unrestri cted fund balance when expenditures are made as necessary.

The City Council reviewed and approved comprehensiv e General Fund reserve policies in June 2021. These reserve policies created distinct categories of fund balance, with specific uses and funding amounts. The reserve policies are GASB 54 compliant and present a strategic a pproach to categorizing av ailable fund balance and specifying – by commitment and assignment – the uses for each reserve category. The policies can be found in their entirety in the Appendices of the Fiscal Year 2021-22 adopted budget.

N. Property Taxes

The assessment, levy, and collection of property taxes ar e the responsibility of the County of Los Angeles. The City records property taxes as revenue when received fro m the County, except at year-end, when property taxes received within 60 days are accrued as revenue.

Property taxes are assessed and collected each fiscal year according to the following property tax calendar:

January 1
July 1
Novem ber 1 and March 1
December 10 and April 10Delinquent Dates
Lien Date
Levy Date
Due Dates

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

75 Note 1 – Summary of Significant Accounting Policies (Continued)

O. Use of Estimates

The preparation of the basic financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions that affect certain reported am ounts and disclosures. Accordingly, actual results could differ from those estimates.

P. Implementation of New GASB Pronouncements

During the fiscal year ended June 30, 2022, the City implemented the following GASB pronouncements:

 GASB Statement No. 84, Fiduciary Activities. This statement establishes standards relating accounting and financial reporting for identifying and financial reporting of fiduciary activities. Those provisions are effective for reporting periods beginning after Dece mber 15, 2019, as amended by GASB Statement No.

95. See Note 15 for restatement of beginning fiduciary net position as result of implementation.

 GASB Statement No. 87 – In June 2017, GASB issued Statement No. 87, Leases, to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for l eases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It also establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to use lease asset, and a lessor is required to recognize a lease receivable and deferred inflow of resources, thereby enhancing the rele vance and consistency of information about governments’ leasing activities. Im plementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

 GASB Statement No. 89 – In June 20 18, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period. This Statement establishes accounting requirements for interest cost incurred before the end of a construction period. Such interest cost includes all interest that previously was accounted for in accordance with the requirements of paragraphs 5–22 of Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre–November 30, 1989 FASB and AICPA Pronouncements, which are superseded by this Statement. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business–type activity or enterprise fund. Implementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

 GASB Statement No. 92 – In January 2020, GASB issued Statement No. 92, Omnibus 2020. The primary objectives of this Statement are to enhance compar ability in accounting and fi nancial reporting and to improve consistency of authoritativ e literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. Implementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

76 Note 1 – Summary of Significant Accounting Policies (Continued)

P. Implementation of New GASB Pronouncements (Continued)

 GASB Statement No. 93 – In March 2020, GASB issued Statement No. 93, Replacement of Interbank Offered Rates . Some governments have entered into agreements in which variable payments made or received depend on an interbank offered rate (IBOR)—most notably, the London Interbank Offered Rate (LIBOR). As a result of global refere nce rate reform, LIBOR is expected to cease to exist in its current form at the end of 2021, prompting governments to amend or replace financial instruments for the purpose of replacing LIBOR with other reference rates, by either changing the reference rate or adding or changing fallback provisions related to the reference rate. Th e objective of this Statement is to address those and other accounting and financial repor ting implications that result from the replacement of an IBOR.

Implementation of this Statement did not have a signi ficant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

 GASB Statement No. 97 – In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financia l Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans—an amendment of GASB Statem ents No. 14 and No. 84, and a supersession of GASB Statement No. 32. The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary co mponent 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 perfo rm; (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 (other employee benefit plans) as fiduciary component units in fiduciary fund financial statemen ts; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporti ng for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. Implementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

Note 2 – Cash and Investments

Cash and investments at June 30, 2022 consisted of the following:

Fiduciary
Fund
Governmental Business-Type Statement of
Activities Activities Net Position Total
Unrestricted assets:

Cash and investments 62,724,376 $ 17,794,854 20,307,572 $ 100,826,802 $ Restricted assets:

Cash and investments with fiscal agent 15,186,067 12,682,854 1,996,774 29,865,695 Total cash and investments 77,910,443$ 30,477,708 $ 22,304,346 $ 130,692,497 $ Government-Wide
Statement of Net Position

Cash and investments at June 30, 2022 in more detail:

Petty cash 10,312$
Deposits with financial institution 19,565,156
Investments 111,117,029
Total cash and investments 130,692,497$

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

77 Note 2 – Cash and Investments (Continued)

A. Deposits

At June 30, 2022, the carrying amount of the City's demand deposits was $19,565,156 the bank balance was $22,104,373. The $2,539, 217 difference represents outstanding checks, deposits in transit, and other reconciling items.

The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.

The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City depos its by pledging first trust deed mort gage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, deposits, which are fully insured up to $250,000 by the Federal Deposit Insura nce Corporation (“FDIC”). The City did not waive the collateral requirement for deposits insured by FDIC.

B. Investments Authorized by California Government Code and the City’s Investment Policy

The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, wh ere more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment polic y, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. The C ity presents its investment policy annually to the City Council, as required by Government Code. The current i nvestment policy was updated in October 2020, and has been updated annually every June since (i.e, June 2021, June 2022). Furthermore, the City’s investment policy has been received the “Investment Policy Certification” award from the California Municipal Treasurers Association (“CMTA”).

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

78 Note 2 – Cash and Investments (Continued)

B. Investments Authorized by California Government Code and the City’s Investment Policy (Continued)

M aximum M inimum
Authorized Maximum Percentage of Quality
Investment Type Maturity Portfolio Requirements
U.S Treasury Obligations 5 years None None
U.S. Agency Obligations 5 years None None
State Obligations - CA and Others 5 years None None
CA Local Agency Obligations 5 years None None
Local Agency Bonds 5 years None
“A” rating categ ory
or its equivalent or
better
Bankers’ Acceptances 180 days 40% None
Commercial Paper— Non-Pooled Funds 270 days or less 25% of the Agency's Money
Hig hest letter and
number rating by an
NRSROH
Commercial Paper— Pooled Funds 270 days or less 40% of the Agency's Money
Hig hest letter and
number rating by an
NRSROH
Negotiable Certificates of Deposit 5 years 30% None
Non-negotiable Certificates of Deposit 5 years None None Placement Service Deposits 5 years 50% None
Placement Service Certificates of Deposit 5 years 50% None Repurchase Agreements 1 year None None
Reverse Repurchase Agreements and Securities Lending Agreements 92 days 20% of the base value of the portfolio None
Medium-Term Notes 5 years or less 30%
“A” rating categ ory
or its equivalent or
better
Mutual Funds And Money Market Mutual Funds N/A 20% M ultiple Collateralized Bank Deposits 5 years None None
Mortgage Pass–Through and Asset–Backed Securities 5 years or less 20% “AA” rating category
or its equivalent or
better
County Pooled Investment Funds N/A None None
Joint Powers Authority Pool N/A None Multiple
Local Agency Investment Fund (LAIF) N/A None None
Supranational Obligations 5 years or less 30%
“AA” rating category
or its equivalent or
better
N/A - Not Applicable

C. 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 City does not have a formal policy to manage interest rate risk. However, one of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter-term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity over time as necessary to provide the cash flow and liquidity needed for operations.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

79 Note 2 – Cash and Investments (Continued)

C. Disclosures Relating to Interest Rate Risk (Continued)

Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provide d by the following table that shows the distribution of the City's investments by maturity:

1 Year 1 Year to
Investment Type Total or Less 3 Years
Local Agency Investment Fund 78,325,391 $ 78,325,391 $ - $ Negotiable Certificates of Deposit 2,925,944 1,237,233 1,688,711 Held by fiscal agent:

Money Market Mutual Funds 29,865,694 29,865,694 - Total inv estments 111,117,029$ 109,428,318 $ 1,688,711 $ Remaining Maturity

D. Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fu lfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating, as reported by Standard & Poor’s, as of year-end for each investment type:

Investment Type Total AAA Unrated
Local Agency Investment Fund (LAIF) 78,325,391 - 78,325,391 Negotiable Certificates of Deposit 2,925,944 - 2,925,944 Held by fiscal agent:

Money Market Mutual Funds 29,865,694 29,865,694 - Total 111,117,029$ 29,865,694$ 81,251,335$

E. Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. At June 30, 2022, none of the City’s deposits or investments were exposed to custodial credit risk.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

80 Note 2 – Cash and Investments (Continued)

F. Fair Value Measurement

The City has the following recurring fair value measurements as of June 30, 2022:

Significant Other
Observable
Inputs
(Level 2) Uncategorized Total
Local Agency Investment Fund - $ 78,325,391$ 78,325,391 $ Negotiable Certificates of deposits 2,925,944 (1) - 2,925,944 Restricted with Fiscal Agent:

Money Market Funds - 29,865,694 29,865,694 Total 2,925,944 $ 108,191,085 $ 111,117,029 $ (1) Valued based on matrix formula.

Investment Type
M easurement Input

G. Investment in State Investment Pool

The City is a voluntary participant in the Local Agency Investment Fund (“LAIF”) that is regulated by California Government Code Section 16429 under th e oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2022, included a porti on of the pool funds invested in Structured Notes and Asset-Backed Securities:

Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) de pend upon one or more indices and/or that have embedded forwards or options.

Asset-Backed Securities: generally, mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2022, the City had $78,325,391 invested in LAIF, which had invested 1.88% of the pool investment funds in Structured Notes and Asset-Backed Securities. The fair value of the City’s portion in the pool is the same as the value of the pool shares and is reported at amortized cost. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. LAIF is not registered with the Securities and Exchange Commission and is not rated.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

81 Note 3 – Interfund Receivables, Payables, and Transfers

A. Due To/From Other Funds

At June 30, 2022, the City had the following interfund balances:

Proprietary Funds Total
Public Nonmajor
General Financing Governmental Golf Course
Due From Other Funds Fund Authority Funds Enterprise Fund Total Governmental Funds:

General Fund -$ 29,057$ 1,915,568$ 3,610,394$ 5,555,019$ Public Financing Authority Debt Service Fund - - - 376,060 376,060 Nonmajor Governmental Funds 1,475,000 - - - 1,475,000 1,475,000$ 29,057$ 1,915,568$ 3,986,454$ 7,406,079$ Due To Other Funds
Governmental Funds

The receivable of the General Fund and Public Financ ing Authority debt service fund from the Golf Course Enterprise Fund was mainly to fund operating deficits incurred by the Golf Course Enterprise Fund and debt service payments in prior years.

The receivable of the Nonmajor Governmental Fund from General Fund was to fund the acquisition of properties located at 612 W. Whittier Blvd. and 715 W. Whittier Blvd.

The other interfund payable balances represent routine and temporary cash flow assistance until amounts receivable from the other funds are collected to pay the amounts owed.

B. Advances To/From Other Funds

At June 30, 2022, the City had the following advances to/from other funds:

Hilton Garden Home2Suites
Enterprise Enterprise
Advances To Other Funds Fund Fund Total
Governmental Funds
General Fund 2,300,000$ 859,680 $ 3,159,680$ Proprietary Funds
Advances From Other Funds

The receivable of the General Fund from the Hilton Gard en Enterprise Fund was a loan for the renovation of the Hilton Garden Inn that will be paid back in one lu mp-sum payment by January 2024. The Hilton Corporation requires hotels under the Hilton “flag” undergo major renovations to stay current with corporate standards. The Hilton Garden Inn, built in 2004, had not undergone such a major renovation. The loan was necessary to complete the required renovations, with the project being completed in September 2020.

The receivable of the General Fund from the Home2Suites Enterprise Fund was a loan for the construction cost of the Home2Suites Hotel which occurred between Novemb er 2016 and December 2020. The balance of the loan will be paid fully on December 2022.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

82 Note 3 – Interfund Receivables, Payables, and Transfers (Continued)

C. Interfund Transfers

For the year ended June 30, 2022, the compositions of the City's interfund transfer balances are as follows:

Proprietary Fund
Public Financing Golf Course
General Authority Debt Enterprise
Transfers Out Fund Service Fund Fund Total
Governmental Funds:

Retirement Special Revenue Fund 3,337,348 $ 7,696,613 $ 6,627 $ 11,040,588$ Transportation and Street Improvement
Special Revenue Fund 300,000 1,835,916 - 2,135,916 3,637,348$ 9,532,529 $ 6,627 $ 13,176,504$ Governmental Funds
Transfers In

(A) Transfers from the Retirement Fund of $3,337,348 to the General Fund and $6,627 to the Golf Course Enterprise Fund were to pay the annual retirement contributions to CalPERS for th e City’s defined benefit retirement program. Transfer from the Retirement Fund of $7,696,613 to the Public Financing Authority Fund was to pay for debt service due for the 2020 Pension Obligation Bonds.

(B) Transfers from Transportation and Street Improvement Special Revenue funds of $300,000 and $1,835,916 to General Fund and to Public Financing Authority De bt Service Fund were to pay for streets expenditures and to pay for debt service due on the 2019ABC Sales Tax Revenue bonds.

Note 4 – Notes Receivable

A. Governmental Activities

Notes receivable at June 30, 2022 include the following:

Low and Moderate Income Housing loans $ 5,905,908
Community Development Block Grant loans 350,693 HOME Program loan 145,000
6,401,601
Allowance for loan forgiveness (5,905,908)
Total notes and loans receivable $ 495,693

Low and Moderate Income Housing Loans

Montebello Downtown Plaza Project – On December 26, 20 01, the Agency entered into an Owner Participation Agreement (Agreement) with the Montebello Downtown Plaza LLC (Participant) for the acquisition, development, and operation of affordable senior citizen rental units and retail commercial buildings. The Agreement, which was amended and restated on October 26, 2005, provides th at the now dissolved Redevelopment Agency loan $6,250,000 from the Low- and Moderate-Income Housing Fund for the acquisition of property and construction of affordable senior housing units. The Participant was to pr ovide financing for costs in excess of $6,250,000. The unpaid balance of the loan outstanding at June 30, 2022 was $5,276,308. The loan is to be forgiven over a period of 99 years.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

83 Note 4 – Notes Receivable (Continued)

A. Governmental Activities (Continued)

Low and Moderate Income Housing Loans (Continued)

Whittier Project – In March 2000, the now dissolved Redevelopment Agency entered into an Owner Participation Agreement with Garfield Financial Corporation (Owner), whereby the Agency was to loan the Owner money for the construction of an affordable housing project. In accordance with the agreement, the amounts disbursed accrue interest at the rate of 7% compounded annually. In fiscal year 2005, the terms of the note were changed to forgive the loan over a period of 99 years. The balance of the note receivable at June 30, 2022 was $629,600.

Above loans were provided with 100% allowance for forgiveness.

Community Development Block Grant Loans

At June 30, 2022, loans made to individual homeowners under the Community Development Block Grant program amounted to $350,693. These loans are payable when the borrowers sell the property.

HOME Program Loan

On July 23, 2014, the City entered into a HOME progr am loan agreement with the Montebello Housing Development Corporation (the “Developer”), whereby the City provided financial assistance of $145,000 in the form of a forgivable loan in exchange for developing single-family homes for sale to low and moderate income individuals and families. In July 2019, the City entered into a development agreement with Developer whereby certain housing units have been dedicated as affordable housing units and restricted for use as a principal residence for eligible home buyers for a period of 20 years. Upon home buyer’s purchase of the property, the Developer’s obligation under the HOME program loan agreement and development agreement will be terminated and a HOME loan agreement is executed between the home buyer and the City. The loan maybe forgiven after the end of July 2039 if the home buyer is in compliance of the affordability covenant.

B. Fiduciary Activities

The following is a summary of the notes receivable at June 30, 2022:

Amount
Quiet Cannon Montebello, Inc. 2,182,178 $
Casa La Merced 666,308
Business assistance program 546,020
Home improvement loans 437,394
Total 3,831,900$

Quiet Cannon Montebello, Inc.

The Agency leases a facility to Quiet Cannon Montebello, Inc. (“Quiet Cannon”). The Agency agreed to provide financing for the renovation and improvement of the leased facility and in return Quiet Cannon agreed to make additional rental payments. As of June 30, 2022, $2,182,178 remains outstanding on the note receivable.

Casa La Merced

Casa La Merced entered into an agreement on September 24, 1985 with the Agency. The agreement with Casa La Merced was for the development of a parcel of land. Casa La Merced agreed to a note payable to the Agency for $666,308 that matures February 1, 2027. The note has a simple interest rate of 9.25%. The outstanding balance on the note receivable at June 30, 2022 was $666,308. The in terest receivable is net with allowance for doubtful account.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

84 Note 4 – Notes Receivable (Continued)

B. Fiduciary Activities (Continued)

Business Assistance Program

Business improvement loans were made in the prior years between the Agency and local merchants. The loans are secured by the real estate property and personal guaranty of the borrowers. As of June 30, 2022, $546,020 remained outstanding on the business improvement loans.

Home Improvement Loans

During the prior fiscal years, the Agency made home improvement loans to low- and moderate-income households.

These loans accrue interest of 4% and are payable in ten years or when the borrower sells their property, whichever comes first. The total outstanding balance as of June 30, 2022 was $437,394.

Note 5 – Capital Assets

A. Governmental Activities

A summary of changes in the governmental activities capital assets for the year ended June 30, 2022 is as follows:

Balance Balance
July 1, 2021 Additions Deletions Reclassification June 30, 2022 Governmental activities:

Capital assets, not being depreciated:

Land 2,378,363 $ 352,361 $ - $ - $ 2,730,724$ Right-of-way 14,391,776 - 14,391,776 Construction in progress 32,502,737 6,785,934 (2,262,716) (11,817,588) 25,208,367 Total assets not being depreciated 49,272,876 7,138,295 (2,262,716) (11,817,588) 42,330,867 Capital assets, being depreciated:

Buildings and improvements 52,339,488 188,956 - 11,817,588 64,346,032 Machinery and equipment 55,318,028 634,203 (441,238) - 55,510,993 Infrastructure 49,618,548 - - - 49,618,548 Total assets being depreciated 157,276,064 823,159 (441,238) 11,817,588 169,475,573 Less accumulated depreciation for:

Buildings and improvements (21,467,278) (1,273,269) - - (22,740,547) Machinery and equipment (46,998,850) (1,404,189) 438,300 - (47,964,739) Infrastructure (35,752,927) (730,831) - - (36,483,758) Total accumulated depreciation (104,219,055) (3,408,289) 438,300 - (107,189,044) Total capital assets,
being depreciated, net 53,057,009 (2,585,130) (2,938) 11,817,588 62,286,529 Total capital assets, net 102,329,885 $ 4,553,165 $ (2,265,654) $ - $ 104,617,396$

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

85 Note 5 – Capital Assets (Continued)

A. Governmental Activities (Continued)

Depreciation and amortization expense was charged to functions of the governmen tal activities for the year June 30, 2022 as follows:

General government $ 508,485
Public safety 1,148,795
Public works, including infrastructure 812,569 Parks, recreation, and culture 201,236
Housing and community
development 36,596
Unallocated infrastructure 700,608
Total depreciation expense 3,408,289$

B. Business-Type Activities

A summary of changes in the business-type activities capital assets for the year ended June 30, 2022 is as follows:

July 1, 2021 Balance
(As Restated) Additions Deletions Reclassification June 30, 2022 Business-type activities:

Capital assets, not being depreciated:

Land 6,306,596 $ - $ - $ - $ 6,306,596$ Construction in progress 4,919,518 9,523,862 - (1,012,569) 13,430,811 Total assets not being depreciated 11,226,114 9,523,862 - (1,012,569) 19,737,407 Capital assets, being depreciated:

Buildings and improvements 109,940,179 - - - 109,940,179 Machinery and equipment 76,370,442 43,935 (957,524) 1,012,569 76,469,422 Total assets being depreciated 186,310,621 43,935 (957,524) 1,012,569 186,409,601 Less accumulated depreciation for:

Buildings and improvements (36,672,406) (2,552,719) - - (39,225,125) Machinery and equipment (57,868,579) (3,674,190) 957,524 - (60,585,245) Total accumulated depreciation (94,540,985) (6,226,909) 957,524 - (99,810,370) Total capital assets,
being depreciated, net 91,769,636 (6,182,974) - 1,012,569 86,599,231 Total capital assets, net 102,995,750 $ 3,340,888 $ - $ - $ 106,336,638$

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

86 Note 5 – Capital Assets (Continued)

B. Business-Type Activities (Continued)

Depreciation and amortization expense was charged to functions of the business-type activities for the year ended June 30, 2022 as follows:

Transit system 4,330,533$
Golf course 233,298
Montebello Hilton 430,301
Home2suites 1,227,097
Water 5,680
Total depreciation expense 6,226,909$

C. Fiduciary Activities

A summary of changes in the fiduciary activities capital assets for the year ended June 30, 2022 is as follows:

Balance
July 1, 2021 Balance
(As restated) Additions Deletions Reclassification June 30, 2022 Fiduciary activities
Capital assets, not being depreciated:

Land 6,815,650 $ - $ - $ - $ 6,815,650$ Total assets not being depreciated 6,815,650 - - - 6,815,650 Capital assets, being depreciated:

Buildings and improvements 7,507,224 - - - 7,507,224 Machinery and equipment 311,026 - (311,026) - - Total assets being depreciated 7,818,250 - (311,026) - 7,507,224 Less accumulated depreciation for:

Buildings and improvements (3,301,087) (228,551) - - (3,529,638) Machinery and equipment (313,515) - 313,515 - - Total accumulated depreciation (3,614,602) (228,551) 313,515 - (3,529,638) Total capital assets,
being depreciated, net 4,203,648 (228,551) 2,489 - 3,977,586 Total capital assets, net 11,019,298$ (228,551)$ 2,489$ -$ 10,793,236$

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

87 Note 6 – Long-Term Liabilities

The summary of changes in the governmental activities long-term liabilities for the year ended June 30, 2022 is as follows:

A. Governmental Activities

Balance
July 1, 2021 Balance Due Within Due in More
(As Restated) Additions Deletions June 30, 2022 One Year Than One Year Governmental Activities:

Bonds Payable, net:
2014B Lease Revenue Refunding Bonds 5,305,000 $ - $ (780,000)$ 4,525,000 $ 820,000 $ 3,705,000 $ 2014C Lease Revenue Refunding Bonds 1,806,860 - (420,200) 1,386,660 439,300 947,360 2019ABC Sales Tax Revenue Bonds 24,115,000 - (870,000) 23,245,000 905,000 22,340,000 2020 Pension Obligation Bonds 108,678,726 - (3,805,827) 104,872,899 3,882,823 100,990,076 Unamortized Premiums/(Discounts)
2014B Lease Revenue Refunding Bonds 617,664 - (102,944) 514,720 - 514,720 2014C Lease Revenue Refunding Bonds (1,939) - 484 (1,455) - (1,455) 2019ABC Sales Tax Revenue Bonds 3,171,379 - (181,897) 2,989,482 - 2,989,482 Finance Purchase:

Transportation and Public Safety Equipment 1,402,552 - (618,969) 783,583 193,634 589,949 Notes Payable:

ABM Notes Payable 5,785,000 - (632,826) 5,152,174 330,966 4,821,208 United States Department of Housing
and Urban Development - CDBG 1,994,000 - (425,000) 1,569,000 445,000 1,124,000 Southern California Edison 23,779 - (3,020) 20,759 3,020 17,739 Claims Payable 23,601,230 7,018,256 (3,174,875) 27,444,611 6,696,705 20,747,906 Compensated Absences 2,977,363 4,110,755 (1,495,936) 5,592,182 2,852,662 2,739,520 Total Gove rnme ntal Acti vi ti e s 179,476,614$ 11,129,011 $ (12,511,010) $ 178,094,615 $ 16,569,110 $ 16 1,525,505$

2014B Lease Revenue Refunding Bonds

On September 10, 2014, the Financing Authority issued the 2014 Lease Revenue Refunding Bonds, Series B, of $10,040,000 which repaid the $12,595,000 of principal due on the 2000 COPs. The City received a premium on the bond issue in the amount of $1,338,273 and incurred a loss of $294,258 in the bond defeasance. The bond premium and loss on defeasance are amortized over the life of the refunded bonds. The Bonds are payable from payments made by the City to the Financing Authority pledging public facilities consisting of the City Hall and Police Department pursuant to the Lease Agreement. The City is required under the Agreement to make payments in each fiscal year to pay the annual principal and in terest due on the Bonds. Annual installments are due November 1, 2014 through November 1, 2026. Interest rates on the 2014 Lease Revenue Refunding Bonds, Series B range from 0.30% to 5.0%. The outstanding balance at June 30, 2022 was $4,525,000.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

88 Note 6 – Long-Term Liabilities (Continued)

A. Governmental Activities (Continued)

2014B Lease Revenue Refunding Bonds (Continued)

The future annual debt service requirements for 2014 Lease Revenue Refunding Bonds, Series B are as follows:

June 30, Principal Interest Total
2023 820,000$ 205,750$ 1,025,750$
2024 860,000 163,750 1,023,750
2025 905,000 119,625 1,024,625
2026 945,000 73,375 1,018,375 2027 995,000 24,875 1,019,875 Subtotal 4,525,000 587,375 5,112,375 Add - premium 514,720 - 514,720 Total 5,039,720$ 587,375$ 5,627,095$
For the Year Ending

2014C Lease Revenue Refunding Bonds

On September 10, 2014, the Financing Authority issued 2014 Lease Revenue Refunding Bonds, Series C of $5,395,000 which defeased the principal due on the 2001 Certificate of Participation. The Bonds are payable from payments made by the City to the Finance Authority pledging public facilities consisting of the City Hall and Police Department pursuant to the Agreement. The City is required under the Agreement to make payments in each fiscal year to pay the annual principal and interest due on the Bonds. Interest rates on the 2014 Lease Revenue Refunding Bonds, Series C range from 0.40% to 4.07%. Annual installments are due November 1, 2014 through November 1, 2024.

The governmental activities’ share (76.4%) from the 2014 Lease Revenue Refunding Bonds, Series C is $4,121,780 and the Golf Course Enterprise Fund’s share (23.6%) is $1,273,220. The governmental activities outstanding balance at June 30, 2022 was $1,386,660.

The future annual debt service requirements for 2014 Lease Revenue Refunding Bonds, Series C are as follows:

For the Year Ending
June 30, Principal Interest Principal Interest Principal Interest Total 2023 439,300 $ 45,584 $ 135,700 $ 14,081 $ 575,000 $ 59,665 $ 634,665 $ 2024 462,220 28,689 142,780 8,862 605,000 37,551 642,551 2025 485,140 9,873 149,860 3,050 635,000 12,923 647,923 Subtotal 1,386,660 84,146 428,340 25,993 1,815,000 110,139 1,925,139 Less - discount (1,455) - (449) - (1,904) - (1,904) Total 1,385,205$ 84,146$ 427,891$ 25,993$ 1,813,096$ 110,139$ 1,923,235$ Governmental Activities Golf Course Enterprise Fund Total

The 2014B and 2014C Lease Revenue Refunding Bonds are secured and payable solely from Revenues payable by the City pursuant to the Agreement and subsequent Amendments to the Agreement relating to certain real properties and improvement located on the Property, and the other asses pledged thereafter under the Indenture. In accordance with the Indenture, the MPFA will satisfy the applicable Reserve Requirement of each Reserve Account established under the Indenture with a Municipal Bond Debt Service Reserve Insurance Policy.

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

89 Note 6 – Long-Term Liabilities (Continued)

A. Governmental Activities (Continued)

2019ABC Sales Tax Revenue Bonds

On December 10, 2019, the Financing Authority issued $24,945,000 in Sales Tax Revenue Bonds, 2019 Series A, B, and C, for the “Paving the Way” citywide road construction and improvement project. The bonds are secured by pledged Measure M, Measure R, and Proposition C sales tax revenues derived by Los Angeles County transportation sales tax levies approved by the voters.

Interest rates on the Sales Tax Re venue Bonds, 2019 Series A, B, and C range from 4.0% to 5.0%. Annual installments are due June 1, 2021 through June 1, 2040. The outstanding balance at June 30, 2022 was $23,245,000.

The future annual debt service requirements for 2019A, B, and C Sales Tax Revenue Bonds are as follows:

For the Year Ending
June 30, Principal Interest Total
2023 905,000 $ 931,138 $ 1,836,138 $ 2024 935,000 894,938 1,829,938 2025 975,000 857,538 1,832,538 2026 1,020,000 818,538 1,838,538 2027 1,055,000 777,738 1,832,738 2028-2032 6,125,000 3,042,688 9,167,688 2033-2037 7,565,000 1,599,488 9,164,488 2038-2040 4,665,000 305,438 4,970,438 Subtotal 23,245,000 9,227,500 32,472,500 Add - premium 2,989,482 - 2,989,482 Total 26,234,482 $ 9,227,500 $ 35,461,982 $

2020 Pension Obligation Bonds

On May 27, 2020, the City issued Pension Obligation Bonds, Series 2020 for $153,425,000 which was used to pay down the City’s unfunded actuarial liability (“UAL”) to the California Public Em ployees’ Retirement System (“CalPERS”). Interest rates on the 2020 POBs range from 1.94% to 4.3% and will mature in 2045.

The General Fund share (73.33%) of the 2020 Pension Obligation Bonds is $108,678,726 and the Transit Fund’s share (26.67%) is $39,526,274.

At June 30, 2022, the outstanding balance for the governmental activities’ 2020 Pension Obligation Bonds was $104,872,899. The future annual debt service requirements for are as follows:

For the Year Ending
June 30, Principal Interest Principal Interest Principal Interest Total 2023 3,882,823 $ 3,813,331 $ 1,412,177 $ 1,386,902 $ 5,295,000 $ 5,200,233 $ 10,495,233 $ 2024 3,967,153 3,728,957 1,442,847 1,356,216 5,410,000 5,085,173 10,495,173 2025 4,062,482 3,633,627 1,477,518 1,321,544 5,540,000 4,955,171 10,495,171 2026 4,161,477 3,531,943 1,513,523 1,284,562 5,675,000 4,816,505 10,491,504 2027 4,282,472 3,414,173 1,557,528 1,241,729 5,840,000 4,655,902 10,495,902 2028-2032 23,494,932 14,976,894 8,545,068 5,447,072 32,040,000 20,423,966 52,463,966 2033-2037 27,971,729 10,408,192 10,173,272 3,785,442 38,145,001 14,193,634 52,338,634 2038-2042 25,056,861 4,681,048 9,113,139 1,702,490 34,170,000 6,383,538 40,553,538 2043-2045 7,992,970 555,369 2,907,030 201,987 10,900,000 757,355 11,657,355 Total 104,872,899 $ 48,743,534 $ 38,142,101 $ 17,727,943 $ 143,015,000 $ 66,471,477 $ 209,486,477 $ Governmental Activities Transit Enterprise Fund Total

City of Montebello
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

90 Note 6 – Long-Term Liabilities (Continued)

A. Governmental Activities (Continued)

Transportation and Public Safety Equipment

The City entered into various finance purchase agreements for the acquisiti on of certain transportation and public safety equipment. The securities for the financing agr eements are the equipment themselves, and will be surrendered to the lender in case of payment default. The outstanding balance at June 30, 2022 was $783,583.

The future debt service payments as of June 30, 2022 are as follows:

June 30, Principal Interest Total
2023 193,634$ 30,624$ 224,258$
2024 191,183 21,799 212,982
2025 93,417 14,744 108,161
2026 71,993 11,970 83,963
2027 74,815 9,148 83,963
2028-2029 158,541 9,382 167,923 Total 783,583$ 97,668$ 881,251$
For the Year Ending

ABM Notes Payable

The City entered into a contract with ABM Building Solutions to finance a citywide energy efficiency upgrade project. The $6.5 million project replaced light fixtures, HVAC, and other infrastructure with more energy-efficient products (i.e., LED lighting, etc.). The goal is to reduce electrical usage by upgrading high-energy use infrastructure. The City was able to accomplish this by financing the entir e cost of the project. The $6.5 million cost is amortized over fifteen years, with payments on the note due July 1 of each year. July 1, 2021 was the first payment on the note. The debt service is split between th e General Fund (89%) and th e Transit Enterprise Fund (11%) based on the ratio of infrastructure in Transit vs. non-Transit operations.

The amount outstanding for governmental activities at June 30, 2022 was $5,152,174. The annual debt service requirements for the governmental activities are as follows:

June 30, Principal Interest Principal Interest Principal Interest Total 2023 330,966$ 151,873$ 40,906$ 18,771$ 371,872$ 170,644$ 542,516$ 2024 340,722 142,117 42,112 17,565 382,834 159,682 542,516 2025 350,766 132,073 43,353 16,324 394,119 148,397 542,516 2026 361,105 121,734 44,631 15,046 405,736 136,780 542,516 2027 371,750 111,089 45,947 13,730 417,697 124,819 542,516 2028-2032 2,029,728 384,468 250,865 47,519 2,280,593 431,987 2,712,580 2033-2036 1,367,137 81,380 168,972 10,058 1,536,109 91,438 1,627,547 Total 5,152,174$ 1,124,734$ 636,786$ 139,013$ 5,788,960$ 1,263,747$ 7,052,707$ For the Year Ending
Governmental Activities Transit Enterprise Fund Total