07 - Financial Statement Audit Results and Related Communication — Newport Beach City Council, January 25, 2022 (part 1 of 2)

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CITY OF
z NEWPORT BEACH
c�<,FORN'P City Council Staff Report
January 25, 2022
Agenda Item No. 7
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Scott Catlett, Finance Director/Treasurer - 949-644-3123, [email protected]
PREPARED BY: Trevor Power, Accounting Manager, [email protected] PHONE: 949-644-3125
TITLE: Financial Statement Audit Results and Related Communication ABSTRACT:

The City of Newport Beach (City) is audited annually by an independent auditing firm, presently, Davis Farr LLP. The audit process takes several months, beginning after the books are closed (typically in September) and concluding several months later once the financial statements have been prepared. On January 13, 2022, the Finance Committee met with representatives of Davis Farr LLP and reviewed the results of the audit in detail.

A copy of the city's Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2021, is attached to this report. Also attached are the auditors' required communications with the Finance Committee in its capacity as the City's Audit Committee and the auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters.

RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and
b) Receive and file.

DISCUSSION:

The auditors' opinion letter can be found within the ACFR (Attachment A). The letter reflects an unmodified or "clean" audit opinion, meaning that the financial statements are presented fairly, in all material respects, and in conformity with generally accepted accounting principles.
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Financial Statement Audit Results and Related Communication January 25, 2022

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The letter included as Attachment B is intended to communicate to the Finance Committee and the City Council matters of particular significance as required by auditing standards. These include:
• Qualitative Aspects of Accounting Practices
• Difficulties Encountered in Performing the Audit
• Corrected and Uncorrected Misstatements
• Disagreements with Management
• Management Representations
• Management Consultations with Other Independent Accountants • Other Audit Findings or Issues
The auditors reported no significant difficulties encountered in connection with the performance of the audit, no material corrected and uncorrected misstatements, no disagreements with management, and no other audit findings or issues.

The letter included as Attachment C is intended to communicate information regarding deficiencies in internal control, instances of non-compliance, and other related matters as required by auditing standards. The auditors did not identify any deficiencies in internal control that would need to be communicated to the Finance Committee, nor did they identify any instances of noncompliance or other matters to report.

The Single Audit, a compliance audit of federally assisted grant programs, is still ongoing.

While no audit findings are anticipated as a result of the Single Audit, staff will communicate any findings, should they occur, to the Finance Committee at a future meeting.

FISCAL IMPACT:

There is no fiscal impact related to this item.

ENVIRONMENTAL REVIEW:

Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.

NOTICING:

The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). 7-2

Financial Statement Audit Results and Related Communication January 25, 2022

Page 3 ends

ATTACHMENTS:

Attachment A —Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021
Attachment B —Auditor's Required Communications with the Audit Committee Attachment C —Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters
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ATTACHMENT A
Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021 7-4

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ANNUAL

COMPREHENSIVE

FINANCIAL REPORT

FISCAL YEAR
ENDI&JUNE 30, 2021
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Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2021
Prepared by the Finance Department
Scott Catlett, Finance Director/Treasurer

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The City of Newport Beach was incorporated September 1, 1906 The present City Seal was adopted July 22,1957
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INTRODUCTORY SECTION
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CITY OF NEWPORT BEACH
Annual Comprehensive Financial Report
Year Ended June 30, 2021

TABLE OF CONTENTS

INTRODUCTORY SECTION
(Unaudited)
Tableof Contents.......................................................................................................................1 Letterof Transmittal................................................................................................................... 5 GFOA Certificate of Achievement for Excellence in Financial Reporting ................................ 20 Listof City Officials..................................................................................................................21 OrganizationChart...................................................................................................................22

FINANCIAL SECTION
Independent Auditors' Report............................................................................................ 25 Management's Discussion and Analysis..........................................................................31 (Required Supplementary Information)
Basic Financial Statements
Government -wide Financial Statements:

Statement of Net Position............................................................................................... 53 Statementof Activities..................................................................................................... 54 Fund Financial Statements:

Governmental Funds:

BalanceSheet..............................................................................................................60 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position....................................................................................... 63 Statement of Revenues, Expenditures and Changes in Fund Balances ...................... 64 Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............. 67 Budgetary Comparison Statements:

GeneralFund.........................................................................................................68 Tide and Submerged Land — Operating Fund ........................................................ 70 Tide and Submerged Land — Harbor Capital Fund ................................................ 71 Proprietary Funds:

Statementof Net Position............................................................................................. 76 Statement of Revenues, Expenses and Changes in Net Position ............................... 77 Statement of Cash Flows............................................................................................. 78 Fiduciary Funds:

Statement of Fiduciary Net Position............................................................................. 82 Statement of Changes in Fiduciary Net Position..........................................................83 Notes to the Financial Statements..................................................................................... 86 7-12

Required Supplementary Information
Defined Benefit Plan For Miscellaneous Employees:

Schedule of Changes in the Net Pension Liability and Related Ratios .........................152 Schedule of Contributions.............................................................................................154 Defined Benefit Plan For Safety Employees:

Schedule of Changes in the Net Pension Liability and Related Ratios ......................... 156
Schedule of Contributions............................................................................................. 158
Post -Employment Health Care Benefits (OPEB):

Schedule of Changes in the Net OPEB Liability and Related Ratios ............................160 Schedule of Contributions............................................................................................. 161
Supplementary Schedules
Other Governmental Funds:

CombiningBalance Sheet.............................................................................................168 Combining Statement of Revenues, Expenditures and Changes in FundBalances..............................................................................................................176 Budgetary Comparison Schedules:

StateGas Tax Fund......................................................................................................184 SB1Gas Tax RMRA Fund............................................................................................185 AssetForfeiture Fund...................................................................................................186 OTSDUI Grant Fund....................................................................................................187 Circulation and Transportation Fund.............................................................................188 Building Excise Tax Fund..............................................................................................189 Community Development Block Grant Fund.................................................................190 Air Quality Management District Fund..........................................................................191 Environmental Liability Fund.........................................................................................192 Supplemental Law Enforcement Fund..........................................................................193 ContributionsFund....................................................................................... 194
FIINFund.....................................................................................................195 Small Business Grant Fund..............................................................................196 MeasureM Fund...............................................................................................197 Internal Service Funds:

Combining Statement of Net Position...........................................................................202 Combining Statement of Revenues, Expenses and Changes in Net Position .............. 203
Combining Statement of Cash Flows............................................................................204 Fiduciary Funds:

Combining Statement of Fiduciary Net Position............................................................207 Combining Statement of Changes in Fiduciary Net Position.........................................208 STATISTICAL SECTION (Unaudited)
Financial Trends:

Net Position by Component................................................................................................ 212 Changesin Net Position......................................................................................................214 Fund Balances of Governmental Funds..............................................................................216 Changes in Fund Balance of Governmental Funds............................................................218 Revenue Capacity:

Assessed Value and Estimated Actual Value of Taxable Property.....................................222 7-13

Property Tax Rates, Direct and Overlapping Governments................................................223 Principal Property Taxpayers..............................................................................................224 Property Tax Levies & Collections...................................................................................... 225
Debt Capacity:

Ratios of Outstanding Debt by Type................................................................................... 228
Ratios of General Bonded Debt.......................................................................................... 230
Schedule of Direct and Overlapping Debt........................................................................... 231
Computation of Legal Debt Margin.....................................................................................232 Demographic and Economic Information:

Demographic and Economic Statistics................................................................................236 PrincipalEmployers............................................................................................................ 237
Operating Information:

Full -Time City Employees by Function................................................................................241 Operating Indicators by Function........................................................................................ 242
Capital Asset Statistics by Function.................................................................................... 244
Water Sold by Customer Type............................................................................................ 246
UtilityRates......................................................................................................................... 247
Major Water Customers...................................................................................................... 248
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1 EDW PO
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December 23, 2021
Honorable Mayor, Members of the City Council,
and Residents of the City of Newport Beach, California

CITY OF NEWPORT BEACH
100 Civic Center Drive
Newport Beach, California 92660
949 644-3127 1 949 644-3339 FAX
newportbeachca.gov/finance
The City Charter and California state law require that the City of Newport Beach ("City") issue a complete set of financial statements annually and that an independent firm of certified public accountants audit this report in conformance with generally accepted auditing standards (GARS). The Annual Comprehensive Financial Report (ACFR) of the City of Newport Beach for the year ended June 30, 2021, is hereby submitted.

The ACFR was prepared in conformance with generally accepted accounting principles (GAAP) as promulgated by the Governmental Accounting Standards Board (GASB). This report consists of City management's representations concerning the finances of the City of Newport Beach. Responsibility for the accuracy and completeness of the data presented rests with the City. Management of the City is also responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the government are protected from loss, theft, or misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. We believe the information presented in this report is complete and accurate in all material respects, and that it is reported in a manner designed to fairly present the financial position and results of operations of the various activities of the City of Newport Beach.

The City of Newport Beach's financial statements have been audited by DavisFarr LLP, a firm of licensed certified public accountants. The goal of the audit was to provide reasonable assurance that the financial statements of the City of Newport Beach for the fiscal year (FY) ended June 30, 2021 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Newport Beach's financial statements for the year ended June 30, 2021, are fairly presented in

conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report.

A narrative introduction, overview, and analysis accompany the basic financial statements in the form of the Management's Discussion and Analysis (MD&A). The letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Newport Beach MD&A can be found immediately following the report of the independent auditors and will provide further information regarding the format and content of this report.

PROFILE OF THE CITY
Newport Beach is a community located in the coastal center of Orange County, in the heart of Southern California, with Los Angeles County to the north and San Diego County to the south. There are currently 34 cities within the county. In terms of population, Orange County is the third largest county in California trailing Los Angeles and San Diego.

It is the sixth largest county in the nation.

The general vicinity of Newport Beach and Orange County relative to the counties of Los Angeles, San Bernardino, Riverside, and San Diego is illustrated on the map below:

Angelesl
County San
Bernardino
County
1p
® Riverside
Orange County
�1county

NEWPORT
BEACH
10 v
San
Diego
County
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Newport Beach surrounds Newport Bay, well known for its picturesque islands and one of the greatest recreational harbors in the world, accommodating about 9,000 recreational and sports charter boats docked within its 21 -square -mile harbor. The bay and the ten miles of ocean beach offer outstanding fishing, swimming, surfing, and aquatic sports activities. The city has a permanent population of 85,865, which typically grows to well over 100,000 during the summer months, including 20,000 to 100,000 or more tourists daily. There are fine residential areas, modern shopping facilities, and a quality school system. The University of California, Irvine, is located immediately adjacent to the city, and several other colleges are within a 30 -mile radius.

The following map illustrates the communities within Newport Beach; the upper bay, the recreational harbor, and beachfront topography; and the city's location relative to the bordering cities of Costa Mesa to the north, Irvine to the east, and Laguna Beach to the south.
� r
' 1 Airport Area
Costa Mesa
\�
<
Irvine
�
Eastbluff-
r. '��.r•
�
Mariners
/ WestNewpori
�•
ti
Harbor View
Fashion bland
Udo Isle
1 City Hall Spyglass
Newport Pier
Balboa island
Balboa Pier
� New ort Coast
Corona.0elMar p
The Wedge
Crystal Cove
Crystal Cove
Sate Park
---��
Laguna Beach
Newport Beach was incorporated on September 1, 1906. The City Charter was originally adopted in 1954 but has been updated and amended over time. The City operates under a Council -Manager form of government. Council Members are elected by district but voted on by the population as a whole, and serve four-year staggered terms. The governing council consists of the Mayor and six other members and is responsible for, 7-18

among other things, policy-making, passing local ordinances, adopting the budget, appointing committees, and hiring the City Manager, City Attorney, and City Clerk. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing heads of departments.

The City of Newport Beach is a full service city providing its residents and visitors with the following functional services: general governance, legal, financial, information technology, and administrative management; police, fire, paramedic, lifeguard, and emergency medical transport services; engineering, construction, and maintenance of public facilities, public streets, beaches, and parks; planning, zoning, and economic development services; building inspection, plan check, and code enforcement services; libraries and cultural and arts services; recreation and senior services; and water, wastewater, and street light utility services. The City provides water and wastewater service to most areas within the city limits, but it does not provide gas, cable television, electrical, or other utility services. Public elementary and secondary education is provided by the Newport -Mesa Unified School District and the Laguna Beach Unified School District.

Component Unit: The City's financial statements present the financial activity of the City of Newport Beach (the primary government) and the Newport Beach Public Facilities Corporation (a component unit of the City). The Corporation is blended into the City's financial statements because of its operational and financial relationship with the City.

Even though it is a legally separate organization, City of Newport Beach elected officials are accountable for fiscal matters of the Corporation. Additional information about the Newport Beach Public Facilities Corporation and the reporting entity in general can be found in Note (1a) of the notes to the financial statements.

DEMOGRAPHICS
Reflective of a mature community, vacant land has become increasingly scarce and the city is relatively built -out. Currently at 85,865, the population has been very stable as indicated by the following chart.
100,040

90.000

80.000
70,040
60, 000
50,000
40,000
30,000
20,000
10,000
0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Fiscal Year
7-19

The effective buying income and median household income are generally higher in Newport Beach than in other areas of the State and the U.S. overall. As illustrated by the table below, Newport Beach median household income is nearly twice that of the U.S. median household income.
2020 Median Household Incor
City of Newport Beach $128,294
Orange County 95,934
California 80,444
USA 65,712
The leading industries here are professional, scientific, health care, finance, insurance, legal, and travel/tourism. Unemployment in the city stands at 4.0% due to the remaining economic impacts associated with the COVID-19 pandemic, but is significantly lower when compared to the state, 7.3% and the county, 4.7%, as illustrated in the following chart.

More detailed information concerning the city's demographics and statistics are contained within the Statistical Section of this report.

LOCAL ECONOMY
Financial activity at the end of the fiscal year indicates that revenues came in higher, and expenditures lower, than the revised budget. This is a reflection of both the City's conservative budgeting and projection methodologies, consistent with City Council Policy F-3 — Budget Adoption and Administration, and a more rapid improvement in the economy than had been initially anticipated.

Newport Beach's hotel occupancy rate stands at 60.7% as of August 21st and is 37.9% higher than at the same time last year. When California reopened its economy in mid- June and dropped several COVID-related restrictions, hotel occupancy shot up. In Anaheim, the home of Disneyland, hotel occupancy was at 70% in June, compared to 7-20

45% the previous year, according to the global hospitality data and analytics company STR. However, some hoteliers remain concerned about the lingering impacts of the COVID-19 pandemic on tourism as well as a slow return of business travelers.

Automobile sales as a major industry group has experienced a classical V-shaped recovery in the aftermath of the COVID-19 recession. New car sales dropped 68% or more at many dealers around the State in the initial weeks after the State's pandemic shutdown order in March 2020. Sales have since steadily rebounded and are now in 2021 13% higher than the same period in 2019, a year before the crisis began. Limited supply has been overwhelmed by strong demand. Consumers are treating themselves to more expensive models, with new cars reported to be 8% more costly this year. The California New Car Dealers Association reports that Porsche, Mercedes, and Tesla have been the most sought-after brands in 2021. S&P Global and other research firms are forecasting continued growth in the 15% range for the remainder of the year before sales begin to flatten out in 2022.

The Conference Board expects consumer spending to continue to improve in the second half of 2021, especially on in-person services, but the overall growth contribution derived from consumer spending will moderate as much of the recovery in this facet of the economy has already been achieved. However, continued consumer uncertainty in reaction to the identification of new COVID-19 variants presents a downside risk to consumer spending. While it is unlikely that a new round of severe government -mandated mobility restrictions will be implemented to contain these variants, cyclical fluctuations in the public's comfort interacting in public spaces does have the potential to affect consumer confidence and in-person spending.

TOP THREE REVENUE SOURCES
Most revenue categories performed at or higher than their budgeted levels this year due to more favorable economic conditions than anticipated when the budget was developed in April 2020. This performance trend led to a $17.7 million budget amendment during the third quarter that aligned the revenue budget with the higher anticipated results projected at that time. Actual revenues were $16.1 million or 7.3% higher than anticipated. As discussed in more detail below, the primary positive variances were in sales tax and service fees & charges.

The top three individual revenue sources, Property Taxes, Sales Taxes and Sales Tax in Lieu, and Transient Occupancy Taxes (TOT), represent 74% of all General Fund revenues. Tax revenues in total, including business licenses, franchise fees, and other taxes represent nearly 80% of all General Fund revenues, while only 20% is generated from other revenue sources.
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General Fund Revenues
20% ■ Property Taxes
■ Sales Taxes
5% Transient Occupancy Taxes
51% Other Taxes
7%
■ All Other Sources
1% 17%
Property Taxes
Unlike many cities, property taxes, not sales taxes, are the number one source of revenue for the City of Newport Beach, representing more than half (51%) of all General Fund revenues. Due to the limited supply of scenic coastal property and the unique access to Newport Bay, the Newport Beach community has been developed into affluent residential neighborhoods and high-end commercial districts. Consistent and vigorous demand for coastal property has allowed the City to enjoy long-term growth trends with its number one revenue source. Property tax revenues for FY 2020-21 were budgeted conservatively anticipating the potential for delayed payments due to economic hardship and the Governor's Executive Order suspending penalties and interest for delinquent property tax payments. These concerns did not come to pass, and FY 2020-21 property taxes came in $1.6 million or 1.4% higher than budgeted. Secured property tax payments came in strong, $1.3 million over budget, which is an indication of timely property tax payments and higher valuations.

Despite new record price levels, statewide growth in home sales slowed and pending sales dropped in the second quarter of 2021 for the first time since May 2020. Higher priced markets like Newport Beach continued to do well while sales of lower priced properties remained below last year's levels. The median home sales price of detached single-family residences in Newport Beach was $3.1 million on June 30, 2021, up 15.9% from the prior quarter and 25% higher than the prior year. With the recent surge of home prices, this category will likely continue to improve, which bodes well for future secured property tax revenues. Estimated average single-family home values of $3,193,863 in Newport Beach far exceed the countywide average value of $1,350,087. 7-22

Year
Home
Value
%
Change
2012
$
1,666,362

3.18%
2013
$
1,930,565

15.86%
2014
$
2,027,552

5.02%
2015
$
2,173, 786

7.21%
2016
$
2,318,400

6.65%
2017
$
2,589,204

11.68%
2018
$
2,727,520

5.34%
2019
$
2,650,832
-2.81%
2020
$
2,879,248

8.62%
2021
$
3,193,863

10.93%
* Source: HdL
After Californians passed Proposition 13 in 1978, assessed property value is reassessed to market value only when the property changes ownership. Otherwise, the assessed value (AV) grows by no more than two percent per year. This practice creates a constant lag and buffer between assessed and market values, effectively insulating the tax base from more market volatility.

While property tax growth rates fell sharply during the Great Recession, the City has experienced positive AV growth during each of the past 20 years (see chart below with the past 15 years of AV growth demonstrated). This positive growth occurred while many other cities experienced decreases in their AV during 2008 through 2011. Note that while growth slowed, the assessed value never declined throughout the recession. 570.0oa.00o.a0a
$&0.=.M0.aoa
$50,o0a,000.000
s 0=0ao.a0a
530,000,000.000
520.000,00x."
516.000.000.000
S
Total Assessed Properly Value GroWth
Value changes in Newport Beach show continued appreciation in property values in FY 2020-21. Over the past 10 years, assessed valuation increased an average of 5.5% per 7-23

year and 6.2% over a twenty-year period. Newport Beach's assessed property values increased 4.8%, with a local assessed value of $63.7 billion for FY 2020-21.

Sales Taxes
The second largest funding source for the General Fund is sales tax revenue, typically making up more than 15% of General Fund revenues. The City's sales tax base is largely generated from three main industry categories including Autos and Transportation, General Consumer Goods, and Restaurants/Hotels. Most of these industries are also heavily impacted by tourism. The latest sales tax information shows that retail and restaurants have been hit especially hard this past year while autos and transportation is showing quarter over quarter increases. Also, the California Department of Tax and Fee Administration (CDTFA) has extended due dates and offered payment plans to small businesses. This has, and will continue to create, timing issues related to when revenues are received.

The City's sales tax consultant provided an updated sales tax estimate at the end of the third quarter, which resulted in an upwardly revised sales tax budget of $34.5 million. This came as the result of increased consumer spending amid an environment of reduced COVID-19-related restrictions. Actual Sales Tax revenues came in $4.4 million or 12.8% higher than anticipated and surpassed the previous highest annual sales tax revenues in FY 2018-19 of $38.5 million and the prior year receipts of $36.2 million. Businesses pivoted in creative ways to reach their customers as they were able to open at some capacity sooner than expected resulting in relatively strong consumer spending, and significantly increased online retail activity resulted in strong revenues from the county sales tax pool. All three main industry categories performed better than expected, with particularly strong growth seen in the fourth quarter.

The City's sales tax base is generated from a relatively diverse business community and is not dependent on any one merchant or industry. The following chart demonstrates the diversity of the City sales tax revenue. The largest segment, "Transportation," accounts for 37% of total sales taxes. The next largest segments, "Food Products" and "General Retail," account for 19% and 36% of total sales taxes, respectively. The next largest sales tax segment, "Business to Business" accounts for 7% of total sales.

Sales Tax by Business Segment
■General Retaii
■Food Products
■ Transportation
■ Construction
W, Business to Rusiness
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Transient Occupancy Taxes (TOT)
TOT accrues to the City at a rate of 10% of room charges with 18% of this collection going to the local destination marketing organization (Newport Beach & Company) to promote Newport Beach as a tourist destination. The City distinguishes its transient occupancy taxpayers in two broad property type categories, commercial and residential property.

The commercial category is composed of approximately 20 hotels and resorts and accounts for 80 percent of TOT revenues. The residential category is made up of approximately 1,500 vacation rentals representing 20 percent of TOT revenue.

TOT was the City's most severely impacted revenue source as the pandemic unfolded, as most major hotels within the City were temporarily closed towards the end of March 2020 and many didn't start reopening until late May or early June, with some hotels remaining closed in the third quarter. Also, short term rentals were not allowed to operate in the City from early April 2020 until May 20, 2020. All but one hotel are now operational, and the latest tax receipts (July) indicate several hotels are reporting their highest monthly tax receipts ever. Staff had budgeted FY 2020-21 TOT revenues very conservatively, expecting to realize 10%, 20%, and 25% of prior year revenue in the first, second, and third quarters respectively. Staff had anticipated that residential TOT would be similarly impacted economically, but in fact, the negative impact has been limited to hotel TOT, with residential TOT revenues coming in at just under $1 million higher than budgeted.

The table below illustrates a comparison of hotel TOT revenues by fiscal year and quarter.

It is remarkable to note the precipitous revenue increase during in the last quarter accounted for 38.6% of revenue for FY 2020-21. The fourth quarter receipts are much higher than the previous year and somewhat narrowed the revenue loss gap when compared to prior years. The positive improvement in this category has led to year-end revenue collections for this category reaching 81 % of the prior year actuals. Revenues through the end of the fiscal year were approximately $1.7 million or 11.0% over the revised budget.

Transient Occupancy Tax Receipts by Quarter FY18-FY21
1stQuarter
2,267,092

13.43%
4,959,179

23.79%
4,820,281

19.52%
4,340,572

19.01%
2nd Quarter
5,523,645

32.71%
7,730,446

37.08%
6,313,511

25.56%
5,962,939

26.11%
3rd Quarter
2,579,739

15.28%
5,545,740

26.60%
5,759,862

23.32%
5,217,752

22.85%
4th Quarter
6,515,721

38.59%
2,612,517

12.53%
7,803,792

31.60%
7,312,352

32.02%
TOTAL
$16.886.197
100%
$20.847.883
100%
$24.697.446
100%
$22.833.614
100%
A steady improvement in revenue and occupancy rates combined with daily room rates that have been consistently higher than in recent years have been seen since December, which is anticipated to continue given the current easing of restrictions and the anticipated return of more significant numbers of leisure, and ultimately business, travelers in the months ahead.
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LONG TERM FINANCIAL PLANNING
The City continues to be in excellent financial health due to its strong underlying tax base, disciplined fiscal decisions, and stable governance. Conservative budgeting and sound financial policies have resulted in a trend of General Fund operating surpluses and strong reserve levels for several years. This is still no less the case even amid the significant economic downturn the City experienced during the COVID-19 pandemic. The City annually completes a Long -Range Financial Forecast covering the next 20 years pursuant to City Council Policy F-3 — Budget Adoption and Administration. That forecast shows positive General Fund results in each of the next 20 years and does no indicate any long-term financial trends of concern. The City's long-term financial planning has been guided by its strong financial policies, prudent budgeting decisions, and proactive planning in such critical areas as facilities replacement and pensions. These policies are regularly evaluated and updated as conditions and needs change.

Financial Policies
The City Council has adopted prudent fiscal policies concerning its investments, reserves, budget administration, revenue initiatives, competitive contracting, facility replacement planning, and more. The budget surplus utilization policy directs the use of surplus funds resulting from unrestricted General Fund annual revenues exceeding total actual expenditures, encumbrances, and commitments for that year. Roughly fifty percent of the budget surplus is used to address long-term obligations such as pension liabilities, other post -employment benefits, bonded debt, lease obligations, and other long-term needs.

The remaining surplus is used to address one-time infrastructure or neighborhood capital improvements, guided by a philosophy that these expenditures improve the community's safety, aesthetics, transportation, or quality of life. The City's debt policy establishes criteria for the issuance of debt and assures that the amount of any debt is affordable and cost effective. The City's debt policy was recognized by the California Debt and Investment Advisory Commission as one of only 14 counties and cities in California whose policies have 20 or more debt management best practice elements. The City's debt and other financial policies can be found on the City's website in the City Council section under City Government at:
www.newportbeachca.gov/policies
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Annual Budget
The annual budget serves as the foundation for the City of Newport Beach's financial planning and control and allows the City Council to prioritize City expenditures so that they are aligned with core community values. The City of Newport Beach, along with other local jurisdictions, states, and the federal government faced an exceptionally challenging economic environment as a result of the COVID-19 Pandemic. As previously mentioned, actual revenue results ended up much better than anticipated and actual expenditures ended the year lower than budgeted due to the careful management of operating expenditures (implementation of a hiring freeze and the curtailment of other expenditures).

Per current policy, appropriations for operating expenditures are balanced in relation to current revenue sources and do not rely on one-time revenue sources or reserves. When significant uncertainty exists concerning revenue volatility or threatening/pending obligations, the City Council and City Manager reserve the right to impose any special fiscal control measures, including personnel hiring freezes, and other spending controls, as was the case in FY 2019-20 and in the development of the FY 2020-21 budget. As a result of early retirement plans, attrition, outsourcing, and lay-offs implemented in the years following the onset of the Great Recession, the full-time work force was reduced by approximately 4% between FY 2012-13 and FY 2016-17 as depicted in the chart below.

In the years since, thoughtful additions to the City's workforce have been implemented with a continued focus on fiscal discipline and maintaining balanced budgets.

Full Time Positions Trend
IJJ
752
750
745
h 740
736
735
730
a0 730 728 730728
U 725 726 727
ak 725 724
720
715
710
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Fiscal Year
The City has traditionally taken a conservative approach to forecasting revenues, often assuming only modest growth. This fiscal conservatism has created a stable financial base. As a result, even in a downturn, the City of Newport Beach is able to maintain its services at a high level, while reducing expenses to accommodate reduced revenues.

The City's fiscal discipline has allowed it to prepare balanced budgets and to save, both 7-27

during prosperous and difficult economic periods. As the economy continues to improve, these trends are likely to continue.

The City Council may authorize the use of Contingency reserves during emergency situations as set forth by the Council Reserve Policy. Current policy requires that the Contingency Reserve equal 25 percent of the General Fund annual "Operating Budget." Credit rating agencies consider a high level of available "fund balance" to be a credit strength. In 2021, Moody's rating agency reaffirmed the City's AAA credit rating noting the City's extensive tax base, a very strong wealth and income profile, and a robust financial position. It also noted the City's moderate debt burden and an elevated pension burden in its rationale. The City's has aggressively attacked its unfunded pension liability and has made regular discretionary payments to reduce that liability at a more rapid pace than is required by CaIPERS, as further described in the Pension section below.

Facilities Financial Plan (FFP) Commitment & Major Construction Initiatives The City's FFP is a comprehensive master facilities replacement schedule that projects the timing of construction of facility projects; projects the schedule of any planned debt issuance; includes all relevant revenue sources and expenditures on a yearly, project -by - project basis; and determines the long-term "level funding" annual budget commitment that is required to support the program. The FFP was the winner of the prestigious "Helen Putnam Award — Internal Administration" category from the League of California Cities in 2008.

The City continued its financial commitment to the Facilities Financial Planning Reserve (FFPR) in FY 2020-21 by allocating resources to debt service, fire stations, parks and community centers, and other projects.

Facilities-
- - Fund
Beginning Balance 7/1/20
$ 17,046,839
Sources
Licenses, Permits and Fees
313,195
Property Income
263,188
Donations
5,150,000
Transfer In from General Fund
19,844,644
Investment Income
263,817
Net increase in fair value of investments
(241,649)
Total Sources
25,593,195
Uses
2010 Civic Center COPS Debt Service
(7,646,138)
Parks and Community Centers
(6,901,299)
Total Uses
(14,547,437)
Ending Balance 6/30/21
$ 28,092,597
The transfer is net of the Build America Bonds subsidy, which is recorded in the Debt Service Fund
Overall, the FFPR balance is increasing by $11.0 million from the prior fiscal year. 7-28

Pensions
As of the actuarial valuation date of June 30, 2020, the City had an Unfunded Accrued Liability (UAL) of $333 million. The City has taken a number of actions in recent years to mitigate the impact of rising pension costs including:
• Established lower benefit formulas for new hires.
• Eliminated the Employer Paid Member Contribution (EPMC). • Through negotiated cost sharing, saw employees contribute 58% of the Normal Cost of the plan, or $10.5 million in FY2020-21.
• Adopted a fixed and shorter amortization period for the unfunded liability. • Made Additional Discretionary Payments (ADPs)
• Contributed no less than Actuarial Determined Contribution (ADC) each & every year.
• Analyzed the schedule of amortization bases annually in an effort to avoid negative amortization.
• Amortized all gains/losses no longer than a 20 -year closed period. • Avoided asset smoothing or "rate phase-in" schedules if possible. Otherwise, the City's goal is to not exceed 5 years for any one smoothing cycle. • Established a General Fund Surplus Utilization Policy F-5 to set aside one-half of any annual budget surplus to fund debts such as the pension liability. • Maintained a contingency reserve to protect against economic recessions and to avoid negative impacts of asset smoothing and rate phased -in schedules.

Local governments with pensions have a total pension liability, which is the obligation to pay deferred pension benefits in the future. When the total pension liability is greater than the pension plan's assets there is a net pension liability, also known as unfunded pension liability. As required by GASB 68, the City reports the net pension liability in the government wide financial statements, as well as in the proprietary fund statements, in the ACFR — see Note (10) of Notes to the Financial Statements.

The City implemented GASB 75 in FY2017-18, which requires local governments offering other post -employment health care benefits (OPEB) to report net OPEB liability in the government wide financial statements, as well as in the proprietary fund statements, in the ACFR — see Note (11) in the Notes to the Financial Statements. When the total OPEB liability is greater than the OPEB plan's assets there is a net OPEB liability, also known as unfunded OPEB liability.

As with past practice, the City will continue to fund its pension and OPEB obligations at an amount equal to or greater than the minimum employer contribution rate. The City has not and will never intentionally short -fund its pension and OPEB obligations. Annually the City evaluates the cost and benefits of paying down the unfunded pension and OPEB liabilities on a faster schedule. Currently, the City Council has committed to a fixed $35 million per year contribution toward the unfunded pension liability, which is approximately $9 million more than is required by CalPERS. Additionally, for two years in a row the City 7-29

Council has appropriated an additional $5 million toward accelerated payment of the unfunded liability from year-end budget surplus funds.

AWARDS AND ACKNOWLEDGMENTS
The City has prepared an Annual Comprehensive Financial Report for the past 28 years.

The City has received awards for excellence in financial reporting in each of those years.

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Newport Beach for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2020. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe our current Annual Comprehensive financial report continues to conform to the Certificate of Achievement program requirements and we are submitting it to GFOA to determine its eligibility for another certificate.

Acknowledgments: Preparation of this report was accomplished through the efficient and dedicated services of everyone in the City's Accounting Division. In addition, the Finance Department staff would like to thank the City Manager, the Mayor, and the City Council for their interest in and support of planning and conducting the financial operations of the City in a responsible and progressive manner. We would also like to thank our auditors, DavisFarr LLP, for their time and assistance in the preparation of the report. This report was completely prepared and published by City employees.

Grace K. Leung
City Manager
Scott Catle
Finance Director/Treasurer
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Newport Beach
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2020
Executive Director/CEO
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Brad Avery
Council Member
District 2
City Council Members
City Executive Staff
Aaron Harp Grace K. Leung
Leilani Brown
City Attorney City Manager
City Clerk
Tara Finnigan.............................................................................................................................

Deputy City Manager
Scott Catlett ......................................................................................................................Finance Director/Treasurer
Seimone Jurjis......................................................................................................Community Development Director
JeffBoyles.....................................................................................................................................................Fire Chief
PaulBlank.............................................................................................................................................

Harbormaster
Barbara Salvini..................................................................................................................

Human Resources Director
Tim Hetherton......................................................................................................................

Library Services Director
JonT. Lewis..............................................................................................................................................

Police Chief
DaveWebb...............................................................................................................................

Public Works Director
Laura Detweiler...............................................................................................

Recreation & Senior Services Director
Mark Vukojevic..................................................................................................................................Utilities Director
Joy Brenner
Council Member
District 6
Will O'Neill
Council Member
District 7
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LECTORATE
Board of
Harbor Commission
Library Trustees 11L
Building & Fire Parks, Beaches &
Code of Appeals ecreation Commission
MAY
&
City Arts COUNCIL Planning
Commission Commission
city
Civil Service Boar EELFM� Committees

CITY CITY CITY

CLERK MANAGER ATTORNEY
Community - - Library
Development Services
Finance Police
Public
Fire Works
Harbor Recreation &
Senior Services
Human
ResourcesUtilities

Z
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FINANCIAL SECTIONf"0`4V
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INDEPENDENT AUDITORS' REPORT

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*I DavisFarr

CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Karmen Avenue I Suite 1100 1 Irvine, CA 92612 Main: 949.474.2020 1 Fax: 949.263.5520

INDEPENDENT AUDITOR'S REPORT
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
Report on the Financial Statements
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 Newport Beach, California, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents.

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

Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
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Opinions
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 of Newport Beach, California, as of June 30, 2021, 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.

Emphasis of Matter
The financial statements for the year ended June 30, 2021 reflect certain prior period adjustments as described further in note 18 to the financial statements. Our opinion is not modified with respect to this matter.

As described further in note 1 to the financial statements, during the year ended June 30, 2021, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 84. Our opinion is not modified with respect to this matter.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information for the General Fund and each major special revenue fund and Schedule of Changes in the Net Pension Liability and Related Ratios - Miscellaneous Plan, Schedule of Contributions - Miscellaneous Plan, Schedule of Changes in the Net Pension Liability and Related Ratios - Safety Plan, Schedule of Contributions - Safety Plan, Schedule of Changes in the Net OPEB Liability and Related Ratios, Schedule of Contributions - OPEB, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the GASB who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Newport Beach's basic financial statements. The combining and individual nonmajor fund financial statements, the introductory section and the statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.
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The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2021 on our consideration of the City of Newport Beach's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Newport Beach's internal control over financial reporting and compliance.

Irvine, California
December 23, 2021
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FINANCIAL SECTION
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MANAGEMENT'S DISCUSSION AND ANALYSIS
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MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the City of Newport Beach's Annual Comprehensive Financial Report (ACFR) presents management's discussion and analysis of the City's financial performance during the fiscal year that ended on June 30, 2021. This analysis should be read in conjunction with the Transmittal Letter at the front of this report and the accompanying Basic Financial Statements.

OVERVIEW OF THE FINANCIAL STATEMENTS
The financial section of the Annual Comprehensive Financial Report contains the following information: IndependentAuditors' Report, Management's Discussion and Analysis (this section), the Basic Financial Statements, the Required Supplementary Information, and the Supplementary Information section, an optional section that presents combining and budgetary schedules for individual non -major funds. The Basic Financial Statements are comprised of three components:
1) Government -wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Financial Statements. Management's Discussion and Analysis is intended to be an introduction to the Basic Financial Statements.

BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements — The Government -wide Financial Statements use the economic resources measurement focus and accrual basis of accounting, which is similar to the accounting standard used by private sector companies. The Government -wide Financial Statements are intended to provide a "Big Picture" view of the City. With the economic resources measurement focus and accrual basis of accounting, changes in net position are recognized as soon as the event occurs regardless of the timing of related cash flows.

The Statement of Net Position includes all of the City's assets (including non -spendable assets like streets, roads, and land rights), deferred outflows of resources, liabilities (including long-term liabilities that may be paid over twenty years), and deferred inflows of resources. All of the current year revenues and expenses are accounted for in the Statement of Activities regardless of when cash is received or paid.

The Government -wide Financial Statements report the City's net position and how they have changed. Net position — the difference between the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources — is one way to measure the City's financial health.

Over time, increases or decreases in the City's net position are an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the City, one should also consider additional non-financial factors such as changes in the City's property tax base and the condition of its facilities and other major infrastructure.

The Government -wide Financial Statements of the City are divided into two categories:

Governmental Activities — This category depicts the extent to which programs are self- supporting and the net amount provided by property taxes and other general revenues.

Most of the City's basic services are included in this category such as the public safety, public works, community development, community services, and general administration.

Taxes and other general revenues finance most of these activities. 7-42

Business -type Activities — The City accounts for its Water and Wastewater utilities as business enterprises. The City charges fees to customers to recover the cost of providing Water and Wastewater services.

Fund Financial Statements — A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements such as State and Federal law or bond covenants. Other funds are utilized simply to control and manage resources intended for particular purposes. The Fund Financial Statements provide more detailed information about the City's most significant funds (major funds) but not the City as a whole.

Fund Financial Statements have a short-term focus measuring inflows of current spendable assets. The resulting net difference between current financial assets and deferred outflows of resources, and current financial liabilities and deferred inflows of resources, otherwise known as fund balance (or net working capital in the private sector) is a measure of the City's ability to finance activities in the near term.

The City utilizes three broad categories of funds:

Governmental Funds — Unlike Government -wide Financial Statements, Governmental Fund Financial Statements utilize the financial resources measurement focus and thus concentrate 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. Consequently, the Governmental Fund Financial Statements provide a detailed short-term view that helps a reader determine whether there are more or fewer financial resources that can be spent in the near future to finance City programs. Also included in the Governmental Funds are Permanent Funds. These funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support City programs.

Proprietary Funds — Business -like services for which the City provides goods or services to the general public are generally reported in Proprietary Funds (Enterprise Funds and Internal Service Funds). Like the Government -wide Financial Statements, these funds provide both long and short-term financial information utilizing the economic resources measurement focus. The City's Enterprise Funds (Water and Wastewater Funds) are individual funds represented in the combined presentation of Business -type Activities in the Government -wide Financial Statements. The individual fund presentation provides more detailed information about each business segment, its operating statements, and statements of cash flow. The City also uses Internal Service Funds that are utilized to report and allocate the cost of certain centrally managed and operated activities (e.g. fleet maintenance and other equipment, risk management, retiree insurance, telecommunications systems, information technology services, etc.). Because the Internal Service Funds primarily serve the government, they are reported with Governmental Activities rather than the Business -type Activities in the Government -wide Financial Statements.

Fiduciary Funds — The City utilizes Fiduciary Funds to account for assets held by the City in a trustee capacity, or as an agent for other governmental entities, private organizations, or individuals. All of the City's fiduciary activities are reported in a separate statement of fiduciary net position, and a statement of changes in fiduciary net position. We exclude 7-43

these activities from the City's Government -wide Financial Statements because the City cannot use these assets to finance its operations.

Notes to the Financial Statements — The financial statements also include the Notes to the Financial Statements that provide important narrative details about the information contained in the financial statements. Information contained in the Notes to the Financial Statements is critical to a reader's full understanding of the Government -wide and Fund Financial Statements.

Required Supplementary Information — In addition to the Basic Financial Statements, we have included a Required Supplementary Information section, which includes the Schedule of Changes in Net Pension Liability and Related Ratios, the Schedule of Changes in Net Post -employment Health Care Benefits (OPEB) Liability and Related Ratios, and the related Schedules of Contributions for the Pension and OPEB plans.

Supplementary Information — In addition to the required elements of the Basic Financial Statements, we have also included a Supplementary Information section, which includes budgetary and combining schedules that provide additional details about the City's Other Governmental Funds, Internal Service Funds, and Fiduciary Funds.

ANALYSIS OF GOVERNMENT -WIDE FINANCIAL STATEMENTS
The Government -wide Financial Statements provide long-term and short-term information about the City's overall financial condition. This analysis addresses the financial statements of the City as a whole.

Net Position Discussion
As shown in Figure 1, the City's combined net position for the year ended June 30, 2021 was $2.4 billion, increasing $28.6 million or 1.2% over the prior year. Net position can serve as an important indicator of whether the City's overall financial condition is improving or deteriorating over time.

Current and other assets increased $27.0 million. This increase is primarily due to increases in cash and investments, accounts receivable (net of allowance), intergovernmental receivables, and prepaid items, offset by a decrease in interest receivable. Capital assets increased $10.8 million, mostly due to new infrastructure related to the water and wastewater systems.

Current liabilities increased $12.7 million primarily due to increases in accounts payable and unearned revenue. The increase in unearned revenue was due to the receipt of federal funds through the American Rescue Plan Act that had not been spent by the end of the fiscal year.

Long-term liabilities increased $6.9 million. The increase is primarily due to increases in outstanding certificates of participation due to a new debt issuance and a small increase to the City's net pension liability. See Note (6) and Note (10) of the Notes to the Financial Statements for more information.
7-44

Figure 1
Net Position
(in thousands)
The largest portion of the City's net position, at $2.4 billion of net position, reflects the net investment in capital assets (e.g., land, right of way, street trees, buildings, infrastructure, and equipment) less accumulated depreciation and any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to residents. Therefore, they do not represent a financial resource to the City and consequently are not readily available for funding current obligations.

Restricted net position totaled only $67.2 million of net position and remained relatively constant with a slight decrease of $519,000 from the prior year.

As of June 30, 2021, unrestricted net position had a deficit of $45.3 million. The deficit decreased $14.7 million from the prior year primarily due to an increase in the receipt of unrestricted revenues such as property taxes and sales taxes that were not spent or restricted by the end of the fiscal year.
7-45
Governmental Activities
Business -Type Activities
Total
2020
2021
2020
2021
2020
2021
Current and other assets
$ 298,255
$ 327,609
$ 42,604
$ 40,271
$ 340,859 $
367,880
Capital assets
2,318,827
2,324,346
120,769
126,028
2,439,596
2,450,374
Total assets
2,617,082
2,651,955
163,373
166,299
2,780,455
2,818,254
Deferred Outflows of Resources
66,119
70,434
1,863
2,304
67,982
72,738
Current liabilities
25,177
35,627
3,833
6,100
29,010
41,727
Long-term liabilities
456,589
463,424
10,600
10,671
467,189
474,095
Total liabilities
481,766
499,051
14,433
16,771
496,199
515,822
Deferred Inflows of Resources
6,088
878
234
17 6,322
895
Net Position
Net investment in capital assets
2,217,853
2,227,573
120,292
124,776
2,338,145
2,352,349
Restricted
67,708
67,189
-
-
67,708
67,189
Unrestricted
(90,214)
(72,302)
30,277
27,039
(59,937)
(45,263)
Total net position
$ 2,195,347
$ 2,222,460
$ 150,569
$ 151,815
$ 2,345,916 $
2,374,275
The largest portion of the City's net position, at $2.4 billion of net position, reflects the net investment in capital assets (e.g., land, right of way, street trees, buildings, infrastructure, and equipment) less accumulated depreciation and any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to residents. Therefore, they do not represent a financial resource to the City and consequently are not readily available for funding current obligations.

Restricted net position totaled only $67.2 million of net position and remained relatively constant with a slight decrease of $519,000 from the prior year.

GOVERNMENTAL ACTIVITIES
Governmental activities are generally financed through taxes, intergovernmental revenues, and other non-exchange revenues. The Statement of Activities is intended to illustrate how the cost of governmental activities is financed and determines the annual change in net position.

Revenues:

Program Revenues:

Charges for services
Operating grants and capital contributions
Capital grants and contributions
Total program revenues
General Revenues:

Taxes:

Property taxes
Sales tax
Transient occupancy taxes
Othertaxes
Investment related income
Other
Total general revenues
Total revenues
Expenses:

General government
Public safety
Public works
Community development
Community services
Interest
Water
Wastewater
Total expenses
Increases in net position
Net position at beginning of year
Net position at end of year
Figure 2
Changes in Net Position
(in thousands)
Governmental Activities
Business -Type Activities
Total
2020
2021
2020
2021
2020
2021
$ 57,670
$ 58,113
$ 31,211
$ 35,358
$ 88,881
$ 93,471
14,659
20,362
-
-
14,659
20,362
7,352
7,658
-
-
7,352
7,658
79,681
86,133
31,211
35,358
110,892
121,491
113,314
119,157
-
-
113,314
119,157
36,233
38,956
36,233
38,956
21,097
16,886
21,097
16,886
11,869
12,852
-
-
11,869
12,852
5,142
518
1,358
55 6,500
573
2,117
3,355
-
-
2,117
3,355
189,772
191,724
1,358
55 191,130
191,779
269,453
277,857
32,569
35,413
302,022
313,270
20,714
20,394
-
-
20,714
20,394
119,194
119,185
119,194
119,185
60,055
63,689
60,055
63,689
12,842
12,157
12,842
12,157
26,668
28,214
26,668
28,214
7,065
7,105
-
-
7,065
7,105
-
-
27,387
28,943
27,387
28,943
-
4,292
5,223
4,292
5,223
246,538
250,744
31,679
34,166
278,217
284,910
22,915
27,113
890
1,247
23,805
28,360
2,172,432
2,195,347
149,678
150,568
2,322,110
2,345,915
$ 2,195,347
$ 2,222,460
$ 150,568
$ 151,815
$ 2,345,915
$ 2,374,275
Revenues Associated with Governmental Activities Discussion Figure 2 illustrates in detail how the $278.1 million in Governmental Activities revenue was derived. Figure 3 summarizes this revenue by major source. As shown on Figures 2 and 3, $58.1 million, or 20.9%, of the revenues were recovered from those who directly benefited from the programs as a charge for service. Another $28.3 million, or 10.2%, of the revenues were generated by contributions and grants received from governmental organizations, developers, and property owners for both capital and operating activities. The remaining $191.7 million, or

68.9%, represented general revenues of the City including taxes, intergovernmental revenues, and other miscellaneous revenues.
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Figure 3
Governmental Activities Revenue Sources
Year Ended June 30, 2021
68%
10% ■ Charges for Services
■ Contributions and grants
■ Taxes
21 Other
1%
As illustrated in Figure 2, program revenues related to Governmental Activities increased $6.5 million from the prior year. This increase was primarily attributable to an increase in operating grants and capital contributions received for a utility undergrounding district project and the restoration of vegetation in a nature park, in addition to funding received from other governmental agencies in response to economic challenges created by the COVID-19 global pandemic.

The City's general revenues related to Governmental Activities increased about $2.0 million from the prior year primarily due increases in property taxes, sales taxes, and other general revenues, which included a delayed reimbursement payment from the federal government due to the pandemic, offset by decreases in transient occupancy taxes due to the pandemic and investment income.

Property tax is the largest individual revenue source for the City and collections finished the year $5.8 million higher than the previous year. This increase was mostly due to an increase in secured taxes as a robust demand for coastal property continued driving property values higher.

At $39.0 million, sales taxes represent the second largest individual revenue source for the City.

Sales taxes increased $2.7 million from the previous year. This was due to the easing of pandemic related restrictions and strong consumer spending as businesses found creative ways to reach their customers.

Transient occupancy taxes (TOT), the City's third largest revenue source, finished the year at $16.9 million, which is a decrease of $4.2 million from the previous fiscal year. The net decrease stems mostly from a decrease in hotel TOT due to falling occupancy rates and closures of hotels because of the coronavirus global pandemic, offset by an increase in residential (short-term lodging -related) TOT.
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Investment income, comprised of both interest income and unrealized gains, totaled $518,000, a decrease of about $4.6 million from the prior fiscal year. Most of the decrease is from a net decrease in the fair value of investments, which is consistent with the fiscal year's generally increasing interest rate environment.

Expenses Associated with Governmental Activities Discussion The City is a full service city providing residents and visitors with the following functional services:

General Government is comprised of six departments (City Council, City Clerk, City Manager, City Attorney, Human Resources, and Finance) providing general governance, information technology services, executive management, legal services, records management, risk management, finance, and accounting.

Public Safety is comprised of two departments (Police and Fire) providing general law enforcement, fire suppression and prevention services, paramedic and medical transport services, disaster preparedness, and ocean lifeguard services.

Public Works is comprised of two departments (Public Works and Utilities) providing engineering, construction and maintenance of public streets, highways, buildings, beaches, parks, facilities and related infrastructure; as well as traffic engineering and street lighting.

Community Development is comprised of one department (Community Development) that provides planning, building, and zoning services, economic development services, and building plan check and code enforcement services.

Community Services is comprised of three departments (Library Services, Recreation & Senior Services, and Harbor) providing library services, cultural and arts programs, recreation services, senior social and transportation services and harbor programs and services.

Business Enterprise Operations are overseen by the Utilities Department providing water and wastewater services. These are considered business -type activities and are discussed further in the Business -Type Activities section.

Figure 2 illustrates in detail how the $250.7 million of Governmental Activities expense was derived. The increase of $4.2 million from the prior year is mostly due to an increase in spending related to the COVID pandemic, including providing economic support to small businesses, and an increase in maintenance type capital improvement projects. 7-48

Figure 4 below summarizes the governmental activities expense shared across function.

Figure 4
Governmental Activities Functional Expenses
Year Ended June 30, 2021
3%
5%
8%
Public Safety
■ Public Works
11 % 48% ■ Community Services
General Government
Community Development
Interest
25%
Figures 5 and 6 illustrate the net cost of each service. The net cost represents the amount that governmental activities are subsidized by taxes and other general revenues of the City.

General government
Public safety
Public works
Community development
Community services
Interest
Figure 5
Governmental Activities
(in thousands)
2020
Total Cost Net Cost
of Service of Service
$ 20,714
$ (15,497)
119,194
(94,767)
60,055
(38,463)
12,842
(2,860)
26,668
(8,204)
7,065
(7,065)
$ 246,538
$ (166,856)
2021
Total Cost Net Cost
of Service of Service
$ 20,394
$ (16,342)
119,185
(93,945)
63,689
(38,984)
12,157
(1,205)
28,214
(7,029)
7,105
(7,105)
$ 250,744
$ (164,610)
7-49

Figure 6
Program Expenses and Revenue - Governmental Activities
Year Ended June 30, 2021
(in millions)
$130.0 -
$120.0
$110.0 -
$100.0 -
$90.0
$80.0
$70.0
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$0.0 �
General Public Safety Public Works Community Community Interest Government Development Services
■Total Expenses ■Program Revenues

BUSINESS -TYPE ACTIVITIES
As noted earlier, the City combines the Water Enterprise Fund and Wastewater Enterprise Fund into Business -type Activities for the presentation of the Government -wide Financial Statements.

Business -type activities are mainly funded by charging fees to customers to recover the cost of providing services.

Revenues Associated with Business -Type Activities Discussion As displayed in Figure 2, total revenues related to Business -type activities totaled $35.4 million, of which, all is related to program revenues. As shown in Figure 7 on the following page, Water activities represents about $30.8 million (87.0%) of program revenues, while Wastewater activities represents $4.6 million (13.0%) of program revenues.
7-50

Figure 7
Program Expenses and Revenue - Business -type Activities Year Ended June 30, 2021
(in millions)
$35.0 - -
$30.0
$25.0
$20.0 -
$15.0
$10.0
$5.0
$0.0
Water Wastewater
■Total Expenses ■ Program Revenues
Expenses Associated with Business -Type Activities Discussion Current year expenses for Business -type activities totaled $34.2 million, an increase of about $2.5 million over prior year as shown in Figure 2. This is attributable to an increase in general and system maintenance and miscellaneous expenses.

Major Business -type expenses in the current fiscal year included the following Water
Of the $28.9 million in water related expenses, $11.2 million (38.8%) is for the purchase of water, $5.2 million (18.0°/x) covers employee related costs, $6.2 million (21.5%) is for maintenance, supplies, and depreciation of the water system, $2.8 million (9.7%) is for professional services, $2.0 million (6.8%) is for utility payments and the remaining $1.5 million (5.3%) is collectively attributable to other miscellaneous expenses.

Wastewater
Of the $5.2 million in wastewater related expenses, $2.5 million (47.8%) is for maintenance, supplies, and depreciation of the wastewater system, $1.5 million (29.2%) is for employee related costs, and the remaining approximately $1.2 million (23.0%) is attributable to professional services, utility payments and other miscellaneous expenses.

Figure 7 summarizes Business -type expenses separately for Water and Wastewater activities. 7-51

FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City uses fund accounting to highlight available financial resources and to ensure and demonstrate compliance with finance -related legal requirements.

Governmental Funds
Utilizing the financial resources measurement focus, the City's Governmental Funds provide information on near-term inflows, outflows, and balances of spendable resources. This information is useful in assessing the City's financing requirements and may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

Fund Balance — As shown in Figure 8, the City's Governmental Funds reported combined fund balances of $222.3 million, an increase of $17.3 million from the prior year. The increase is the net result of increases in fund balances in the General Fund, Facilities Financial Planning Reserve Fund, Civic Center COP Fund, Tide and Submerged Land — Operating Fund, Tide and Submerged Land — Harbor Capital Fund, and other permanent funds in aggregate; offset by decreases in the other special revenue funds, and other capital projects funds in aggregate. The General Fund represented $106.0 million or 47.7% of the combined fund balances of the Governmental Funds.

Figure 8
Governmental Funds Fund Balance
(in thousands)
General Fund
Tide and Submerged Land - Operating
Tide and Submerged Land - Harbor Capital
Facilities Financial Planning Reserve
Civic Center COP
Non -major special revenue
Non -major capital projects
Non -major permanent
2020 2021 Change
$ 99,083 $ 105,953 $ 6,870
2,872
4,313
1,441
16,399
23,608
7,209
17,047
28,093
11,046
1,159
2,256
1,097
23,056
21,798
(1,258)
38,740
29,608
(9,132)

6.667

6.673
6 $ 205,023 $ 222,302 $ 17,279
The following describes the classification of fund balance as of June 30, 2021. Additional information on the City's fund balance can be found in Note (16) of the Notes to the Financial Statements.

Nonspendable Fund Balance — The City has $15.3 million in fund balance classified as nonspendable to indicate that it cannot be readily converted to cash. Of the $15.3 million nonspendable fund balance, $978,644 is for prepaid items, $309,343 is for inventories, $9.4 million is for long-term loan receivables, and $4.6 million is for permanent endowments.

Restricted Fund Balance — The City has $68.8 million in fund balance classified as restricted to indicate that it has an externally imposed restriction on how the money may be spent. Of the $68.8 million restricted fund balance, $4.9 million is restricted in the General Fund, of which $212,877 is for Affordable Housing, $1.7 million is for Oceanfront Encroachment and $3.0 million is restricted for support of public access channel programming, training, and community benefits; 7-52

$3.6 million is restricted in the Tide and Submerged Land - Operating Fund, of which $2.4 million is restricted for capital projects and maintenance and repairs, and $1.2 million is restricted for the Upper Newport Bay restoration; $23.6 million is restricted in the Tidelands and Submerged Land - Harbor Capital Fund for capital projects; and $2.3 million is restricted for Civic Center COP debt service. Of the remaining $34.5 million in restricted fund balance, $21.7 million is restricted for various special revenue funds, $2.9 million is restricted for the Assessment District Fund, $7.9 million is restricted for the Fire Station Fund, and $2.0 million of fund balance is restricted for permanent funds.

Committed Fund Balance - The City has $51.1 million in fund balance classified as committed to indicate that the City Council has committed how the money will be spent. Of the $51.1 million committed fund balance, $3.2 million is committed in the General Fund for encumbrances and miscellaneous projects; $760,000 is committed in the Tide and Submerged Land - Operating Fund; $28.1 million is committed in the Facilities Financial Planning Reserve Fund; $121,334 is committed in the Fire Station Fund, $7.0 million is committed in the Unrestricted Capital Improvements Fund; $4.7 million is committed in the Parks and Community Center Fund, $497,985 is committed in the Civic Center Fund, $2.2 million is committed to the Facilities Maintenance Fund; $3.1 million is committed in the Neighborhood Enhancement Fund; and $1.4 million is committed in Balboa Village Parking Management District Fund.

Assigned Fund Balance - The City has $1.5 million in fund balance which is not restricted or committed and is classified as assigned to indicate the City Manager's intent to be used for specific purposes. Currently, the assignments are intended to be used for items related to arts and culture.

Unassigned Fund Balance - The remaining $85.6 million in fund balance is classified as unassigned to indicate that it is the residual balance not otherwise restricted, committed, or assigned.

Major Governmental Funds results for the year included the following:

General Fund revenues finished $4.8 million or 2.1 % higher than prior year mostly due to a $5.8 million increase in property taxes as the City's assessed valuation continued to increase due primarily to the appreciation of home values, and a $2.7 million increase in sales taxes as consumer spending increased as pandemic related restrictions eased.

These two major increases were offset by a $4.0 million pandemic related decrease in transient occupancy taxes revenues. General Fund expenditures finished $8.4 million or

4.3% higher than the prior year mostly due to a $5.7 million increase in pension related costs, primarily due to additional discretionary payments to pay down the City's unfunded liability sooner; and a $1.2 million increase in public safety strike team and mutual aid costs that will be offset by future reimbursements. In total, fund balance in the General Fund increased $6.9 million and ended the year at $106.0 million.

Fund balance for the Tide and Submerged Land - Operating Fund increased $1.4 million and ended the current year with $4.3 million in fund balance. The increase was due to the City's General Fund subsidizing the operations of the Tide and Submerged Land - Operating Fund.
• Fund balance for the Tide and Submerged Land - Harbor Capital Fund increased $7.2 million ending at $23.6 million. This was largely due to a transfer from the General Fund 7-53

for harbor related capital improvements and net results from operations as the fund accumulates resources for future harbor related uses.
• Fund balance for the Facilities Financial Planning Reserve Fund increased $11.0 million to end the current year at $28.1 million in fund balance. This was mainly due to the revenue from donations and transfers of unexpended appropriations from various Capital Projects Funds that relate to completed or ultimately debt-financed capital projects. • Fund balance for the Civic Center COP Fund increased $1.1 million ending at $2.3 million.

The increase was mostly due to the receipt of a delayed Build America Bond subsidy payment from the federal government.

Proprietary Funds
The City's Proprietary Funds (Enterprise and Internal Service Funds) presented in the Fund Financial Statements section basically provides the same type of information in the Government - wide Financial Statements, but also include information for individual funds.

Enterprise Fund results for the year included the following:
• Net position in the Water Fund increased $2.0 million mainly due to increases in both water rates and water usage. Associated expense increases were manageable, because the City was allowed to purchase more groundwater than usual. Groundwater generally costs less than imported water.

Net position in the Wastewater Fund decreased $489,429 mainly due to expenses exceeding revenues. The implementation of a multi-year rate increase is ongoing.

Major Internal Service Fund activity in the current fiscal year included the following:

Total net position in the Internal Service Funds increased $2.7 million in the current year.

This was mostly due to operating income of $6.6 million, which included increases in revenue from charges for services for retiree insurance and equipment maintenance.

Operating income's contribution to net position was reduced by the net effect of non- operating revenue and net transfers, which combined reduced net position by approximately $3.9 million. Approximately $4.5 million was transferred to the General Fund following an analysis of certain Internal Service Funds that had excess reserves on hand that could be returned to the General Fund as part of the budget -balancing strategy to address the COVID-19 pandemic.

GENERAL FUND BUDGETARY HIGHLIGHTS
Changes to Original Budget
Final budgeted revenues for the General Fund increased $19.1 million from the original budget during the year ended June 30, 2021. Factors contributing to this fluctuation are highlighted as follows:

Sales tax revenue estimates were increased $5.8 million based on more favorable economic conditions than expected when the budget was developed. Certain industry 7-54

categories, such as autos and transportation saw record highs, even as others, such as restaurants were hit especially hard.

The transient occupancy tax budget was increased by $8.8 million as most major hotels and short-term lodging reopened after the budget was developed. Short-term lodging revenues very quickly rebounded and achieved record highs, while hotel -related revenues rebounded faster over time than anticipated as occupancy rates improved. The revenue impact of these lower occupancy rates was partially offset by sustained higher -than typical daily room rates.
• Final budgeted intergovernmental revenue increased $3.5 million due to an increase in grants from other governmental agencies, specifically from the CARES Act, California Office of Emergency Services, and Medi -Cal Intergovernmental Transfer program. • Service Fees & Charges decreased from the adopted budget, in the amount of $3.0 million. The most significant portion of these reductions were from fee-based recreation classes that were canceled or scaled back due to the pandemic. • Other Taxes, which includes Property Transfer Tax, Business License Tax, and Franchise Taxes increased by $1.4 million. These revenue sources performed better than expected when the budget was developed and the impact from the COVID-19 pandemic was still unknown.
• Miscellaneous revenues, licenses and permits, and property income all were adjusted upward from the adopted budget by a total of $2.6 million. These revenues had been adjusted downward by 20% across the board in response to the pandemic. Ultimately building construction activity remained strong, parking revenues hit record highs as visitors flocked to the beaches in lieu of other vacation destinations, and property income continued to be received without any measurable delinquencies.

Final budgeted expenditures for the General Fund increased $7.8 million from the original budget during the year ended June 30, 2021. The significant factors contributing to the increase are as follows:
• The addition of $5.0 million to the benefits budget associated with an additional discretionary payment toward the City's unfunded pension liability. • An increase of $1.2 million related to the City's contribution to a new homeless shelter to be operated by the City of Costa Mesa in partnership with the City of Newport Beach.

Variance with Final Budget
Actual General Fund revenues came in at $16.1 million above final budgeted revenues for the year ended June 30, 2021. Significant factors contributing to this favorable variance are summarized as follows:

A favorable variance of $1.6 million in property taxes was mostly due to secured property taxes coming in above expectations.
7-55

• A favorable variance of $4.4 million in sales tax revenue was due to strong consumer spending in certain industries such as autos and transportation, despite restrictions in place for restaurants, as well as increased revenues from the Orange County sales tax pool from online purchases.
• A favorable $1.7 million variance in transient occupancy tax was due to the aforementioned positive variances in hotel occupancy rates and nightly room rates. • Other Taxes ended the year $1.8 million higher than projected due primarily to strong growth in property transfer taxes related to a very active housing market. • Charges for services ended the year $3.9 million higher due primarily to receipts for paramedic service fees that were $1.6 million more than the revised budget. This was caused by a higher number of transports and a reduction in collection times for these fees.

Additionally, plan check fees came in higher than anticipated due to steady activity in the construction field, including large projects such as the Newport Beach Marriot Hotel & Spa renovation and other sizable developments.

Actual General Fund expenditures of $203.5 million were less than final budgetary estimates of $210.6 million. The $7.1 million favorable variance was due to routine savings in salaries as well as contract services.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City's capital assets for governmental and business -type activities as of June 30, 2021, amounts to $2.4 billion, net of accumulated depreciation. This is comprised of a broad range of capital assets including land, buildings, machinery and equipment, park facilities, road improvements, storm drains, piers, oil wells, sound walls, an 800 MHz radio communications system, parking pay stations and meters, and bridges. The total capital assets increased $10.8 million over the prior fiscal year.

Figure 9
Capital Assets at Year End
(net of depreciation, in thousands)
7-56
Governmental
Business -Type
Activities
Activities
Total
2020
2021
2020
2021
2020
2021
Land
$ 1,897,520 $
1,897,520
$ 2,219 $
2,219
$ 1,899,739 $
1,899,739
Structures
190,481
186,077
424
409
190,905
186,486
Equipment
18,774
18,428
167
154
18,941
18,582
Infrastructure
206,039
210,945
115,104
122,831
321,143
333,776
Work in progress
6,013
11,375
2,855
415
8,868
11,790
Totals
$ 2,318,827 $
2,324,345
$ 120,769 $
126,028
$ 2,439,596 $
2,450,373
7-56

Major capital asset events during the current fiscal year included the following:
• Capital asset additions totaled $39.2 million in both the Governmental and Business Type Activities in the current year. Of the $39.2 million, $23.7 million represents additions of infrastructure assets mostly related to the road system and water system; and $4.0 million is related to equipment additions. The remaining $15.5 million is comprised of additions of non -depreciable assets such as work in progress, $10.6 million, along with depreciable structure additions of $873,519.
• Of the $28.4 million of additions in governmental assets in the current year, additions in infrastructure contributed $13.4 million, which was mostly due to upgrades in the road system. The remaining $15.0 million added in the current year as governmental assets, is comprised of $873,519 million of structure additions which is mostly related to a new gun range at the police station, $10.2 million of work in progress, mostly related to the ongoing construction of a new fire station, enhancements to an existing park and upgrades to the road system, and $4.0 million of equipment additions mostly related to vehicle purchases and the purchase of parking pay stations.
• The $10.7 million of business -type asset additions in the current year is comprised of $10.3 million in water and sewer system infrastructure additions, $12,007 in equipment additions, and $414,590 of work in progress additions related to water system improvements.

Additional information on the City's capital assets can be found in Note (5) of the Notes to the Financial Statements.

Long-term Debt
Figure 10
Outstanding Debt at Year End
(in thousands)
The City's total debt increased $5.9 million during the current fiscal year. The increase is the result of the issuance of new debt, partially offset by debt service payments and amortization of bond premiums. Additional information on the City's long-term debt obligation can be found in Note (6) of the Notes to the Financial Statements.
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Governmental
Business -Type
Total
Activities
Activities
2020 2021
2020 2021
2020 2021
Certificates of participation
$ 100,695 $ 105,490
$ $
$ 100,695 $ 105,490
Bond premium
- 1,291
- 1,291
CDBG Loan
585 403
585 403
Totals
$ 101,280 $ 107,184
$ $
$ 101,280 $ 107,184
The City's total debt increased $5.9 million during the current fiscal year. The increase is the result of the issuance of new debt, partially offset by debt service payments and amortization of bond premiums. Additional information on the City's long-term debt obligation can be found in Note (6) of the Notes to the Financial Statements.
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FACTORS AFFECTING NEXT YEAR'S BUDGET
Economy
The Conference Board recently forecasted that that the US economy will grow by 3.5 percent (year -over -year) in 2022 and 2.9 percent (year -over -year) in 2023. This forecast is a downgrade from the prior outlook despite the recent approval of a large bipartisan infrastructure package by Congress. While this package will certainly benefit growth in 2022 and 2023, the forecast had already assumed it would pass for several months.

The downgrade is due to two concerns. 1) Despite progress in the vaccination campaign, some resurgence in COVID-19 in Q1 2022 is expected due to colder weather and more time spent indoors. This seasonal pattern was seen in early 2021 and it is expected that a similar, though muted, wave of infections early next year may slow consumer spending growth. 2) It is expected that the US Federal Reserve (the Fed) will begin to raise interest rates earlier and incrementally more frequently than previously anticipated. The persistence of high inflation rates and a recent rebound in hiring are likely to result in the Fed reigning in supportive monetary policy more rapidly.

While these two factors will moderate growth in 2022 and 2023, it is important to note that projections still show robust economic expansion over the next two years.

Next year, the bulk of economic growth will be associated with continued expansion in consumer spending. However, economists expect support from business investment and, critically, a rebound in private inventories. Government spending should also grow more rapidly as money associated with the infrastructure package begins to be spent. Finally, economists are also increasing their inflation outlook for 2022. Recent bottlenecks in supply chains, elevated demand for some goods and services, and higher energy prices appear to be more persistent than previously thought.

Local Revenue Trend
Residential and commercial property values are among the highest in the country. Our overall assessed valuation (AV) has been stable despite the economic downturn between 2009 and 2012, with growth in the each of the last 26 years. Property tax revenues in Newport Beach are expected to continue to grow in the 5% to 6% range in the year ahead. This positive growth is primarily being driven by a strong real estate market with the limited inventory of coastal and view homes seeing strong demand. The reassessment of homes that are sold to the current market value has a significantly positive impact on the City's property tax revenues as homes that have been owned by the same owner for 10, 20, or more years are sold at prices that substantially exceed the assessed valuation of the homes as limited by Proposition 13.

Sales have since steadily rebounded and are now in 2021 13% higher than the same period in 2019, a year before the crisis began. Limited supply has been overwhelmed by strong demand.

Consumers are treating themselves to more expensive models, with new cars reported to be 8% more costly this year. The California New Car Dealers Association reports that Porsche, Mercedes, and Tesla have been the most sought-after brands in 2021, all of which have retail locations in Newport Beach. S&P Global and other research firms are forecasting that sales will begin to flatten out in 2022, but the sizable number of automobile dealers in the City is anticipated to have a continued positive impact on the City's sales tax revenues in the year ahead. Fiscal 7-58

year 2020-21 saw the City achieve a record for sales tax revenues. It is anticipated that strong automobile sales combined with the continued rebound of in-person retail establishments and restaurants will push the City's sales tax revenues to a new high next fiscal year.

Discretionary Appropriations
The annual budget serves as the foundation for financial planning and control, and allows the City Council to prioritize expenditures in alignment with core community values. The budget as adopted is reflective of strong revenues, healthy reserves, and a sound debt position. This budget reflects a strong local economy that continues to provide stable revenues that support a wide variety of programs and initiatives. It also includes competitive wages for City employees that will further the City's goal of attracting and retaining a well-qualified workforce to meet the high expectations of our community.

The City Council adopted a fiscal year 2021-22 budget that maintains a deliberate resource balance between these important municipal expenses:
• Addressing long-term obligations such as pension liabilities, post -employment health care benefits, and debt service;
• Keeping a level of operations that reflects the community's desire for an active, safe, and attractive community; and
• Investing in infrastructure to maintain a high-quality natural and physical environment.

An aspect of the City's balanced approach to fiscal management is managing resources as efficiently as possible, responsibly managing debt, and working collaboratively with employees to recalibrate the compensation structure and share in the costs of pension obligations. Overall, the City's total debt burden is low and remains affordable. The economy benefits from the City's mature, wealthy tax base and strong employment among a diversity of business sectors, as well as retail shopping and tourism activity.

Fiscal year 2021-22 will mark another year of an accelerated plan to pay down the City's unfunded pension liability. Increasing the City's pension contribution now will result in a lower, level -dollar payment in the future, so the adopted budget also includes an additional $10.2 million discretionary payment towards the City's unfunded liability.

Overall, the City's total debt burden is low and remains affordable. The economy benefits from the City's mature, wealthy tax base and strong employment among a diversity of business sectors, as well as retail shopping and tourism activity. Residential and commercial property values are among the highest in the country. Our overall assessed valuation (AV) has been stable despite the economic downturn between 2009 and 2012, with growth in the each of the last 26 years.

A strong financial profile is a particularly important factor considered by rating agencies in their evaluation of the creditworthiness of local government debt. The rating agencies Fitch, Moody's, and Standard & Poor's which have all assigned the City the highest quality credit rating of AAA.

Moody's reaffirmed their AAA ratings in 2021. Expenditure controls within the past decade have included early retirement incentive plans, increased employee contributions to pension plans, contracting services, and freezing vacant positions when necessary, usually during recessionary periods. Financial operations produced net surpluses (after transfers) in the last ten years due to conservative budgeting and a stable and growing tax revenue base. The City has used surpluses 7-59

for important one-time purposes, like paying more towards retirement obligations and investing in IT and communications infrastructure. Financial management policies are robust and have continued to improve in recent years.

CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City's Finance Department, 100 Civic Center Drive, Newport Beach, CA 92660, (949) 644-3146. The City's Budgets, Annual Comprehensive Financial Reports, as well as other City financial information can be found on the City's website at:
www.newoortbeachca.aov/financialinfo
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FINANCIAL SECTIONV
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GOVERNMENT -WIDE FINANCIAL STATEMENTS
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CITY OF NEWPORT BEACH
Statement of Net Position
June 30, 2021
Assets:

Cash and investments (note 4)
Receivables:

Accounts (net of allowance)
Interest
Intergovernmental receivables
Restricted cash and investments with fiscal agent (note 4) Internal balances
Investment in joint ventures (note 14)
Inventory
Prepaid items
Capital assets (note 5):

Non -depreciable
Depreciable
Accumulated depreciation
Total assets
Deferred Outflows of Resources:

Deferred amount from pension plans (note 10)
Deferred amount from OPEB (note 11)
Total deferred outflows of resources
Liabilities:

Accounts payable
Accrued payroll
Accrued interest payable
Deposits payable
Unearned revenue
Noncurrent liabilities (note 6):

Due within one year
Due in more than one year:

Net pension liability (note 10)
Net OPEB liability (note 11)
Other
Total liabilities
Deferred Inflows of Resources:

Deferred amount from pension plans (note 10)
Deferred amount from OPEB (note 11)
Total deferred inflows of resources
Net Position:

Net investment in capital assets
Restricted for:

Public safety
Public works
Community services
Community development
Debt service
Permanent funds:

Nonexpendable
Expendable
Unrestricted
Total net position
Governmental
Business -type
310,081,711
Activities
Activities
Total
129,848,285
-
129,848,285
$ 279,418,393
$ 34,052,547
$ 313,470,940
8,814,538
6,663,749
15,478,287
824,791
99,552
924,343
13,171,502
99,863
13,271,365
18,373,724
-
18,373,724
644,587
(644,587)
-
256,862
-
256,862
756,798
-
756,798
5,347,783
-
5,347,783
1,908,895,494
2,634,040
1,911,529,534
685,353,555
197,210,256
882,563,811
(269,902,749)
(73,815,846)
(343,718,595)
2,651,955,278
166,299,574
2,818,254,852
2,043,658
-
2,043,658
62,371,001
1,864,920
64,235,921
8,062,754
438,601
8,501,355
70,433,755
2,303,521
72,737,276
14,889,650
5,886,750
20,776,400
5,233,135
182,887
5,416,022
3,590,292
-
3,590,292
2,583,151
29,940
2,613,091
9,330,752
-
9,330,752
13,867,383 - 13,867,383
300,459,059
9,622,652
310,081,711
19,248,798
1,048,642
20,297,440
129,848,285
-
129,848,285
499, 050, 505
16, 770, 871
515, 821, 376
693,186
6,875
700,061
185,275
10,078
195,353
878,461
16,953
895,414
2,227,572,605
124,775,772
2,352,348,377
734,689
-
734,689
25,660,079
-
25,660,079
31,648,834
-
31,648,834
216,184
-
216,184
2,255,795
-
2,255,795
4,629,781
-
4,629,781
2,043,658
-
2,043,658
(72,301,558)
27,039,499
(45,262,059)
$ 2,222,460,067
$ 151,815,271
$ 2,374,275,338
See accompanying notes to basic financial statements
7-64

CITY OF NEWPORT BEACH
Statement of Activities
Year Ended June 30, 2021
Net position at beginning of year
Net position at end of year
See accompanying notes to basic financial statements
7-65
Program Revenues
Operating
Capital
Total
Charges for
Grants and
Grants and
Program
Expenses
Services
Contributions
Contributions
Revenues
Functions/Programs
Primary government:

Governmental activities:

General government
$ 20,394,278 $
2,914,007
$ 1,137,923
$ $
4,051,930
Public safety
119,184,958
22,038,904
3,201,135
25,240,039
Public works
63,689,155
5,067,478
12,104,521
7,532,825
24,704,824
Community development
12,157,226
10,491,970
458,013
2,005
10,951,988
Community services
28,214,205
17,601,288
3,460,028
123,557
21,184,873
Interest on long-term debt
7,104,816
-
-
-
-
Total governmental activities
250,744,638
58,113,647
20,361,620
7,658,387
86,133,654
Business -type activities:

Water
28,943,243
30,739,726
-
-
30,739,726
Wastewater
5,223,245
4,618,186
4,618,186
Total business -type activities
34,166,488
35,357,912
-
-
35,357,912
Total primary government
$ 284,911,126 $
93,471,559
$ 20,361,620
$ 7,658,387 $
121,491,566
General revenues:

Taxes:

Property tax
Sales tax
Transient occupancy tax
Business license tax
Franchise tax
Other taxes
Investment income
Net decrease in fair
value of investments
Other
Total general revenues
Change in net position
Net position at beginning of year
Net position at end of year
See accompanying notes to basic financial statements
7-65

Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental Business -type
Activities Activities
Total
$ (16,342,348) $
$ (16,342,348)
(93,944,919)
(93,944,919)
(38,984,331)
(38,984,331)
(1,205,238)
(1,205,238)
(7,029,332)
(7,029,332)
(7,104,816)
(7,104,816)
(164,610,984) - (164,610,984)
1,796,483 1,796,483
(605,059) (605,059)
1,191,424 1,191,424
(164,610,984) 1,191,424 (163,419,560)
119,157,057
119,157,057
38,956,275
38,956,275
16,886,197
16,886,197
4,481, 349
4,481, 349
4,204,224
4,204,224
4,166,549
4,166,549
2,603,982
525,295
3,129,277
(2,086,189)
(469,799)
(2,555,988)
3,354,808
-
3,354,808
191,724,252
55,496
191,779,748
27,113,268
1,246,920
28,360,188
2,195, 346, 799 150,568,351 2,345,915,150
$ 2,222,460,067 $ 151,815,271 $ 2,374,275,338
See accompanying notes to basic financial statements
7-66

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7-67

FUND FINANCIAL STATEMENT

GOVERNMENTAL FUNDS

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7-69

GOVERNMENTAL FUNDS
Major Funds
The General Fund is used to account for fiscal resources that are dedicated to governmental operations of the City, and not required to be accounted for in another fund.

The Tide and Submerged Land — Operating Fund is a Special Revenue Fund used to account for revenues related to the operation of the City's tidelands, including beaches and marinas, and the related expenditures. Revenue from tideland operations includes, but is not limited to, rents from moorings, piers, and leases, as well as income from parking lots, meters, and the sale of oil.

The Tide and Submerged Land — Harbor Capital Fund is a Special Revenue Fund used to account for incremental increases in revenue from certain property lease, pier, and mooring rentals that exceed Council designated base year revenue amounts, as well as other designated revenues and the related expenditures for capital projects, maintenance, and servicing of loan advances from the General Fund.

The American Rescue Plan Act Fund is used to account for federal funding received through Coronavirus State and Local Fiscal Recovery Funds under the American Rescue Plan Act.

The Facilities Financial Planning Reserve Fund is used to account for the receipt and expenditure of funds for the replacement of facilities. In prior years, this fund was called the Facilities Replacement Fund.

The Civic Center COP Fund is used to account for debt service transactions related to the Certificates of Participation issued to finance the construction of the Civic Center.

Other Governmental Funds
Other governmental funds are those governmental funds that do not meet the criteria of a major fund. For reporting purposes in this section, they are combined as Other Governmental Funds.
7-70

Assets
Cash and investments (note 4)
Receivables:

Accounts (net of allowance)
Interest
Intergovernmental receivables
Restricted cash and investments with fiscal agent (note 4) Advance to other funds (note 12)
Due from other funds (note 12)
Prepaid items
Inventory
Total assets
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:

Accounts payable
Accrued payroll
Deposits payable
Unearned revenue
Advance from other funds (note 12)
Due to other funds (note 12)
Total liabilities
Deferred Inflows of Resources:

Unavailable revenue
Total deferred inflows of resources
Fund balances (deficits):

Nonspendable:

Prepaid items
Inventories
Long-term loan receivable
Permanent endowment
Restricted:

Affordable housing
Oceanfront encroachment
Upper Newport Bay restoration
Other
Committed:

Oil and gas
Other
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources and fund balances

CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2021

Page 1 of 2 ends

Special Revenue Funds
Tide and
Tide and
Submerged
Submerged
American
General Land - Operating
Land - Harbor Capital
Rescue Plan Act
$ 94,479,951 $ 4,593,441
$ 33,053,540
$ 5,070,636
5,148,723 1,464,333
-
-
322,461 45,467
75,395
10,971,734 -
-
9,426,659
439,194
901,095
309,343
-
-
$ 121,999,160 $ 6,103,241
$ 33.128.935
$ 5,070,636
$ 5,971,016 $ 824,660 $ 94,280 $
4,914,760 25,576 -
2,394,195 188,956 -
2,498,846 751,292 - 5,070,636
- - 9,426,659 -
15,778,817 1,790,484 9,520,939 5,070,636
266,945 - -
266,945
901,095
309,343
9,426,659
212,877
1,707,188 -
- 1,161,905 -
2,955,960 2,390,852 23,607,996
- 760,000 -
3,235,746 -
1,489,350
5,715,180
105,953,398 4,312,757 23,607,996
$ 121,999,160 $ 6,103,241 $ 33,128,935 $ 5,070,636
(continued)
See accompanying notes to basic financial statements
7-71

Assets
Cash and investments (note 4)
Receivables:

Accounts payable
Accrued payroll
Deposits payable
Unearned revenue
Advance from other funds (note 12)
Due to other funds (note 12)
Total liabilities
Deferred Inflows of Resources:

Unavailable revenue
Total deferred inflows of resources
Fund balances (deficits):

Nonspendable:

Prepaid items
Inventories
Long-term loan receivable
Permanent endowment
Restricted:

Affordable housing
Oceanfront encroachment
Upper Newport Bay restoration
Other
Committed:

Oil and gas
Other
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources and fund balances

CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2021

Page 2 of 2 ends

Capital Project Fund Debt Service Fund
Facilities Other
Financial Planning Civic Center Governmental
Reserve COP Funds Totals
$ 21,524,441 $ - $ 53,376,807 $ 212,098,816
- 986,123 7,599,179
58,350 125,876 627,549
- - 2,199,768 13,171,502
8,651,423 9,722,301 18,373,724
- - - 9,426,659
6,531,812 - 6,971,006
- 77,549 978,644
- - 309,343
$ 28,114,603 $ 8,651,423 $ 66,488,424 $ 269,556,422
$ $ 115 $ 5,550,699 $ 12,440,770
- 3,342 4,943,678
- 2,583,151
22,006 987,972 9,330,752
- - - 9,426,659
6,395,513 222,657 6,618,170
22,006 6,395,628 6,764,670 45,343,180
1,644,087 1,911,032
1,644,087 1,911,032
77,549 978,644
- 309,343
- 9,426,659
4,629,781 4,629,781
212,877
1,707,188
- - 1,161,905
2,255,795 34,498,079 65,708,682
- - - 760,000
28,092,597 19,010,557 50,338,900
- - 1,489,350
(136,299) 85,578,881
28,092,597 2,255,795 58,079,667 222,302,210
$ 28,114,603 $ 8,651,423 $ 66,488,424 $ 269,556,422
See accompanying notes to basic financial statements
7-72

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7-73

CITY OF NEWPORT BEACH
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2021
Fund balances of governmental funds $ 222,302,210
Amounts reported for governmental activities in the statement of net position are different because:

Capital assets net of accumulated depreciation have not been included as financial resources in governmental fund activity. Amount excludes capital assets from internal service funds which are added below. 2,308,183,827 Long-term debts have not been reported in the governmental fund activity.

Amounts exclude long-term debt activity from internal service funds which have been added below:

Certificates of participation payable - Series 2010B (97,630,000) Certificates of participation payable - Series 2020A (7,860,000) Bond premium - Series 2020A (1,291,026)
CDBG loan (403,000)
Pension related debt applicable to the governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to pension are only reported in the Statement of Net Position as the changes in these amounts affect only the government -wide statements for governmental activities. Amounts exclude internal service fund activity which has been added below:

Deferred outflows of resources 61,144,383
Deferred inflows of resources (688,663)
Pension liability (294,129,932)
OPEB related debt applicable to the governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to OPEB are only reported in the Statement of Net Position as the changes in these amounts affect only the government -wide statements for governmental activities. Amounts exclude internal service fund activity which has been added below:

Deferred outflows of resources 7,774,270
Deferred inflows of resources (178,645)
OPEB liability (18,559,067)
Accrued interest payable for the current portion of interest due on long-term debt has not been reported in the governmental funds. (3,590,292) Some of the revenue will be collected after year-end, but is not available soon enough to pay for the current period's expenditures, and therefore is reported as unavailable revenue in the governmental funds. 1,911,032 Internal service funds are used by management to charge the costs of certain activities, such as self-insurance, workers' compensation, compensated absences, retiree insurance, fleet management and information technology, to individual funds.

The assets (including capital assets) and liabilities of the internal service funds must be added to the statement of net position. 44,573,521
Investment in joint ventures is not a current financial resource and therefore not reported in the governmental funds. 256,862
Internal balance created by the consolidation of internal service fund activities related to enterprise funds is not reported in the governmental funds. 644,587 Net position of governmental activities $ 2,222,460,067 See accompanying notes to basic financial statements
7-74

See accompanying notes to basic financial statements
7-75

CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2021
Page
1 of 2
Special Revenue Funds
Tide and
Tide and
Submerged
Submerged American
General
Land - Operating
Land - Harbor Capital Rescue Plan Act
Revenues:

Taxes and assessments:

Property tax
$ 119,157,057
$
$ $
Sales tax
38,956,275
Transient occupancy tax
16,886,197
Other taxes
12,852,122
Intergovernmental
5,175,738
Licenses, permits and fees
5,167,349
87,955
Charges for services
18,423,745
10,694
Fines and forfeitures
3,887,782
35,944
Investment income
1,598,624
146,455
404,878
Net decrease in fair value of investments
(1,221,105)
(147,649)
(357,700)
Property income
12,167,053
12,778,430
3,633,703
Donations
241,871
-
-
Other
1,415,919
-
-
Total revenues
234,708,627
12,911,829
3,680,881
Expenditures:

Current:

General government
16,254,262
1,117,041
-
Public safety
111,542,840
13,637,963
Public works
40,525,674
3,087,944
Community development
12,726,565
3,019
Community services
22,469,259
1,856,593
-
Capital outlay
-
479,994
967,233
Debt service (note 6):

Principal
-
-
Interest and fiscal charges
-
-
-
Total expenditures
203,518,600
20,182,554
967,233
Excess (deficiency) of revenues
over expenditures
31,190,027
(7,270,725)
2,713,648
Other financing sources (uses):

Transfers in (note 13)
10,335,111
8,711,959
4,500,000
Transfers out (note 13)
(34,655,212)
-
(4,184)
Certificates of participation issued
Premium on certificates of participation issued
-
-
Total other financing sources
(uses)
(24,320,101)
8,711,959
4,495,816
Net change in fund balances
6,869,926
1,441,234
7,209,464
Fund balances, beginning, as restated
99,083,472
2,871,523
16,398,532
Fund balances, ending
$ 105,953,398
$ 4,312,757
$ 23,607,996 $
(continued)
See accompanying notes to basic financial statements
7-75

CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2021

Page 2 of 2 ends

Capital Project Fund Debt Service Fund
Facilities Other
Financial Planning Civic Center Governmental
Reserve COP Funds
Revenues:

Taxes and assessments:

Property tax
Sales tax
Transient occupancy tax
Othertaxes
Intergovernmental
Licenses, permits and fees
Charges for services
Fines and forfeitures
Investment income
Net decrease in fair value of investments
Property income
Donations
Other
Total revenues
Expenditures:

Current:

General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service (note 6):

Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):

Transfers in (note 13)
Transfers out (note 13)
Certificates of participation issued
Premium on certificates of participation issued
Total other financing sources
(uses)
Net change in fund balances
Fund balances, beginning, as restated
Fund balances, ending
Totals
$ $
$ $
119,157,057
126,006,313
38,956,275
3,203,675
46,817,293
16,886,197
499,406
13,351,528
3,380,852 13,677,282
22,233,872
313,195
- 998,056
6,566,555
-
-
18,434,439
-
- -
3,923,726
263,817
36,298 751,304
3,201,376
(241,649)
- (666,579)
(2,634,682)
263,188
-
28,842,374
5,150,000
100,000
5,491,871
-
- 2,088,184
3,504,103
(6,549,729)
(21,918,451)
5,748,551
3,417,150 17,447,653
277,914,691
17,371,303
See accompanying notes to basic financial statements
7-76
825,510
126,006,313
3,203,675
46,817,293
267,256
12,996,840
2,419,337
26,745,189
-
32,280,858
33,728,085
3,065,000
182,000
3,247,000
6,901,879
187,468
7,089,347
-
9,966,879
39,366,104
274,001,370
5,748,551
(6,549,729)
(21,918,451)
3,913,321
19,844,644
7,646,138
19,341,972
70,379,824
(14,547,437)
-
(16,758,179)
(65,965,012)
7,860,000
7,860,000
-
-
1,373,936
1,373,936
5,297,207
7,646,138
11,817,729
13,648,748
11,045,758
1,096,409
(10,100,722)
17,562,069
17,046,839
1,159,386
68,180,389
204,740,141
$ 28,092,597 $
2,255,795 $
58,079,667 $
222,302,210
See accompanying notes to basic financial statements
7-76

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7-77

CITY OF NEWPORT BEACH
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year Ended June 30, 2021
Net change in fund balances - total governmental funds $ 17,562,069 Amounts reported for governmental activities in the statement of activities differ from the amounts reported in governmental funds because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives 5,237,027 as depreciation expense. This is the amount by which depreciation exceeded capital outlay in the current period.

The issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal and issuance costs of long-term debt consumes the current financial resources of the governmental funds. Issuance of bond principal is an other financing source and repayment of bond principal is an expenditure in governmental funds, but the issuance increases long-term liabilities and the repayment reduces long-term liabilities in the Statement of Net Position.

The amounts are the net effect of these differences in the treatment of long-term debt:

Certificates of participation issued - Series 2020A (7,860,000) Repayment of principal 3,247,000
Premium on bonds is recognized as revenues in the period received; however, in the statement of activities, it is amortized over the life of the bond.

Bond premium - Series 2020A (1,373,936)
Amortization of bond premium - Series 2020A 82,910
Accrued interest for debt service is the net change in accrued interest for the current period. (98,379) Pension expense reported in the governmental funds includes the employer contributions made.

In the Statement of Activities, pension expense includes the change in the net pension liability and related change in pension amounts for deferred outflows of resources and deferred inflows of resources. 4,872,162
OPEB expense reported in the governmental funds includes the employer contributions made.

In the Statement of Activities, OPEB expense includes the change in the net OPEB liability and related change in OPEB amounts for deferred outflows of resources and deferred inflows of resources. 3,292,279
Some of the revenue will be collected after year-end, but is not available soon enough to pay for the current period's expenditures, and therefore is reported as unavailable revenue in the governmental funds. This is the net change in unavailable revenue for the current period. (867,071)
Internal service funds are used by management to charge the costs of certain activities, such as self-insurance, workers' compensation, compensated absences, retiree insurance and fleet management, to individual funds. The net revenue of the internal service funds is reported in the statement of activities. 2,743,371 Investment in joint ventures creates an explicit, measurable equity interest reported only in the statement of activities. 10,392
Internal balance created by the consolidation of internal service funds activities related to enterprise funds is reflected as a reduction of revenues in the statement of activities. 265,444 Change in net position of governmental activities $ 27,113,268 See accompanying notes to basic financial statements
7-78

CITY OF NEWPORT BEACH
Budgetary Comparison Statement
General Fund
For the Year Ended June 30, 2021
See accompanying notes to basic financial statements
7-79
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:

Taxes and assessments:

Property
$ 117,508,227
$ 117,508,227
$ 119,157,057
$ 1,648,830
Sales
28,690,831
34,540,800
38,956,275
4,415,475
Transient occupancy
6,434,115
15,209,156
16,886,197
1,677,041
Other taxes
9,674,739
11,083,175
12,852,122
1,768,947
Intergovernmental
1,646,716
5,109,769
5,175,738
65,969
Licenses, permits and fees
4,194,661
5,093,067
5,167,349
74,282
Charges for services
17,521,798
14,477,586
18,423,745
3,946,159
Fines and forfeitures
3,536,151
3,144,524
3,887,782
743,258
Investment income
1,112,200
1,112,200
1,598,624
486,424
Net decrease in fair value of investments
-
-
(1,221,105)
(1,221,105)
Property income
8,706,310
10,109,836
12,167,053
2,057,217
Donations
113,000
525,155
241,871
(283,284)
Other
445,156
734,127
1,415,919
681,792
Total revenues
199,583,904
218,647,622
234,708,627
16,061,005
Expenditures:

General government:

City council
832,892
839,658
622,965
216,693
City clerk
1,141,782
1,162,143
1,116,925
45,218
City attorney
2,535,945
2,587,242
2,360,181
227,061
City manager
3,386,595
3,678,398
2,948,796
729,602
Finance
7,092,263
6,550,074
6,374,397
175,677
Human resources
3,243,014
3,302,699
2,830,998
471,701
Total general government
18,232,491
18,120,214
16,254,262
1,865,952
Public safety:

Police
67,002,345
65,413,679
62,900,635
2,513,044
Fire
54,790,910
46,920,623
48,642,205
(1,721,582)
Total public safety
121,793,255
112,334,302
111,542,840
791,462
Public works:

Public works - general services
26,387,118
26,746,503
26,815,801
(69,298)
Public works
10,666,858
8,812,475
8,680,675
131,800
Utilities
5,033,549
5,109,739
5,029,198
80,541
Total public works
42,087,525
40,668,717
40,525,674
143,043
See accompanying notes to basic financial statements
7-79

CITY OF NEWPORT BEACH
Budgetary Comparison Statement
General Fund
For the Year Ended June 30, 2021
(continued)
Community services
Parking operations
2,114,404
2,476,564
Variance with
574,833
Library services
9,559,849
Final Budget
9,160,027
Budgeted Amounts
Recreation and senior services
Positive
13,617,021
Original Final
Actual
(Negative)
Community development:
26,388,494
22,469,259
3,919,235
Community development
11,751,729 12,106,768
11,775,668
331,100
Code and water quality enforcement
993,947 953,842
950,897
2,945
Total community development
12,745,676 13,060,610
12,726,565
334,045
Community services
Parking operations
2,114,404
2,476,564
1,901,731
574,833
Library services
9,559,849
10,294,909
9,160,027
1,134,882
Recreation and senior services
13,325,836
13,617,021
11,407,501
2,209,520
Total community services
25,000,089
26,388,494
22,469,259
3,919,235
Total expenditures
219,859,036
210,572,337
203,518,600
7,053,737
Excess of revenues
over expenditures
Other financing sources (uses):

Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balance
Fund balance, beginning
Fund balance, ending
(20,275,132) 8,075,285 31,190,027 23,114,742
9,623,249 10,616,723 10,335,111 (281,612)
(6,000,000) (34,655,212) (34,655,212)
3,623,249 (24,038,489) (24,320,101) (281,612)
(16,651,883) (15,963,204) 6,869,926 22,833,130
99,083,472 99,083,472 99,083,472 -
$ 82,431,589 $ 83,120,268 $ 105,953,398 $ 22,833,130
See accompanying notes to basic financial statements
7-80

CITY OF NEWPORT BEACH
Budgetary Comparison Statement
Tide and Submerged Land - Operating
For the Year Ended June 30, 2021
Expenditures:

General government
-
1,104,658
1,117,041
Variance with
Public safety
-
12,420,766
13,637,963
Final Budget
Public works
Budgeted
Amounts
3,087,944
Positive
Community development
Original
Final
Actual
(Negative)
Revenues:
2,208,344
2,339,878
1,856,593
483,285
Licenses, permits and fees
$ 48,785
$ 66,507
$ 87,955
$ 21,448
Charges for services
8,608
12,050
10,694
(1,356)
Fines and forfeitures
15,144
17,843
35,944
18,101
Investment income
192,208
192,208
146,455
(45,753)
Net decrease in fair value of investments
-
-
(147,649)
(147,649)
Property income
10,224,109
11,885,165
12,778,430
893,265
Total revenues
10,488,854
12,173,773
12,911,829
738,056
Expenditures:

General government
-
1,104,658
1,117,041
(12,383)
Public safety
-
12,420,766
13,637,963
(1,217,197)
Public works
746,736
3,189,116
3,087,944
101,172
Community development
-
-
3,019
(3,019)
Community services
2,208,344
2,339,878
1,856,593
483,285
Capital outlay
780,000
1,293,095
479,994
813,101
Total expenditures
3,735,080
20,347,513
20,182,554
164,959
Excess (deficiency) of revenues
over expenditures 6,753,774 (8,173,740) (7,270,725) 903,015 Other financing sources:

Transfers in - 8,711,959 8,711,959
Net change in fund balance
6,753,774
538,219
1,441,234 903,015
Fund balance, beginning
2,871,523
2,871,523
2,871,523 -
Fund balance, ending
$ 9,625,297
$ 3,409,742
$ 4,312,757 $ 903,015
See accompanying notes to basic financial statements
7-81

CITY OF NEWPORT BEACH
Budgetary Comparison Statement
Tide and Submerged Land - Harbor Capital
For the Year Ended June 30, 2021
See accompanying notes to basic financial statements
7-82
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:

Investment income
$ 436,141
$ 436,141
$ 404,878
$ (31,263)
Net decrease in fair value of investments
-
-
(357,700)
(357,700)
Property income
2,320,035
2,320,035
3,633,703
1,313,668
Total revenues
2,756,176
2,756,176
3,680,881
924,705
Expenditures:

Capital outlay
1,946,972
12,233,890
967,233
11,266,657
Excess (deficiency) of revenues
over expenditures
809,204
(9,477,714)
2,713,648
12,191,362
Other financing sources (uses):

Transfers in
-
4,500,000
4,500,000
-
Transfers out
-
(4,184)
(4,184)
-
Total other financing
sources (uses)
-
4,495,816
4,495,816
-
Net change in fund balance
809,204
(4,981,898)
7,209,464
12,191,362
Fund balance, beginning
16,398,532
16,398,532
16,398,532
-
Fund balance, ending
$ 17,207,736
$ 11,416,634
$ 23,607,996
$ 12,191,362
See accompanying notes to basic financial statements
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FUND FINANCIAL STATEMEN

PROPRIETARY FUNDS
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7-85

PROPRIETARY FUNDS
Business -type Activities
The Water Fund is a Major Fund used to account for the operations of the City's water utility, a self-supporting activity which is entirely financed though user charges.

The Wastewater Fund is a Major Fund used to account for the operations of the City's wastewater system, a self-supporting activity which is entirely financed through user charges.

Governmental Activities
The Internal Service Funds are used to allocate the cost of providing goods and services by one department to other departments on a cost reimbursement basis.

CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Net Position
June 30, 2021
Assets and Deferred Outflows of Resources
Current assets:

Cash and investments
Receivables:

Accounts (net of allowance)
Interest
Intergovernmental receivables
Inventories
Prepaid items
Total current assets
Noncurrent assets:

Capital assets (note 5):

Land
Structures
Equipment
Software
Infrastructure
Work in progress
Less accumulated depreciation
Total capital assets (net of accumulated depreciation)
Total assets
Deferred outflows of resources:

Deferred amount from pension plans
Deferred amount from OPEB
Total deferred outflows of resources
Liabilities and Deferred Inflows of Resources
Current liabilities:

Accounts payable
Accrued payroll
Deposits payable
Due to other funds (note 12)
Workers' compensation - current
General liability - current
Compensated absences - current
Total current liabilities
Noncurrent liabilities:

Workers' compensation (note 6)
General liability (note 6)
Compensated absences (note 6)
Net pension liability (note 10)
Net OPEB liability
Total noncurrent liabilities
Total liabilities
Deferred inflows of resources:

Deferred amount from pension plans
Deferred amount from OPEB
Total deferred inflows of resources
Net Position
Net investment in capital assets 95,781,695 28,994,077 124,775,772 19,627,040 Unrestricted 26,493,102 1,190,984 27,684,086 24,946,481 Total net position $ 122,274,797 $ 30,185,061 152,459,858 $ 44,573,521 Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds (644,587) Net position of business -type activities $ 151,815,271 See accompanying notes to basic financial statements
7-87
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 31,398,142
$ 2,654,405
$ 34,052,547
$ 67,319,577
5,721,383
942,366
6,663,749
1,215,359
91,778
7,774
99,552
197,242
99,863
-
99,863
-
-
-
447,455
-
-
-
4,369,139
37,311,166
3,604,545
40,915,711
73,548,772
2,219,450
-
2,219,450
-
688,396
-
688,396
39,581
301,193
35,988
337,181
41,859,340
-
-
-
3,603,419
147,358,085
48,826,594
196,184,679
-
264,425
150,165
414,590
462,981
(53,832,521)
(19,983,325)
(73,815,846)
(29,802,848)
96,999,028
29,029,422
126,028,450
16,162,473
134,310,194
32,633,967
166,944,161
89,711,245
1,347,450
517,470
1,864,920
1,226,618
316,901
121,700
438,601
288,484
1,664,351
639,170
2,303,521
1,515,102
5,808,573
78,177
5,886,750
2,448,880
138,683
44,204
182,887
289,457
29,940
-
29,940
-
-
-
352,836
2,716,603
2,679,733
-
-
-
4,336,047
5,977,196
122,381
6,099,577
12,823,556
-
-
-
12,036,397
5,585,902
-
-
-
9,176,960
6,952,631
2,670,021
9,622,652
6,329,127
757,672
290,970
1,048,642
689,731
7,710,303
2,960,991
10,671,294
33,818,117
13,687,499
3,083,372
16,770,871
46,641,673
4,967
1,908
6,875
4,523
7,282
2,796
10,078
6,630
12,249
4,704
16,953
11,153
Net Position
Net investment in capital assets 95,781,695 28,994,077 124,775,772 19,627,040 Unrestricted 26,493,102 1,190,984 27,684,086 24,946,481 Total net position $ 122,274,797 $ 30,185,061 152,459,858 $ 44,573,521 Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds (644,587) Net position of business -type activities $ 151,815,271 See accompanying notes to basic financial statements
7-87

CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Revenues,
Expenses and Changes in Net Position
For the Year Ended June 30, 2021
Operating expenses
Purchase of water
11,156,173
Enterprise Funds
11,156,173
-
Salaries and benefits
5,241,360
1,526,710
6,768,070
Governmental
Depreciation
1,648,246
651,414
Total
Activities
Professional services
2,796,812
466,669
Enterprise
Internal Service
Maintenance and supplies
Water
Wastewater
Funds
Funds
Operating revenues:
2,136,803
876,922
3,013,725
-
Charges for sales and services:
1,969,678
75,672
2,045,350
-
Water sales
$ 30,413,190
$
$ 30,413,190
$ -
Charges for services
-
-
-
32,823,267
Sewer service and connection fees
4,586,512
4,586,512
-
Retiree reimbursements
-
-
141,862
Employee contributions
-
-
-
59,084
Other
326,536
31,674
358,210
1,046,058
Total operating revenues
30,739,726
4,618,186
35,357,912
34,070,271
Operating expenses
Purchase of water
11,156,173
-
11,156,173
-
Salaries and benefits
5,241,360
1,526,710
6,768,070
3,444,472
Depreciation
1,648,246
651,414
2,299,660
3,500,207
Professional services
2,796,812
466,669
3,263,481
281,592
Maintenance and supplies
2,453,903
968,865
3,422,768
2,884,280
System maintenance
2,136,803
876,922
3,013,725
-
Utilities
1,969,678
75,672
2,045,350
-
Fleet parts and supplies
-
-
-
299,837
Telecommunication
-
-
153,434
Hardware
-
-
436,613
Software
-
-
237,204
Workers' compensation
-
-
1,917,334
Claims and judgments
-
5,604,723
Compensated absences
-
2,866,959
OPEB ARC - cash subsidy
-
-
-
5,819,883
Other
1,386,664
545,153
1,931,817
-
Total operating expenses
28,789,639
5,111,405
33,901,044
27,446,538
Operating income (loss)
1,950,087
(493,219)
1,456,868
6,623,733
Nonoperating revenues:

Investment income
480,092
45,203
525,295
957,868
Net decrease in fair value of investments
(428,386)
(41,413)
(469,799)
(865,084)
Gain on sale of capital assets
-
-
-
441,666
Total nonoperating revenues
51,706
3,790
55,496
534,450
Income (loss) before transfers
2,001,793
(489,429)
1,512,364
7,158,183
Transfers in (note 13)
-
-
531,764
Transfers out (note 13)
-
(4,946,576)
Total transfers
-
-
(4,414,812)
Change in net position
2,001,793
(489,429)
1,512,364
2,743,371
Net position, beginning of year
120,273,004
30,674,490
41,830,150
Net position, end of year $
122,274,797
$ 30,185,061
$ 44,573,521
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
(265,444)
Change in net position of business -type activities
$ 1,246,920
See accompanying notes to basic financial statements
7-88

CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Cash Flows
For the Year Ended June 30, 2021
Noncash investing, capital and financing activities:

Net (decrease) in fair value of investments
Total of noncash activities
$ (428,386) $ (41,413) $ (469,799) $ (865,084)
$ (428,386) $ (41,413) $ (469,799) $ (865,084)
See accompanying notes to basic financial statements
S•
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal
Service
Water
Wastewater
Funds
Funds
Cash flows from operating activities:

Cash received from customers or user departments
$ 29,954,995
$ 4,507,796
$ 34,462,791
$
33,545,836
Cash payments to employees for services
(5,656,512)
(1,686,265)
(7,342,777)
(8,773,870)
Cash payments to suppliers for goods and services
(18,175,318)
(2,469,435)
(20,644,753)
(17,389,115)
Cash payments for other operating activities
(1,060,128)
(513,479)
(1,573,607)
-
Cash received for other operating activities
-
-
1,630,277
Net cash provided (used) by operating activities
5,063,037
(161,383)
4,901,654
9,013,128
Cash flows from noncapital financing activities:

Cash received from other funds
-
-
1,997,853
Cash paid to other funds
(6,427,541)
Net cash (used) by noncapital financing activities
(4,429,688)
Cash flows from capital and related financing activities:

Acquisition of capital assets
(7,136,340)
(422,423)
(7,558,763)
(3,782,403)
Proceeds from sale of capital assets
441,666
Net cash (used) for capital and related financing activities (7,136,340)
(422,423)
(7,558,763)
(3,340,737)
Cash flows from investing activities:

Investment (loss)
(40,072)
(3,984)
(44,056)
(104,458)
Net cash (used) by investing activities
(40,072)
(3,984)
(44,056)
(104,458)
Net increase (decrease) in cash and cash equivalents
(2,113,375)
(587,790)
(2,701,165)
1,138,245
Cash and cash equivalents, beginning
33,511,517
3,242,195
36,753,712
66,181,332
Cash and cash equivalents, ending
$ 31,398,142
$ 2,654,405
$ 34,052,547
$
67,319,577
Reconciliation to the statement of net position:

Cash and investments reported on statement of net position $ 31,398,142
$ 2,654,405
$ 34,052,547
$
67,319,577
Cash and cash equivalents
$ 31,398,142
$ 2,654,405
$ 34,052,547
$
67,319,577
Reconciliation of operating income to net cash
provided by operating activities:

Operating income (loss)
$ 1,950,087
$ (493,219)
$ 1,456,868
$
6,623,733
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities:

Depreciation
1,648,246
651,414
2,299,660
3,500,207
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(457,475)
(78,716)
(536,191)
580,707
Decrease in intergovernmental receivables
1,226
1,226
525,135
(Increase) in inventories
-
-
(34,440)
(Increase) in prepaid items
-
-
(3,384,759)
Increase (decrease) in accounts payable and accrued payroll 2,346,692
(78,110)
2,268,582
1,631,956
(Decrease) in deposits payable
(1,946)
(1,946)
-
(Decrease) in workers' compensation
(768,000)
Increase in general liability
304,687
Increase in compensated absences
419,688
(Decrease) in net pension liability and deferred cash flows (289,552)
(111,199)
(400,751)
(263,585)
(Decrease) in net OPEB liability and deferred cash flows (134,241)
(51,553)
(185,794)
(122,201)
Total adjustments
3,112,950
331,836
3,444,786
2,389,395
Net cash provided by operating activities
$ 5,063,037
$ (161,383)
$ 4,901,654
$
9,013,128
Noncash investing, capital and financing activities:

FUND FINANCIAL STATEMEN

FIDUCIARY FUNDS

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7-91

FIDUCIARY FUNDS
Custodial Funds, a type of Fiduciary Funds, are used to account for assets held by the City as an agent for other government entities, private organizations, or individuals.
7-92

CITY OF NEWPORT BEACH
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2021
Net Position
Restricted for:

Individuals, organizations, and other governments 2,137,567 Total net position $ 2,137,567
See accompanying notes to basic financial statements
7-93
Custodial
Funds
Assets
Cash and investments (note 4)
$ 1,224,273
Restricted cash and investments with fiscal agent (note 4) 1,333,345
Receivable:

Accounts (net of allowance)
336,687
Interest
1,490
Intergovernmental receivable
18,283
Total assets
2,914,078
Liabilities
Due to others
776,511
Total liabilities
776,511
Net Position
Restricted for:

Individuals, organizations, and other governments 2,137,567 Total net position $ 2,137,567
See accompanying notes to basic financial statements
7-93

CITY OF NEWPORT BEACH
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
June 30, 2021
Net (decrease) in fiduciary net position (134,033)
Net position, beginning of year as restated 2,271,600
Net position, end of year $ 2,137,567
See accompanying notes to basic financial statements
7-94
Custodial
Funds
Additions
Special assessments
$ 1,283,969
Investment earnings
1,236
Other
70,395
Total additions
1,355,600
Deductions
Debt service
1,130,047
Unclaimed property
281,611
Administrative
59,767
Other
18,208
Total deductions
1,489,633
Net (decrease) in fiduciary net position (134,033)
Net position, beginning of year as restated 2,271,600
Net position, end of year $ 2,137,567
See accompanying notes to basic financial statements
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FINANCIAL SECTIONV
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NOTES TO THE FINANCIAL STATEMENTS

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
(1) Summary of Significant Accounting Policies
The basic financial statements of the City of Newport Beach (the "City") have been prepared in conformity with generally accepted accounting principles ("GAAP") as applicable to government units. The Governmental Accounting Standards Board ("GASB") is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
a. Reporting Entity
The City of Newport Beach was incorporated on September 1, 1906. The current City Charter was adopted in 1954. Since adoption, the Charter has been amended several times. The most recent Charter amendment was approved by the voters on November 2, 2010. The City operates under a Council -Manager form of government and provides the following services: public safety (police, fire, and marine), highway and streets, cultural and recreation, public improvements, planning and zoning, utilities, and general administrative services.

The financial statements present the financial activity of the City of Newport Beach (the primary government) and its component unit. The component unit discussed below is included in the City's reporting entity because of the significance of its operational or financial relationship with the City. This entity is legally separate from the City. However, the City of Newport Beach's elected officials have continuing full or partial accountability for fiscal matters of the component unit. The financial reporting entity consists of: (1) the City, (2) organizations for which the City is financially accountable, and (3) organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete.

An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit's balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City's or the component unit provides services almost entirely to the City.

Blended Component Unit
The financial statements of the City of Newport Beach include the financial activities of the Newport Beach Public Facilities Corporation (the "Corporation").

The Corporation was formed on March 9, 1992, for the purpose of assisting the City of Newport Beach in the financing of public improvements, including the City's Central Library, Civic Center, and most recently the new Fire Station No. 2 Project.

The Corporation is governed by a Board of Directors, which is comprised of the seven City Council Members of the City of Newport Beach. The Corporation's 7-97

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
financial data and transactions are included in the debt service fund. Separate financial statements are not prepared for the Corporation. The debt service fund is used solely to account for the activities of the Corporation and contains no other City debt financing activities.
b. Basis of Accounting and Measurement Focus
The basic financial statements of the City are composed of the following:
• Government -wide financial statements
• Fund financial statements
• Notes to the financial statements
Government -wide Financial Statements
Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the primary government (including its blended component units). The City of Newport Beach has no discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the City.

Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place.

Program revenues include charges for services, special assessments, and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program.

Amounts paid to acquire capital assets are capitalized as assets in the government -wide financial statements, rather than reported as an expenditure.

Proceeds of long-term debt are recorded as a liability in the government -wide financial statements, rather than as an other financing source. Amounts paid to 7-98

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure.

Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted — net position and unrestricted — net position in the government -wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City's practice to consider restricted -net position to have been depleted before unrestricted — net position is applied.

Fund Financial Statements
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, deferred inflows/outflows of resources, 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.

Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements.

These statements display information about major funds individually and non - major funds in the aggregate for governmental and enterprise funds. Fiduciary funds are excluded from government -wide financial statements. Fiduciary statements include financial information for fiduciary funds. Fiduciary funds of the City primarily represent assets held by the City in a custodial capacity for other individuals or organizations.

Governmental Funds
In the fund financial statements, governmental funds are presented using the modified -accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The City uses an availability period of 60 days for all revenues.

Property taxes, sales taxes, franchise taxes, gas taxes, motor vehicle license fees, transient occupancy taxes, grants, and interest associated with the current fiscal period are all considered to be subject to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the 7-99

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
availability period. Other revenue items are considered to be measurable and available when cash is received by the City.

Revenue recognition is subject to the measurability and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first.

Government -mandated and voluntary non-exchange transactions are recognized as revenues when all applicable eligibility requirements have been met.

In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and deferred outflows of resources, and current liabilities and deferred inflows of resources are generally included on their balance sheets. The reported fund balance is considered to be a measure of "available spendable resources".

Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period.

Non-current portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus.

Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by non-current liabilities.

Since they do not affect "available spendable resources", such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as other financing sources rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures.

Permanent Funds, also referred to as Endowment Funds, are governmental funds used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support City programs. The amount of net appreciation on investments that is available to support City programs is $2,043,658. The amount of investment earnings available for expenditure is reported as Restricted Fund Balance in the fund level financial statements. The endowment principal is reported as Nonspendable for Permanent 7-100

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Endowments in the Balance Sheet. The State law governing the spending of endowment funds investment earnings is California Probate Code Section 18504.

The authority for spending investment earnings for scholarships resides with the City Manager, and the authority for periodic maintenance dredging in the Newport Bay resides with the City Council.

Proprietary & Fiduciary Funds
The City's enterprise and internal service funds are proprietary funds. In the fund financial statements, proprietary and fiduciary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the economic resources measurement focus. This means that all assets, deferred outflows of resources, all liabilities and deferred inflows of resources (whether current or non- current) associated with their activity are included on their balance sheets.

Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies, taxes, and investment earnings result from non-exchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the proprietary fund financial statements, rather than reported as expenditures. Proceeds of long-term debt are recorded as a liability in the proprietary fund financial statements, rather than as other financing sources. Amounts paid to reduce long-term indebtedness of the proprietary funds are reported as reductions of the related liabilities, rather than as expenditures.

When both restricted and unrestricted resources are combined in a proprietary fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources.

Fiduciary funds are also reported using the economic resources measurement focus and the accrual basis of accounting.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
C. Fund Classifications
The City utilizes the following broad categories of funds:

Major Funds — Major funds are those funds which are either material or of particular importance.

Major Governmental Funds — Governmental funds are generally used to account for tax supported activities. The following governmental funds meet the criteria of a major fund:

GPnprAI Fund
The General Fund is the general operating fund of the City. It is used to account for all activities, except those required to be accounted for in another fund.

Special Revenue Funds
Tide and Submerged Land — Operating
The Tide and Submerged Land — Operating Fund is a special revenue fund used to account for revenues related to the operation of the City's tidelands, including beaches and marinas, and the related expenditures. Revenue from tideland operations includes, but is not limited to, rents from moorings, piers, and leases, as well as income from parking lots, meters, and the sale of oil.

Tide and Submerged Land — Harbor Capital
The Tide and Submerged Land - Harbor Capital Fund is used to account for incremental increases in revenue from certain property lease, pier, and mooring rentals that exceed Council designated base year revenue amounts, as well as other designated revenues and the related expenditures for capital projects, maintenance, and servicing of loan advances from the General Fund.

American Rescue Plan Act Fund
The American Rescue Plan Act Fund
received through Coronavirus State and
American Rescue Plan Act.

Capital Project Funds
is used to account for federal funding
Local Fiscal Recovery Funds under the
Facilities Financial Planning Reserve Fund
The Facilities Financial Planning Reserve Fund is used to account for the receipt and expenditure of funds for the replacement of facilities. In prior years, this fund was called the Facilities Replacement Fund.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Debt Service Funds
Civic Center COP
The Civic Center COP Fund is used to account for debt service transactions related to the Certificates of Participation issued to finance the construction of the City's Civic Center Complex.

Major Proprietary Funds — Proprietary funds are used to report an activity for which a fee is charged to external users to recover the cost of operation.

Water Fund
The Water Fund is an enterprise fund used to account for the activities associated with the transmission and distribution of potable water by the City to its users.

Wastewater Fund
The Wastewater Fund is an enterprise fund used to account for the activities associated with providing sewer services by the City to its users.

Other Governmental Funds — Other Governmental Funds are those funds which do not meet the criteria of a major fund. Other Governmental Funds used by the City fall into the following governmental fund types:

Other Special Revenue Funds — Other Special Revenue Funds are used to account for the proceeds of specific revenue sources which are legally restricted to expenditures for specified purposes.

Other Capital Projects Funds — Other Capital Projects Funds are used to account for resources used for the acquisition and construction of capital facilities by the City, except those financed by Enterprise Funds.

Permanent Funds — Permanent Funds are used to report resources that are legally restricted for the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs.

Internal Service Funds — The Internal Service Funds are used to account for the City's self-insured general liability and workers' compensation, compensated absences, and retiree insurance liabilities; the cost of maintaining and replacing the City's rolling stock fleet, parking equipment, coordinated communications systems equipment, certain fire equipment, and recreation equipment; and the cost of maintaining and replacing the City's information technology systems. City departments are the primary users of these services and are charged a fee on a cost reimbursement basis.

Fiduciary Funds — The Custodial Funds, a type of Fiducuiary Fund, are used to account for assets held by the City as an agent for property owners with special 7-103

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
assessments, local businesses in business improvements districts, and monies held by the police department in a custodial capacity.
d. New Accounting Pronouncements
Current Year Standards
In fiscal year 2020-21, the City implemented the following Government Accounting Standards Board (GASB) Statements:
• GASB Statement No. 84 — "Fiduciary Activities", effective for periods beginning after December 15, 2019. The result of implementing this statement was changes to the accounting and presentation of fiduciary funds.

Fiduciary fund net position at July 1, 2020 increased $500,160. • GASB Statement No. 89 — "Accounting for Interest Cost Incurred before the End of a Construction Period", effective for periods beginning after December 15, 2020. This statement did not impact the City.
• GASB Statement No. 90 — "Majority Equity Interests", effective for periods beginning after December 15, 2019. This statement did not impact the City. • GASB Statement No. 98 — "The Annual Comprehensive Financial Report", effective for fiscal years ending after December 15, 2021. The result of implementing this statement was changing the name of the Comprehensive Annual Financial Report to Annual Comprehensive Financial Report.

Pendina Accountina Standards
GASB has issued the following statements, which may impact the City's financial reporting requirements in the future:
• GASB Statement No. 87 —"Leases", effective for periods beginning after June 15, 2021.
• GASB Statement No. 91 — "Conduit Debt Obligations", effective for periods beginning after December 15, 2021.
• GASB Statement No. 92 — "Omnibus 2020", primarily effective for periods beginning after June 15, 2021.
• GASB Statement No. 93 —"Replacement of Interbank Offered Rates", effective for periods beginning after June 15, 2021
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
• GASB Statement No. 94 — "Public -Private and Public -Public Partnerships and Availability Payment Arrangements", effective for periods beginning after June 15, 2022.
• GASB Statement No. 96 — "Subscription -Based Information Technology Arrangements", effective for fiscal years beginning after June 15, 2022.

GASB Statement No. 97 — "Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans — an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32", effective for fiscal years beginning after June 15, 2021, except for the requirements of paragraphs 4 and 5.

Accounts Receivable
Accounts receivable represent all service and capital project billings other than intergovernmental receivables stated below. As of June 30, 2021, accounts receivable deemed to be uncollectible with an outstanding balance over 120 days past due were written off the City's accounting records to ensure that the income statement and balance sheet are fairly stated at the amount expected to be collected in receivables. Receivables with governmental organizations are generally excluded from the write-off as they are more likely to be received due to the governments' creditworthiness.

Cash and Investme
Cash and Cash Equivalents
Cash and cash equivalents are defined to be cash on hand, demand deposits and highly liquid investments with a maturity of three months or less from the date of purchase.

Investments
Investments are generally stated at fair value which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Cash and investments are pooled to maximize investment yields. The net change in fair value and interest earned on the investments is allocated to the respective funds based on each fund's average monthly cash and investments balance.

The City's investment in LAIF is $64,004,389 at June 30, 2021. This investment value is based on information provided by the State Treasurer's Office. The carrying value of the City's position in the fund is materially consistent with the fair 7-105

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
value of the fund shares. This pool is under the regulatory oversight of the State Treasurer's Office. The LAIF Board consists of five members as designated by Statute. The Chairman is the State Treasurer, or her designated representative.

Two members qualified by training and experience in the field of investment or finance, and two members who are treasurers, finance or fiscal officers, or business managers employed by any county, city or local district, or municipal corporation of this state, are appointed by the State Treasurer. The term of each appointment is two years, or at the pleasure of the appointing authority. g. Intergovernmental Receivables
Intergovernmental receivables represent grant reimbursement requests, capital project billings, and pending transfers of taxes and fees collected by other government agencies. As of June 30, 2021, the balance of these accounts totaled $13,271,365.
h. Inventories and Preaaid Items
Inventories are valued at cost, which approximates market, using the first -in, first - out method. The City follows the consumption method for inventory control. The costs of governmental fund and internal service fund inventories are recorded as expenditures when consumed.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. The City follows the consumption method for prepaid items.

L Capital Assets
Capital assets, which include land, structures, equipment, and infrastructure assets, are reported in the applicable governmental or business -type activities columns in the Government -wide Financial Statements. Capital assets are recorded at cost where historical records are available and at an estimated original cost where no historical records exist. Equipment purchased in excess of $5,000 is capitalized if it has an expected useful life in excess of one year. Buildings, infrastructure, and improvements are capitalized if cost is in excess of $30,000 and the expected useful life is in excess of one year. The cost of normal maintenance and repairs that do not add to the value of the asset's life are not capitalized. The City chose to value and report on infrastructure assets in their entirety (e.g. prior to 1980).

Major capital outlays for capital assets and improvements are capitalized as projects are constructed. Capital assets acquired through lease obligations are valued at the present value of future lease payments at the date acquired.

Contributed capital assets are valued at their estimated acquisition value at the date of contribution.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
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 fund financial statements of the proprietary funds. Depreciation is charged as an expense against operations and accumulated depreciation is reported on the respective balance sheet. The ranges of useful life for depreciation purposes for each capital asset class are as follows:

Structures
15-75 years
Equipment
3-15 years
Infrastructure
20-75 years
j. Claims and Judgments
The City accounts for material claims and judgments and associated legal and administrative costs when it is probable that the liability claim has been incurred and the amount of the loss can be reasonably estimated. The City records the estimated loss liabilities in the Internal Service Fund. Included therein are claims incurred but not reported, which consists of (a) known loss events expected to be presented as claims later, (b) unknown loss events that are expected to become claims, and (c) expected future development on claims already reported. This is based upon historical actual results that have established a reliable pattern supplemented by specific information about current matters. Small dollar claims and judgments are recorded as expenditures when paid.
k. Property Taxes
The assessment, levy, and collection of property taxes are the responsibility of the County of Orange. The City records property taxes as revenue when received from 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:

Lien date
Jan 1
Levy date
July 1
Due dates
November 1
1St installment
March 1
2nd installment
Collection dates
December 10
1St installment
April 10
2nd installment
I. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation and limited amounts of earned but unused sick leave benefits, which will be paid to employees upon separation from City service. Beginning in fiscal year 7-107

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
1990, the City adopted a general leave plan to replace the traditional vacation and sick leave plan. The City uses a general leave plan that permits a maximum of three years' accrual for every employee, above which the excess either stops accruing or is paid out as current compensation. All employees hired prior to January 1,1990, were given the option of remaining in the traditional vacation and sick leave plan or enrolling in the general leave plan. All employees hired on or after January 1,1990, are automatically enrolled in the general leave plan.

Compensated absences are accrued in the Compensated Absence Internal Service Fund when employee services have been rendered and when it becomes probable that the City will compensate the employees for benefits through paid time off or cash payments at termination or retirement. Benefits that have been earned but are not yet available for use because employees have not met certain conditions are accrued to the extent it is probable that the employees will meet the conditions for compensation in the future.

M. Deposits Payable
In the government -wide and fund -level financial statements, deposits payable represents monies collected for developer deposits, demolition deposits, planning deposits and others, for services which have not yet been performed. These unspent portions are reported as liabilities on the financial statements. n. Unearned Revenue
Unearned revenues are those where asset recognition has been met, but the revenue recognition criteria have not been met.
o. Deferred Inflows/Outflows of Resources
In addition to assets, the statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense) until that time.

The City has three items that qualify for reporting in this category. The first item is the deferred outflows related to employer pension and OPEB contributions made after the measurement date. The second item is a deferred outflow related to pensions and OPEB resulting from changes in assumptions. This amount is amortized over a closed period equal to the average of expected remaining service lives of all employees that are provided pensions and OPEB through the plans.

The third item is a deferred outflow related to pensions and OPEB resulting from the difference between expected and actual experience. This amount is amortized over a closed period equal to the average of expected remaining service lives of all employees that are provided pensions and OPEB through the plans. 7-108

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
In addition to liabilities, the statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The City has five items that qualify for reporting in this category. The first item is unavailable revenues, which is only reported in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources:
grants receivable and rent collections. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The second item is a deferred inflow related to pensions resulting from the difference between actual and expected experience. This amount is amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided pensions through the plans. The third item is a deferred inflow related to pensions resulting from the change in assumptions. This amount is amortized over a closed period equal to the average of expected remaining service lives of all employees that are provided pensions through the plans. The fourth item is a deferred inflow resulting from the net difference in projected and actual earnings on investments of the OPEB plan fiduciary net position. This amount is amortized over five years. The fifth item is the net difference in projected and actual earnings on investments of the pension plan's fiduciary net position. This amount is amortized over five years.

P. Fund Balance Classifications
The governmental fund balance is made up of different classifications and the following provides explanations as to the nature and purpose of each classification:

Nonspendable fund balance
That portion of fund balance that typically includes amounts that are either (a) not in a spendable form such as inventories and prepaid items, or (b) legally or contractually required to be maintained intact such as endowments.

Restricted fund balance
The portion of fund balance that reflects constraints placed on the use of resources (other than nonspendable items) that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation.

Committed fund balance
That portion of a fund balance that includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action by the government's highest level of decision making authority, and remain binding unless removed in the same manner. The City Council has authority to establish or modify a fund balance commitment by legislation (Council action) and can only rescind a fund balance commitment by new legislation requiring the same voting 7-109

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
consensus. The City considers a resolution to constitute a formal action of the City Council for the purposes of establishing committed fund balance.

Assigned fund balance
That portion of a fund balance that includes amounts that are constrained by the City's intent to be used for specific purposes and do not meet the criteria to be classified as restricted or committed. Constraints imposed on the use of assigned amounts are more easily removed or modified than those imposed on amounts classified as committed. The City's Reserve Policy gives the City Manager the authority to establish, modify, or rescind a fund balance assignment.

Unassigned fund balance
The residual portion of a fund balance that is not otherwise restricted, committed, or assigned. Positive unassigned fund balance is available to be used for any purpose. Only the general fund may report a positive unassigned fund balance.

Funds, except the general fund, may report negative unassigned fund balance in certain circumstances.

In the governmental fund statements, when expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City uses the most restrictive funds first. The City uses the appropriate funds in the following order: restricted, committed, assigned, and finally unassigned amounts.
q. Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets, deferred outflows of resources, liabilities and deferred inflows of resources, disclosure of contingent assets and liabilities, and the related amounts of revenues and expenditures. Actual results could differ from those estimates.

Management believes that the estimates are reasonable.

Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Newport Beach's California Public Employees' Retirement System (CaIPERS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CaIPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 7-110

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.

Valuation Date (VD)
Measurement Date (MD)
Measurement Period (MP)
June 30, 2019
June 30, 2020
July 1, 2019 to June 30, 2020
S. Post -Employment Health Care Benefits (OPEB)
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB and OPEB expense, information about the fiduciary net position of the City of Newport Beach's California Public Employees' Retirement System (CaIPERS) Health Plan and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CaIPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

GASB 75 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.

Valuation Date (VD) June 30, 2019
Measurement Date (MD) June 30, 2020
Measurement Period (MP) July 1, 2019 to June 30, 2020
(2) Reconciliation of Government -wide and Fund Financial Statements a. Explanation of Differences Between Governmental Funds Balance Sheet and the Statement of Net Position
The "total fund balances" of the City's governmental funds $222,302,210 differs from "net position" of governmental activities $2,222,460,067 reported in the statement of net position. This difference primarily results from the long-term economic focus of the statement of net position versus the current financial resources focus of the governmental funds balance sheet.

Capital Related Items
When capital assets (property, plant, and equipment) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures in governmental funds. However, the statement of net position includes those capital assets among the assets of the City as a whole. 7-111

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Cost of capital assets
$2,548,283,728
Accumulated depreciation
(240,099,901)
Total capital assets, net*
$2,308,183,827
*Amount excludes net capital assets of $16,162,473 from Internal Service funds
Long-term Debt Transactions
Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities.

All liabilities (both current and long-term) are reported in the statement of net position. Balances at June 30, 2021 were:

Certificates of participation — Series 2010B $97,630,000 Certificates of participation — Series 2020A 7,860,000
Bond premium — Series 2020A 1,291,026
CDBG loan 403,000
Total $107,184,026
Accrued Interest
Accrued liabilities in the statement of net position differ from the amount reported in governmental funds due to accrued interest on outstanding debt payable (see Note 6).

Accrued interest added
Investment in Joint Venture
$3,590,292
Investment in joint venture is not a current financial resource and hence reported only in the statement of net position.

Net equity in joint venture
Unavailable Revenue
$256,862
Some of the revenue will be collected after year-end, but is not available soon enough to pay for the current period's expenditures, and therefore is reported as unavailable revenue in the governmental funds.

Unavailable revenue $1,911,032
7-112

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Internal Service Funds
Internal service funds are used by management to charge the costs of certain activities (such as equipment management and self-insurance authorities) to individual funds. The assets (including capital assets) and liabilities of the internal service funds are included in governmental activities in the statement of net position because they primarily serve governmental activities of the City.

Internal Service Funds $44,573,521
Deferred Outflows of Resources, Deferred Inflows of Resources and Net Pension Liabilitv — GASB 68
Pension related debt applicable to the governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities.

Deferred outflows of resources and deferred inflows of resources related to pension are only reported in the Statement of Net Position as the changes in these amounts effects only the government -wide statements for governmental activities.

Internal service funds amounts are excluded.

Deferred Outflows of Resources $61,144,383
Deferred Inflows of Resources (688,663)
Pension Liability (294,129,932)
Deferred Outflows of Resources, Deferred Inflows of Resources and Net Post - Employment Health Care Benefits Liability — GASB 75
Post -employment health care benefits (OPEB) debt applicable to the governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to OPEB are only reported in the Statement of Net Position as the changes in these amounts effects only the government -wide statements for governmental activities. Internal service funds amounts are excluded.

Deferred Outflows of Resources $7,774,270
Deferred Inflows of Resources (178,645)
OPEB Liability (18,559,067)
Internal Balance
Internal balances created by the consolidation of internal service fund activities related to enterprise funds are not reported in the governmental funds.

Internal Balance
$644587
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Reclassifications and Eliminations
Interfund balances must generally be eliminated in the government -wide statements, except for net residual amounts due between governmental activities.

Amounts involving fiduciary funds should be reported as external transactions. Any allocations must reduce the expenses of the function from which the expenses are being allocated, so that expenses are reported only once in the function in which they are allocated.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Explanation of Differences Between Government Funds
Balance Sheet and the Statement of Net Position
Total assets and deferred outflows of resources $ 269,556,422 $ 2,548,283,728 $ (240,099,901) $ 68,918,653 Liabilities, Deferred Inflows of Resources
and Fund Balances/Net Position
Liabilities:

Total
Capital
$ 12,440,770 $ $ $
Long-term
4,943,678
Governmental
Related
Accumulated
Debt
Claims payable
Funds
Items
Depreciation
Transactions
Assets and Deferred Outflows of Resources
Unearned revenue
9,330,752
Due to other funds
6,618,170
Cash and investments
$ 212,098,816
$
$
$
Receivables:
and fund balances / net position
$ 269,556,422
Accounts (net of allowance)
7,599,179
Advances to other funds
9,426,659
Interest
627,549
Intergovernmental receivables
13,171,502
Restricted cash and investments with fiscal agent
18,373,724
Interfund balances
6,971,006
Investment in joint venture
-
Inventory
309,343
Prepaid items
978,644
Capital assets
-
2,548,283,728
Accumulated depreciation
(240,099,901)
Total assets
$ 269,556,422
$ 2,548,283,728
$ (240,099,901)
$
Deferred Outflows of Resources:

Deferred amount from pension plans
-
61,144,383
Deferred amount from OPEB
7,774,270
Total deferred outflows of resources
68,918,653
Total assets and deferred outflows of resources $ 269,556,422 $ 2,548,283,728 $ (240,099,901) $ 68,918,653 Liabilities, Deferred Inflows of Resources
and Fund Balances/Net Position
Liabilities:

Accounts payable
$ 12,440,770 $ $ $
Accrued payroll
4,943,678
Accrued interest payable
-
Deposits payable
2,583,151
Claims payable
-
Workers' compensation payable
-
Compensated absences payable
-
Unearned revenue
9,330,752
Due to other funds
6,618,170
Advance from other funds
9,426,659
Long-term liabilities
- 419,873,025
Total liabilities
45,343,180 419,873,025
Deferred Inflows of Resources:

Unavailable revenue
1,911,032
-
Deferred amount from pension plans
-
688,663
Deferred amount from OPEB
-
178,645
Total deferred inflows of resources
1,911,032
867,308
Fund balances / net position
222,302,210
2,548,283,728 (240,099,901)
(351,821,680)
Total liabilities, deferred inflows of resources
and fund balances / net position
$ 269,556,422
$ 2,548,283,728 $ (240,099,901)
$ 68,918,653
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Investment
Internal
Reclassifications
Interest in Joint
Unavailable Service
and
Statement of
Payable Venture
Revenue Funds
Eliminations
Net Position
$ $
$ $ 67,319,577
$
$ 279,418,393
1,215,359
8,814,538
-
(9,426,659)
-
197,242
824,791
-
13,171,502
18,373,724
(6,326,419)
644,587
256,862
-
256,862
-
447,455
756,798
4,369,139
5,347,783
45,965,321
2,594,249,049
-
(29,802,848)
(269,902,749)
$ $ 256,862
$ $ 89,711,245
$ (15,753,078)
$ 2,651,955,278
1,226,618
288,484
1,515,102
62,371,001
8,062,754
70,433,755
$ $ 256,862 $ - $ 91,226,347 $ (15,753,078) $ 2,722,389,033 $ $ $ $ 2,448,880 $ $ 14,889,650
289,457 5,233,135
3,590,292 - 3,590,292
- - 2,583,151
2,679,733 2,679,733
2,716,603 2,716,603
4,336,047 4,336,047
- 9,330,752
352,836 (6,971,006) -
- (9,426,659) -
33,818,117 453,691,142
3,590,292 46,641,673 (16,397,665) 499,050,505
- (1,911,032) - -
4,523 693,186
6,630 185,275
(1,911,032) 11,153 - 878,461
(3,590,292) 256,862 1,911,032 44,573,521 644,587 2,222,460,067 $ $ 256,862 $ $ 91,226,347 $ (15,753,078) $ 2,722,389,033 7-116

101

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Explanation of Differences Between Enterprise Funds and Government -wide Statement of Net Position
The net position of the City's Enterprise Funds of $152,459,858 differs from the net position of the business -type activities of $151,815,271 as reported in the government -wide statement of net position. The difference of $644,587 results from consolidating internal service fund activities related to the enterprise funds.

Explanation of Differences Between Enterprise Funds
and Government -wide Statement of Net Position
Total Internal Government -wide
Enterprise Service Statement of
Funds Funds Net Position
Assets and Deferred Outflows of Resources
Cash and investments
$ 34,052,547 $ $
34,052,547
Receivables:
$ 5,886,750 $
$ 5,886,750
Accounts (net of allowance)
6,663,749
6,663,749
Interest
99,552
99,552
Intergovernmental receivables
99,863
99,863
Interfund balances
- (644,587)
(644,587)
Capital assets, net
126,028,450
126,028,450
Total assets
166,944,161 (644,587)
166,299,574
Deferred amount from pension plans
Deferred outflows of resources:
6,875
Deferred amount from OPEB
Deferred amount from pension plans
1,864,920
1,864,920
Deferred amount from OPEB
438,601
438,601
Total deferred outflows of resources
2,303,521
2,303,521
Total assets and deferred outflows of resources $ 169,247,682 $ (644,587) $ 168,603,095 Liabilities and Deferred Inflows of Resources
Liabilities:

Accounts payable
$ 5,886,750 $
$ 5,886,750
Accrued payroll
182,887
182,887
Deposits payable
29,940
29,940
Net pension liability
9,622,652
9,622,652
Net OPEB liability
1,048,642
1,048,642
Total liabilities
16,770,871
16,770,871
Deferred inflows of resources:

Deferred amount from pension plans
6,875
6,875
Deferred amount from OPEB
10,078
10,078
Total deferred inflows of resources
16,953
16,953
Total liabilities and deferred inflows of resources
Net Position
Net investment in capital assets
Unrestricted
Total net position
$ 16,787,824 $ - $ 16,787,824
$ 124,775,772 $ - $ 124,775,772
27,684,086 (644,587) 27,039,499
$ 152,459,858 _L_(6 $ 151,815,271
7-117

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Explanation of Differences Between Governmental Fund Operating Statements and the Statement of Activities
The "net change in fund balances" for governmental funds $17,562,069 differs from the "change in net position" for governmental activities $27,113,268 reported in the statement of activities. The differences arise primarily from the long-term economic focus of the statement of activities versus the current financial resources focus of the governmental funds. The effect of the difference is illustrated below.

Capital Related Items
When capital assets that are to be used in governmental activities (excluding those reported in Internal Service Funds) are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds.

However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. In governmental funds, significant maintenance projects are reclassified as functional expenses in the statement of net assets. Also, contributed capital is not recorded in governmental funds; therefore, it is added to the statement of net activities.

Capital outlays
Transfers out of WIP
Capital outlays, net
Governmental funds - asset deletions
Net change in capital related items
Depreciation expense
Deletions in governmental funds accumulated depreciation Net change in accumulated depreciation
Total
$ 24,611,910
(4,833,875)
19,778,035
(3,147,591)
16,630,444
(13,516,221)
2,122,804
(11,393,417)
$ 5,237,027
7-118

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Long -Term Debt Transactions
Payment of debt service is reported as an expenditure in governmental funds and has the effect of reducing fund balance because current financial resources have been used. Issuance of debt is reported as an other financing source in governmental funds and increases fund balance. For the City as a whole, however, the principal payments reduce the liabilities, and proceeds from long-term debt increase liabilities in the statement of net position.

Certificates of participation — Series 2010B $3,065,000 CDBG loan 182,000
Certificates of participation — Series 2020A (7,860,000) Bond premium — Series 2020A (1,373,936)
Amortization of bond premium — Series 2020A 82,910
Total debt proceeds ($5,904,026)
Accrued Interest
Interest accrued on outstanding debt payable is not recorded as an expenditure in governmental funds and has been added to the statement of activities.

Net change in accrued interest
Investment in Joint Venture
The City's investment in a joint venture creates an explicit, measurable equity interest reported only in the statement of activities.

Net change in investment in joint venture IM 392
Unavailable Revenue
Some of the revenue will be collected after year-end, but is not available soon enough to pay for current -period expenditures. This amount is reported as unavailable revenue in the governmental funds.

Net change in unavailable revenue (867 071
7-119

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Pension Expense
Pension expense reported in the governmental funds includes the annual required contribution. In the statement of activities, pension expense includes the change in the net pension liability and related change in the pension amounts for deferred outflows of resources and deferred inflows of resources.

Pension expense $4,872,162
Post -Employment Health Care Benefits Expense
Post -employment health care benefits (OPEB) expense reported in the governmental funds includes the annual required contribution. In the statement of activities, OPEB expense includes the change in the net OPEB liability and related change in the OPEB amounts for deferred outflows of resources and deferred inflows of resources.

OPEB expense
Internal Service Funds
$3,292,279
Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance activities, to individual funds. The adjustments for internal service funds "close" those funds by reimbursing or charging additional amounts to participating departments in individual funds for costs over or under charged for those activities.

Net change in internal service funds $2,743,371
Reclassification and Eliminations
Interfund balances must generally be eliminated in the government -wide financial statements, except for net residual amounts due between governmental and business -type activities. Any allocations must reduce the expenses of the function from which the expenses are being allocated, so that expenses are reported only once — in the function in which they are allocated. Amounts involving fiduciary funds should be reported as external transactions. Reclassifications and eliminations are used by management to consolidate internal service funds into the statement of activities.

Net change in reclassifications and
eliminations to consolidate
internal service funds $265,444
7-120

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Explanation of Differences Between Government Funds
Operating Statement and the Statement of Activities
Revenues:

Taxes and assessments
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Investment income
Net decrease in fair value of investments
Property income
Share of joint venture net gain
Donations
Gain on sale of capital assets
Other
Total revenues
Expenditures:

Current:

General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:

Principal retirement
Interest and fiscal charges
Amortization of debt premium
Total Capital Long-term
Governmental Related Accumulated Debt
Funds Items Depreciation Transactions
$ 188,351,057 $
22,233,872
6,566,555
18,434,439
3,923,726
3,201,376
(2,634,682)
28,842,374
5,491,871
3,504,103
277,914,691
17,371,303
-
2,556,843
126,006,313
354,973
548,594
46,817,293
2,736,716
5,895,566
12,996,840
-
5,082
26,745,189
55,902
2,387,332
33,728,085
(19,778,035)
-
(1,024,795)
(4,622,339)
(1,160,858)
(615,607)
(740,842)
3,247,000 - (3,247,000)
7,089,347 -
- - (82,910)
Total expenses 274,001,370 (16,630,444) 11,393,417 (11,494,351) Other financing sources (uses):

Transfers in
70,379,824
Transfers out
(65,965,012)
Certificates of participation issued
7,860,000
Premium on certificates of participation issued
1,373,936
Total other financing sources
(uses)
13,648,748
Net change in fund balances /
net position
17,562,069
Fund balances / net position, beginning of year as
(7,860,000)
(1,373,936)
(9,233,936)
16,630,444 (11,393,417) 2,260,415
restated 204,740,141 2,531,653,284 (228,706,484) (354,082,095) Fund balances / net position, end of year $ 222,302,210 $ 2,548,283,728 $ (240,099,901) $ (351,821,680) 7-121

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
7-122
Investment
Internal
Reclassifications
Interest
in Joint
Unavailable
Service
and
Statement of
Payable
Venture
Revenue
Funds
Eliminations
Activities
$ -
$
$ -
$
$ -
$ 188,351,057
-
(867,071)
-
21,366,801
-
-
-
-
6,566,555
-
265,444
18,699,883
-
3,923,726
957,868
4,159,244
(865,084)
(3,499,766)
-
28,842,374
10,392
-
10,392
-
-
5,491,871
441,666
441,666
-
-
-
3,504,103
10,392
(867,071)
534,450
265,444
277,857,906
-
-
(1,225,833)
2,716,760
20,394,278
-
-
-
(3,524,382)
421,799
119,184,958
-
-
-
(720,552)
10,120,990
63,689,155
-
-
-
(392,774)
163,685
12,157,226
-
-
(760,192)
526,816
28,214,205
-
-
(13,950,050)
-
98,379
7,187,726
-
(82,910)
98,379
(6,623,733)
250,744,638
-
531,764
(70,911,588)
-
(4,946,576)
70,911,588
-
(4,414,812)
-
-
(98,379)
10,392
(867,071)
2,743,371
265,444
27,113,268
(3,491,913)
246,470
2,778,103
41,830,150
379,143
2,195,346,799
$ (3,590,292)
$ 256,862
$ 1,911,032
$ 44,573,521
$ 644,587
$ 2,222,460,067
7-122

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
d. Explanation of Differences Between Enterprise Funds Operating Statement and the Statement of Activities
The change in net position for the City's enterprise funds of $1,512,364 differs from the change in net position of the business -type activities of $1,246,920 as reported in the government -wide statement of activities. The difference of $265,444, results from consolidating internal service fund activities related to the enterprise funds.

Explanation of Differences Between Enterprise Funds
Operating Statement and the Statement of Activities
Operating revenues:

Charges for sales and services:

Water sales
Sewer service and connection fees
Other
Total operating revenues
Operating expenses:

Purchase of water
Salaries and wages
Depreciation
Professional services
Maintenance and supplies
System maintenance
Utilities
Other
Total operating expenses
Operating income
Nonoperating revenues (expenses)
Total Internal Business -type activities
Enterprise Service Statement of
Funds Fund Activities
$ 30,413,190 $ - $ 30,413,190
4,586,512 - 4,586,512
358,210 - 358,210
35, 357, 912 - 35, 357, 912
11,156,173 -
6,768,070 -
2,299,660 -
3,263,481 -
3,422,768 265,444
3,013,725 -
2,045,350 -
1,931,817 -
33,901,044 265,444
1,456,868 (265,444)
11,156,173
6,768,070
2,299,660
3,263,481
3,688,212
3,013,725
2,045,350
1,931,817
34,166,488
1,191,424
Investment income
525,295
-
525,295
Net decrease in fair value of investments
(469,799)
-
(469,799)
Total nonoperating revenues (expenses)
55,496
-
55,496
Change in net position
1,512,364
(265,444)
1,246,920
Net position, beginning of year
150,947,494
(379,143)
150,568,351
Net position, end of year $
152,459,858
$ (644,587) $
151,815,271
7-123

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
(3) Budgetary Control and Compliance
The City adheres to the following general procedures in establishing the budgetary data reflected in the financial statements:
• During May, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted at City Council meetings to obtain citizen comments. Prior to July 1, the budget is legally adopted through passage of an appropriation resolution. • Budgets are adopted on an annual basis consistent with generally accepted accounting principles for General and Special Revenue Funds. • The City of Newport Beach does not present budget information on Capital Projects Funds since the City approves project -length budgets. These project - length budgets authorize total expenditures over the duration of a construction project rather than through year -by -year budgeting.
• The City of Newport Beach does not present budget information on Debt Service and Permanent Funds since the City is not required to and does not adopt an annual budget for these funds. No budget was adopted for the American Rescue Plan Act Fund because neither revenues or expenditures were recognized during the fiscal year.
• The budget is formally integrated into the accounting system and employed as a management control device during the year.
• The legal level of budgetary control is at the fund level. The City Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revisions which alter the total appropriations of any fund must be approved by the City Council.
• At fiscal year-end, budget appropriations lapse. Budget appropriations for incomplete capital projects are re -budgeted in the following fiscal year by City Council action and are included in the revisions noted above. Projects that are not started during the budget year are re-evaluated in the following year. • Encumbrances represent commitments related to unperformed contracts for goods and services. The City utilizes an encumbrance system as a management control technique to assist in controlling expenditures. Under this system, encumbrance accounting for the expenditure of funds is recorded in order to indicate outstanding commitments and is employed in the governmental fund types. Encumbrances outstanding at year-end are reported as committed or restricted fund balances since they do not constitute expenditures or liabilities. 7-124

(4)

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Encumbrances and their related budgets are honored in the subsequent year to fulfill these commitments and are presented in the original adopted budget.

Expenditures exceeded appropriations in the following governmental funds:

Appropriations
Supplemental Law Enforcement $ 200,000
The following funds reported deficit fund balances:

Other Governmental Funds
Junior Lifeguards
Expenditures Variance
$ 205,263 $ (5,263)
$ 136,299
Internal Service Funds
Compensated Absences $ 8,212,322
The City's intention for the Junior Lifeguards Fund is to eliminate the deficit fund balance through an inter -fund transfer.

For the Compensated Absences Fund, the City's Reserve Policy sets the maximum cash reserve at 50% of the long-term compensated absences liability and targets a lesser amount that is the median between that amount and a three-year average of the actual payments made for the cash -out of accumulated leave balances. Accordingly, this deficit fund balance is intentional and in compliance with the City Council -approved Reserve Policy.

Cash and Investments
Cash and investments as of June 30, 2021, are classified in the accompanying financial statements as follows:

Statement of net position:

Cash and investments
Restricted cash and investments
with fiscal agent
Fiduciary funds:

Cash and investments
Restricted cash and investments
with fiscal agent
Total cash and investments
$ 313,470,940
18,373,724
1,224,273
1,333,345
$ 334,402,282
7-125

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Cash and investments as of June 30, 2021, consist of the following:

Cash on hand $ 24,235
Deposits with financial institutions 13,700,479
Investments 320,677,568
Total cash and investments $ 334,402,282
Investments Authorized by the California Government Code and the Entity's Investment Policy
The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, whichever is more restrictive) that address interest rate risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.
7-126
Maximum
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maturity*
of Portfolio*
in One Issuer*
Local Agency Bonds
5 years
30%
5%
U.S. Treasury Obligations
5 years
No Limit
No Limit
U.S. Agency Securities
5 years
No Limit
No Limit
Banker's Acceptances
180 days
40%
5%
Commercial Paper
270 days
25%
5%
Negotiable Certificates of Deposit
2 years
30%
5%
Repurchase Agreements
30 days
No Limit
5%
Reverse Repurchase Agreements
30 days
10%
5%
Medium -Term Notes
5 years
30%
5%
Mutual Funds
N/A
20%
10%
Money Market Mutual Funds
N/A
20%
20%
Mortgage Pass -Through Securities
5 years
20%
5%
LA County Pooled Investment Funds
N/A
5%
5%
Local Agency Investment Fund (LAIF)
N/A
$75 million
$75 million
Supranationals
5 years
20%
10%
* Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. 7-126

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustees (i.e., fiscal agents) are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

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. 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.

Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity:
7-127
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maximum Maturity
Allowed
in One Issuer
U.S. Treasury Obligations
6 months — No Limit
No Limit
No Limit
U.S. Agency Securities
6 months — No Limit
No Limit
No Limit
Banker's Acceptances
6 months — 1 Year
0% - No Limit
No Limit
Commercial Paper
180 days - 6 months
No Limit
10%
Money Market Mutual Funds
N/A
No Limit
No Limit
Investment Agreements
6 months — No Limit
No Limit
No Limit
Certificates of Deposit
6 months — No Limit
No Limit
No Limit
Demand Deposits
6 months — No Limit
No Limit
No Limit
Time Deposits
6 months — No Limit
No Limit
No Limit
Local Agency Bonds
6 months — No Limit
No Limit
No Limit
Forward Delivery Agreement
6 months — No Limit
0% - No Limit
No Limit
Forward Purchase Agreement
6 months — No Limit
0% - No Limit
No Limit
Repurchase Agreements
6 months — No Limit
No Limit
No Limit
Local Agency Investment Fund (LAIF)
N/A
No Limit
No Limit
Municipal Obligations
6 months — No Limit
No Limit
No Limit
County Pooled Investment Funds
N/A
0% - No Limit
No Limit
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. 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 NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Some of the City's investments may have call features where the investments' principal may be paid down before its maturity. Such investments include asset backed securities, investments with make whole call provisions, and investments with call dates.

The City's asset backed securities pay monthly coupons, at which time principal may be paid down. As of June 30, 2021, the City held asset backed securities of $13,071,449.

Investments with make whole call provisions generally may be called any time, but the terms of the call price generally mitigate the financial impact of a call. As of June 30, 2021, the City held corporate and municipal bonds with make whole call provisions as summarized below:

Maturitv
July 2021
January 2023
May 2023
January 2024
February 2024
May 2024
Value
$ 2,000,880
1,036,110
1,037,500
1,607,610
2,077,600
4,735,831
$ 12,495,531
Investments with call dates may be called anytime on or after the call date. As of June 30, 2021, the City held corporate bonds with call dates as summarized below:

Maturity
Value
Call Date
Investment Maturities (In Years)
$ 1,008,370
November 2021
Fair Value
Less than 1
1 to 3
3 to 5 More than 5
Total
Investment Type
August 2023
1,035,480
June 2023
February 2024
2,141,980
Money Market Funds
$ 108,586 $
108,586
$ - $
- $
$ 108,586
U.S. Treasuries
71,239,771
13,214,614
43,017,409
15,007,748
71,239,771
U.S. Agency Bonds
100,225,493
15,808,544
84,416,949
-
100,225,493
Asset Backed Securities
13,071,449
42,765
7,205,066
5,823,617
13,071,449
Corporate Bonds
44,211,043
9,907,119
28,097,609
6,206,316
44,211,043
Municipal Bonds
2,077,600
-
2,077,600
-
2,077,600
LAIF
64,004,389
64,004,389
-
64,004,389
Supranationals
6,032,212
-
6,032,212
6,032,212
Investments with Fiscal Agent:

Money Market Funds
10,645,891
10,645,891
-
10,645,891
LAIF
9,061,135
9,061,135
-
-
9,061,135
$ 320,677,568 $
122,793,042
$ 170,846,845 $
27,037,681 $
$ 320,677,568
Assuming callable securities (if any)
Wil not be called.

Some of the City's investments may have call features where the investments' principal may be paid down before its maturity. Such investments include asset backed securities, investments with make whole call provisions, and investments with call dates.

The City's asset backed securities pay monthly coupons, at which time principal may be paid down. As of June 30, 2021, the City held asset backed securities of $13,071,449.

Maturity
Value
Call Date
December 2021
$ 1,008,370
November 2021
January 2022
1,011,650
December 2021
February 2022
1,758,214
January 2022
August 2023
1,035,480
June 2023
February 2024
2,141,980
January 2024
$ 6 955 694
7-128

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Investments may have both a make whole call provision and a regular call date. As of June 30, 2021, the City held corporate bonds with both a make whole call provision and a regular call date as summarized below:

Maturity
Value
Call Date
February 2022
$ 2,016,500
November 2021
December 2022
1,033,190
October 2022
March 2023
1,037,680
January 2023
June 2023
2,116,540
May 2023
March 2024
2,242,488
February 2024
March 2024
1,644,205
March 2023
June 2024
999,400
June 2023
July 2024
470,316
July 2022
March 2025
2,123,920
March 2024
June 2025
998,080
June 2024
-
1 14,682,319
8,304,015 470,316
About $5.8 million of the investments with both a make whole call provision and a regular call date, also have interest rate reset dates. If these securities are not called by their call date, then these securities will revert to floating rate securities tied to a benchmark index.

Prior to their call date, these securities pay a fixed rate of interest.

Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations As of June 30, 2021, the City did not have any investments (including investments held by fiscal agent) whose fair values were highly sensitive to interest rate fluctuations.

Disclosures Relatina to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented in the following schedule is the minimum rating (where applicable) required by the California Government Code, the City's investment policy, or debt agreements, and the actual rating by Standard & Poor's as of the June 30, 2021 for each investment type.

Investment Type
Fair Value
Minimum Legal
Rating
AAA
AAAm AA+ AA AA- A+ A
A- Not Rated
Money Market Funds
$ 108,586
AAAm
$ - $
108,586 $ - $ - $ - $ - $ - $
- $ -
U.S. Treasuries
71,239,771
None
-
- 71,239,771 - - - -
- -
U.S. Agency Bonds
100,225,493
None
-
- 100,225,493 - - - -
- -
Asset Backed Securities
13,071,449
AAA
8,529,718
- - - - - -
- 4,541,731
Corporate Bonds
44,211,043
A-
-
- 1,037,500 4,986,890 1,033,190 9,282,716 19,096,417
8,304,015 470,316
Municipal Bonds
2,077,600
A-
-
- 2,077,600 - - - -
- -
LAIF
64,004,389
N/A
-
- - - - - -
- 64,004,389
Supranationals
6,032,212
AA-
6,032,212
- - - - - -
- -
Investments with Fiscal Agent:

Money Market Funds
10,645,891
AAm
-
10,645,891 - - - - -
- -
LAIF
9,061,135
N/A
-
- - - - - -
- 9,061,135
$ 320,677,568
$ 14,561,930 $
10,754,477 $174,580,363 $ 4,986,890 $ 1,033,190 $ 9,282,716 $ 19,096,417 $ 8,304,015 $ 78,077,571
7-129

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Concentration of Credit Risk
The investment policy of the City and the California Government Code limit the amount that can be invested in any one issuer as previously discussed. Investments in any one issuer (excluding U.S. Treasury Bills, U.S. Treasuries, mutual funds, and pooled investments) that represent 5% or more of total City's investments are as follows:

Issuer
Investment Type
Reported Amount
FHLB
Federal agency securities
$34,883,840
FFCB
Federal agency securities
$29,375,069
FNMA
Federal agency securities
$19,492,225
FHLMC
Federal agency securities
$16,474,358
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2021, none of the City's deposits with financial institutions in excess of federal depository amounts were held in uncol lateral ized accounts.

For investments identified herein as restricted cash with fiscal agent, the fiscal agent selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government.

Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro -rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting 7-130

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
records maintained by LAIF, which are recorded on an amortized cost basis. LAIF is not rated.

Limitations and restrictions apply to the City's investment in LAIF. Up to 15 transactions with LAIF are permitted each month. Balances in LAIF may not exceed $75 million, with the exception of bond accounts. LAIF requests one day prior notice for withdrawals of $10 million or more.

Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are significant other observable inputs.

Level 3 inputs are significant unobservable inputs.

Most of the City's investments are in Level 2 of the fair value hierarchy. Examples of Level 2 valuation inputs include:
a)Quoted prices for similar assets or liabilities in active markets b)Quoted prices for identical or similar assets or liabilities in markets that are not active c) Inputs other than quoted prices that are observable for the asset or liability d)Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Following are the City's recurring fair value measurements as of June 30, 2021:
7-131
Investments That
Quoted Prices in
Quoted Prices
Significant
Are Not Subject
Active Markets
for Similar Assets
Unobservable
to Fair Value
for Identical
in Active Markets
Inputs
Fair Value
Hierarchy
Assets (Level 1)
(Level 2)
(Level 3)
Money Market Funds
$ 108,586
$ 108,586
$ -
$ -
$
U.S. Treasuries
71,239,771
-
-
71,239,771
-
U.S. Agency Bonds
100,225,493
-
-
100,225,493
-
AssetBackedSecurities
13,071,449
-
-
13,071,449
-
Corporate Bonds
44,211,043
-
-
44,211,043
-
Municipal Bonds
2,077,600
-
-
2,077,600
-
LAIF
64,004,389
64,004,389
-
-
-
Supranationals
6,032,212
-
-
6,032,212
-
Investments with Fiscal Agent:

Money Market Funds
10,645,891
10,645,891
-
-
-
LAIF
9,061,135
9,061,135
-
-
-
$ 320,677,568
$ 83,820,001
$ -
$ 236,857,568
$ -
7-131

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
(5) Capital Assets
Capital asset activity for the year ended June 30, 2021, was as follows:

Governmental Activities:

Non -depreciable:

Land and rights of way
Work in progress
Depreciable:

Structures
Equipment
Infrastructure
Less accumulated
depreciation for:

Structures
Equipment
Infrastructure
Net Depreciable
Net Capital Assets
Beginning
Balance
Additions
Deletions
Balance
June 30, 2021
$ 1,897,520,485
$ -
$ -
$ 1,897,520,485
6,012,710
10,196,174
(4,833,875)
11,375,009
1,903,533,195
10,196,174
(4,833,875)
1,908,895,494
(257,505,832)
(17,016,428)
4,619,511
(269,902,749)
239,878,560
873,519
(279,570)
240,472,509
53,837,634
4,015,989
(2,674,669)
55,178,954
379,083,520
13,355,288
(2,736,716)
389,702,092
672,799,714
18,244,796
(5,690,955)
685,353,555
(49,397,226)
(5,173,158)
175,192
(54,395,192)
(35,063,735)
(4,271,342)
2,584,244
(36,750,833)
(173,044,871)
(7,571,928)
1,860,075
(178,756,724)
(257,505,832)
(17,016,428)
4,619,511
(269,902,749)
415,293,882
1,228,368
(1,071,444)
415,450,806
$ 2,318,827,077
$ 11,424,542
$ (5,905,319)
$ 2,324,346,300
Governmental Activities capital assets net of accumulated depreciation at June 30, 2021 are comprised of the following:

General Capital Assets, net $ 2,308,183,827
Internal Service Fund Capital Assets, net 16,162,473
$ 2,324,346,300
7-132

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Business -type Activities:

Depreciation expense was charged in the following functions in the Statement of Activities Beginning
Business -type
Balance
Activities
Balance
Additions
Deletions
June 30, 2021
Non -depreciable:
-
Public works
174,848
-
Land and rights of way
$ 2,219,450
$ -
$ -
$ 2,219,450
Work in progress
2,855,174
414,590
(2,855,174)
414,590
-
5,074,624
414,590
(2,855,174)
2,634,040
Depreciable:

Structures
688,396
-
-
688,396
Equipment
325,174
12,007
-
337,181
Infrastructure
186,551,195
10,311,610
(678,126)
196,184,679
187,564,765
10,323,617
(678,126)
197,210,256
Less accumulated
depreciation for:

Structures
(264,141)
(15,357)
-
(279,498)
Equipment
(158,310)
(24,690)
-
(183,000)
Infrastructure
(71,447,591)
(2,259,613)
353,856
(73,353,348)
(71,870,042)
(2,299,660)
353,856
(73,815,846)
Net Depreciable
115,694,723
8,023,957
(324,270)
123,394,410
Net Capital Assets
$ 120,769,347
$ 8,438,547
$ (3,179,444)
$ 126,028,450
Depreciation expense was charged in the following functions in the Statement of Activities $ 17,016,428 $ 2,299,660
*Internal Service Fund depreciation of $3,500,207 is allocated to governmental functions above.
7-133
Governmental
Business -type
Activities*
Activities
General government
$ 5,206,070
$ -
Public safety
1,463,225
-
Public works
174,848
-
Community development
513,094
-
Community service
9,659,191
-
Water
-
1,648,246
Wastewater
-
651,414
$ 17,016,428 $ 2,299,660
*Internal Service Fund depreciation of $3,500,207 is allocated to governmental functions above.
7-133

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
(6) Long -Term Liabilities
Changes in Long -Term Liabilities
The long-term liabilities for the year ended June 30, 2021, are as follows:

Governmental activities:

Other debt:

Certificates of participation
payable - Series 2010B
Certificates of participation
payable - Series 2020A
Bond premium - Series 2020A
Direct borrowing:

CDBG loan
Other long-term liabilities:

Workers' compensation
payable
Claims and judgments payable
Compensated absences
Beginning
Balance
$ 100,695,000 $
585,000
Amounts
Ending Due Within
Additions Deletions Balance One Year
- $ (3,065,000) $ 97,630,000 $ 3,165,000
7,860,000 - 7,860,000 775,000
1,373,936
15,521,000
1,917,334
7,960,948
5,604,723
13,093,319
2,866,959
(82,910) 1,291,026 -
(182,000) 403,000 195,000
(2,685,334)
14,753,000
2,716,603
(5,300,036)
8,265,635
2,679,733
(2,447,271)
13,513,007
4,336,047
Total governmental activities $ 137,855,267 $ 19,622,952 $ (13,762,551) $ 143,715,668 $ 13,867,383 Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. Also, liabilities for workers' compensation, claims and judgments, compensated absences, and net OPEB obligation are typically liquidated from the internal service funds through resources collected from individual funds.

Governmental Activities
• 2010 Certificates of Participation
In Fiscal Year 2010-11, the City issued $20,085,000 of Series 2010A (Tax Exempt) and $106,575,000 of Series 2010B (Federally Taxable Direct Pay Build America Bonds) Certificates of Participation. The 2010A Certificates were issued to prepay the $3,990,000 principal outstanding on the 1998 Library Certificates of Participation.

Accordingly, the 1998 Library Certificates have been defeased and are no longer outstanding. The remaining proceeds from the Series 2010A Certificates were used to finance the acquisition, improvement and equipping of the Civic Center Project. The Series 2010B Certificates were issued to provide additional financing for the Civic Center Project. The proceeds of the Certificates also were applied to pay certain costs of issuance incurred in connection with the Certificates. 7-134

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
The lease payments made by the City are held by a trustee who makes semi-annual payments on the Certificates of Participation. The lease payments began January 1, 2011, and are in amounts sufficient to cover the payment of principal and interest of the Certificates. Interest on the Certificates is payable semiannually on January 1 and July 1 of each year. The 2010A Certificates have been defeased and are no longer outstanding. The 2010B Certificates interest rates range from 4.45% to 7.17%. The City has designated the Series 2010B Certificates as "Build America Bonds" (BABs) under the provisions of the American Recovery and Reinvestment Act of 2009. Thus, the City receives refundable credits from the United States Treasury on the interest paid on the 2010B Certificates. As of June 30, 2021, the City has received $25,127,584 of BABs Subsidy from the United States Treasury and expects to receive subsidy equal to about 33% on future interest payable on the 2010B Certificates.

Principal payments are payable annually on July 1 of each year. The remaining principal payments for the Series 2010B Certificates, which are payable through July 1, 2040, range from $3,165,000 to $7,245,000. The total outstanding balance at June 30, 2021 amounted to $97,630,000. The use of the following assets has been pledged as security for the outstanding balance: the Central Library and the Civic Center.

The annual amortization requirements of the outstanding Series 2010B Certificates of Participation are as follows:

Year Ending
June 30
2022
2023
2024
2025
2026
2027-2031
2032-2036
2037-2041
Principal
$ 3,165,000
3,275,000
3,390,000
3,510,000
3,675,000
21,090,000
26,390,000
33,135,000
$ 97,630,000
• 2020 Certificates of Participation
Interest Total
6,733,265
6,556,869
6,365,978
6,142,971
5,889,360
25,200,799
16,776,346
6,154,266
$ 79,819,854
9,898,265
9,831,869
9,755,978
9,652,971
9,564,360
46,290,799
43,166,346
39,289,266
$ 177,449,854
In Fiscal Year 2020-21, the City issued $7,860,000 of Series 2020A Certificates of Participation. The 2020A Certificates were issued to finance the acquisition, improvement, and equipping of the Fire Station 2 Project. The proceeds of the Certificates also were applied to pay certain costs of issuance incurred in connection with the Certificates.

The lease payments made by the City are held by a trustee who makes semi-annual payments on the Certificates of Participation. The lease payments began June 15, 2021, and are in amounts sufficient to cover the payment of principal and interest of the Certificates. Interest on the Certificates is payable semiannually on January 1st and July 1St of each year. The 2020A Certificates' interest rate is 4.00%. Principal 7-135

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
payments are payable annually on July 1St of each year. The remaining principal payments of the Series 2020A Certificates, which are payable through July 1, 2030, range from $665,000 to $915,000. The total outstanding balance at June 30, 2021 amounted to $7,860,000. The use of the following assets has been pledged as security for the outstanding balance: Fire Station 5 and Fire Station 7.

The annual amortization requirements of the outstanding Series 2020A Certificates of Participation are as follows:

Year Ending
June 30
Principal
2022
$ 775,000
2023
665,000
2024
695,000
2025
725,000
2026
755,000
2027-2031
4,245,000
$ 7,860,000
• CDBG Loan
Interest Total
$ 318,987
$ 1,093,987
270,100
935,100
242,900
937,900
214,500
939,500
184,900
939,900
437,500
4,682,500
$ 1,668,887 $ 9,528,887
In fiscal year 2003, the City received $2,400,000 in Section 108 loan proceeds to assist with the funding for the Balboa Village Improvement Program. The loan is collateralized by future Community Development Block Grant allocations. The original loan was refinanced in fiscal year 2015 lowering the average interest rate from 6.5% to 1.5%. Future principal payments range from $195,000 to $208,000 through June 30, 2023. The outstanding balance at June 30, 2021, amounts to $403,000.

The annual amortization requirements for the CDBG Loan are as follows:

Year Ending
June 30 Principal
Interest
Total
2022 $ 195,000
$ 7,387
$ 202,387
2023 208,000
2,548
210,548
$ 403,000
$ 9,935
$ 412,935
• Claims and Judgments
The City retains the risk of loss for general liability and workers' compensation claims as described in Note (8). These amounts represent estimates of amounts to be paid for reported general liability and workers' compensation claims including incurred -but - not -reported claims based upon past experience, modified for current trends and information. While the ultimate amount of losses incurred through June 30, 2021, is dependent on future developments based upon information from the City's attorney, the City's claims administrators, and others involved with the 7-136

(7)
(8)

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
administration of the programs, City management believes the accrual is adequate to cover such losses. The estimated liability at June 30, 2021, for general liability amounted to $8,265,635 and for workers' compensation was $14,753,000. • Compensated Absences
The City's policies relating to compensated absences are described in Note (1). This liability at June 30, 2021, is $13,513,007. Compensated absences are liquidated from the Compensated Absences internal service fund.
• Unused Credit
The City has a letter of credit in the amount of $317,922.

Limited Obligation Bonds
Special Assessment Districts Bonds
The City has issued certain Assessment District and Community Facilities District Bonds.

Although the City collects and disburses funds for these districts, the City has no obligation or duty to pay any delinquency out of any available funds of the City. Neither the faith and credit nor the taxing power of the City is pledged to the payment of the bonds, and therefore the bonded indebtedness is not shown in the financial statements of the City.

The City holds reserve funds on behalf of bondholders, and the assets are recorded in the Special Assessment Agency Fund. Bonds outstanding at June 30, 2021, for each district under the Bond Acts of 1911 and 1915 are as follows:

Assessment District
Reassessment District 2012
Assessment District No. 117
Assessment District No. 116
Assessment District No. 116B
Assessment District No. 111
Risk Management — General Liability and Workers' Compensation The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters.

The City carries commercial insurance with independent third parties for loss risks associated with real and personal property, and automotive liability. The City purchases fidelity bonds for employees in key positions. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. 7-137
Bonds Outstanding
Original
Issue
June 30, 2021
$13,583,436
$2,582,521
$
2,955,000
$2,620,000
$
1,575,000
$1,510,000
$
665,000
$ 640,000
$
2,412,000
$2,412,000
Risk Management — General Liability and Workers' Compensation The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters.

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
The City utilizes Public Risk Innovation, Solutions, and Management (PRISM), formerly called California State Association of Counties — Excess Insurance Authority (CSAC-EIA), a joint powers authority, to provide excess insurance for the general liability and workers' compensation programs. PRISM provides coverage under the terms of a joint -powers agreement with the City as follows:

Type of Coverage Self -Insured Retention (SIR) Coverage Limits General Liability $500,000 $25,000,000
Workers' Compensation $500,000 Statutory
PRISM was established for the purpose of creating a risk management pool for all California public entities. PRISM is governed by a Board of Directors consisting of representatives of its member public entities.

The Insurance Reserve fund was established to account for costs associated with general liability and workers' compensation. The Insurance Reserve fund is accounted for as an internal service fund where assets are set aside for risk management, administration, claim settlements and benefit distribution. A premium is charged to each fund that accounts for part-time or full-time employees. The total charge allocated to each of the funds is calculated using trends in actual experience after considering unexpected and unusual claims.

Fund liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNR). Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The total liability claims payable was $23,018,635 at June 30, 2021, which represents the discounted present value of all outstanding claims. The claims are discounted using an interest rate of 3%.

General Liability Workers' Compensation
(9) Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to set aside a portion of their salary and defer taxation on the contributions and any investment earnings until future years.
7-138
June 30, 2020
June 30, 2021
June 30, 2020
June 30, 2020
Unpaid claims, beginning of fiscal year
$ 6,951,907
$ 7,960,948
$ 16,270,000
$ 15,521,000
Incurred claims (including IBNR)
6,559,117
5,604,723
1,646,315
1,917,334
Claim payments
(5,550,076)
(5,300,036)
(2,395,315)
(2,685,334)
Unpaid claims, end of fiscal year
$ 7,960,948
$ 8,265,635
$ 15,521,000
$ 14,753,000
(9) Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to set aside a portion of their salary and defer taxation on the contributions and any investment earnings until future years.
7-138

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Section 457 plan assets were placed in trust for the exclusive benefit of all employees and their beneficiaries. Therefore, all employee assets held in Section 457 plans are not the property of the City and are not subject to the claims of the City's general creditors. The assets under the plan, which are not included in the accompanying financial statements, totaled $151,034,783 at June 30, 2021.
(10) Pension Plans
a. General Information about the Pension Plans
Plan Descriptions — All qualified permanent and probationary employees are eligible to participate in the City of Newport Beach's separate Safety (police and fire) and Miscellaneous (all other) Employee Pension Plans, agent multiple -employer defined benefit pension plans administered by the California Public Employees' Retirement System (CaIPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and Local Government resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided— CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least 5 years of service. All members are eligible for non -duty disability benefits after 5 years of service.

The death benefit is one of the following: the Basic Death Benefit, the 1959 Survivor Benefit, the Optional Settlement 2W Death Benefit, or the 1957 Survivor Benefit. Safety members can receive a special death benefit if the member dies while actively employed and the death is job-related. Fire members may receive the alternate death benefit in lieu of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law.
7-139

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
The Plans' provisions and benefits in effect for the measurement period ended June 30, 2020 are summarized as follows:

Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Prior to
November 24,2012

2.5%@55
5 years service
monthly for life
50-55

2.0% to 2.5%

12.35% -13.0%

32.57% - 33.22%
Prior to
Miscellaneous
On or after
November 24,2012

2.0%@60
5 years service
monthly for life
50-63

1.092% to 2.418%

12.35% -13.0%

29.15% - 29.80%
On or after
On or after
January 1, 2013

2.0%@62
5 years service
monthly for life
52-67

1.0% to 2.5%

12.35% -13.0%

28.65% - 29.30%
On or after
November 24,2012
November 24,2012
January 1, 2013

3.0%@50

2.0%@50; 3.0%@55

2.7%@57
5 years service
5 years service
5 years service
monthly for life
monthly for life
monthly for life
50-55
50-55
50-57

3.0%

2.0% - 2.7%; 2.4% - 3.0%

2.0% to 2.7%

12.0% -14.6%

68.58% - 71.18%

71.08% - 73.68%
Employees Covered — At the measurement date of June 30, 2020, the following employees were covered by the benefit terms for each Plan:

Inactive employees or beneficiaries
currently receiving benefits
Inactive employees entitled to but not
yet receiving benefits
Active employees
Total
Miscellaneous
688
607
526
Safety
447
93 268
1,821 808
Contributions — Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CaIPERS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate 7-140

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
of employees. City contribution rates may change if plan contracts are amended.

Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions.
b. Net Pension Liability
The City's net pension liability for each Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2020, using an annual actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The General Fund, Tidelands Funds, Water Fund, and Wastewater Fund have typically been used in prior years to liquidate the net pension liability. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Assumptions — The total pension liabilities in the June 30, 2019 actuarial valuations were determined using the following actuarial assumptions:

Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Payroll growth
Projected salary Increase
Investment Rate of Return
Mortality Rate Table (2)
Post Retirement Benefit Increase
Miscellaneous
June 30, 2019
June 30, 2020
Safety
June 30, 2019
June 30, 2020
Entry -Age Normal Cost Method

7.15% 7.15%

2.625%

2.875%

2.625%

2.875%
Varies by Entry Age and Service

7.25% "' 7.25% ")
Derived using CaIPERS' Membership Date
for all Funds
Contract COLA up to 2.0% until Purchasing
Power Protection Allowance Floor on
Purchasing Power applies, 2.5% thereafter
(1) Net of pension plan investment and administrative expenses, including inflation. (2) The mortality table was developed based on CalPERS'specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CaIPERS demographic data from 1997 to 2015) that can be found on the CaIPERS Kebsite.

All other actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial experience study for the period from 1997 to 2015, including 7-141

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at the CalPERS website under Forms and Publications.

Discount Rate — The discount rate used to measure the total pension liability was 7.15%.

The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.

Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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

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

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

Assumed
(U In the CalPERS' CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
(z) An expected inflation of 2.0% used for this period. (3) An expected inflation of 2.92% used for this period. 7-142
asset
Real return
Real Return
Asset class
allocation
Years 1-10 (2)
Years 11+(s)
Global equity

50.00%

4.80%

5.98%
Fixed income

28.00%

1.00%

2.62%
Inflation assets
-

0.77%

1.81%
Private equity

8.00%

6.30%

7.23%
Real assets

13.00%

3.75%

4.93%
Liquidity

1.00%
-
-0.92%
(U In the CalPERS' CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
(z) An expected inflation of 2.0% used for this period. (3) An expected inflation of 2.92% used for this period. 7-142

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Subsequent Events
There were no subsequent events that would materially affect the results presented in this disclosure.
c. Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan for the measurement period follow:

Miscellaneous Plan:

Balance at June 30, 2019
Changes in the year:

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Safety Plan:

Balance at June 30, 2019
Changes in the year:

Service cost
Interest on the total pension liability
Changes in benefit terms
Changes of assumptions
Differences between expected and
actual experience
Net Plan to Plan Resource Movement
Contribution — employer
Contribution — employee
Net investment income
Benefit payments, including refunds of
employee contributions
Administrative Expense
Other Miscellaneous Income/(Expense)
Net changes
Balance at June 30, 2020
Increase (Decrease
Total Pension Plan Fiduciary
Liability Net Position
$ 590,087,083 $ 394,985,375
9,622,985 -
41,449,511 -
957,686 -
- 28,539,301
- 3,249,005
- 19,685,354
(32,285,653) (32,285,653)
- (556,832)
19,744,529 18,631,175
$ 609,831,612 $ 413,616,550
Net Pension
Liability/(Asset)
$ 195,101,708
9,622,985
41,449,511
957,686
(28,539,301)
(3,249,005)
(19,685,354)
556,832
1,113,354
$ 196,215,062
Sensitivity of the Net Pension Liability to Changes in the Discount Rate — The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1 -percentage point lower or 1 -percentage point higher than the current rate:

Miscellaneous Safety
1 % Decrease 6.15% 6.15%
Net Pension Liability $173,337,179 $275,078,734
Current Discount Rate 7.15% 7.15%
Net Pension Liability $113,866,649 $196,215,062
1% Increase 8.15% 8.15%
Net Pension Liability $64,708,268 $130,938,202
7-144

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Pension Plan Fiduciary Net Position — Detailed information about each pension plan's fiduciary net position is available in the separately issued CalPERS financial reports. d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2021, the City recognized pension expense of $45,448,494 ($13,983,368 Miscellaneous Plan and $31,465,126 Safety Plan). At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Pension contributions subsequent to
measurement date
Differences between expected and
actual experience
Changes in assumptions
Net differences between projected and
actual earnings on plan investments
Total Miscellaneous Plan
Pension contributions subsequent to
measurement date
Differences between expected and
actual experience
Changes in assumptions
Net differences between projected and
actual earnings on plan investments
Total Safety Plan
Grand Total
$ 64,235,921 $ (700,061)
7-145
Miscellaneous Plan
Deferred
Deferred
Outflows
Inflows
of Resources
of Resources
$
18,730,840
$ -
453,174
-
-
(81,359)
2,883,943
-
$
22,067,957
$ (81,359)
Safety Plan
Deferred
Deferred
Outflows
Inflows
of Resources
of Resources
$
32,251,903
$ -
4,118,233
(152,975)
2,100,724
(465,727)
3,697,104
-
$
42,167,964
$ (618,702)
$ 64,235,921 $ (700,061)
7-145

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
$50,982,743 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ending
June 30
Misc.
2022
$ (895,669)
2023
1,053,890
2024
1,720,348
2025
1,377,189
Thereafter
-
e. Payable to the Pension Plan
Total
Safety Amount
$ 2,405,425
2,681,277
2,488,566
1,722,091
$ 1,509,756
3,735,167
4,208,914
3,099,280
At June 30, 2021, the City had no outstanding amount of contributions to the pension plan required for the year ended June 30, 2021.
f. Plan Description - Defined Contribution Plan
Pursuant to City Council Resolution No. 91-106, the City entered into a defined contribution plan administrated by the private administrator known as Public Agency Retirement System ("PARS") for all of its part-time employees, pursuant to the requirements of Section 11332 of the Social Security Act. The City Council has the authority for establishing and amending the plan's provisions per the Resolution, including establishing and amending contribution requirements. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. All part-time employees are eligible to participate from the date of employment. Federal legislation requires contributions of at least 7.5% to a retirement plan, and City Council resolved to match the employees' contributions of 3.75%. The City's contributions for each employee (and interest earned by the accounts) are fully vested immediately.

For the year ended June 30, 2021, the City's covered payroll for employees participating in the plan was $3,309,541. Employees made contributions of $124,108 (3.75% of current covered payroll), which was matched by the employer in the same amount. Assets of the plan totaled $2,735,070 at June 30, 2021.
(11) Post -Employment Health Care Benefits (OPEB)
The following description of the City of Newport Beach Retiree Health Savings ("RHS") Plan provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. 7-146

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Plan Description
In January 2006, the City and employee associations agreed to major changes in the Post - Employment Health Care Plan. All employees hired after January 1, 2006, and certain employees hired prior to this date, as well as employees who elected to fully convert to a defined contribution formula (hereafter fully converted employees), participate in a program that requires mandatory employee and employer contributions. However, once these contributions have been made to the employee's account, the City has no further funding obligation to the Plan on their behalf, except for the Public Employees' Medical and Hospital Care Act ("PEMHCA") minimum, which is the responsibility of the City. These employees and eligible retirees participate in a Retiree Health Savings ("RHS") Plan sponsored by the City, the single employer of the plan. Plan assets are held in trust and managed by MissionSquare Retirement (Trustee), under IRS Revenue Ruling 2002-41 (June 26, 2002) and IRS Notice 2002-45 (June 26, 2002).

Certain employees hired prior to January 1, 2006, had the option to retain a hybrid of the former defined benefit plan, or to fully convert to the new Plan. Employees electing to retain a hybrid of the former defined benefit formula participate in a program requiring mandatory defined contributions by employees and the City, as well as a defined benefit consisting of an ongoing contribution from the City to the participant's RHS account each month after retirement. Additionally, these employees are eligible to receive health care benefits under the City's group health care plans. In order to receive these benefits, these employees are required to pay the City $100 per month up until their retirement to offset the unfunded portion of post -employment health care benefits existing at the inception of the plan.

For fully converted employees, the City made a one-time contribution into their individual RHS account of $100 per month for every month the employee contributed to the previous defined benefit plan up to a maximum of 15 years. For employees who elected to retain a hybrid plan, the City made a one-time contribution into their individual RHS account of $75 per month for every month the employee contributed to the previous defined plan up to a maximum of 15 years. In order to receive these contributions, the employee must retire from the City. At June 30, 2021, the liability for the conversion part of the RHS Plan was $1,432,500. This amount is not included in the Net OPEB Liability, but is included in the compensated absences liability. See Note (6).

Employees who retired prior to January 1, 2006, continue to receive an ongoing defined benefit consisting of a contribution made by the City to the participant's RHS account each month. The defined benefit portion of the plan is closed to new participants.

The City has elected to participate in the California Employers' Retiree Benefit Trust ("CERBT") Fund to prefund its OPEB liability. CERBT is managed by CalPERS and invests in global equity, global debt securities, inflation assets, commodities, and REITs.

By placing funds in trust to fund future City contributions before those future contributions are due, the City earns investment income that will help pay those future contributions and thereby reduce the City's long-term OPEB budgetary requirements. 7-147

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Employees Covered
As of the measurement date June 30, 2020, the following current and former employees were covered by the benefit terms under the plan:

Inactive employees, spouses, or beneficiaries currently receiving benefits 605 Inactive employees or beneficiaries entitled to but not yet receiving benefits 53 Active employees 790
Total 1,448
Contributions
Contribution requirements are established by City policy and may be amended by the City Council. The annual contribution is based on the actuarially determined contribution. For the year ended June 30, 2021, the City's cash contributions were $5,665,649 to the trust in premium payments and $845,896 for the estimated implicit subsidy, resulting in a total payment of $6,511,545.

Net OPEB Liability
The City's net OPEB liability was measured as of June 30, 2020, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2019. The General Fund, Tidelands Funds, Water Fund, and Wastewater Fund have typically been used in prior years to liquidate the net OPEB liability. A summary of the principal assumptions and methods used to determine the total OPEB liability is shown below.

Actuarial Assumptions
The total OPEB liability as of June 30, 2019 actuarial valuation was determined using the following actuarial assumptions and applied to all periods included in the measurement, unless otherwise specified:

Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Projected Salary Increase
Expected long term investment rate of return
Healthcare Cost Trend Rates
Post Retirement Turnover
Mortality
June 30, 2019
June 30, 2020
Entry -Age Normal Cost Method

6.50%

2.50%

2.75% per annum, in aggregate

6.50%

6.00% HMO/6.00% PPO
Derived from CaIPERS pension plan
Derived from CALPERS pension plan updated to
reflect most recent experience study
7-148

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
The actuarial assumptions used in the June 30, 2019, valuation were based on a standard set of assumptions the actuary has used for similar valuations, modified as appropriate for the City.

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

The asset class percentages are taken from the current composition of the CERBT Fund, and the expected yields are taken from a recent CalPERS publication for the pension fund:

Discount Rate
The discount rate used to measure the total OPEB liability is 6.50% per annum. This is the expected long-term rate of return on City assets using investment strategy 1 within CERBT. The projection of cash flows used to determine the discount rate assumed that the City contribution will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position is projected to cover all future OPEB payments. Therefore, the discount rate was set equal to the long- term expected rate of return.
7-149
Long -Term
Target
Expected Real
Asset Class
Allocation
Rate of Return
CERBT
Global Equity

59.00%

5.50%
Global Debt Securities

25.00%

2.35%
Inflation Assets

5.00%

1.50%
Commodities

3.00%

1.75%
RE ITs

8.00%

3.65%
Total
100.00%
Discount Rate
The discount rate used to measure the total OPEB liability is 6.50% per annum. This is the expected long-term rate of return on City assets using investment strategy 1 within CERBT. The projection of cash flows used to determine the discount rate assumed that the City contribution will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position is projected to cover all future OPEB payments. Therefore, the discount rate was set equal to the long- term expected rate of return.
7-149

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Changes in the Net OPEB Liability
The changes in the net OPEB liability are as follows:

Balance at June 30, 2019
Changes in the year:

Service cost
Interest on the total OPEB liability
Changes of benefit terms
Changes of assumptions
Differences between expected and actual
experience
Contributions - employer
Contributions - employees
Net investment income
Benefit payments, including refunds of
employee contributions
Administrative expenses
Other expense
Net changes
Balance at June 30, 2020
Change of Assumptions
There was no change of assumption.

Change of Benefit Terms
There was no change of benefit terms.

Subsequent Events
Increase (Decrease)
Total OPEB
Plan Fiduciary
Net OPEB
Liability
Net Position
Liability
(a)
(b)
(a) -(b)
$ 46,635,812
$ 24,021,071
$ 22,614,741
521,285
2,944,050
(219,772)
(3,787,663)
4,674,814
900,087
(3,787,663)
(12,037)
521,285
2,944,050
(219,772)
(4,674,814)
(900,087)
12,037
(542,100) 1,775,201 (2,317,301)
$ 46,093,712 $ 25,796,272 $ 20,297,440
There were no subsequent events that would materially affect the results presented in this disclosure.

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City, calculated using the discount rate for the Plan, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 1 -percentage point lower or 1 -percentage point higher than the current rate:
7-150

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
1 % Decrease Current Discount Rate 1 % Increase

5.50% 6.50% 7.50%
Net OPEB Liability $ 24,892,589 $ 20,297,440 $ 16,395,020 Sensitivity of the Net OPEB Liability to Changes in Health -Care Cost Trend Rates The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 - percentage point lower (5.0% HMO/5.0% PPO) or 1 -percentage point higher (7.0% HMO/7.0% PPO) than current healthcare cost trend rates:
1 % Decrease
(5.0%HMO/5.0%PPO
Current Healthcare
Cost Trend Rates
(6.0%HMO/6.0%PPO
1 % Increase
(7.0%HMO/7.0%PPO
decreasing to decreasing to decreasing to

3.5%HMO/3.5%PPO) 4.5%HMO/4.5%PPO) 5.5%HMO/5.5%PPO)
Net OPEB Liability $ 18,386,736 $ 20,297,440 $ 22,939,327 OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2021, the City recognized OPEB expense of $2,206,286. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Deferred Inflows of
Description Resources Resources
OPEB contributions subsequent to measurement date $ 6,511,545 $ - Differences between expected and actual experience 1,688,213 (195,353) Changes of assumptions 76,207
Net difference between projected and actual earnings on OPEB plan investments 225,390 -
Total $ 8,501,355 $ (195,353)
The differences between expected and actual experience are amortized over a six-year period or a nine-year period, depending on the fiscal year the difference occurred.

Changes of assumptions are amortized over a six-year period. The net difference between projected and actual earnings on plan investment is amortized over a five-year period.

An amount of $6,511,545, which is reported as deferred outflows of resources related to contributions subsequent to the measurement date, will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2022. 7-151

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ending
June 30 Amount
2022
2023
2024
2025
2026
Thereafter
Payable to the OPEB Plan
31 b,2 /y
476,501
542,812
554,541
(24,419)
(73,258)
At June 30, 2021, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2021.
(12) Interfund Receivables and Payables
At June 30, 2021, interfund advances receivable and payable were as follows:

Advance from Advance to
General Fund $ 9,426,659 $ -
Tide and Submerged Land - Harbor Capital Fund - 9,426,659 Total $ 9,426,659 $ 9,426,659
The General Fund advance to the Tide and Submerged Land — Harbor Capital Fund was utilized for dredging within the City's Tidelands. Repayment of the advance to the General Fund is funded from incremental revenue increases generated from certain leases, mooring rents, commercial and residential pier rents, and parking meter revenues. 7-152

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
The annual amortization of the repayment of the advance is as follows:

Harbor Capital Fund Advance - Repayment Terms
(Zero Interest Advance)
Total $ 4,926,659 $ 4,500,000 $ 9,426,659
At June 30, 2021, interfund receivables and payable were as follows:

General Fund
Facilities Financial Planning Reserve Fund
Civic Center COP
Internal Service Funds
Other Governmental Funds
Total
Due from Due to
$ 439,194 $ -
6,531,812 -
- 6,395,513
352,836
222,657
$ 6,971,006 $ 6,971,006
The above balances are primarily due to reclassification of negative cash balances in the city-wide cash pool.
7-153
Advance #1
Advance #2
Dredging
Marina Park
Fiscal
Projects
Project
Total
Year
Repayment
Repayment
Repayment
2022
$ 750,000
$ 500,000
$ 1,250,000
2023
750,000
500,000
1,250,000
2024
750,000
500,000
1,250,000
2025
750,000
500,000
1,250,000
2026
750,000
500,000
1,250,000
2027
750,000
500,000
1,250,000
2028
426,659
500,000
926,659
2029
-
500,000
500,000
2030
-
500,000
500,000
Total $ 4,926,659 $ 4,500,000 $ 9,426,659
At June 30, 2021, interfund receivables and payable were as follows:

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
(13) Interfund Transfers
Interfund transfers at June 30, 2021, consisted of the following:

The City typically uses transfers to fund ongoing subsidies and to set aside resources for long-term needs such as capital facilities replacement and major maintenance. The General Fund transferred:
• $8,711,959 to subsidize the maintenance and operation of the Tide and Submerged Land — Operating Fund;
$4,500,000 to the Tide and Submerged Land — Harbor Capital Fund to cash fund Harbor Capital projects;
• $8,500,000 to the Facilities Financial Planning Reserve Fund to cash fund construction projects for General Fund supported facilities; • $531,764 to internal service funds, of which $500,000 was to the Equipment Maintenance Fund for vehicle replacement and $31,764 was to the Information Technology Fund for a wireless phone system;
• and $12,411,489 to Other Governmental Funds, which includes $2,508,176 to the Neighborhood Enhancement Fund to fund construction projects and acquire Rule 20A credits, $1,366,254 to the Facilities Maintenance Fund, $8,137,059 to the Unrestricted Capital Improvements Fund to cash fund General Fund capital improvements, and $400,000 to the Assessment District Fund for assessment district expenditures.

Tide and Submerged Land — Harbor Capital transferred $4,184 to Other Governmental Funds for costs associated with the removal of abandoned or surrendered vessels from the waters of Newport Harbor.
7-154
Transfers In
Tide and
Tide and
Facilities
Submerged
Submerged
Financial
Internal
Other
Land -
Land - Harbor
Planning
Civic Center
Service
Governmental
General Fund
Operating
Capital
Reserve
COP
Funds
Funds
Total
General Fund
$
$ 8,711,959
$ 4,500,000
$ 8,500,000
$
$ 531,764
$ 12,411,489
$34,655,212
Tide and
Submerged Land-
-
-
-
-
4,184
4,184
5 Harbor Capital
E2 Facilities Financial
a
Planning Reserve
-
-
-
7,646,138
6,901,299
14,547,437
m
Internal Service
Funds
4,946,576
-
4,946,576
Other
Governmental
5,388,535
11,344,644
25,000
16,758,179
Funds
Total
$10,335,111
$ 8,711,959
$ 4,500,000
$19,844,644
$ 7,646,138
$ 531,764
$ 19,341,972
$70,911,588
The City typically uses transfers to fund ongoing subsidies and to set aside resources for long-term needs such as capital facilities replacement and major maintenance. The General Fund transferred:
• $8,711,959 to subsidize the maintenance and operation of the Tide and Submerged Land — Operating Fund;
$4,500,000 to the Tide and Submerged Land — Harbor Capital Fund to cash fund Harbor Capital projects;
• $8,500,000 to the Facilities Financial Planning Reserve Fund to cash fund construction projects for General Fund supported facilities; • $531,764 to internal service funds, of which $500,000 was to the Equipment Maintenance Fund for vehicle replacement and $31,764 was to the Information Technology Fund for a wireless phone system;
• and $12,411,489 to Other Governmental Funds, which includes $2,508,176 to the Neighborhood Enhancement Fund to fund construction projects and acquire Rule 20A credits, $1,366,254 to the Facilities Maintenance Fund, $8,137,059 to the Unrestricted Capital Improvements Fund to cash fund General Fund capital improvements, and $400,000 to the Assessment District Fund for assessment district expenditures.

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
The Facilities Financial Planning Reserve Fund transferred $7,646,138 to the Civic Center COP Fund for the debt service payments related to the Civic Center Certificates of Participation and $6,901,299 to Other Governmental Funds to cash fund construction projects related to parks and community centers.

Internal Service Funds transferred $4,500,000 of excess reserve funds on hand to the General Fund, which were identified during the budget balancing strategy in response to the COVID-19 pandemic. The transfers include $2,000,000 from the Insurance Reserve Fund; $500,000 from the Equipment Maintenance Fund; and $2,000,000 from the Information Technology Fund. The Equipment Maintenance Fund transferred an additional $446,576 to the General Fund as expected equipment replacement was deemed unnecessary.

Other Governmental Funds transferred $5,388,535 of unappropriated fund balances to the General Fund, which includes $2,765,286 from the Capital Projects Fund and $2,623,249 from the Neighborhood Enhancement Fund related to capital projects that were either postponed or eliminated. These transfers were also related to the budget balancing strategy in response to the pandemic. Other Governmental Funds also transferred $11,344,644 of unappropriated fund balances to the Facilities Financial Planning Reserve, which includes $1,222,853 from the Civic Center and Park Fund; $14,983 from the Miscellaneous Facilities Financing Fund; $343,884 from the West Newport Community Center Fund; $105,858 from the Sunset Ridge Park Fund; $157,066 from the Strategic Planning Fund; and $9,500,000 from the Fire Stations Fund. The funds returned from the Fire Stations Fund resulted from the City deciding to finance the construction of a fire station in lieu of cash funding the project, while the remainder of the funds were excess funds on hand related to completed projects that had originally been funded from the Facilities Financial Planning Reserve.
(14) Joint Venture Agreements
Bonita Canyon Public Facilities Financing Authority
The Bonita Canyon Public Facilities Financing Authority (Authority) is a joint powers authority comprised of the City of Newport Beach and the Newport -Mesa Unified School District. The Authority's Board is comprised of two members appointed by each of the member agencies. The Authority created Community Facilities District 98-1 to finance public facilities that will benefit the properties within the District's boundaries. In 1998, the Authority issued $45,000,000 of special tax bonds to be repaid by special assessments. $30,577,712 (81.7°/x) of the proceeds were used to pay for the costs of the City acquiring and constructing public facilities including parks and road improvements. In Fiscal Year 2011-12, the Authority issued $38,330,000 of special tax refunding bonds to refinance the 1998 Series. In Fiscal Year 2017-18, the Authority issued $28,245,000 of special tax refunding bonds to refinance the 2012 series; the City is not obligated in any manner to repay the bonds. As of June 30, 2021, the contributions from property owners have been fully spent and no funds are held in trust by the fiscal agent. The City does not make any 7-155

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
annual contributions to the Authority and does not include the Authority as a component unit, as the City is not financially accountable for the Authority's activities and the Authority is not fiscally dependent on the City. The City's equity interest in the Authority is not readily determinable. Complete separate financial statements can be obtained at the Newport Mesa Unified School District, 2985 Bear Street, Suite 8M, Costa Mesa, California.

Metro Cities Fire Authorit
The City of Newport Beach is a participant in a joint venture consisting of the cities of Anaheim, Brea, Fountain Valley, Fullerton, Huntington Beach, and Orange for the operation of a communication network utilized by fire suppression, emergency medical assistance, and rescue services. The oversight board consists of one voting member and one alternate appointed by the governing body of each member agency. The City of Newport Beach's costs are based each fiscal year upon the number of recorded incidents attributable to the City divided by the recorded incidents attributable to all members during the year, and are recorded in the General Fund as an expenditure for service. Upon termination of the agreement, the proceeds from the sale of the property and assets of the joint venture will be paid to each member agency pursuant to their fair share percentage.

Annually, the amounts paid by the City to this joint venture are approximately $750,051.

The City's 11.26% interest in the net equity of this joint venture at June 30, 2021, amounts to $256,862. Complete separate financial statements can be obtained at the Metro Cities Fire Authority offices at 201 S. Anaheim Boulevard, Suite 302, Anaheim, California.

Integrated Law and Justice Agency of Orange County
The City is a participant in a joint venture with several other public agencies in Orange County for the operation of the Integrated Law and Justice Agency of Orange County (ILJAOC). The ILJAOC was established in fiscal year 2006-07 and consists of 23 member agencies, with an oversight board consisting of 12 members from the participating agencies. Annually, each member agency pays a percentage of the operating and replacement costs for the ILJAOC. The City's annual contribution and interest in the net equity of this joint venture was immaterial as of June 30, 2021. The City of Newport Beach acted as the Treasurer/Controller of the ILJAOC from inception through the end of fiscal year 2010-11. Beginning July 1, 2011, the City of Brea, another member agency, was appointed to serve as Treasurer/Controller, and assumed responsibility for all operating activities of the ILJAOC. Complete separate financial statements can be obtained from the City of Brea, 1 Civic Center Circle, Brea, California 92821. 7-156

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
(15) Commitments and Contingencies
Claims and Judaments
Numerous claims and suits have been filed against the City in the normal course of business. The estimated liability under such claims, based upon information received from the City Attorney, contracted attorneys, and the Risk Manager, has been estimated and recorded as accrued claims and judgments payable. (See Notes 6 and 8.) Operating Agreements
The City of Newport Beach first entered into an agreement with Visit Newport Beach Inc. ("VNB"), a legally separate non-profit marketing organization, in 1987. The primary responsibility of VNB is to attract additional visitor business by promoting the City as the premier tourist and business destination in Orange County. VNB is governed by an Executive Committee comprised of seven individuals not appointed by the City Council of the City of Newport Beach. The current agreement was entered into on September 27, 2011, and subsequently amended on January 28, 2014, extending the agreement through December 31, 2024. The City pays VNB 18% of the Total Transient Occupancy Tax collected during the fiscal year. For the Fiscal Year ending June 30, 2021, the City paid VNB $3,654,036.

The City of Newport Beach entered into an agreement with the City of Costa Mesa to share a homeless shelter that would enable both agencies to provide services to their respective homeless populations without duplicating efforts. The current agreement was entered into on December 15, 2020 and has a five-year term until December 15, 2025, with two optional extension terms of five years each. The agreement provides the City of Newport Beach exclusive use of 20 temporary shelter beds in exchange for one-time funding of $1,600,000 towards capital improvements and furniture, fixtures and equipment for the new shelter; and an initial annual contribution of $1,000,000 towards shelter operational costs upon project completion. The annual operational contribution is subject to increases in relation to the consumer price index, however, it shall increase by a minimum of 2.0% and a maximum of 4.0% annually. For the fiscal year ending June 30, 2021, the City paid the City of Costa Mesa $1,600,000.
7-157

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Contractual Commitments
Construction and contractual commitments for major construction projects are as follows:

Project YTD
Annual
Expenditures
Budget
Lido Fire Station 2
$ 9,548,841
Advanced Metering Infrastructure
6,377,973
Transmission Main Valves Replace
3,205,537
UUD 22 Phase 2
5,195,420
Bay Crossing Water Main Replc
1,403,186
WCH Hwy Intersection Imp Ped Bridge
1,199,237
General Plan Update
1,762,569
Balboa Island Drainage Master Plan
2,254,600
Project YTD
Unexpended
Expenditures
Commitments
$ 2,864,779
$ 5,497,891
3,620,612
2,757,360
86,300
3,090,557
2,397,555
2,797,865
-
1,222,533
70,717
1,127,104
671,855
938,198
73,585
760,859
At fiscal year end, the City's encumbrances with contractors were as follows:
7-158
Major Governmental Funds
Other Governmental Funds
Tide and
Tide and
Special
Capital
Submerged
Submerged
Revenue
Project Permanent
General
Land Operating
Land Harbor Capital
Funds
Funds Funds
Total
Drainage
$ -
$ -
$ -
$ -
$ 923,452 $
$ 923,452
Streets
6,971
3,743
37,500
2,061,693
2,060,804
4,170,711
Facilities
57,100
-
-
-
227,731
284,831
Miscellaneous and studies
-
-
1,073,123
1,073,123
Parks
200,384
32,730
1,325,581
1,558,695
Contract services
1,627,377
-
-
1,627,377
Supplies and materials
323,368
-
323,368
Maintenance and repairs
688,168
641,393
1,329,561
General
169,299
-
270
169,569
Beaches
-
141,776
425,111
-
-
566,887
Equipment
-
185,375
29,450
196,393
-
411,218
Total encumbrances
$ 3,072,667
$ 363,624
$ 492,061
$ 2,258,086
$ 6,252,354 $
$ 12,438,792
7-158

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
(16) Fund Balance
Governmental Fund Balance at June 30, 2021, is classified as follows:
7-159
Other Governmental Funds
Tide and
Tide and American
Facilities
Special
Capital
Submerged
Submerged Rescue Plan
Financial Planning Civic Center
Revenue
Project
Permanent
General Land - Operating Land - Harbor Capital Act
Reserve COP
Funds
Funds
Funds
Totals
Nonspendable:

Prepaid items (legally restricted)
$ 901,095 $
- $
- $ -
$ - $ - $
77,549 $
- $
- $
978,644
Inventories (legally restricted)
309,343
-
- -
- -
-
-
-
309,343
Long-term loan receivable (form restricted)
9,426,659
-
- -
- -
-
-
-
9,426,659
Permanent endowment (legally restricted)
-
-
- -
- -
-
-
4,629,781
4,629,781
Restricted:

Affordable housing
212,877
-
- -
- -
-
-
-
212,877
Oceanfront encroachment
1,707,188
-
- -
- -
-
-
-
1,707,188
Upper Newport bay restoration
-
1,161,905
- -
- -
-
-
-
1,161,905
Cable franchise reserve
2,436,995
-
- -
- -
-
-
-
2,436,995
Community development
518,965
-
- -
- -
-
3,307
-
522,272
Streets and highways
-
-
- -
- -
1,369,670
-
-
1,369,670
Public safety
-
-
- -
- -
369,519
-
-
369,519
Parks
-
-
- -
- -
44,213
-
-
44,213
Facilities
-
-
- -
- -
44,212
7,875,501
-
7,919,713
Transportation
-
-
- -
- -
2,674,161
-
-
2,674,161
Air quality improvement
-
-
- -
- -
947,783
-
-
947,783
Environmental liability mitigation
-
-
- -
- -
8,496,962
-
-
8,496,962
Dredging
-
-
13,283,824 -
- -
-
-
1,602,911
14,886,735
Libraries
-
-
- -
- -
-
-
216,872
216,872
Scholarships
-
-
- -
- -
-
-
223,875
223,875
Fiin
-
-
- -
- -
1,335,109
-
-
1,335,109
Debt service
-
-
- -
- 2,255,795
-
-
-
2,255,795
Capital re -appropriations
-
2,027,228
9,832,111 -
- -
4,181,210
2,854,688
-
18,895,237
Encumbrance reserve:

Beaches
-
141,776
425,111 -
- -
-
-
-
566,887
Streets
-
3,743
37,500 -
- -
2,061,693
-
-
2,102,936
Equipment
-
185,375
29,450 -
- -
196,393
-
-
411,218
Parks
-
32,730
- -
- -
-
-
-
32,730
Committed:

Strategic planning
-
-
- -
- -
-
-
-
-
Facilities replacement
-
-
- -
28,092,597 -
-
-
-
28,092,597
Facilities maintenance
-
-
- -
- -
-
3,837,544
-
3,837,544
Civic center and park
-
-
- -
- -
-
497,985
-
497,985
Fire station
-
-
- -
- -
-
-
-
-
Oil and gas liabilities
-
760,000
- -
- -
-
-
-
760,000
Parks and community centers
-
-
- -
- -
-
31,819
-
31,819
Parking management
163,079
-
- -
- -
-
962,271
-
1,125,350
Neighborhood enhancement
-
-
- -
- -
-
2,141,506
-
2,141,506
Capital re -appropriations
-
-
- -
- -
-
5,287,078
-
5,287,078
Encumbrance reserve:

Drainage
-
-
- -
- -
-
923,452
-
923,452
Streets
6,971
-
- -
- -
-
2,060,804
-
2,067,775
Facilities
57,100
-
- -
- -
-
227,731
-
284,831
Miscellaneous and studies
-
-
- -
- -
-
1,073,123
-
1,073,123
Parks
200,384
-
- -
- -
-
1,325,581
-
1,525,965
Contract services
1,627,377
-
- -
- -
-
-
-
1,627,377
Supplies and materials
323,368
-
- -
- -
-
-
-
323,368
Maintenance and repairs
688,168
-
- -
- -
-
641,393
-
1,329,561
General
169,299
-
- -
- -
-
270
-
169,569
Assigned:

Recreation and senior services
710,250
-
- -
- -
-
-
-
710,250
Fair value adjustment reserve
779,100
-
- -
- -
-
-
-
779,100
Unassigned:
85,715,180
(136,299)
85,578,881
Total fund balances
$ 105,953,398 $
4,312,757 $
23,607,996 $
$ 28,092,597 $ 2,255,795 $ 21,798,474 $29,607,754 $
6,673,439 $222,302,210
7-159

(17)

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
Tax Abatements
The City may enter into sales tax abatement agreements with automobile dealerships under City Council Resolution 99-64. Under that Resolution, the City may rebate sales taxes "for the sole purpose of reimbursing [automobile dealerships] for costs incurred for a project necessary to make the project financially feasible". Automobile dealerships must covenant "to complete the project, to remain and operate the project for a specified period of time... [, and] to maximize the City as the point-of-sale...". Automobile dealership sales tax rebates are based on negotiations that require City Council approval. On an accrual basis, for the fiscal year ended June 30, 2021, the City rebated sales taxes to automobile dealerships totaling $619,315 under this program.
(18) Net Position / Fund Balance Restatement
Governmental fund revenue that is not available soon enough after the end of a fiscal year should be recorded as a deferred inflow of resources called unavailable revenue.

Unavailable revenue is not included in fund balance. July 1, 2020's fund balance has been restated for an amount that should have been recorded as unavailable revenue.

Governmental Accounting Standards Board Statement No. 84 "Fiduciary Activities" changed the accounting and reporting standards of fiduciary activities. Consistent with Statement No. 84, the beginning net position of the City's fiduciary funds has been restated as of July 1, 2020 to summarize Statement No. 84's effect on fiduciary net position as if Statement No. 84 had been applied retroactively.

Governmental Funds
7-160
Other
Governmental
Funds
Fund balance at June 30, 2020, as previously reported
$
68,462,889
Deferral of prior period revenue
(282,500)
Fund balance at July 1, 2020, as restated
$
68,180,389
Fiduciary Funds:

Custodial
Funds
Net position at June 30, 2020, as previously reported
$
-
Adjustment for implementation of GASB Statement No. 84
2,271,600
Net position at July 1, 2020, as restated
$
2,271,600
7-160

CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2021
(19) Subsequent Events
Limited Obligation Bond Issue for Assessment District No. 113 On July 20, 2021 the City issued $4,565,000 of Assessment District No. 113 Limited Obligation Improvement Bonds pursuant to the provisions of the Improvement Bond Act of 1915. The bonds are issued in serial maturities over twenty years ranging from 1.75% to 3.0%. The bond proceeds will primarily be used to provide financing to underground power, telephone and cable facilities in the Improvement Area. Bond proceeds will also be used to establish a debt service reserve fund and pay costs of issuance and capitalized interest on the bonds. Although the City will be collecting and disbursing funds for this district, the City has no obligation or duty to pay any delinquency out of any available funds of the City. Neither the faith and credit nor the taxing power of the City is pledged to the payment of the bonds.
7-161

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REQUIRED SUPPLEMENTARY INFORMATION
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CITY OF NEWPORT BEACH
an Agent Multiple -Employer Defined Benefit Pension Plan As of June 30, 2021
Last 10 Years *
Defined Benefit Plan for Miscellaneous Employees

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Newport Beach City CouncilJanuary 25, 2022

Newport Beach City Council
January 25, 2022