Norco City Council
February 2, 2022

AGENDA
City Council
Wednesday, February 2, 2022
City Council Chamber – Norco City Hall
2820 Clark Avenue, Norco, CA 92860
CALL TO ORDER 6:00 PM
ROLL CALL Greg Newton, Mayor
Robin Grundmeyer, Mayor Pro Tem
Katherine Aleman, Council Member
Kevin Bash, Council Member
Ted Hoffman, Council Member

CLOSED SESSION
§54956.9(c) – Conference with Legal Counsel – Anticipated Litigation Once Case
54957.6 – Conference with Labor Negotiator
Negotiating Party: City Manager Okoro
Employee Organization: Norco General Employees Association Unrepresented Employees: Norco Mid-Management, Confidential, and Management Employees
RECONVENE PUBLIC SESSION 7:00 PM

REPORT OF ACTION(S) TAKEN IN CLOSED SESSION
PLEDGE OF ALLEGIANCE Mayor Pro Tem Robin Grundmeyer
INVOCATION Pastor Fred Griffin
Corona Church of the Open Door

1. CITY COUNCIL REPORTS ON REGIONAL BOARDS

2. CONSENT CALENDAR
All items listed under the Consent Calendar are considered to be routine and may be enacted by one motion. Prior to the motion to consider any action by the presiding governmental body, any public comments on any of the Consent Items will be heard. There will be no separate action unless members of the governmental body or the audience request specific items be removed from the Consent Calendar. Items removed from the Consent Calendar will be separately considered under Item 3 of the Agenda.

City Council Agenda - February 2, 2022

2.A. Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only.

RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

Staff Report - Pdf

2.B. Approval of City Council Regular Meeting Minutes
RECOMMENDATION:

Approve the City Council Regular Meeting Minutes of January 19, 2022 Staff Report - Pdf

2.C. Acceptance of the Nellie Weaver Hall Drainage Improvement Project as Complete
RECOMMENDATION:

Accept Nellie Weaver Hall Drainage Improvement Project as complete and authorize the City Clerk to file a Notice of Completion with the County of Riverside.

Staff Report - Pdf

2.D. Resolution Making Findings and Continuing Existing Benefit Assessment Rates (BAU) for Maintaining Flood Control Channels within County Service Area CSA-152 for Fiscal Years 2022-2023 through 2024-2025 RECOMMENDATION:

Adopt Resolution 2022-08, making findings and continuing existing Benefit Assessment Rates (BAU) for maintaining flood control channels within County Service Area CSA-152 for Fiscal Years (FY) 2022-2023 through 2024-2025.

Staff Report - Pdf

3. ITEM(S) PULLED FROM CONSENT CALENDAR

4. PUBLIC COMMENTS
This is the time when persons wishing to address the presiding governmental body regarding matters not on the agenda may be heard. Please submit a speaker card to the Meeting Clerk. Please limit comments to three minutes or less. The Ralph M. Brown Act limits the governmental body’s ability to respond to comments on non-agendized matters at the time such comments are made.

The governmental body shall not discuss or act relative to any general public comment.

City Council Agenda - February 2, 2022

5. LEGISLATIVE MATTERS
No new evidence will be heard from the public as the public hearing has been closed regarding the items listed.

5.A. Ordinance No. 1079, Second Reading: An Ordinance of the City Council of the City of Norco, California Amending Norco Municipal Code Title 10 “Vehicles and Traffic” to add Chapter 10.06 “Parking Restrictions”, Code Amendment 2022-01 and approval of the index and maps that identifies the various parking restrictions and locations throughout the City of Norco.

RECOMMENDATION:

Adopt Ordinance No. 1079 for Second Reading; and adopt Resolution No. 2022-09 to approve the index and maps that identifies the various parking restrictions and locations throughout the City of Norco.

Staff Report - Pdf

6. DISCUSSION / ACTION ITEM(S)
Order of Presentation for Discussion Items:

1. Staff Report Presentation

2. Council Questions of Staff

3. Public Comment

4. Council Discussion and Action

6.A. Report on Fiscal Year 2020-2021 Audited Financial Reports RECOMMENDATION:

Receive and file the Fiscal Year (FY) 2020-2021 Audited Financial Reports Staff Report - Pdf

6.B. Five Keys School and Programs Update
RECOMMENDATION:

Receive and File
Staff Report - Pdf

6.C. Trail Standard and Rehabilitation Discussion
RECOMMENDATION:

Provide staff with feedback or recommendations regarding trail standards and/or rehabilitation practices used by staff.

Staff Report - Pdf

City Council Agenda - February 2, 2022

7. CITY COUNCIL / STAFF COMMUNICATIONS

8. ADJOURNMENT
In compliance with the Americans with Disabilities Act, any person who requires a modification or accommodation in order to participate in this meeting is encouraged to contact the City Clerk’s Office at (951) 270-5623 or [email protected] at least 48 hours prior to the meeting so that reasonable arrangements can be made to ensure accessibility. Staff reports are on file in the City Clerk’s Office. Any writings or documents provided to a majority of the presiding governmental body regarding any item on this agenda will be available for public inspection at the City Clerk’s Office during normal business hours at Norco City Hall, located at 2870 Clark Avenue in Norco. The meeting is recorded.

City Council

STAFF REPORT
Date: February 2, 2022 Agenda Item:

2.A.

To: Honorable Mayor and City Council Members
Prepared By: Dana Roa, City Clerk
Department: City Clerk
SUBJECT:

Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only.

RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

REVIEWED AND APPROVED BY:

City Council

STAFF REPORT
Date: February 2, 2022 Agenda Item:

2.B.

To: Honorable Mayor and City Council Members
Prepared By: Dana Roa, City Clerk
Department: City Clerk
SUBJECT:

Approval of City Council Regular Meeting Minutes
RECOMMENDATION:

Approve the City Council Regular Meeting Minutes of January 19, 2022 REVIEWED AND APPROVED BY:

ATTACHMENT(S):

DRAFT City Council - Jan 19 2022 - Minutes (1)

DRAFT - MINUTES
City Council
Wednesday, January 19, 2022
City Council Chamber – Norco City Hall
2820 Clark Avenue, Norco, CA 92860
CALLED TO ORDER 6:00 PM
ROLL CALL Greg Newton, Mayor
Robin Grundmeyer, Mayor Pro Tem
Katherine Aleman, Council Member
Kevin Bash, Council Member
Ted Hoffman, Council Member
a) Adding One Case of Anticipated Litigation to Closed Session.

Deputy City Attorney Burns requested to add One Case of Anticipated Litigation to Closed Sessions.

Following discussion motion was made.

M/S BASH/HOFFMAN to add One Case of Anticipated Litigation to the Closed Session Calendar. The Motion was carried by the following roll call vote:

AYES: NEWTON, GRUNDMEYER, ALEMAN, BASH, AND HOFFMAN
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

CLOSED SESSION
§54956.9(c) – Conference with Legal Counsel – Anticipated Litigation Three Cases
§54956.8 - Conference with Legal Counsel - Real Property Negotiation Property: APN 125-100-046
City Negotiator: City Manager Andy Okoro
Under Negotiation: Price and Terms
RECONVENE PUBLIC SESSION 7:00 PM

REPORT OF ACTION(S) TAKEN IN CLOSED SESSION
Deputy City Attorney Colin Burns stated there were no reportable actions taken in closed session.

City Council Minutes - January 19, 2022

PLEDGE OF ALLEGIANCE Mayor Greg Newton
INVOCATION Pastor Caleb Booth
Turning Point Church

PRESENTATIONS
Community Spirit Award - John and Joanne Aikens

Council Member Bash presented the Community Spirit award to John and Joanne for their dedication to community service and to the betterment of the City of Norco.

1. CITY COUNCIL REPORTS ON REGIONAL BOARDS
The Mayor, Mayor Pro Tem and Council Members provided reports on their recent individual participation in committees, commissions, regional boards and community organizations.

2. CONSENT CALENDAR
M/S BASH/HOFFMAN approve the Consent Calendar Items as presented. The Motion was carried by the following roll call vote:

AYES: ALEMAN, HOFFMAN, BASH, NEWTON, AND GRUNDMEYER
NOES: NONE
ABSENT: NONE
ABSTAIN:NONE

2.A. Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only.

Action: Waived reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

2.B. Approval of City Council Regular Meeting Minutes
Action: Approved the City Council Regular Meeting Minutes of January 5, 2022

City Council Minutes - January 19, 2022

2.C. Proclamation of Local Emergency Regarding Novel Coronavirus (COVID-19) 30- day review.

Action: The City Council reviewed Proclamation of Local Emergency Regarding Novel Coronavirus (COVID-19), continued Local Emergency and asked staff to return to City Council in thirty days, or soon thereafter, for review until emergency is terminated.

2.D. Accept State of California Prop 68 Per Capita Grant Funds in the amount of $194,308 and appropriate funds for the Playground Equipment Replacement Project.

Action: Adopted Resolution No. 2022-03, accepting State of California Prop 68 Per Capita Grant Funds in the amount of $194,308 and appropriated funds for revenue and expenditure for the Playground Equipment Replacement Project.

2.E. City of Norco’s 2021 Sewer System Management Plan Audit as required by State Order 2006-0003
Action: Received and filed the City of Norco’s 2021 Sewer System Management Plan Audit as required by State Order 2006-0003

2.F. Final Parcel Map 38021, located at 1004 Parkridge Avenue.

Action: Approved Final Parcel Map 38021, located at 1004 Parkridge Avenue, and authorized the City Clerk to sign the map.

2.G. Acceptance of bids and award of Contract for the Norconian Drive Pavement Resurfacing Project (Fifth Street to Norco Drive)
Action: Accepted bids and awarded a contract to Hardy & Harper, Inc. for the Norconian Drive Pavement Resurfacing Project (Fifth Street to Norco Drive) in the amount of $264,000; and authorized the City Manager to approve contract change orders up to 10 percent of the total bid amount.

2.H. Designation of Applicant’s Agents for the State of California Governor's Office of Emergency Services
Action: Adopted Resolution 2022-04, to approve the City Manager, Public Works Director, Community Services Director, and Finance Director as Designated Applicant Agents for the State of California Governor's Office of Emergency Services (Cal OES)

City Council Minutes - January 19, 2022
for the purpose of obtaining federal financial assistance under the California Disaster Assistance Act.

2.I. Acceptance of bids and award of Contract for the Fortuna Et Al. Street Improvements Project
Action: Accepted bids and awarded a contract to Copp Contracting, Inc. for the Fortuna Et Al. Street Improvements Project in the amount of $183,037; and authorized the City Manager to approve contract change orders up to 10 percent of the total bid amount.

2.J. Quarterly Investment Report for Quarter Ended December 31, 2021 Action: Received and filed the Quarterly Investment Report for the Quarter Ended December 31, 2021.

2.K. Amend FY 2021-2022 Capital Improvement Program (CIP) to include additional funding for the Slurry Seal Project; and acceptance of bids and award of Contract for the Slurry Seal Project.

Action: Adopted Resolution No. 2022-05 to increase FY 2022-2026 CIP funding in the amount of $13,000 for the FY 2021-2022 Slurry Seal Project; and accepted bids and awarded a contract to All American Asphalt for the FY 2021-2022 Slurry Seal Project in the amount of $147,435; and authorized the City Manager to approve contract change orders up to 10 percent of the total bid amount.

3. ITEM(S) PULLED FROM CONSENT CALENDAR
There were no items pulled from the Consent Calendar for discussion.

4. PUBLIC COMMENTS
Bill Naylor spoke regarding trail fencing and parking on the trails.

5. LEGISLATIVE MATTERS

5.A. Ordinance No. 1078, Second Reading: An Ordinance of the City Council of the City of Norco, California approving Zone Amendment 2021-04 Following discussion motion was made.

City Council Minutes - January 19, 2022
M/S NEWTON/BASH Adopt Ordinance No. 1078, Second Reading, approving Zone Amendment 2021-04, a proposal to add the Housing Development Overlay (HDO) Zone on property generally located at the southeast intersection of Second and River Road, consisting of four parcels totaling 14.57 acres (APNs 119-020- 015, -021, -022 and -023) and with an underlying commercial-general (C-G) Zoning designation. The Motion was carried by the following roll call vote:

AYES: NEWTON, GRUNDMEYER, ALEMAN, BASH, AND HOFFMAN
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

6. PUBLIC HEARING(S)

6.A. Approval of the Self-Evaluation and Transition Plan for facilities, programs and services regarding compliance with the Americans with Disabilities Act.

City Manager Okoro presented report regarding the approval of the SelfEvaluation and Transition Plan for facilities, programs and services regarding compliance with he Americans with Disabilities Act. He introduced the consultants that worked on the Self-Evaluation and Transition Plan.

Mayor Pro Tem Grundmeyer had questions regarding working with Norco College on braille and large print options.

Kathy Oswold from Miller Architectural Corporation and David SanFilippo ADA consultant answered questions.

Mayor Newton opened the public hearing.

There were no public comments at this time.

Mayor Newton closed the public hearing.

Following discussion motion was made.

M/S HOFFMAN/BASH Adopt Resolution 2022-06 approving the Self-Evaluation and Transition Plan for public facilities, programs and services regarding compliance with the Americans with Disabilities Act. The Motion was carried by the following roll call vote:

AYES: NEWTON, GRUNDMEYER, ALEMAN, BASH, AND HOFFMAN
NOES: NONE
ABSENT: NONE

City Council Minutes - January 19, 2022
ABSTAIN: NONE

6.B. Adoption of the Temescal Basin Groundwater Sustainability Plan (GSP) Public Works Director Blais presented report regarding the Temescal Basin Groundwater Sustainability Plan and introduced Melissa Estrada-Maravilla from the City of Corona and Chad Taylor from Todd Groundwater to present presentation.

Melissa Estrada-Maravilla presented powerpoint on the Temescal Basin Groundwater Sustainability Plan and the Sustainable Groundwater Management Act. She reviewed the Stakeholder Engagement, Sustainability Indicators, Projects and Management Actions, and the Temescal GSP Implementation.

Council Members Hoffman and Bash had questions and concerns that were addressed by the consultants.

Mayor Newton opened the public hearing.

There were no public comments at this time.

Mayor Newton closed the public hearing.

Following discussion motion was made.

M/S BASH/HOFFMAN Approve Resolution No. 2022-07, adopting the Temescal Basin Groundwater Sustainability Plan (GSP) The Motion was carried by the following roll call vote:

AYES: NEWTON, GRUNDMEYER, ALEMAN, BASH, AND HOFFMAN
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

6.C. Ordinance No. 1079, First Reading: Amending Norco Municipal Code Title 10 “Vehicles and Traffic” to add Chapter 10.06 “Parking Restrictions”, Code Amendment 2022-01.

Public Works Director Blais presented report regarding Ordinance No. 1079, First Reading: Amending Norco Municipal Code Title 10 “Vehicles and Traffic” to add Chapter 10.06 “Parking Restrictions”, Code Amendment 2022-01. He stated that Staff is recommending the City Council add Norco Municipal Code (NMC) Chapter 10.06, “Parking Restrictions” to address the definitions and rules related to, in part, parking in parkways, no parking, and the adoption process

City Council Minutes - January 19, 2022
and documentation of posted parking restrictions. He reviewed that On December 1, 2021, the City Council considered and discussed the adoption of the proposed "Parking Restrictions" and ultimately unanimously approved the first reading of the proposed update to the NMC but, on December 15, 2021, the second reading of the new ordinance was not passed by Council due to a request by Mayor Newton who indicated that even though the businesses were provided letters, he felt there wasn't enough notification to the impacted businesses on Hamner Avenue who would be impacted by the removal of onehour parking. He stated that the Mayor also requested that staff review this item one more time with the Streets, Trails, and Utilities Commission which was done on January 2, 2022, businesses were noticed of the meeting date for this meeting. He stated that one business owner did attend the meeting and voiced concerns. He stated that the City Attorney did review recommendations.

Mayor Newton had questions, concerns, and asked for clarification.

Public Works Director Blais addressed the questions and discussed the concerns.

Mayor Newton opened the Public Hearing.

Linda Dixon discussed her history as a business owner, her opposition to what is being recommended, and asked for the curbs and gutters to be completed before this is considered.

Mayor Newton closed the Public Hearing.

Following discussion regarding parking restrictions from East Side of Hamner Avenue from Third Street to Lampton Lane to leave as 1 hour parking unless otherwise posted, motion was made.

M/S GRUNDMEYER/BASH Adopt Ordinance No. 1079, First Reading, with amendment to parking restrictions as directed; and schedule the Second Reading for February 2, 2022. The Motion was carried by the following roll call vote:

AYES: NEWTON, GRUNDMEYER, ALEMAN, BASH, AND HOFFMAN
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

7. CITY COUNCIL / STAFF COMMUNICATIONS

City Council Minutes - January 19, 2022
Public Works Director Blais thanked Council for their support on the action items.

He stated there are many getting started and more in process.

Council Member Hoffman thanked City Manager Okoro and City Staff for sending Todd Shank Parks and Building Superintendent to League of Equestrian Training.

He asked Lt. Rowan about the DUI Check points over the weekend.

Lieutenant Rowan stated that a press release will go out about the DUI Check Points.

Mayor Pro Tem Grundmeyer encouraged those who can to donate blood due to a critical shortage of blood.

Council Member Bash remembered Shane Porter.

Mayor Newton asked Chief Veik to talk about Shane Porter.

Chief Veik discussed the passing of Shane Porter and the wonderful man and community member he was.

8. ADJOURNMENT
Mayor Newton closed the meeting at 8:39 p.m. with a moment of silence in honor of Shane Porter.

_________________________________
Dana Roa, CMC
City Clerk

City Council

STAFF REPORT
Date: February 2, 2022 Agenda Item:

2.C.

To: Honorable Mayor and City Council Members
Prepared By: Michelle Anglin, Community Services Director Department: Parks, Recreation and Community Services
SUBJECT:

Acceptance of the Nellie Weaver Hall Drainage Improvement Project as Complete RECOMMENDATION:

Accept Nellie Weaver Hall Drainage Improvement Project as complete and authorize the City Clerk to file a Notice of Completion with the County of Riverside.

SUMMARY:

The Nellie Weaver Hall Drainage Improvement Project has been completed and staff is requesting that the Council accept the project as complete.

BACKGROUND:

On July 21, 2021, the City Council awarded a contract for the Nellie Weaver Hall Drainage Improvement Project to Three Peaks Corp., in the amount of $157,935 with a 10% contingency.

Three Peaks Corp. completed their scope of work for the project at a total cost of $157,935. The work has been inspected by the Parks and Public Facilities Superintendent along with the City Engineer and found to be in full conformance with the plans and specifications on the contract document. Staff is recommending that the City Council accept the work as complete and authorize the City Clerk to record the Notice of Completion with the County Recorder’s Office.

FISCAL IMPACT:

There is no financial impact for this item.

RELATIONSHIP TO STRATEGIC PLAN:

Nellie Weaver Hall Drainage Improvement Project is consistent with Strategic Directive #1 – Establish funding for planning, maintenance, replacement and development of infrastructure.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Andy Okoro, City Manager
Approved as to Form: John Harper, City Attorney
ATTACHMENT(S):

Notice of Completion

/di
RECORDING REQUESTED BY: THIS DOCUMENT IS FILED AT THE REQUEST

CITY OF NORCO OF THE CITY OF NORCO PURSUANT TO
WHEN RECORDED MAIL TO: SECTION 6103 OF THE GOVERNMENT
2870 CLARK AVENUE CODE. NO FEE IS CHARGED THEREFORE.

NORCO, CA 92860
ATTN: CITY CLERK

NOTICE OF COMPLETION

NOTICE IS HEREBY GIVEN BY THE CITY OF NORCO, A MUNICIPAL CORPORATION, STATE OF CALIFORNIA THAT THE WORK DESCRIBED AS

NELLIE WEAVER HALL DRAINAGE IMPROVEMENT PROJECT IN THE CITY OF NORCO IN ACCORDANCE WITH THE TERMS AND WRITTEN CONTRACT DATED BETWEEN THE CITY OF NORCO AND THREE PEAKS CORP. WAS COMPLETED AND ACCEPTED BY THE CITY OF NORCO ON THE 2
ND DAY OF FEBRUARY, 2022.

THE WORK DONE: CONSISTED OF CONCRETE V-GUTTER, SEWER REPLACEMENT, STORM DRAIN PIPE AND CATCH BASINS, GRADING IMPROVEMENT, AND MECHANICALLY STABILIZED EARTH WALL AT THE NELLIE WEAVER HALL, LOCATED AT 3939 CRESTVIEW DRIVE, IN THE CITY OF NORCO, CALIFORNIA.

THAT THE CITY OF NORCO, A PUBLIC BODY, CORPORATE AND POLITIC, WHOSE ADDRESS IS 2870 CLARK AVENUE, NORCO, CALIFORNIA, 92860 IS THE OWNER OF SAID IMPROVEMENT WORK; AND THAT SAID WORK WAS PERFORMED BEGINNING JULY 21, 2021, IN THE CITY OF NORCO. THE NATURE OF INTEREST IS VENDEE UNDER CONTRACT.

THAT SAID WORK OF IMPROVEMENT WAS SO PERFORMED BY THREE PEAK CORP. LOCATED IN CALIMESA, CALIFORNIA, IN ACCORDANCE WITH SAID WRITTEN AGREEMENT DATED JULY 21, 2021, AND THE DRAWINGS AND SPECIFICATIONS, WHICH WERE A PART OF SAID CONTRACT.

THAT THE CORPORATE SURETY ON THE CONTRACTOR’S BOND, FAITHFUL PERFORMANCE AND LABOR AND MATERIALS BOND IS OHIO CASUALTY INSURANCE CO. THIS NOTICE OF COMPLETION IS GIVEN BY THE CITY OF NORCO PURSUANT TO THE APPROPRIATE PROVISIONS OF TITLE XV, PART IV, DIVISION 1 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA, AND UPON ORDER OF THE CITY OF NORCO.

February 2, 2022
DATED: CITY OF NORCO

A MUNICIPAL CORPORATION
BY: __________________________

DANA ROA, CMC

CITY CLERK
VERIFICATION FOR NON-INDIVIDUAL OWNER:

I, THE UNDERSIGNED, DECLARE UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT I AM THE DEPUTY CITY CLERK OF THE CITY OF NORCO; THAT I HAVE SIGNED THE SAID NOTICE, THAT I KNOW AND UNDERSTAND THE CONTENTS THEREOF, AND THAT THE FACTS STATED THEREIN ARE TRUE AND CORRECT. 02/02/2022 ______________________________

DATE DANA ROA, CMC

CITY CLERK

CITY OF NORCO

City Council

STAFF REPORT
Date: February 2, 2022 Agenda Item:

2.D.

To: Honorable Mayor and City Council Members
Prepared By: Lisette Free, Finance Director
Department: City Council
SUBJECT:

Resolution Making Findings and Continuing Existing Benefit Assessment Rates (BAU) for Maintaining Flood Control Channels within County Service Area CSA-152 for Fiscal Years 2022-2023 through 2024-2025
RECOMMENDATION:

Adopt Resolution 2022-08, making findings and continuing existing Benefit Assessment Rates (BAU) for maintaining flood control channels within County Service Area CSA-152 for Fiscal Years (FY) 2022-2023 through 2024-2025.

SUMMARY:

Riverside County requires a resolution authorizing the County to levy a County Service Area (CSA) parcel charge. The proceeds of the charge are used to maintain and operate the City’s storm drains and flood control channels into the Santa Ana River. This service area assessment is exempt from the requirements of Prop. 218 and to continue existing rates for maintaining flood control channels within County Service Area CSA-152.

BACKGROUND:

County Service Area (CSA) 152 was formed and established pursuant to Riverside County Ordinance number 573 in November 1991 to establish a funding mechanism to meet the permit requirements for the unincorporated portions of the County. Municipalities were also permitted to annex into CSA 152. The City Council entered into an agreement with the County of Riverside on April 6, 1994 to participate in the County Service Area 152 to facilitate collection of funds in implementing the federally mandated NPDES program. Riverside County requires a resolution authorizing the County to levy a County Service Area (CSA) parcel charge. The proceeds of the charge are used to maintain and operate the City’s storm drains and flood control channels into the Santa Ana River. This service area assessment is exempt from the requirements of Prop. 218. Below is an excerpt from Prop. 218:

Section 5, Paragraph (a) of Proposition 218 reads as follows:

“Section 5. Effective Date. Pursuant to subdivision (a) of Section 10 of Article II, the provisions of this article shall become effective the day after the election unless otherwise provided. Beginning July 1, 2001, all existing, new, or increased assessments shall comply with this article. Notwithstanding the foregoing, the following assessments existing on the effective date of this article shall be exempt from the procedures and approval process set forth in Section 4:
(a) Any assessment imposed exclusively to finance the capital costs or maintenance and operation expenses for sidewalks, streets, sewers, water, flood control, drainage systems or vector control. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4...” The City Attorney supports a “declaration of exemption” for Norco in this case because the assessment was established before November 6, 1996 and is used exclusively for flood control purposes, an exempt category under Section 5 (a).

In 2016, the City negotiated a contract with Albert A. Webb Associates to provide a parcel audit and administration of the CSA-152 beginning in FY 2016-2017. Through the audit, the contractor identified all properties within the special district boundaries and generated a list of parcels to be added to the database. This audit also recommended increasing the rates to the maximum amount allowed to ensure that substantial portion of the costs to comply with NPDES permit requirements is funded with revenues derived from the CSA assessments. The recommended adjustments were implemented from FY 2017- 2018 through FY 2019-2020. As a result, the Benefit Assessment Unit rate for FY 2022- 2023 through FY 2024-2025 is the maximum amount allowed, $10. The County of Riverside will accept a multi-year resolution as is being proposed.

FISCAL IMPACT:

The proposed assessment will generate approximately $133,000 annually for FY 2022- 2023 through FY 2024-2025 for the NPDES Fund.

RELATIONSHIP TO STRATEGIC PLAN:

Continuing this assessment is consistent with Strategic Direction #3, “Assure financial stability by identifying new revenue sources and continuing prudent financial management.”
REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Andy Okoro, City Manager
Approved as to Form: John Harper, City Attorney
ATTACHMENT(S):

Resolution No. 2022-08

RESOLUTION NO. 2022-08

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORCO,

CALIFORNIA, MAKING FINDINGS AND CONTINUING EXISTING

BENEFIT ASSESSMENT RATES (BAU) FOR MAINTAINING FLOOD
CONTROL CHANNELS WITHIN COUNTY SERVICE AREA CSA-152
WHEREAS, the City of Norco is a co-permittee of Permit No. CSA-618033 with the County of Riverside and the incorporated cities therein; and WHEREAS, the City must have a valid NPDES Permit in order to discharge runoff from properties within the boundaries of the City through its storm drain and flood control channels directly into the Santa Ana River or through Riverside County’s channels into the Santa Ana River; and
WHEREAS, the City uses revenues from the CSA-152-Norco assessments solely for the purpose of maintaining and operating the City’s storm drain and flood control system, including complying with the Permit.

NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Norco, California, as follows:

SECTION 1: Based upon the facts set forth herein, the City Council finds that CSA-152-Norco charges are assessments that confer benefits upon each parcel of property subject to the assessments. Pursuant to Section 5(a) of Article XIIID of the California Constitution, the CSA-152-Norco assessments are exempt from the procedures and approval process of Section 4 of Article XIIID of the California Constitution because CSA-152-Norco assessments existed before November 6, 1996, and the assessments are imposed exclusively to finance the capital costs and maintenance and operation expenses for the flood control and drainage system in the City.

SECTION 2: The City Council entered into an agreement with the County of Riverside on April 6, 1994 to participate in the County Service Area 152 to facilitate collection of funds in implementing the federally mandated NPDES program. A yearly rate of $5.78 per benefit assessment unit was added to residents’ property tax bill following a public hearing on May 18, 1994. Beginning in Fiscal Year (FY) 2017-2018 the City, upon approval by the City Council, increased the rate gradually over two years with the final increase of $10 presented for FY 2019-2020.

SECTION 3: The City Council elects to continue existing rates for FY 2022-2023 through FY 2024-2025.

Resolution 2022-08 – Maintaining Flood Control Channels in CSA-152

February 2, 2022
PASSED AND ADOPTED by the City Council of the City of Norco, California, at a regular meeting held February 2, 2022.
______________________
Greg Newton, Mayor
City of Norco, California
ATTEST:
________________________
Dana Roa, CMC, City Clerk
City of Norco, California
I, Dana Roa, CMC, City Clerk of the City of Norco, California, do hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of Norco, California, at a regular meeting thereof held on February 2, 2022 by the following vote of the City Council:

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the City of Norco, California on February 2, 2022.
________________________
Dana Roa, CMC, City Clerk
City of Norco, California

City Council

STAFF REPORT
Date: February 2, 2022 Agenda Item:

5.A.

To: Honorable Mayor and City Council Members
Prepared By: Dana Roa, City Clerk
Department: City Clerk
SUBJECT:

Ordinance No. 1079, Second Reading: An Ordinance of the City Council of the City of Norco, California Amending Norco Municipal Code Title 10 “Vehicles and Traffic” to add Chapter 10.06 “Parking Restrictions”, Code Amendment 2022-01 and approval of the index and maps that identifies the various parking restrictions and locations throughout the City of Norco.

RECOMMENDATION:

Adopt Ordinance No. 1079 for Second Reading; and adopt Resolution No. 2022-09 to approve the index and maps that identifies the various parking restrictions and locations throughout the City of Norco.

SUMMARY:

The First Reading of Ordinance No. 1079 was held on January 9, 2022, and was adopted by City Council. Ordinance No. 1079, amending Norco Municipal Code Title 10 “Vehicles and Traffic” to add Chapter 10.06 “Parking Restrictions" to address the definitions and rules related to, in part, parking in parkways, no parking, and the adoption process and documentation of posted parking restrictions. Code Amendment 2022-01.

FISCAL IMPACT:

There is no financial impact.

RELATIONSHIP TO STRATEGIC PLAN:

The adoption of the proposed Ordinance and Resolution is consistent with Strategic Direction #2 Community Outreach by providing a clear and accurate record of the rules and regulations related to parking restrictions within the City.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director

Approved by: Andy Okoro, City Manager
Approved as to Form: John Harper, City Attorney
ATTACHMENT(S):

Ordinance No.1079
Resolution No 2022-09
Parking Restrictions Description
Parking Restrictions Location Maps

ORDINANCE NO. 1079

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NORCO,
CALIFORNIA, AMENDING NORCO MUNICIPAL CODE TITLE 10
“VEHICLES AND TRAFFIC” TO ADD CHAPTER 10.06 “PARKING
RESTRICTIONS”; CODE AMENDMENT 2022-01
WHEREAS, the City of Norco initiated Code Amendment 2022-01, to amend Norco Municipal Code Title 10 “Vehicles and Traffic”, to add Chapter 10.06 “Parking Restrictions to address the definitions and rules related to, in part, parking in parkways, no parking, and the adoption process and documentation of posted parking restrictions; and
WHEREAS, in the City of Norco, the City manages the public street for the citizens and businesses of Norco; and
WHEREAS, Code Amendment 2022-01 was scheduled for a public hearing on January 19, 2022 on or about 7:00 p.m. in the Council Chambers at 2620 Clark Avenue, Norco, California 92860; and
WHEREAS, at the time set, the City Council held a public hearing and received both oral and written testimony pertaining to the Code Amendment; and WHEREAS, the City Council will adjust or modify the parking restrictions posted along various streets in Norco on an as-needed basis.

NOW, THEREFORE, t he City Council of t he City of Norco, California, does hereby approve as follows:

SECTION 1: Norco Municipal Code Chapter 10.06 “Parking Restrictions” is hereby added as follows:

CHAPTER 10.06 - PARKING RESTRICTIONS

10.06.010 Parking Defined
“Parking” means and includes stopping, parking or left standing on public streets; “off-street parking” means and includes stopping, parking or left standing off of public streets. Parking is a traffic problem and the duties of the Director of Public Works are applicable to this chapter.

10.06.020 Applicability
The provisions of this chapter prohibiting the stopping, parking or left standing of a vehicle including, but not limited to vehicles that are six feet more in height, shall apply at all times or at those times specified in this chapter, except when it is necessary to stop a vehicle to avoid conflict with other traffic or in compliance with the directions of a police officer or official traffic control device. The provisions of this chapter imposing a time limit on parking shall not relieve any person from the duty to observe other and more restrictive provisions of this chapter or of laws prohibiting or limiting the parking of vehicles in specified places or at specified times.

Ordinance No. 1079 – Parking Restrictions

February 2, 2022

10.06.030 Locations and Restrictions
Except as hereinafter provided in this chapter and for painting of red curbs less than 50 lineal feet authorized by the public works director, streets and highways or portions thereof subject to stopping, parking or left standing of vehicles during all or certain hours of the day shall be established by resolution of the City Council.

10.06.040 Parkways, Sidewalks, and Trails
No person shall stop, park or leave standing a vehicle within a parkway adjacent to a curb, on a sidewalk, or on an equestrian trail.

10.06.045 Curb Parking
Except when established by ordinance by the city council permitting angle parking, every vehicle stopped or parked upon a roadway where no curbs or barriers bound the roadway, right-hand parallel parking is required unless otherwise indicated.

Parking of any vehicle on or over a curb into the public parkway is not permitted. The only exception to parking over a curb is when a rolled curb is used as part of the defined driveway to a property, but said vehicle may not block the sidewalk or trail.

10.06.050 Parking Prohibited Where Indicated by Sign.

Upon resolution of the City Council, the Director of Public Works is authorized to place signs or markings indicating no parking upon a street or alley. When official signs or markings prohibiting parking are erected upon streets or alleys as authorized in this section, no person shall park a vehicle in and on such place.

10.06.060 Parking Adjacent to Schools.

The Director of Public Works is authorized to erect signs indicating no parking upon that side of any street adjacent to any school property when such parking would in their opinion interfere with traffic or create a hazardous situation. When official signs are erected indicating no parking upon that side of a street adjacent to any school property, no person shall park a vehicle in any such designated place.

10.06.070 Emergency Parking Signs—Authority.

Whenever the Director of Public Works shall determine that an emergency traffic congestion is likely to result from the holding of public or private assemblages, gatherings or functions, or for other reasons, the Director of Public Works shall have the power and authority to order temporary signs to be erected or posted indicating that the operation, parking or standing of vehicles is prohibited on such streets and alleys as the Director of Public Works shall direct during the time such temporary signs are in place.

Such signs shall remain in place only during the existence of such emergency and the Director of Public Works shall cause such signs to be removed promptly thereafter.

When signs authorized by the provisions of this section are in place giving notice thereof, no person shall operate, park or stand any vehicle contrary to the directions and provisions of such signs.

Ordinance No. 1079 – Parking Restrictions

February 2, 2022

10.06.080 Parking During Fire Prohibited.

It is unlawful for any person, other than members of the police department and police officers to drive or park anywhere between the site of conflagration and the fire hydrant used or to be used in extinguishing the fire; no person other than members of the police department and police officers shall park within two hundred feet of the site of conflagration.

10.06.090 Restricted Parking Areas—Signs Required.

The Director of Public Works shall appropriately sign or mark the following places and when so signed or marked no person shall stop, stand or park a vehicle in any of the places:

A. Safety Zone. At any place within twenty feet of a point on the curb immediately opposite the midblock end of a safety zone; B. At any place within twenty-five feet of any intersection in any business district except that a bus may stop at a designated bus stop;
C. Stop Signs, Traffic Signals, Etc. Within twenty-five feet of the approach to any traffic signal, stop sign or official electric flashing device.

D. Unusual Traffic Hazard. At any place where the Director of Public Works determines that it is necessary in order to eliminate unusual traffic hazard.

10.06.100 Inventory of Parking Restrictions.

The Director of Public Works shall index and maintain an inventory of all parking restrictions as authorized by the City Council and shall furnish a copy thereof to the City Clerk for retention by that office.

10.06.110 Posted Parking Zones Established.

The City Council may from time to time by resolution or ordinance establish parking time limits on various streets in the city. Notice of the passage of the resolution or ordinance shall be deemed effective when the street has been posted or painted, as the case may be, with the appropriate signage. After such signage has been posted or painted in accordance with the applicable resolution or ordinance, it is unlawful for any person to park a vehicle in the posted zone beyond the time limits.

SECTION 2: EFFECTIVE DATE. This Ordinance shall become effective 30 days after final passage thereof.

SECTION 3: SEVERABILITY. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of the Ordinance. The City Council hereby declares that it would have passed this Ordinance, and each section, subsection, sentence, clause, subsections, sentences, clauses, or phrases hereof irrespective of the fact that any one or more of the sections, subsections, sentences, clauses, or phrases hereof be declared invalid or unconstitutional.

SECTION 4: POSTING. The Mayor shall sign this Ordinance and the City Clerk shall attest hereto and shall cause the same within 15 days of its passage to be posted at no less than five public places within the City of Norco.

Ordinance No. 1079 – Parking Restrictions

February 2, 2022
PASSED AND ADOPTED by the City Council of the City of Norco, California, at a regular meeting held on February 2, 2022.

ATTEST:

Greg Newton, Mayor
City of Norco, California
Dana Roa, CMC, City Clerk
City of Norco, California
I, Dana Roa, CMC, City Clerk of the City of Norco, California, do hereby certify that the foregoing Ordinance was introduced at a regular meeting of the City Council of the City of Norco, California, duly held on January 19, 2022 and thereafter at a regular meeting of said City Council duly held on February 2, 2022, it was duly passed and adopted by the following vote of the City Council.

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Norco, California, on February 2, 2022.

Dana Roa, CMC, City Clerk
City of Norco, California

RESOLUTION NO. 2022-09

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

NORCO, CALIFORNIA, APPROVING THE INDEX AND MAPS THAT

IDENTIFIES THE VARIOUS PARKING RESTRICTIONS AND
LOCATIONS THROUGHOUT THE CITY OF NORCO.

WHEREAS, in the City of Norco, the City manages the public street for the citizens and businesses of Norco; and
WHEREAS, the City Council will adjust or modify the parking restrictions posted along various streets in Norco on an as-needed basis; and WHEREAS, per Norco Municipal Code Section 10.06.100 – Inventory of Parking Restriction states “The Director of Public Works shall index and maintain an inventory of all parking restrictions as authorized by the City Council and shall furnish a copy thereof to the City Clerk for retention by that office”; and WHEREAS, the approval of the index and maps attached, which outlines the various parking restrictions and locations within the City of Norco, shall be adopted by Resolution.

NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Norco, California, approve the attached index and maps, which outlines the various restrictions and locations within the City of Norco.

PASSED AND ADOPTED by the City Council of the City of Norco, California, at a regular meeting held on February 2, 2022.
______________________
Greg Newton, Mayor
City of Norco, California
ATTEST:
________________________
Dana Roa, CMC, City Clerk
City of Norco, California

Resolution No. 2022-09, Index and Maps of Various Parking Restrictions

February 2, 2022
I, Dana Roa, CMC, City Clerk of the City of Norco, California, do hereby certify that the foregoing Resolution was adopted by the City Council of the City of Norco, California, at a regular meeting thereof held on February 2, 2022 by the following vote of the City Council:

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Norco, California, on February 2, 2022. ________________________
Dana Roa, CMC, City Clerk
City of Norco, California
Attachments: Parking Restriction Index and Maps

City of Norco Parking Restrictions - February 2, 2022
1 of 3
STREET SIDE FROM TO No Parking No Parking Vehicles
over 12,500 lbs
20 Min. Parking
6:30AM - 3:30PM
No Parking - Loading
and Unloading Only
No Parking or Stopping
8AM - 9AM and
2:30PM - 3:30PM
Alhambra Street South Side Rocky View Drive River Ridge Drive X Automall Drive Both Sides Four Wheel Drive Hamner Avenue X Bluff Street Both Sides River Road 4001 Bluff Street X
California Avenue East Side 3541 California Avenue Buckskin Lane X California Avenue West Side East Street Buckskin Lane X California Avenue West Side Sixth Street North Drive X
California Avenue West Side North Drive 345 Filly Lane X Center Avenue West Side Fifth Street River Drive X
Clark Avenue Both Sides Fourth Street Lampton Lane X
Commerce Street Both Sides Hamner Avenue Industrial Street X Corona Avenue East Side River Drive Seventh Street X
Corona Avenue East Side Third Street First Street X
Corona Avenue West Side Seventh Street Sixth Street X
Corona Avenue West Side Fifth Street Fourth Street X
Corona Avenue West Side Reservoir Drive Third Street X
Crestview Drive Both Sides 3570 Crestview Drive Sixth Street X Crestview Drive Both Sides Buckskin Lane Sixth Street X Crestview Drive Both Sides Eighth Street North Drive X
Crestview Drive West Side Seventh Street Eighth Street X Cross Rail Street East Side Andalusian Drive North End X Cross Rail Street West Side 149 Cross Rail Street North End X Detroit Street South Side Sierra Avenue Corona Avenue X Eighth Street North Side Pedley Avenue California Avenue X Fifth Street Both Sides Norco Drive Horseless Carriage Drive X Fifth Street North Side Horseless Carriage Drive I-15 Freeway Bridge X Fifth Street South Side Horseless Carriage Drive 1830 Fifth Street X Fifth Street South Side 1830 Fifth Street I-15 Freeway Bridge X Fifth Street South Side Sierra Avenue Hillside Avenue X First Street Both Sides Parkridge Avenue Hamner Avenue X First Street South Side Valley View Avenue Corona Avenue X First Street South Side Corona Avenue Hillside Avenue X Four Wheel Court Both Sides Four Wheel Drive End X
Four Wheel Drive Both Sides Second Street Automall Drive X Fourth Street Both Sides Naval Base Hamner Avenue X
Fourth Street North Side Corona Avenue Temescal Avenue X Fourth Street North Side 793 Fourth Hillside Avenue X
Fourth Street South Side Sierra Avenue Corona Avenue X
Friesian Street North Side Valley Drive 279 Friesian Street X Friesian Street South Side Valley Drive 250 Friesian Street X Hamner Avenue Both Sides Sixth Street North City Limits X Hamner Avenue East Side South City Limit Hidden Valley Parkway X Hamner Avenue East Side 2441 Hamner Ave 2441 Hamner Ave Hamner Avenue East Side 2503 Hamner Ave 2547 Hamner Avenue

ONE HOUR PARKING

ONE HOUR PARKING

City of Norco Parking Restrictions - February 2, 2022
2 of 3
STREET SIDE FROM TO No Parking No Parking Vehicles
over 12,500 lbs
20 Min. Parking
6:30AM - 3:30PM
No Parking - Loading
and Unloading Only
No Parking or Stopping
8AM - 9AM and
2:30PM - 3:30PM
Hamner Avenue East Side Hidden Valley Parkway 3327 Hamner Ave X Hamner Avenue East Side 3327 Hamner Ave Fifth Street X
Hamner Avenue East Side Fifth Street 3699 Hamner Avenue X Hamner Avenue East Side 3699 Hamner Avenue Sixth Street X Hamner Avenue West Side South City Limit Third Street X Hamner Avenue West Side Third Street Market Street X
Hamner Avenue West Side Market Street 3370 Hamner Avenue X Hamner Avenue West Side 3370 Hamner Avenue Fifth Street X Hamner Avenue West Side Fifth Street Sixth Street X
Hidden Valley Parkway North Side Hamner Avenue 475 Hidden Valley Pkwy X Hidden Valley Parkway North Side Corona Avenue Norco Hills Road X Hidden Valley Parkway South Side Hamner Avenue I-15 NB Onramp X Hillside Avenue East Side El Paso Drive 2245 Hillside Avenue X Hillside Avenue West Side First Street Third Street X
Hillside Avenue West Side Third Street 2714 Hillside Avenue X Hillside Avenue West Side 2990 Hillside Avenue Fifth Street X Hillside Avenue West Side Fifth Street River Drive X
Horseless Carriage Drive Both Sides Fifth Street End X
Industrial Street Both Sides Commerce Street End X
Mountain Avenue Northeast Side First Street Hamner Avenue X Mountain Avenue Southwest Side First Street Hamner Avenue X Mountain Avenue West Side North End First Street X
Mountain Avenue West Side Second Street First Street X
Norco Hills Drive Northwest Side Hidden Valley Parkway Valley Drive X Norco Hills Drive Southeast Side Valley Drive Dodge Way X Norconian Both Sides Norco Drive Fifth Street X
North Drive Both Sides California Avenue Crestview Drive X Pacific Avenue East Side Second Street End X
Parkridge Avenue Northeast Side 2019 Parkridge Ave. Second Street X Parkridge Avenue Northeast Side Second Street 1579 Parkridge Avenue X Parkridge Avenue Northeast Side 1397 Parkridge Ave. Cota Street X Parkridge Avenue Southwest Side 3200 Parkridge Ave. 3200 Parkridge Ave. X Parkridge Avenue Southwest Side 1004 Parkridge Ave. Cota Street X Pedley Avenue East Side 4521 Pedley Avenue 4615 Pedley Avenue X Pedley Avenue East Side Eighth Street North End X
Pedley Avenue West Side Fifth Street Seventh Street X
Reservoir Drive West Side Temescal Avenue 2656 Reservoir Drive X Reservoir Drive West Side 2340 Reservoir Drive Willow Drive X River Drive North Side Woodward Avenue Temescal Avenue X River Drive North Side Hillside Avenue Pedley Avenue X
River Drive South Side Sierra Avenue Woodward Avenue X
River Drive South Side Temescal Avenue Hillside Avenue X River Road Northeast Side Bluff Street Auburndale Intermediate X

City of Norco Parking Restrictions - February 2, 2022
3 of 3
STREET SIDE FROM TO No Parking No Parking Vehicles
over 12,500 lbs
20 Min. Parking
6:30AM - 3:30PM
No Parking - Loading
and Unloading Only
No Parking or Stopping
8AM - 9AM and
2:30PM - 3:30PM
River Road Southwest Side Bluff Street Corydon Street X Second Street North Side River Road Parkridge Avenue X
Second Street North Side Western Avenue Valley View Avenue X Second Street North Side Corona Avenue Hillside Avenue X Second Street South Side River Road 2920 Second Street X Second Street South Side 2920 Second Street Mountain Avenue X Second Street South Side Mountain Avenue Valley View Avenue X Second Street South Side 1330 Second Street Corona Avenue X Seventh Street South Side Valley View Avenue California Avenue X Sierra Street East Side Detroit Street River Drive X
Sierra Street West Side Valley View Avenue Sixth Street X Sixth Street Both Sides Sierra Avenue Crestview Drive X Sixth Street North Side Pikes Peak Drive East End X
Sixth Street South Side Crestview Drive East End X
Temescal Avenue East Side 1621 Temescal Avenue 1675 Temescal Avenue X Temescal Avenue East Side Norco High School Norco High School X Temescal Avenue East Side Norco Intermediate School Norco Intermediate School X Temescal Avenue East Side Reservoir Drive Fourth Street X Temescal Avenue East Side Wrangler Way Fifth Street X
Temescal Avenue East Side Fifth Street River Drive X
Temescal Avenue West Side First Street 1630 Temescal Avenue X Temescal Avenue West Side 1630 Temescal Avenue 1820 Temescal Avenue X Temescal Avenue West Side 1820 Temescal Avenue 2028 Temescal Avenue X Temescal Avenue West Side 2028 Temescal Avenue 2294 Temescal Avenue X Temescal Avenue West Side 2294 Temescal Avenue Third Street X Temescal Avenue West Side Reservoir Drive Fourth Street X Third Street Both Sides Hamner Avenue Valley View Avenue X Third Street North Side Valley View Avenue Corona Avenue X Third Street North Side Hillside Avenue Hillside Avenue X Third Street South Side Temescal Avenue 2398 Third Street X Town and Country Drive Both Sides Horseless Carriage Drive Hamner Avenue X Valley Drive Both Sides Norco Hills Drive Country Club Drive X Valley Drive Both Sides Country Club Drive Vandermolen Drive X Valley View Avenue East Side Detroit Street Seventh Street X Valley View Avenue West Side South End First Street X
Valley View Avenue West Side First Street Second Street X Valley View Avenue West Side Third Street Fourth Street X Valley View Avenue West Side Fourth Street Fifth Street X Valley View Avenue West Side Sixth Street Detroit Street X Valley View Avenue West Side Seventh Street River Drive X Western Avenue Both Sides Second Street Parkridge Avenue X Willow Drive South Side Valley View Avenue Corona Avenue X Woodward Avenue West Side Detroit Street River Drive X

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City Council

STAFF REPORT
Date: February 2, 2022 Agenda Item:

6.A.

To: Honorable Mayor and City Council Members
Prepared By: Lisette Free, Finance Director
Department: Finance
SUBJECT:

Report on Fiscal Year 2020-2021 Audited Financial Reports RECOMMENDATION:

Receive and file the Fiscal Year (FY) 2020-2021 Audited Financial Reports SUMMARY:

Staff recommends that the City Council receive and file the City’s Annual Comprehensive Financial Report (ACFR) and other related reports for the fiscal year-ended June 30, 2021. The audited reports received an unqualified/clean opinion from the City’s independent auditors.

BACKGROUND:

The City’s independent auditors, CliftonLasronAllen LLP, have completed the year-end annual independent audit of City funds and accounts for FY 2020-2021. The City’s annual financial reports were prepared in accordance with Generally Accepted Accounting Principles (GAAP) and comply with other rules and regulations applicable to government entities. Transmitted herewith for City Council’s information are the following financial and related reports (Attachments 1-5) for the fiscal year ended June 30, 2021:

1. Annual Comprehensive Financial Report

2. Auditors’ Audit Committee Letter to the City Council

3. Auditors’ Report on Internal Control over Financial Reporting and on Compliance

4. Auditors’ Report on Appropriations Limit Calculation

5. Measure R Transactions and Use Tax Fund Financial Statements and Staff Report of January 26, 2022 to Measure R Citizens' Oversight Committee.

The Independent Auditors will be at the City Council Meeting to present the results of their audit for the Fiscal Year ended June 30, 2021.

The Measure R Transactions and Use Tax Fund Financial Statements were presented to the Measure R Citizens' Oversight Committee (COC) at their meeting on January 26, 2022. The COC reviewed the Measure R Financial Statements and approved for submittal to City Council.

FISCAL IMPACT:

There is no fiscal impact for this item.

RELATIONSHIP TO STRATEGIC PLAN:

The FY 2020-2021 Audited Financial Reports and auditing processes are consistent with Strategic Direction #3 - “Assure financial stability by identifying new revenue sources and continuing prudent financial management."
REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Andy Okoro, City Manager
Approved as to Form: John Harper, City Attorney
ATTACHMENT(S):

Attachment 1
Attachment 2
Attachment 3
Attachment 4
Attachment 5

CITY OF NORCO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL STATEMENTS AND

SUPPLEMENTARY INFORMATION
YEAR ENDED JUNE 30, 2021

THIS PAGE INTENTIONALLY LEFT BLANK

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021

INTRODUCTORY SECTION
LETTER OF TRANSMITTAL i
ORGANIZATION CHART x
DIRECTORY OF CITY OFFICIALS xii

GFOA CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING xiv

FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENTS’ DISCUSSION AND ANALYSIS 7

FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 21
STATEMENT OF ACTIVITIES 22

FUND FINANCIAL STATEMENTS

GOVERNMENTAL FUNDS
BALANCE SHEET 27

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL
FUNDS TO THE STATEMENT OF NET POSITION 28

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 29

RECONCILIATION OF THE STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 30

PROPRIETARY FUNDS
STATEMENT OF NET POSITION 31

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET
POSITION 33
STATEMENT OF CASH FLOWS 34

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021

FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET POSITION 36
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION 37
NOTES TO FINANCIAL STATEMENTS 41

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION
LIABILITY 89
SCHEDULE OF CONTRIBUTIONS – DEFINED BENEFIT PENSION PLANS 91

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS 93
SCHEDULE OF CONTRIBUTIONS – OPEB PLAN 94
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND 95
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 96

INDIVIDUAL FUND SCHEDULES AND COMBINING FINANCIAL

STATEMENTS

COMBINING NONMAJOR GOVERNMENTAL FUNDS
NONMAJOR GOVERNMENTAL FUND DESCRIPTIONS 101
COMBINING BALANCE SHEET 104

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES 111

NONMAJOR SCHEDULES OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE – BUDGET AND ACTUAL 119

SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
MISCELLANEOUS GRANTS SPECIAL REVENUE FUND 120

COMMUNITY DEVELOPMENT BLOCK GRANT SPECIAL REVENUE
FUND 121
GAS TAX SPECIAL REVENUE FUND 122

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021

SBI ROAD MAINTENANCE REHABILITATION SPECIAL REVENUE
FUND 123
MEASURE A SPECIAL REVENUE FUND 124
NPDES SPECIAL REVENUE FUND 125
AIR QUALITY IMPROVEMENT TRUST SPECIAL REVENUE FUND 126

SUPPLEMENTAL LAW ENFORCEMENT BLOCK GRANT SPECIAL
REVENUE FUND 127
LANDSCAPE MAINTENANCE DISTRICT #1 SPECIAL REVENUE
FUND 128
LANDSCAPE MAINTENANCE DISTRICT #2 SPECIAL REVENUE
FUND 129
LANDSCAPE MAINTENANCE DISTRICT #3 SPECIAL REVENUE
FUND 130
LANDSCAPE MAINTENANCE DISTRICT #4 SPECIAL REVENUE
FUND 131
LANDSCAPE MAINTENANCE DISTRICT #5 SPECIAL REVENUE
FUND 132
STORM DRAIN CAPITAL PROJECTS FUND 133

GENERAL GOVERNMENT IMPROVEMENT CAPITAL PROJECTS
FUND 134
FIRE IMPROVEMENT CAPITAL PROJECTS FUND 135
TRAILS IMPROVEMENT CAPITAL PROJECTS FUND 136
PARK IMPROVEMENT CAPITAL PROJECTS FUND 137
PUBLIC MEETING CAPITAL PROJECTS FUND 138
STREET IMPROVEMENT CAPITAL PROJECTS FUND 139
AQUATICS CENTER CAPITAL PROJECTS FUND 140
ANIMAL CONTROL CAPITAL PROJECTS FUND 141

INTERNAL SERVICE FUNDS
INTERNAL SERVICE FUNDS DESCRIPTIONS 145

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021
COMBINING STATEMENT OF NET POSITION 146

COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN NET POSITION 147
COMBINING STATEMENT OF CASH FLOWS 148

FIDUCIARY FUNDS
CUSTODIAL FUNDS DESCRIPTIONS 151
COMBINING STATEMENT OF FIDUCIARY NET POSITION 152
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION 154 STATISTICAL SECTION (NOT COVERED BY INDEPENDENT AUDITORS’

REPORT)
CONTENTS 159
NET POSITION BY COMPONENT 160
CHANGES IN NET POSITION 162
FUND BALANCES GOVERNMENTAL FUNDS 166
CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 168
ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY 170 DIRECT AND OVERLAPPING PROPERTY TAX RATES 171
PRINCIPAL PROPERTY TAX PAYERS 172
PROPERTY TAX LEVIES AND COLLECTIONS 173
RATIOS OF OUTSTANDING DEBT BY TYPE 174
RATIOS OF GENERAL BONDED DEBT OUTSTANDING 176
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 177 LEGAL DEBT MARGIN INFORMATION 178
PLEDGED-REVENUE COVERAGE 180
DEMOGRAPHIC AND ECONOMIC STATISTICS 182
PRINCIPAL EMPLOYERS 183

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021

FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY
FUNCTION/PROGRAM 184
OPERATING INDICATORS BY FUNCTION/PROGRAM 186
CAPITAL ASSETS BY FUNCTION/PROGRAM 188

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INTRODUCTORY SECTION

THIS PAGE INTENTIONALLY LEFT BLANK

(i)
December 31, 2021
To the Honorable Mayor, Members of the City Council, and Citizens of the City of Norco, California:

In accordance with the City’s Municipal Code, we hereby present to you the City of Norco (City) Annual Comprehensive Financial Report (ACFR) for the Fiscal Year ended June 30, 2021 (FY 2021). This report provides a comprehensive view of the results of the City’s financial activities and financial position for FY 2021.

The basic financial statements have been presented in conformity with Generally Accepted Accounting Principles (GAAP) and audited in accordance with Generally Accepted Auditing Standards (GAAS) by a firm of licensed independent Certified Public Accountants.

The ACFR consists of management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all information presented in this report. To provide a reasonable basis for making these representations, management has implemented a comprehensive internal control framework that is designed to protect the City’s assets from loss, theft, or misuse, and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. The City’s internal control procedures are established and operates on the principle that the cost of internal controls should not outweigh their benefits. As a result, the City’s internal control systems have been designed to provide reasonable rather than absolute assurance that the financial statements will be free of any material misstatements. As management, we assert that, to the best of our knowledge and belief, these financial reports are complete and reliable in all material respects.

Management also recognizes that the internal control environment changes over time due to changes in operation or the personnel performing various duties. As a result, the internal control environment is continuously being reviewed to ensure that adequate controls still exist within the City to achieve the City’s objectives.

CliftonLarsonAllen LLP, a firm of independent licensed Certified Public Accountants, has audited the City’s basic financial statements. The goal of an independent audit is to provide reasonable assurance that the financial statements of the City for the Fiscal Year ended June 30, 2021, are free of any material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures on the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall presentation of the financial statements. Based upon their audit, the independent auditors concluded that there was a reasonable basis for rendering an unqualified (clean) opinion that the City’s financial statements for the Fiscal Year ended June 30, 2021, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the Financial Section of this ACFR.

The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special requirements of federal grantor agencies under the Single Audit Act Amendments of 1996 and related Office of Management and Budget (OMB) Circular A-133. Under the Single Audit Act, the independent auditor is required to report not only on fair presentation of financial statements, but also on the City’s internal controls and compliance with legal requirements, with emphasis on internal controls and legal requirements involving the administration of federal awards. For the Fiscal Year ended June 30, 2021, the City did not expend over $750,000 in federal grants and therefore, did not meet the threshold set by the OMB for a Single Audit. Consequently, the independent auditors have issued no separate Single Audit Report.

(ii)
GAAP also requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management Discussion and Analysis (MD&A). This transmittal letter which includes forward looking statements is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the independent auditors’ report.

Profile of the City of Norco, California
The City of Norco, California was incorporated as a general law City on December 28, 1964, and is located in southwestern Riverside County (part of the Inland Empire), approximately 45 miles east of Los Angeles. Despite the declining employment, the Inland Empire remains one of the top economic and population areas in the state with 2.1 million in civilian labor force and 1.9 million in civilian employment; total population in 2021 was about 4.6 million representing less than 1% growth from the previous year. The Inland Empire’s labor market has continued to steadily recover from the COVID-19 pandemic, adding 185,600 jobs since it hit bottom in April 2020 (gaining back roughly 83% of total jobs lost between February and April of last year). According to the latest data from U.S. Labor Department and the State of California Employment Development Department (EDD), the unemployment rate of 5.4% in the Inland Empire was lower than the state’s unemployment rate of 6.9% but higher than the national unemployment rate of 4.2%. EDD’s most reported unemployment rate for the City of Norco as November 2021 was 4.6%. The area’s employment is heavily service oriented with key sectors responsible for the region’s employment and economic growth consisting of healthcare, logistics/transportation, construction, professional services, leisure/hospitality, education, government and manufacturing.

The region’s population growth rate is currently at 1% compared to 2% seen in most recent years. The area’s population, which includes Riverside and San Bernardino Counties, is currently estimated to be 4.6 million, which exceeds the population of many states in the country. While the population of the region continues to grow at a rate faster than the state, the population of the City of Norco over the last five years has remained stable except for a 5.45% decrease from January 2020 to January 2021. It is estimated that the decrease is mostly attributable to inmate population decrease at the California Rehabilitation Center in the City of Norco. The City limits cover an area of approximately 15 square miles, with a current permanent population of approximately 26,107 according to the most recent data as of January 2021 from the State of California, Department of Finance. Norco is strategically located with convenient access to the major interstate highways I-15, I-10, and State Routes 60 and 91, as well as Ontario International Airport (ONT).

Norco is proud of its animal-keeping and equestrian-oriented community, and has trademarked and branded itself as “Horsetown USA.” Residents enjoy over 168 acres of parkland, over 100 miles of pedestrian and equestrian trails and more than 100 miles of streets. Most residential properties are zoned for animal-keeping with a minimum lot size of one-half acre. Within 30 miles, there are several public colleges and universities providing a wide range of education facilities and opportunities. These include University of California – Riverside, University of California – Irvine, California State University – San Bernardino, California State University – Fullerton, California Polytechnic University – Pomona, Norco College, and several private universities. The City continues to enjoy a very stable and affluent population base with average household income of $119,459 which is 169% of Inland Empire’s average.

The City operates under the Council-Manager form of government. Under this form of government, policy-making and legislative authority are vested in the City Council, which consists of five members elected at-large. The City Council is responsible for approving ordinances, adopting the budget, appointing committees and commissions, and hiring both the City Manager and City Attorney. The City Manager is responsible for carrying out the policies, resolutions and ordinances of the City Council, overseeing the day-to-day staff supervision and operations of the City, and appointing the heads of the various departments. The City Council is elected at-large on a non-partisan basis and each member serves a four-year term. The City Council selects a Mayor by a majority vote who serves a one-year term.

City Services: The City provides a full range of municipal services, including police and fire protection; construction and maintenance of streets, trails and other infrastructure; recreational/leisure activities and cultural events; sanitation and water services; street lighting; planning and zoning; and animal control services. Police protection is provided through a contract between the City and Riverside County Sheriff’s Department. Fire and emergency medical services are provided through a cooperative contract with CAL FIRE/Riverside County Fire Department.

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The Planning Division is responsible for all current and advanced planning projects. Current planning projects include land use entitlement processes, such as site plans, variances, conditional use permits, zone changes and specific plans. Advanced planning consists of updates to the General Plan, annexations and inter-agency cooperation on transportation and habitat conservation issues. The City has over 900 acres of passive and active parkland and open space, which are maintained by the City’s Parks and Recreation Division. The vision of the department is to create community through people, animals, parks and programs. As an equestrian community, the Animal Control Services division establishes standards for the care and health of animals; provides a safe haven animal shelter; sponsors adoption and placement of animals; and enforces laws to protect the well-being of all animals in the community. The Animal Shelter cares for more than 2,000 impounded animals annually.

Through the City Manager’s Office, and with assistance from the Economic Development Advisory Council, the City provides economic development assistance to developers, real estate agents, appraisers and property owners; conducts business recruitment and outreach programs; provides business incentives; and collaborates with the Norco Chamber of Commerce to meet the business needs of the community. The primary purpose of the City’s economic development activities is to increase and diversify the City’s tax revenue base.

The City’s Public Works and Engineering Department provides a variety of services to residents and businesses.

Amongst these are production and distribution of potable water; collection and transmission of wastewater to regional treatment plants; construction and maintenance of pipelines; installation and maintenance of equestrian trails; and construction and maintenance of roadways, streets, storm drains and trails. The department also provides engineering plan check, permitting and inspection services for public and private construction projects.

Fire prevention, suppression, emergency medical services, hazmat response, emergency preparedness and police protection make up the City’s public safety divisions. Protecting the lives and property of the citizens of Norco is the primary mission of the public safety divisions. The City maintains a significant investment in equipment, facilities and personnel to preserve high quality rural lifestyle and safe neighborhoods for the community. The Information Technology Division, City Clerk’s Division, Human Resources Division, and Fiscal and Support Services Division provide customer services to residents, business and other stakeholders; and support and administrative services to other departments Operating Budget Preparation and Control Process: The development of the City’s Fiscal Year Annual Operating Budget begins around January each year when staff begins a review of the current fiscal year revenues and expenditures for each Fund in order to determine appropriate mid-year budget adjustments. Result of from the mid-year budget review and adjustments generally serves as the starting point for the development next year’s annual Operating Budget. The City’s annual Operating Budget serves as the foundation for financial planning and expenditure control. Each City division is required to submit budget requests for annual appropriation to the City Manager. These budget requests are reviewed by the City Manager and are used as the starting point for the development of a Proposed Budget. The City Manager presents a Proposed Budget to the City Council for review through staff and Council budget study sessions. At the completion of budget study sessions, the City Council is required to have a minimum of one public hearing to further review the Proposed Budget. At the conclusion of the public hearing(s), the budget is required to be adopted by a majority vote of the City Council no later than June 30, the close of the City’s fiscal year. The appropriated budget is prepared by Fund, department and division. Within each department and division, the budget is further detailed by expenditure type and line items (e.g., salaries, benefits, services, supplies).

After the budget is approved by the City Council, department heads can make transfers of appropriations within their department and Fund. Transfer of appropriations between departments within the same Fund requires the approval of the City Manager. Transfers of appropriations between funds require City Council authorization.

Expenditures may not legally exceed appropriations at the Fund level. Budget-to-actual comparisons are provided in this report for each major individual governmental fund for which the appropriated annual budget was adopted by the City Council. As part of the budgetary control process, quarterly budget-to-actual reports are presented to the City Council every quarter beginning with the end of the second quarter of the fiscal year. Access to real-time financial information is also available to all departments.

Factors Affecting Financial Condition
The financial condition of the City is affected by internal and external factors, including the local economy, state government actions, staffing and service levels, long term financial planning and other relevant financial policies.

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Local Economy: While the City of Norco is largely zoned as an animal-keeping and equestrian-oriented community, it also has a robust balanced economy with commercial, retail and light industrial activities. The city is included in the Riverside-San Bernardino labor market area. This area is also known as the Inland Empire region, which is considered one of the most significant regional economies in the state. The City’s financial health is heavily dependent on its ability to generate tax and other revenues. Despite the coronavirus pandemic, the Inland Empire and the City saw significant growth in tax and other revenues during FY 2021. Early FY 2022 data suggests that the strong growth in revenue experienced during FY 2021 is continuing. So, the outlook in FY 2022 is favorable as the impacts on city revenues from the coronavirus pandemic continues to diminish.

Although, hotel and leisure activities slowed down significantly during the coronavirus pandemic, this sector of the City’s economy and related revenue are projected to rebound in FY 2022. In addition to increased leisure activities, revenue increase is anticipated as the City met its obligation under certain transient occupancy tax sharing agreement with Excel Hotel Group in FY 2021. Retail sales and property values are projected to continue to rise. The City’s direct taxable retail sales during FY 2020-2021 was over $673 million placing the City eleventh on retail sales per capita among the fifty cities in the Inland Empire region. Based on strong demand in automobiles, especially used cars; and two (2) additional used car stores that recently opened in the City, sales tax revenues are projected to remain strong during FY 2022. Sales tax from new and used cars is the dominant category in the City’s retail taxable sales. However, it is important to note that due to changes implemented by the California Department of Tax and Fee Administration (CDTFA) regarding how sales tax generated from certain online sales are allocated to cities, the FY 2022 sales tax revenue will be lower than it could have been had this change not been implemented by CDTFA. If this change continues in future fiscal years, it is anticipated to have a negative impact on the City’s sales tax revenue. Real property values rose during the fiscal year and are projected to continue to rise in FY 2022, due to strong demand in existing home sales, rising values and strong commercial/industrial construction. The region’s median single-family-home price jumped by 24.7%, a stronger growth rate than in neighboring Orange County 22.5%, but lower than in Los Angeles County 27.5%; and San Diego County 25.8%. The total value of real property in the City is projected to rise by 5.0% to a record of nearly $3.7 billion with the average taxable value of existing homes rising 6.0% to a $617,000. The City anticipates that property tax revenues should rise by a comparable 5.7% during FY 2022.

Other key general revenues such as franchise fees, motor vehicle license fees and charges for services are expected to remain stable during FY 2022. Development impact fees are expected to show significant increase in FY 2022 due to two (2) major developments that commenced development in the City in FY 2022. Development impact fees are collected and used to mitigate the impacts on infrastructure from new developments. Lease income in FY 2021 was negatively impacted due to deferral of lease payment on the Silverlakes property. This impact will continue into FY 2022 as deferral of lease payment continued to September 2021. While not expected in FY 2022, it is possible that additional lease payment deferral could occur if additional restrictions are placed on indoor activities; this will further reduce lease revenue during the year. In addition to lease deferral, the City also agreed to re-amortize the loan provided to Balboa for the development of the Silverlakes property. During FY 2022, the remaining principal amount plus accrued interest was re-amortized at 2.63% interest rate based on the City’s borrowing rate on the 2019 Enterprise Revenue Refunding Bonds. The previous interest rate was 5.9%.

The action to re-amortize the loan at lower interest rate will reduce subsequent years’ interest income in the Sewer and Water Funds. The state has prohibited water and sewer utility service providers in the state from disconnecting service for non-payment of utility bills. This action has resulted in increases in amount of utility accounts receivable outstanding and the rate of delinquency. This raises the risks that portions of the outstanding amounts will not be timely collected and may eventually be written off.

Long-Term Financial and Strategic Planning: During FY 2016-2017, the City adopted a multi-year Strategic Plan with a vision through 2025. The Strategic Plan identified five strategic directions with three of these strategic directions addressing funding for infrastructure, on-going financial stability through new revenue initiatives, and economic development. The development of the Strategic Plan was a collaborative effort between the community, City Council, commissions and staff. The primary goal of the strategic plan is to create a foundation for on-going financial stability through revenue enhancement, expenditure reduction and efficiency. The City’s long-term financial and strategic planning has achieved significant success in creating financial resiliency for the General Fund and Water and Sewer Enterprise Funds. This has resulted in substantial General Fund reserves which strengthens the City’s ability to withstand future slowdown in economic activities. In early FY 2022, City staff, elected and appointed officials began a process to develop a new Strategic Plan. This plan will focus on economic development and financial resiliency; infrastructure improvements; communication and customers service; human capital; and public safety and wellness. The economic and financial resiliency component seeks to continue

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diversifying the City’s revenue base; develop and implement policies and procedures that are designed to further enhance and sustain the city’s current strong financial position.

During FY 2021, the city continued to execute on the FY 2017 Strategic Priorities. Substantial progress was made to ensure long-term financial resiliency; improve transparency and citizen engagement; diversify economic development; implement infrastructure projects; and enhance public safety. The following strategic action plans were initiated or completed during the fiscal year:

1. The City completed its second full year of implementation of Measure R Transactions and Use Tax Revenue Measure which adds a one percent (1%) Transactions and Use Tax rate to the existing sales tax rate. In FY 2021 Measure R generated nearly $6.9 million for infrastructure and vital city services.

Measure R is expected to generate similar amount in FY 2022.

2. The City continued to strengthen long-term financial resiliency by increasing General Fund’s (including Special Asset Revenue and Measure R Funds) – fund balance from $24.7 million to $32.3 million.

Excluding Special Asset Revenue and Measure R, fund balance of the General Fund grew by $1.8 million to $16.6 million, the highest amount in the history of the City. The financial position of the Water and Sewer Funds continued to improve as significant investments were made in water infrastructure and cash balance of the Sewer Fund increased to a record high of $16.9 million at the end of the fiscal year.

3. In FY 2021, the City Council approved a Development Agreement with CapRock Development for the development of the former Norco Egg Ranch into a modern industrial and commercial business park to be known as the Palomino Business Park. This project is expected to be completed in multiple phases generating over 1,200 jobs during construction and over 1,700 permanent jobs. In addition to jobs, this project is estimated to generate $15 million in one-time development fees to the City in addition to $2 million in unrestricted development agreement fees. The project will also result in increase in sales tax, property tax as well as substantial improvement to public infrastructure in the neighborhood surrounding the project area. This development commenced construction of in early FY 2022.

4. The City completed a comprehensive review and analysis regarding implementation of Internal Revenue Code Section 115 post-employment benefit trust program to pre-fund pension Unfunded Accrued Liabilities (OPEB). This analysis and recommendation of strategies to pre-fund pension UAL was approved by the City Council in early FY 2022. The recommendation includes comprehensive policies and procedures for determining amounts to be contributed to pre-fund UAL beginning in FY 2022. The initial contribution of $1 million into the trust was made in early FY 2022. Another contribution which will be based on the financial performance of the General Fund in FY 2021 will be made into the trust in the third quarter of FY 2022.

5. On March 11, 2021, President Joe Biden signed into law nearly a $1.9 trillion Coronavirus Relief Bill known as the American Rescue Plan Act of 2021 (ARPA). Local governments will receive funding as a recovery measure from the impacts from COVID-19. The City of Norco expects to receive $6.4 million in ARPA funding. The City’s allocation will be used largely to replace revenues lost from the economic impact of COVID-19. Certain amounts will also be allocated to homeless programs, provision of grants to small businesses and non-profits; utility assistance to eligible residents; and for the payment of expenditures directly related to mitigating the impacts of COVID-19.

6. The City continued with Community Outreach and Engagement Program that supports the goal of implementing a public information program that provides all residents and stakeholders with timely and accurate information to strengthen community relations through transparency. During the coronavirus pandemic most of the City’s community engagement shifted to electronic media including the use of City website, Facebook, electronic mail blasts to provide residents with updates and information regarding the coronavirus pandemic. A new government access portal and agenda management system were implemented to enhance citizens’ access to city information and transparency in city government.

7. Due to the financial uncertainty created by the coronavirus pandemic, the City did not provide any cost of living adjustment to general and administrative employees at the beginning of FY 2021. However, the City was able to provide adjustment effective January 1, 2021 when it was determined mid-way through FY 2021 that the financial impact of the pandemic on the City is not going to be as severe as previously thought. The City Council approved a 3% cost of living adjustment for general and administrative employee designed to make the City competitive with neighboring jurisdictions in recruitment and retention of valuable employees.

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8. As part of the City’s efforts to be more proactive in crime prevention by emphasizing community-oriented policing, the City Council authorized a new strategic deployment model for police services that was implemented in FY 2021 with estimated savings of $388,000. This was achieved by reducing the City’s daily patrol hours from sixty (60) to forty-eight (48). To offset the reduction in patrol-supported hours, the City Council approved adding one dedicated Community Oriented Policing and Problem Solving (COPPS) Deputy Sheriff to the special enforcement team and one dedicated Community Services Officer (CSO). With these adjustments, the new deployment model increased the number of dedicated special enforcement team sheriff deputies assigned to the City from two (2) to three (3); and increased the number of dedicated Community Service Officers from three (3) to four (4). This new deployment model is continuing in FY 2022.

9. During FY 2021, the City Council approved a five-year extension of the contract for fire protection and emergency services with Riverside County Cal Fire. This contract extension ensures that the current level and quality of fire and medical emergency response services provided to city residents will continue for the next five years. A separate contract was also executed with County of Riverside Emergency Management Department to provide the City with assistance on emergency operations and related programs.

10. To improve the quality of life and safety in the City, homeless services and programs were implemented in the city for the first time during the fiscal year. The program provides emergency hotel/motel housing and outreach placement services to residents experiencing homelessness. These services were expanded in FY 2022 to serve more homeless residents.

11. During FY 2021, the City implemented Small Enterprise Assistance Loan program. This program provides loan of up to $20,000 to small businesses in the City to help them meet working capital and other expenses as they recover from the economic and financial impacts of COVID-19. This loan program is ongoing.

Other Relevant Financial Policies
Budgetary Control Policies: The City has implemented strict expenditure control procedures and policies.

Personnel costs represent a significant portion of the City’s general government operating cost. To reduce personnel related costs, the City generally negotiates short-term labor agreements with employee organizations in order to provide the City with the flexibility to make expenditure reductions in the future to ensure balanced budgets. Strict expenditure control is also achieved through constant monitoring of expenditures. Budget-to-actual expenditure information is available on a real-time basis to all departments. Hard copy monthly reports are also provided to each department, and potential over expenditure indications are discussed with each department.

Additionally, summarized budget-to-actual reports are available to the City Council on a quarterly basis beginning with the second quarter. An extensive mid-year budget review process is also undertaken. The mid-year budget review process offers the City an opportunity to conduct a detailed review of the budget in order to take corrective action by making timely adjustments as necessary.

Pension, Health and OPEB Funding Policies: Pension, medical insurance and Other Post-Employment Benefits (OPEB) are significant cost items affecting the long-term financial condition of the City. Effective January 1, 2013, the City implemented the provision of the State of California Public Employees’ Pension Reform Act. This reform reduced public employees’ pension benefits and required employees to make a greater contribution toward funding of their pension benefits. All City employees are required to pay the employee’s portion of annual pension costs, which equates to either 6% or 8% of salary for PEPRA and Classic employees, respectively. In terms of OPEB, the City continued to contribute up to $300,000 more than the Pay-As-You-Go cost toward reducing unfunded liability. The City also continued to maintain the policy that capped the amount of City subsidy toward the cost of retiree and active employee medical insurance costs at $1,250 per month.

As part of the implementation of GASB 45, the City established a Trust Account to accumulate funds for the payment of post-retirement healthcare insurance premium. The City also adopted a funding policy. Under the policy, the City made a significant deposit into the Trust Account to prefund a portion of its unfunded retiree healthcare liabilities. Because of substantial earnings accrued to the Trust Account through June 30, 2021, the City has made significant progress in funding OPEB liabilities through this Trust Account. As of June 30, 2021, the City’s OPEB Trust Account had a balance of $13.7 million.

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As previously mentioned, soon after the close of FY 2021, the City established an Internal Revenue Code Section 115 Post-Employment Benefits Trust Program to be administered by Public Agency Retirement Services and the US Bank to pre-fund its unfunded pension obligations.

Other Relevant Financial Policies: The City of Norco has adopted several financial policies to ensure that the fiscal affairs of the City are professionally and prudently managed. With passage of Measure R, a one percent Transactions and Use Tax that the City implemented during Fiscal Year 2020, the City Council passed a resolution creating a Citizens’ Oversight Committee, an advisory body to the City Council charged with the responsibility for reviewing and prioritizing lists of projects and programs to be funded with Measure R tax revenues. The Committee is also responsible for reviewing Measure R revenues, expenditures and related reports to ensure that Measure R revenues are expended efficiently and effectively, and overseeing the required independent audit. Members of the Oversight Committee are subject to bylaws that detail their duties, responsibilities, terms and qualifications. A super majority vote of the City Council is required in order to override recommendations of the Committee. In its second full year of operation in FY 2021, the Oversight Committee was successful in reviewing and recommending many capital projects for approval to the City Council. Many of these projects were commenced during the year with some being completed and others carried over to FY 2022.

The City has also adopted a Debt Issuance and Management Policy. The purpose of this policy is to provide written guidance to policymakers regarding the timing and purposes for which debt may be issued, types and amounts of permissible debt, and methods for sale that may be used. Adherence to this policy helps to ensure prudent fiscal management and to maintain sound financial position and optimal credit ratings. The financing plan previously discussed regarding the refinancing of the City’s Enterprise Revenue Bonds was based on this policy.

Major Initiatives
The City of Norco is dedicated to maintaining the motto of “City Living in a Rural Atmosphere” by building and maintaining adequate infrastructure to serve its residents and attract compatible economic development projects.

As previously discussed, the City adopted a multi-year strategic plan with a vision through 2025. The Strategic Plan drives major initiatives, including capital project planning. The key to the City’s capital project planning is the adopted five-year Capital Improvement (CIP) Program Budget. This budget, which is updated annually by staff and adopted by the City Council, ensures that facilities and infrastructure are well maintained and replaced timely for reliable and effective service delivery to residents and businesses. During the fiscal year ended June 30, 2021, the City engaged in the following major initiatives, which are consistent with the Strategic Plan and the Capital Improvement Program Budget:

1. The five-year Capital Improvement Program Budget provides for $39.5 million in infrastructure improvements and replacement during FY 2022. In particular, the City will make significant investments on streets, water, storm drain, sewer, parks and public facilities as follows:
a. Street improvements $6.0 million
b. Storm drains $11.2 million
c. Water system improvements $5.3 million
d. Sewer system improvements $5.4 million
e. Public buildings $0.5 million
f. Public parks $0.3 million
g. Various Measure R funded projects $10.8 million

2. During FY 2021, several capital projects were completed as follows:
a. Pavement of various streets; Crestview Ave. (North to Sixth Street), Sierra Avenue (Sixth St to Detroit and citywide street sign replacements.
b. Completion of various storm drain improvement projects including Parmenter Park Storm Drain. c. Completion of equestrian trail fence replacement projects at various locations including the City’s western themed Sixth Street.

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d. Completion of various facilities improvements including replacement of Riley Gym’s floor, Animal Control’s meet and greet adoption area, Fire Station 57 improvements e. Completion of various park improvements including Ingalls Event Center Americans with Disabilities Act (ADA) parking pads and replacement of ball field sports lights. f. Completion of several water lines on Hillside Ave., Detroit St, and Chestnut. g. Completion of replacement of Reservoir No. 2.
h. Acquisition of utility service trucks, passenger van, and other equipment i. In addition to the capital projects that were completed during the fiscal year, substantial investment in the amount of $9.3 was made on water, sewer, storm drain, public facilities, street, and trail projects that were still in progress at the end of the fiscal year.

3. Several economic development projects were also initiated and/or completed during the fiscal year including:
a. In FY 2021, building and construction plans were submitted for approval for Phase I of the Palomino Ranch Business Park project. City Council had previously approved Palomino Ranch Business Park Project proposed by the CapRock Partners for the development of over two million square feet light industrial project with some retail component. Construction of this project commenced in early FY 2022. When completed, this project which will be built in phases will generate significant one-time development fees and ongoing property tax and sales tax revenues.

The City also estimates that this project will generate over 1,700 permanent jobs. b. The Planning Commission approved Saddle Ranch Phase II Project, proposed by the CapRock Partners for the development of over 374,170 square-foot industrial/ warehouse/manufacturing/cold storage warehouse and distribution. This project will also generate significant one-time development fee and ongoing property tax and sales tax revenues. c. In FY 2020, The City Council approved entitlements and construction started on a CarMax automobile dealership store at the corner of Second Street and Valley View Avenue.

Unfortunately, this project was temporarily suspended due to the coronavirus pandemic. During FY 2021 construction on this project recommenced and the project was completed and opened for business in early FY 2022. This highly sought after used car dealership is a huge economic development win for the City of Norco. It is anticipated to be one of the City’s top sales tax generator along with anticipated increase in employment and property tax base.

4. As required by state laws, the city began work on the update of its Sixth Cycle Housing Element. This Sixth Cycle update provides detail plans and policies that the City plans to implement in order to accommodate housing for all people who live and work in the community. The Housing Element update was approved by the City Council in early FY 2022 and will be submitted to the State of California, Department of Housing and Community Development for review and approval.

Awards and Acknowledgments
The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Norco for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2020. This is the eight consecutive year that the City has received this prestigious award. In order to be awarded the annual Certificate of Achievement for Excellence in Financial Reporting, a government unit must publish an easily readable and efficiently organized Annual Comprehensive Financial Report, which conforms to program standards. Such reports must also satisfy Generally Accepted Accounting Principles, applicable rules, regulations and legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR continues to meet the Certificate of Achievement for Excellence in Financial Reporting Program’s requirements, and we will be submitting it to the GFOA to determine eligibility for another certificate.

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The preparation of this report could not have been accomplished without the efficient and dedicated services of the entire staff of the City, specifically the Fiscal and Support Services Division and our independent auditors, CliftonLarsonAllen LLP, Finance Director Lisette Free and the entire accounting staff, all deserve special credit for their dedication and contribution in preparing this ACFR and in serving the City of Norco. Our gratitude is also given to every City department for their contributions in providing the data necessary to prepare this report.

Finally, we must also commend the Mayor and the entire City Council for their vision, direction and unwavering support of City staff in maintaining the highest level of professionalism in the management of the City and its finances.

Respectfully Submitted,
___________________ __________________________
V. Andy Okoro, CPA Lisette Free, CPA, CFE
City Manager Finance Director

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FINANCIAL SECTION

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INDEPENDENT AUDITORS’ REPORT
Honorable Mayor and City Council
City of Norco
Norco, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund and the aggregate remaining fund information of the City of Norco (the City), 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.

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the City’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 City’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.

CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer for details.

CliftonLarsonAllen LLP
CLAconnect.com

Honorable Mayor and City Council
City of Norco
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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, 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
As noted in Note 18, the City adopted Governmental Accounting Standards (GASB) Statement) No. 84, Fiduciary Activities in fiscal year ended June 30, 2021, which resulted in a restatement. Also, as described in Note 18, the City restated the net position of the business-type activities and sewer enterprise fund to adjust for wastewater capacity rights (expansion) not previously capitalized. Our opinions are 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, the schedule of proportionate share of the net pension liability, the schedule of contributions – defined benefit pension plans, the schedule of changes in net OPEB liability and related ratios, as listed in the table of contents, the schedule of contributions – OPEB plan, and the budgetary comparison schedule – general fund, as listed in the table of contents, be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the 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 financial statements, and other knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide any assurance on the required supplementary 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’s financial statements. The introductory section, combining statements and individual fund schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements.

Honorable Mayor and City Council
City of Norco
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The combining statements and individual fund schedules, as listed in the table of contents, are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining statements and individual fund schedules are fairly stated in all material respects in relation to the financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the 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 28, 2021, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP
Irvine, California
December 28, 2021

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MANAGEMENT’S DISCUSSION AND ANALYSIS

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CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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The following Management Discussion and Analysis (MD&A) of the City of Norco’s (City) financial condition and performance provides an introduction and overview of the financial activities of the City for the fiscal year ended June 30, 2021. Management’s Discussion and Analysis (MD&A) is designed to be condensed, so we encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal and the basic financial statement including the accompanying notes to basic financial statements.

Financial Highlights
 The City’s total assets of $368.2 million and deferred outflow of $6.5 million exceeded its total liabilities of $86.2 million and deferred inflows of resource of $2.1 million at the close of fiscal year 2021 by $286.5 million (net position). Of this amount, $54.4 million (unrestricted net position) may be used to meet City’s obligations to citizens and creditors.  The City’s total net position increased by $8.8 million during the year. The increase was a result of revenues exceeding expenditures in the governmental activities by $5.4 million and business type activities by $3.3 million.
 As of June 30, 2021, the City’s governmental funds reported combined fund balance of $54.5 million, a net increase of $7.6 million from prior fiscal year. A total of $2.3 million is nonspendable, $30.4 million is committed or restricted and $21.8 million is unassigned.  At the end of fiscal year 2021, committed fund balance for the general fund was $9.9 million; unassigned fund balance was $19.9 million. The total spendable fund balance of $30.0 million, which includes $0.1 million in donation revenue, represents 128% of total fiscal year 2020-2021 general fund expenditures.
 The City’s total long-term debt decreased by a net $3.5 million during fiscal year 2020-2021 primarily due to the debt service payment for the 2019 Enterprise Revenue Refunding Bonds.

Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City’s financial statements, which include all of the activities of the City of Norco and its component units as well as the Successor Agency to the former Norco Community Redevelopment Agency. The City’s basic financial statements comprise of the following three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to basic financial statements. The City’s Annual Comprehensive Financial Report also contains other supplementary information in addition to the basic financial statements.

Government-wide financial statements: The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances in a manner that is similar to a private-sector business. Government-wide financial statements include a statement of net position and a statement of activities.

The Statement of Net Position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. This is one way to measure the City’s financial health. Over time, increases or decreases in net position may provide a useful indicator on whether the financial position of the City is improving or deteriorating.

The Statement of Activities provides information that show how the City’s net assets changed during the current fiscal year. These changes are reported using the full accrual basis of accounting. Under this method, transactions are reported when the economic event occurs, rather than when cash is received or paid. Consequently, revenues and expenses are also reported in the statement for some items that will only result in future cash inflows or outflows such as vacation earned but not paid and uncollected taxes.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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In both the Statement of Net Position and Statement of Activities, financial reporting is divided into two kinds of activities:

Governmental Activities - Financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, streets and highways, community/economic development, culture and leisure and housing.

Business-Type Activities - The City charges a fee to customers to recover all or most of the cost of certain services it provides. The City’s water and sewer operations are reported as business-type activities.

The government-wide financial statements include not only the City, known as the primary government, but also its component units that are legally separate but whose activities the City is financially accountable. For the fiscal year ended June 30, 2021, the Norco Financing Authority is the only entity included as a component unit of the City. Due to the dissolution of the former Norco Community Redevelopment Agency in FY 2012, the activities of the Successor Agency are reported in a fiduciary fund (private-purpose trust fund) and have not been included in the consolidated financial statements of the primary government, the City of Norco. On September 29, 2014, the Oversight Board of the Successor Agency to the Norco Community Redevelopment Agency elected to serve as the Housing Successor for the operations of the former Redevelopment Agency’s Housing Agency. Consequently, the assets of the Housing Agency were transferred to the low and moderate income housing special revenue fund of the City of Norco in fiscal year 2014-2015.

Fund Financial Statements: Fund financial statements are designed to report information about groupings of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The funds of the City can be divided into three broad categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike government-wide financial statements, governmental fund financial statements are prepared using the modified accrual basis of accounting which focuses on short-term receipts and disbursements of financial resources, as well as balance of financial resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements.

The focus of governmental funds in the fund financial statements is narrower than that of the governmentwide financial statements. Therefore, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and government-wide activities.

The City maintains several individual governmental funds organized by their type (general, special revenue and capital project funds). Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance for the general fund and the low and moderate income housing fund, which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation called non-major governmental funds. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report.

The City adopts an annual appropriated budget for its general, special revenue and capital project funds.

Budgetary comparison statements have been provided for these funds to demonstrate compliance with the budget.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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The basic governmental fund financial statements can be found on pages 27-29 of this report.

Proprietary Funds: The City maintains two different types of proprietary funds, enterprise and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer utilities. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions and departments. The City uses internal service funds to account for the acquisition and maintenance of its fleet of vehicles, risk financing activities and computer and related information systems operations. Because these funds predominantly benefit governmental activities rather than business-type functions, they have been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as government-wide financial statements, only in a more detailed format. The proprietary fund financial statements provide separate information for the water and sewer operations, both of which are considered to be major funds of the City. Internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements.

Individual fund data for the internal service funds is also provided in the form of combining statements elsewhere in this report.

The basic proprietary fund financial statements can be found on pages 31-34 of this report.

Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the City. In these cases, the City has a fiduciary responsibility and is acting as a trustee. The Statement of Fiduciary Net Position separately reports all of the City’s fiduciary activities. Fiduciary funds are not included in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The resources of the Successor Agency to the former Redevelopment Agency are accounted for in fiduciary funds as a private purpose trust fund.

The basic fiduciary fund financial statement can be found on pages 36-37 of this report.

Notes to the basic financial statements: The notes to the basic financial statements, which are an integral part of the financial statements, provide additional information that is essential to a full understanding of the data in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 41-86 of this report.

Other information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information regarding the City’s proportionate share of net pension liability, contribution to defined benefit plans, progress in funding of the Other Post-Employment Benefits (OPEB) obligation to provide health benefits to its employees, as well as the budgetary comparison for the general fund. Required supplementary information can be found on pages 91-98 of this report.

Combining statements for non-major governmental funds, internal service funds and agency funds are presented immediately following the required supplementary information. Combining financial statements and schedules are also presented elsewhere in this report.

Government-wide Financial Analysis
This analysis focuses on the City’s net position and changes in net position in the governmental and business-type activities. As noted earlier, net position may serve over time as a useful indicator of the City’s financial position. For the fiscal year ended June 30, 2021, total City assets of $368.2 million, deferred loss on debt refunding of $0.8 million, and deferred outflow of amount related to OPEB of $1.6 million and pension plans of $4.1 million, exceeded total liabilities of $86.2 million and deferred inflow of amounts related to OPEB of $1.3 million and pension plans of $0.8 million by $286.5 million.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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For comparative purposes, management has included data from the fiscal year ended June 30, 2020 as summarized below:
2021 2020 2021 2020 2021 2020 %
Change
Assets:

Current and other assets $ 65,976,932 $ 59,082,360 $42,534,016 $50,128,741 $108,510,948 $ 109,211,101 -1% Capital assets (net of
depreciation) 177,702,983 178,341,941 81,986,978 75,768,623 259,689,961 254,110,564 2% Total assets 243,679,915 237,424,301 124,520,994 125,897,364 368,200,909 363,321,665 1% Deferred Outflow of Resources:

Deferred loss on debt refunding - - 839,543 879,144 839,543 879,144 -5% Amount related to other post employment benefits 1,029,748 902,061 530,476 475,527 1,560,224 1,377,588 13% Amount related to pension plans 3,280,807 3,447,817 863,288 890,867 4,144,095 4,338,684 -4% Total deferred outflow of resources 4,310,555 4,349,878 2,233,307 2,245,538 6,543,862 6,595,416 -1% Liabilities:

Current and other liabilities 4,803,269 5,040,923 3,289,514 4,940,397 8,092,783 9,981,320 -19% Long-term liabilities 22,960,361 21,082,961 55,153,642 58,197,638 78,114,003 79,280,599 -1% Total liabilities 27,763,630 26,123,884 58,443,156 63,138,035 86,206,786 89,261,919 -3% Deferred Inflow of Resources:

Amount related to other post employment benefits 861,299 1,049,997 443,699 546,764 1,304,998 1,596,761 100% Amounts related to pension plans 676,405 1,357,778 85,582 282,909 761,987 1,640,687 -54% Total deferred inflow of resources 1,537,704 2,407,775 529,281 829,673 2,066,985 3,237,448 -36% Net position:

Net investment in
capital assets 176,797,895 177,143,786 33,381,504 32,451,604 210,179,399 209,595,390 0% Restricted 21,842,280 22,301,118 26,475 137,489 21,868,755 22,438,607 -3% Unrestricted 20,048,961 13,797,616 34,373,885 31,586,101 54,422,846 45,383,717 20% Total net position $ 218,689,136 $213,242,520 $67,781,864 $64,175,194 $286,471,000 $ 277,417,714 3% Governmental Activities Business-type Activities Total
City of Norco, California
Statement of Net Position
Net position for the fiscal year ended June 30, 2021 increased by 3% and includes investments in capital assets such as roads, streets, drainage systems, large roadway signs, park improvements, property plant and equipment.

Including the value of infrastructure assets, net investment in capital assets total is $210.2 million as of June 30, 2021. The City uses capital assets to provide services to citizens and these assets are not available for future spending. An additional portion of the City’s net position, $21.9 million for fiscal year 2021 and $22.4 million for fiscal year 2020, represent resources that are subject to restrictions on how they can be used. The remaining balance, unrestricted net position, is $54.4 million and $45.4 million for fiscal years 2021 and 2020 respectively.

The deferred loss on debt refunding is reported in the statement of net position for the business-type activities as required by Statement No. 65 of the Governmental Accounting Standards Board (GASB).

This amount had been previously reported in the long-term liability line item. It is the difference between the amount required to repay the previously issued debt at the time it was refinanced in 2009 for the business-type activities and the amount due at maturity. In fiscal year 2019-2020, the City advance refunded the outstanding 2009 Enterprise Revenue Refunding Bonds. The City has been amortizing this amount since fiscal year ended June 30, 2009 and will continue to amortize it for the life of the refunding bond.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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The amounts related to pension plans have been as required by Statement No. 68 of the Governmental Accounting Standards Board (GASB). The deferred inflows are to record the actuarial accruals for changes in proportionate share of net pension liability and change in assumptions. The deferred outflow represents the amounts contributed by the City to CalPERS subsequent to measurement date, the differences between projected and actual earnings on Plan investments, and differences between expected and actual experience.

The amounts related to other post-employment benefits (OPEB) have been recorded as required by Statement No. 75 of the Governmental Accounting Standards Board (GASB). The deferred inflows are to record the actuarial accruals for differences between actual and expected experience and change in assumptions. The deferred outflow represents the amounts contributed by the City to CalPERS subsequent to measurement date, and the differences between projected and actual earnings on Plan investments.

Statement of Activities: The statement of activities shows how the City’s net position changed during the year. Provided below is the summary of changes in net position.

Governmental activities Business-type activities Total
2021 2020 2021 2020 2021 2020 % Change
Revenues:

Program Revenues:

Charges for services $ 5,954,075 $ 6,318,439 $ 21,129,640 $ 21,607,763 $ 27,083,715 $ 27,926,202 -3% Operating grants and contributions 2,407,654 2,113,841 - - 2,407,654 2,113,841 14% Capital grants and contributions 147,472 2,007,911 12,599 122,408 160,071 2,130,319 -92% General revenues 25,390,426 22,107,884 162,751 945,726 25,553,177 23,053,610 11% Total revenues 33,899,627 32,548,075 21,304,990 22,675,897 55,204,617 55,223,972 0% Expenses:

General Government 6,590,791 5,752,506 - - 6,590,791 5,752,506 15% Public safety 11,842,671 11,653,805 - - 11,842,671 11,653,805 2% Streets and Highw ays 5,167,004 5,934,482 - - 5,167,004 5,934,482 -13% Community development 2,110,070 1,546,406 - - 2,110,070 1,546,406 36% Culture and leisure 3,000,679 3,236,433 - - 3,000,679 3,236,433 -7% Water - - 11,325,678 12,699,537 11,325,678 12,699,537 -11% Sew er - - 6,397,952 7,134,484 6,397,952 7,134,484 -10% Total expenses 28,711,215 28,123,632 17,723,630 19,834,021 46,434,845 47,957,653 -3% Change in net position before transfers 5,188,412 4,424,443 3,581,360 2,841,876 8,769,772 7,266,319 21% Transfers 258,204 258,204 (258,204) (258,204) - - N/A
Change in net position 5,446,616 4,682,647 3,323,156 2,583,672 8,769,772 7,266,319 21% Net position - beginning 213,242,520 208,559,873 64,175,194 61,591,522 277,417,714 270,151,395 3% Net position - ending $ 218,689,136 $ 213,242,520 67,498,350 64,175,194 $ 286,187,486 $ 277,417,714 3% City of Norco, California
Statement of Changes in Net Position
During the year, total net position increased by $8.8 million primarily due to general revenues derived from the second full year of implementation of Measure R Transaction and Use Tax Revenue Measure.

Further analysis is provided below.

Governmental activities: Total net position from governmental activities increased by $5.4 million during the year primarily due to the increase in sales tax and operating grants and contributions. In terms of the general fund, revenues exceeded expenses by $6.6 million including tax revenues derived from Measure R and an additional $1.1 million from other financing sources.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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The following chart provides a graphic representation of the City’s expenses compared to program revenues for governmental activities. This information is by function.

The following chart provides a graphic representation of governmental activities revenues by source.

The governmental activity’s expense and program revenue chart is designed to reflect expenses associated with each City function and the revenues that are directly attributable to that function. It is important to note that general revenues such as property, sales and other taxes are not directly attributable to specific functions and are used to support program activities citywide. Investment earnings are also not associated directly with any particular function.

Capital grants and contributions represent revenues and contributions of capital assets received from developers and other third party entities including local, state and federal governments. Capital grants and contributions are restricted to the acquisition and construction of capital assets. Capital grants and contributions decreased in FY 2020-2021 as compared to prior year due to decrease in development impact fees revenues.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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Sales taxes are derived from taxable transactions originating from the City. During the fiscal year ended June 30, 2021, sales tax revenue included Measure R transactions and use tax revenue. The other taxes categories include property taxes and taxes derived from business license, franchises, motor vehicle licenses and transient occupancy taxes.

Business-type activities: Including non-operating income, net position of the business type activities increased $3.3 million during the fiscal year as expenses for both water and sewer operations are decreased. The chart below provides a graphic representation of the City’s revenues by source for business-type activities. A five-year water and sewer rate increase was approved by City Council with a rate study and Prop. 218 processes completed resulting in increased rates effective January 1, 2017 of each fiscal year through 2021. The net position of the water fund increased by $2.2 million. The water fund had operating income of $3.1 million due to decrease in water operation expenses, $0.1 million of nonoperating revenues and $12.6 thousands of capital contributions that were reduced by $0.9 million of interest expense and $0.1 million of transfers out. The net position of the sewer fund increased by $1.1 million as total revenues exceeded total expenses. The sewer fund had operating income of $1.7 million before nonoperating expense of $0.2 million and transfers out of $0.1 million.

Water fund expenses make up 65 percent of total business-type activities expenses while sewer fund expenses make up the remaining 35 percent of total expenses. Total charges for services from businesstype activities consist of 65 percent derived from water fund and 35 percent from the sewer fund.

Financial Analysis of City Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements.

Governmental Funds: The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s ability to meet financial obligations in the short-term. As example, assigned and unassigned fund balance could serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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As of June 30, 2021, the City’s governmental funds reported combined ending fund balances of $54.5 million, an increase of $7.6 million. Of the $54.5 million, $2.3 million is non-spendable representing the long-term amount of a note receivable from the City of Corona for the sale of donated assets; $22.3 million, or 0.4 percent, constitutes restricted fund balance which can only be used for specific purposes due to external restrictions or enabling legislation. Committed fund balances include balances that have been constrained by the City Council through a resolution or ordinance for specific future use. Total committed fund balance as of June 30, 2021 was $9.9 million. Unassigned fund balance of $19.9 million represent amount that is available for future appropriation.

In the general fund, revenues exceeded expenditures by $6.6 million. This excess of revenues over expenditures was as a result of better than anticipated receipt of taxes. The Housing Successor Agency’s Low Moderate Income Housing Special Revenue Fund’s fund balance decreased by $0.3 million. In FY 2014-2015, the Oversight Board of the Successor Agency to the Norco Community Redevelopment Agency elected to serve as the Housing Successor and has implemented program related to housing rehabilitation grants and loans, first-time homebuyer programs. During the fiscal year, homeless programs were implemented. The fund balance for non-major governmental funds increased by $0.2 million mainly due to decrease in capital expenditures for streets and highway projects.

Proprietary Funds: Proprietary funds provide the same type of information found in the governmentalwide financial statements, but in more detail. The City’s proprietary funds consist of two major enterprise funds and three internal service funds. The internal service funds are presented as Governmental Activities in the Proprietary Funds financial statements. Individual fund data are presented in the form of combining statements. Operating revenues for Enterprise Funds consist primarily of charges for services.

Unrestricted net position in the water fund at the end of the year was $11.6 million while the sewer fund had an unrestricted net position balance of $22.8 million. During the fiscal year, the net position of the water fund increased by $2.2 million due to total revenues exceeding total expenses largely as a result of water operation expenses decrease during the fiscal year. The net position of the sewer fund increased by $1.1 million and is largely due to operating revenues that surpassed operating expenses.

The City also has three internal service funds used to allocate cost of the City’s information systems, equipment services/replacement and risk management activities. The $0.5 million increase in the net position of the internal service funds was due to charges for services exceeding expenses in fleet management fund and benefits and insurance fund.

Fiduciary Funds: The City uses Fiduciary funds to account for resources held for the benefit of other parties outside the City, in which the City is acting as a trustee. The resources of the various community facilities districts are accounted for in fiduciary funds. A Statement of Changes in Fiduciary Net Position, Private Purpose Trust Fund is used to report the additions and deductions to the net assets of the Successor Agency’s Redevelopment Property Tax Trust Fund (RPTTF) created as a result of the dissolution of the former Norco Redevelopment Agency. In addition, Custodial funds is used to report the additions and deductions to account for various deposits, collections from citizens for solid waste by the City on behalf of Waste Management and for various receipts of assessments and for the payment of debt service and administrative costs for the various community facilities districts.

General Fund Financial and Budgetary Highlights
The general fund is the chief operating fund of the City. At June 30, 2021, total fund balance was $32.3 million which consists of $9.9 million committed by a resolution of the City Council to fund future operations; $2.3 million that is not available for spending due to the long-term nature of associated receivable; and $19.9 million unassigned. As a measure of general fund’s financial condition, it may be useful to compare this fund balance to total expenditures. The total unassigned general fund balance of $19.9 million represents 85 percent of total general fund recurring expenditures for the fiscal year. The general fund’s total fund balance increased by $7.6 million during the fiscal year due to total revenues exceeding total expenditures by $6.6 million and an increase of $1.1 million from other financing sources.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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In comparing the general fund actual revenues and expenditures to final budget, total revenues exceeded budget by $3.4 million while total expenditures were under budget by $6.2 million. The favorable revenue variance was due to more than anticipated receipts from taxes, licenses and permits, fines and forfeitures, and charges for services. The favorable increase in taxes is related to sales taxes, property taxes, and residual property tax increment.

On the expenditure side, there were cost savings between the final budget and actual expenditures.

There were less capital related projects expenditure than expected. Additional cost savings were also realized in general government salaries, public safety, contractual and professional expenditure categories.

Capital Assets and Debt Administration
Capital Assets: City investment in capital assets for its governmental and business-type activities as of June 30, 2021 amounted to $259.7 million (net of accumulated depreciation). Investment in capital assets includes infrastructure assets as well as land, buildings, improvements and equipment. During the year, capital assets net of depreciation decreased by $0.6 million for governmental activities and increased $6.2 million for business-type activities.

During FY 2020-2021, several capital projects were completed as follows:
• Pavement of various streets; Crestview Ave. (North to Sixth Street), Sierra Avenue (Sixth St to Detroit and citywide street sign replacements.
• Completion of various storm drain improvement projects including Parmenter Park Storm Drain. • Completion of equestrian trail fence replacement projects at various locations including the City’s western themed Sixth Street.
• Completion of various facilities improvements including replacement of Riley Gym’s floor, Animal Control’s meet and greet adoption area, Fire Station 57 improvements • Completion of various park improvements including Ingalls Event Center Americans with Disabilities Act (ADA) parking pads and replacement of ball field sports lights. • Completion of several water lines on Hillside Ave., Detroit St, and Chestnut. • Completion of replacement of Reservoir No. 2.
• Acquisition of utility service trucks, passenger van, and other equipment.

In addition to the capital projects that were completed during the fiscal year, substantial investment in the amount of $12.3 was made on water, sewer, storm drain, public facilities, street, and trail projects that were still in progress at the end of the fiscal year.

In FY 2021-2022, the City will make significant investments on streets, water, storm drain, sewer, parks and public facilities as follows:
• Street improvements $6.0 million
• Storm drains $11.2 million
• Water system improvements $5.3 million
• Sewer system improvements $5.4 million
• Public buildings $0.5 million
• Public parks $0.3 million
• Various Measure R funded projects $10.8 million
Additional information on the City’s capital assets can be found in the notes to the basic financial statements pages 58-60 and a summary is provided below.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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City of Norco
Capital Assets (Net of Depreciation)
June 30, 2021
Land $ 101,161,035 $ 1,863,896 $ 103,024,931
Building and improvements 9,686,527 744,815 10,431,342
Equipment and machinery 4,844,120 265,806 5,109,926
Infrastructure 60,055,500 53,570,686 113,626,186
Intangible 16,360 15,185,119 15,201,479
Construction in progress 1,939,441 10,356,656 12,296,097 Total capital assets, net $ 177,702,983 $ 81,986,978 $ 259,689,961 Total
Governmental
Activities
Business-type
Activities
Long-term debt: At the end of fiscal year 2021, the City’s total long debt outstanding was $50.1 million.

Of this amount, $48.8 million is debt of the sewer and water enterprise funds while $1.3 million represents debt of governmental activities representing claims, judgment, and compensated absences. Outstanding long-term debt of the City is summarized below and additional information can be found in the notes to basic financial statements on pages 67-69.

City of Norco
Outstanding Long Term Debt
June 30, 2021
Capital leases $ - $ 5,884,080 $ 5,884,080
Revenue bonds - 42,901,245 42,901,245
Compensated absences 794,888 - 794,888
Claims and judgment 477,935 - 477,935
Total long-term debt $ 1,272,823 $ 48,785,325 $ 50,058,148 Total
Governmental
Activities
Business-type
Activities
Economic Factors and Next Year’s Budgets and Rates
 In March 2020, Governor Gavin Newsom issued a Stay at Home Order as a result of the worldwide Coronavirus Pandemic. It was anticipated that this event would result in a significant negative impact on local government revenues in upcoming fiscal years. Consequently, as part of the development of the FY 2021-2022 Budget, a conservative approach was used to provide a projected FY 2020-2021 year-end to account for the potential negative impacts from the Governor’s Stay at Home Order and the recovery efforts from the COVID-19. This revised projection indicated that the City could end FY 2020-2021 with a net deficit. Fortunately, the worst-case scenario did not materialize as total actual revenues came in better than anticipated. It is anticipated the Pandemic will still have significant negative impact on local government revenues in the upcoming fiscal years.
 Measure R transactions and use tax that is estimated to generate approximately $5.8 million a year for investment in infrastructure and vital services, was approved by voters on the November 6, 2018 ballot, with over 70% of registered voters participating. Measure R was approved by over

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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56% of the voters that voted. Measure R allows Norco to preserve its quality of life, and restore deteriorating streets, trails, parks, facilities and equestrian amenities. Measure R will also prevent future cuts to Norco’s public safety services in order to maintain safe levels of sheriff and fire protection without risking emergency response times. With the approval of Measure R, the sales tax rate in Norco increased by 1%, from 7.75% to 8.75% effective April 1, 2019. It was anticipated a reduction to Measure R revenues following the COVID-19 Pandemic and the requirements contained in the Governor’s Stay at Home Order. It was estimated that the Stay at Home Order was going to have a significant negative impact on revenues for future fiscal years.

Fortunately, the impact was less severe than anticipated on a statewide basis and the City even performed significantly better than the State. Measure R Fund ended second full year of implementation with a total revenue of $6.9 million.
 American Rescue Plan Act (ARPA) was signed into law by President Biden on March 11, 2021.

ARPA provides Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) to all cities in the United States. The purpose of the funding is to help cities respond and recover from the health and economic impacts from the world-wide Coronavirus Pandemic (COVID-19). The City's allocation is $6,364,242 and the eligibility period for obligating these funds is March 3, 2021 through December 31, 2024 as long as the obligations incurred by December 31, 2024 are expended by December 31, 2026. In July 2021, the City received $3.2 million, or 50% of the $6.4 million allotment. The City Council approved FY 2021-2022 appropriation in the amount of $3.1 million from the City’s total allocation of $6.4 million. The remaining funds will be appropriated in future fiscal years.
 During FY 2020-2021 the City experienced sales tax increases for a 22.6 percent increase in sales tax receipts over FY 2019-2020 actual receipts, excluding Measure R Transactions Use Tax. The City continues with economic development practices to diversify the sales tax base and generate additional revenues. It is anticipated that sales tax revenue which makes up a significant portion of General Fund revenues will continue to increase in FY 2021-2022.  In September 2015, the long awaited 130-acre Silverlakes Equestrian and Sports Complex opened for operations in Norco. This complex with over 22 soccer fields, equestrian facilities, concert/event venue and full service restaurant and bar, operates 48 weeks each year. This facility was attracting over 1.5 million visitors annually to the City prior to the Coronavirus pandemic. In recent years, this has resulted in increase to Transient Occupancy Tax (TOT) revenues as new hotels were built to serve the increased visits to Silverlakes. However, with the pandemic, the number of visitors to the facility has significantly decreased resulting in decrease to TOT. The City expects that TOT revenues will continue to be negatively impacted as long as the pandemic continues.
 Property tax revenues are based on the assessed value of real property located within the City’s boundary. The assessed value of real property in the City grew by $178.0 million or 5 percent during the fiscal year. The growth was mainly from property sales and the application of the 2 percent Proposition 13 inflation adjustment factor. Growth in the City was lower than Countywide growth which historically has been the trend due to the City being built-out. This growth in the assessed value is expected to result to an increase in the City’s property tax revenues in the coming year. In December 2020, the California State Board of Equalization (BOE) has directed County Assessors to apply a 1.036 percent inflation factor (CCPI – California Consumer Price Index) to statewide property values for taxation, falling below the 2 percent cap. By enacting a

1.036 percent CCPI rather than the 2 percent maximum, taxpayers will save – and conversely state and local governments will see smaller increases in property tax revenues beginning in 2022.
 A five-year water and sewer rate analysis was completed in early FY 2016-2017 resulting in Prop. 218 approved multi-year rate increase which was anticipated to remedy the continued decrease in working capital and restructure the rates to reduce revenue volatility as consumption changes.

In FY 2019-2020, the status of the water fund improved due to the implementation of new rates.

The resulting increase in revenues allowed for the establishment of operating and rate stabilization reserves for the water fund. Minimum operating reserve balance was also established for the sewer fund. The sewer fund’s operating reserve was funded in FY 2017-2018 prior to the planned increase in rates for FY 2019-2020. Consequently, none of the approved rate increases have been implemented. It is anticipated that the current sewer rates will generate

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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sufficient revenues to fund capital projects and operations. While the financial position of the Sewer Fund is expected to remain strong in the coming years even without any rate increases, Water Fund’s financial position will depend on future rate increases and the ability to generate operating savings by purchasing less expensive imported water. The City plans to produce more water domestically as a result of the recent completion of water production and storage facilities.

There was on increase to sewer rates during FY 2020-2021: and no increase to water and sewer rates is planned in FY 2021-2022.
 The City continues to contract out to California Department of Forestry through the County of Riverside for fire protection and emergency medical response services. A new five-year contract was approved in June 2021. This action is expected to continue to generate significant ongoing cost savings to the City’s general fund budget.
 Over the last several years, the City’s employer pension contribution requirements have been rising due to lower payroll base and actuarial revisions by California Public Employees Retirement System (CalPERS). It is anticipated that employer pension contribution rates will continue to rise in the near future. Furthermore, when the City contracted out for fire and emergency medical services, the City’s safety pension plan was placed into inactive status by CalPERS and as a result of the lag in actuarial valuation, the City did not make any pension contribution to the safety plan over the initial two years. Even though the plan was fully funded when it was placed into inactive status, due to revisions to actuarial assumptions and changing demographics, the City began contributing to the plan in fiscal year 2016. In FY 2020-2021, the City’s pension contribution for the safety plan increased to $691,954 from $626,617 in FY 2019- 2020. With the anticipation of future contributions for all pension plans to increase, in FY 2021- 2022, the City Council approved additional pension contributions through Revenue Code Section 115 Post-Employment Benefits Trust Program to be administered by Public Agency Retirement Services (PARS) and U.S Bank, as Trustee. As of the date of the report, the City had made $1.0 million from the Special Asset Revenue Fund contribution to the Trust.  Current Memorandums of Understanding (MOU) and salary resolutions with all of the City’s employee bargaining units will expire by June 30, 2022. Renegotiating these MOUs and salary negotiations will likely result in cost increases to future year budgets.  During the FY 2020-2021, the building construction plans were submitted for approval for Phase I of the Palomino Ranch Business Park project. City Council had previously approved Palomino Ranch Business Park Project proposed by the CapRock Partners for the development of over two million square feet light industrial project with some retail component. When completed, this project will generate significant one-time development fees and ongoing property tax and sales tax revenues. The City also estimates that this project will generate over 1,700 permanent jobs.  The Planning Commission approved Saddle Ranch Phase Project proposed by the CapRock Partners for the development of over 374,170 square-foot industrial/warehouse/ manufacturing/cold storage warehouse and distribution. When completed, this project will also generate significant one-time development fees and ongoing property tax and sales tax revenues.  In FY 2019-2020, the City Council approved entitlements and construction started on a CarMax automobile dealership store at the corner of Second Street and Valley View Avenue.

Unfortunately, this project was temporarily suspended due to the coronavirus pandemic. During FY 2020-2021 construction on this project recommenced and was completed in early FY 2021- 2022. This project will generate significant sales tax revenue, and increase employment and property tax base.
 Other significant commercial projects initiated during the fiscal year include for the development of a six-building (6) industrial complex, totaling 80,078 square-feet located within the Industrial District of the Gateway Specific Plan.

Requests for Information
This financial report is designed to provide our citizens, taxpayers, customers, investors, creditors and all those with interest in the City’s finances with an overview of the City’s finances and to demonstrate accountability over the City’s financial assets. Questions concerning any of the information provided in this report or request for additional information should be addressed to the Finance Director, City of Norco, 2870 Clark Avenue, Norco, California 92860, or call (951) 270-5651.

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GOVERNMENT-WIDE FINANCIAL STATEMENTS

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CITY OF NORCO

STATEMENT OF NET POSITION
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(21)
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and Investments $ 46,816,414 $ 27,294,337 $ 74,110,751 Cash and Investments with Fiscal Agents 117,082 13,882 130,964 Receivables, Net:

Accounts 763,770 3,320,263 4,084,033
Interest 72,147 90,491 162,638
Notes 10,716,778 11,672,403 22,389,181
Due from Other Governments 4,178,012 - 4,178,012
Internal Balances (47,574) 47,574 -
Inventories - 95,058 95,058
Prepaids 36,065 8 36,073
Property Held for Resale 3,324,238 - 3,324,238
Capital Assets not Being Depreciated/Amortized:

Land and Construction in Progress 103,100,476 12,220,552 115,321,028 Capital Assets, Net of Accumulated Depreciated/Amortized 74,602,507 69,766,426 144,368,933 Total Assets 243,679,915 124,520,994 368,200,909

DEFERRED OUTFLOWS OF RESOURCES
Deferred Loss on Debt Refunding - 839,543 839,543
Amounts Related to Other Postemployment Benefits 1,029,748 530,476 1,560,224 Amounts Related to Pension Plans 3,280,807 863,288 4,144,095 Total Deferred Outflow of Resources 4,310,555 2,233,307 6,543,862

LIABILITIES
Accounts Payable and Accrued Liabilities 4,408,353 1,563,861 5,972,214 Accrued Interest Payable - 453,387 453,387
Retentions Payable 134,176 272,086 406,262
Unearned Revenues 254,340 608,854 863,194
Deposits Payable 6,400 391,326 397,726
Noncurrent Liabilities:

Due Within One Year 302,610 1,341,477 1,644,087
Due in More than One Year: 970,212 47,443,848 48,414,060 Net OPEB Liability 4,413,450 2,273,595 6,687,045
Net Pension Liability 17,274,089 4,094,722 21,368,811
Total Liabilities 27,763,630 58,443,156 86,206,786

DEFERRED INFLOWS OF RESOURCES
Amounts Related to Other Postemployment Benefits 861,299 443,699 1,304,998 Amounts Related to Pension Plans 676,405 85,582 761,987 Total Deferred Inflow of Resources 1,537,704 529,281 2,066,985

NET POSITION
Net Investment in Capital Assets 176,797,895 33,381,504 210,179,399 Restricted for:

Capital Projects 4,492,488 12,599 4,505,087
Community Development 571,420 - 571,420
Low and Moderate Income Housing 16,778,372 - 16,778,372 Debt Service - 13,876 13,876
Unrestricted 20,048,961 34,373,885 54,422,846
Total Net Position $ 218,689,136 $ 67,781,864 $ 286,471,000

CITY OF NORCO

STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(22)

Program Revenues
Operating Capital
Charges for Contributions Contributions
Functions/Programs Expenses Services and Grants and Grants Governmental Activities:

General Government $ 6,590,791 $ 2,180,587 $ 153,625 $ 2,704 Public Safety 11,842,671 1,088,710 192,623 37,031
Streets and Highways 5,167,004 933,850 1,920,404 -
Community and Economic Development 2,110,070 1,520,456 77,553 77,221 Culture and Leisure 3,000,679 230,472 63,449 30,516
Total Governmental Activities 28,711,215 5,954,075 2,407,654 147,472 Business-Type Activities:

Water 11,325,678 13,660,048 - 12,599
Sewer 6,397,952 7,469,592 - -
Total Business-Type Activities 17,723,630 21,129,640 - 12,599 Total Primary Government $ 46,434,845 $ 27,083,715 $ 2,407,654 $ 160,071 General Revenues:

Taxes:

Property Tax, Levied for General Purpose
Transient Occupancy Tax
Franchise Tax
Public Service Taxes
Intergovernmental - Sales Tax
Motor Vehicle in Lieu Tax - Unrestricted
Unrestricted Investment Earnings
Unrestricted Intergovernmental
Transfers
Total General Revenues and Transfers

CHANGE IN NET POSITION
Net Position - Beginning of Year, As Restated

NET POSITION - END OF YEAR

CITY OF NORCO

STATEMENT OF ACTIVITIES (CONTINUED)
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(23)
Net (Expense) Revenue and
Changes in Net Position
Governmental Business-Type
Activities Activities Total
$ (4,253,875) $ - $ (4,253,875)
(10,524,307) - (10,524,307)
(2,312,750) - (2,312,750)
(434,840) - (434,840)
(2,676,242) - (2,676,242)
(20,202,014) - (20,202,014)
- 2,346,969 2,346,969
- 1,071,640 1,071,640
- 3,418,609 3,418,609
(20,202,014) 3,418,609 (16,783,405)
5,157,673 - 5,157,673
741,248 - 741,248
1,863,816 - 1,863,816
518,358 - 518,358
16,460,577 - 16,460,577
20,216 - 20,216
38,841 162,751 201,592
589,697 - 589,697
258,204 (258,204) -
25,648,630 (95,453) 25,553,177
5,446,616 3,323,156 8,769,772
213,242,520 64,458,708 277,701,228
$ 218,689,136 $ 67,781,864 $ 286,471,000

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FUND FINANCIAL STATEMENTS

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CITY OF NORCO

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(27)
Housing
Successor Agency
Low and Moderate Total
Income Housing Nonmajor Total
Special Governmental Governmental
General Revenue Fund Funds Funds
ASSETS
Cash and Investments $ 29,311,628 $ 5,400,033 $ 5,839,043 $ 40,550,704 Cash and Investments with Fiscal Agents - 117,082 - 117,082 Receivables, Net:

Accounts 612,951 - 132,319 745,270
Interest 59,306 4,068 4,078 67,452
Notes 2,320,941 7,981,172 414,665 10,716,778
Due from Other Governments 3,464,182 - 713,830 4,178,012 Prepaids 4,134 - 2,500 6,634
Property Held for Resale - 3,324,238 - 3,324,238
Due from Other Funds 319,079 - - 319,079
Total Assets $ 36,092,221 $ 16,826,593 $ 7,106,435 $ 60,025,249

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities $ 3,412,394 $ 48,221 $ 854,666 $ 4,315,281 Retentions Payable 42,313 - 91,863 134,176
Due to Other Funds 30,242 - 336,411 366,653
Deposits Payable - - 6,400 6,400
Unearned Revenues 254,340 - - 254,340
Total Liabilities 3,739,289 48,221 1,289,340 5,076,850

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues 37,008 - 414,665 451,673

FUND BALANCES
Nonspendable 2,325,075 - 2,500 2,327,575
Restricted 115,657 16,778,372 5,438,741 22,332,770
Committed 9,925,562 - - 9,925,562
Unassigned 19,949,630 - (38,811) 19,910,819
Total Fund Balances 32,315,924 16,778,372 5,402,430 54,496,726 Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 36,092,221 $ 16,826,593 $ 7,106,435 $ 60,025,249

CITY OF NORCO

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL

FUNDS TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(28)
Fund Balances of Governmental Funds $ 54,496,726
Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the funds. 176,531,882 Internal service funds are used by management to charge the costs of equipment usage, and certain employee benefits and City-wide insurance coverage. The assets and liabilities of the internal service funds are included in the governmental activities in the Statement of Net Position. 6,123,543 Interest receivable on certain long-term loans, principal on long-term loans to be repaid with sales tax proceeds, and certain grants receivable are not available to pay for current-period expenditures and, therefore, are deferred in the governmental funds. In the Statement of Net Position, these receivables are recognized as earned revenues. 451,673
Pension and OPEB related debt applicable to the City 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 pensions and 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:

Deferred Outflows of Resources Related to OPEB 1,029,748 Deferred Inflows of Resources Related to OPEB (861,299) Net OPEB Liability (4,413,450)
Deferred Outflows of Resources Related to Pensions 3,280,807 Deferred Inflows of Resources Related to Pensions (676,405) Net Pension Liability (17,274,089)
Net Position of Governmental Activities $ 218,689,136

CITY OF NORCO

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(29)
Housing
Successor Agency
Low and Moderate Total
Income Housing Nonmajor Total
Special Governmental Governmental
General Revenue Fund Funds Funds

REVENUES
Taxes $ 24,741,672 $ - $ 1,027,702 $ 25,769,374
Assessments - - 779,905 779,905
Licenses and Permits 1,279,186 - - 1,279,186
Fines and Forfeitures 727,315 - - 727,315
Development Fees - - 62,717 62,717
Intergovernmental 49,064 - 2,800,187 2,849,251
Charges for Services 2,769,953 - 1,781 2,771,734
Investment Earnings 173,880 5,821 (617) 179,084
Lease Income 230,692 - - 230,692
Reimbursements 11,263 - - 11,263
Other 51,875 31,166 40,258 123,299
Total Revenues 30,034,900 36,987 4,711,933 34,783,820

EXPENDITURES
Current:

General Government 6,357,776 - 235,441 6,593,217
Public Safety 11,216,244 - 224,011 11,440,255
Streets and Highways 526,759 - 3,721,797 4,248,556
Community and Economic Development 1,563,745 318,627 190,050 2,072,422 Culture and Leisure 2,315,071 - 120,680 2,435,751
Capital Outlay:

Special Assessment 1,454,185 - 1,454,185
Total Expenditures 23,433,780 318,627 4,491,979 28,244,386 Excess (Deficiency) of Revenues
Over (Under) Expenditures 6,601,120 (281,640) 219,954 6,539,434

OTHER FINANCING SOURCES (USES)
Transfers In 258,204 - - 258,204
Proceeds from Sale of Land 802,585 - - 802,585
Total Other Financing Sources (Uses) 1,060,789 - - 1,060,789 NET CHANGE IN FUND BALANCES 7,661,909 (281,640) 219,954 7,600,223 Fund Balances - Beginning of Year 24,654,015 17,060,012 5,182,476 46,896,503 FUND BALANCES - END OF YEAR $ 32,315,924 $ 16,778,372 $ 5,402,430 $ 54,496,726

CITY OF NORCO

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
See accompanying Notes to Financial Statements.
(30)
Net Change in Fund Balance - Total Governmental Funds $ 7,600,223 Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Asset deletions also affect the amounts reported in the Statement of Activities.

Capital Outlays 2,814,571
Depreciation (3,398,363)
Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the governmental funds:

Adjustment to Interest Income on Notes Receivable -
Grant Revenue not Available to Pay for Current-Period Expenditures (888,505) OPEB expense reported in the governmental funds includes the insurance premiums paid. In the Statement of Activities, OPEB expense includes the change in the OPEB liability, and related change in OPEB amounts for deferred outflows of resources and deferred inflows of resources. (828,473) Internal service funds are used by management to charge the costs of equipment usage, and certain employee benefits and City-wide insurance coverage to individual funds. The change in net position of the internal service funds are reported with governmental activities. 498,586
Pension expense reported in the governmental funds includes the annual required contributions. 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 (351,423) Change in Net Position of Governmental Activities $ 5,446,616

CITY OF NORCO

STATEMENT OF NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(31)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds
ASSETS

CURRENT ASSETS
Cash and Investments $ 10,426,374 $ 16,867,963 $ 27,294,337 $ 6,265,710 Cash and Investments with Fiscal Agents 7,574 6,308 13,882 - Receivables, Net:

Accounts 2,231,033 1,089,230 3,320,263 18,500
Interest 8,093 82,398 90,491 4,695
Notes 266,861 348,904 615,765 -
Prepaids 8 - 8 29,431
Due from Other Funds 47,574 - 47,574 -
Inventories 95,058 - 95,058 -
Total Current Assets 13,082,575 18,394,803 31,477,378 6,318,336

NONCURRENT ASSETS
Notes Receivable 3,342,233 7,714,405 11,056,638 -
Capital Assets not Being Depreciated
Amortized:

Land 1,863,896 - 1,863,896 -
Construction in Progress 10,283,698 72,958 10,356,656 - Capital Assets Being Depreciated/Amortized:

Buildings and Improvements 1,239,573 340,121 1,579,694 - Utility Plant 14,864,466 6,578,031 21,442,497 -
Wastewater Capacity Rights - 25,605,545 25,605,545 -
Pipelines 46,212,760 31,255,307 77,468,067 -
Fire Hydrants 2,152,973 - 2,152,973 -
Meters 1,827,287 1,741,393 3,568,680 -
Vehicles and Equipment 125,736 384,585 510,321 3,192,769 Intangible Assets: - - - 436,609
Less Accumulated Depreciation/
Amortization (32,469,244) (30,092,107) (62,561,351) (2,458,277) Total Noncurrent Assets 49,443,378 43,600,238 93,043,616 1,171,101 Total Assets 62,525,953 61,995,041 124,520,994 7,489,437

DEFERRED OUTFLOWS OF RESOURCES
Deferred Loss on Debt Refunding 464,485 375,058 839,543 - Amounts from Other Postemployment Benefits 267,578 262,898 530,476 - Amounts from Pension Plans 490,230 373,058 863,288 -
Total Deferred Outflows of Resources 1,222,293 1,011,014 2,233,307 -

CITY OF NORCO

STATEMENT OF NET POSITION (CONTINUED)

PROPRIETARY FUNDS
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(32)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds

LIABILITIES

CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 1,352,813 $ 211,048 $ 1,563,861 $ 93,072 Accrued Interest Payable 225,178 228,209 453,387 -
Retentions Payable 272,086 - 272,086 -
Deposits Payable 209,802 181,524 391,326 -
Unearned Revenues 301,447 307,407 608,854
Compensated Absences - - - 198,723
Capital Leases Payable - 296,477 296,477 -
Claims and Judgements - - - 189,706
Bonds Payable 514,107 530,893 1,045,000 -
Total Current Liabilities 2,875,433 1,755,558 4,630,991 481,501

NONCURRENT LIABILITIES
Compensated Absences - - - 596,164
Capital Leases Payable - 5,587,602 5,587,602 -
Claims and Judgements - - - 288,229
Bonds Payable 23,876,933 17,979,313 41,856,246 -
Net OPEB Obligation 1,146,828 1,126,767 2,273,595 -
Net Pension Liability 2,440,201 1,654,521 4,094,722 -
Total Noncurrent Liabilities 27,463,962 26,348,203 53,812,165 884,393 Total Liabilities 30,339,395 28,103,761 58,443,156 1,365,894

DEFERRED INFLOWS OF RESOURCES
Amounts from Other Postemployment Benefits 223,807 219,892 443,699 - Amounts from Pension Plans 73,855 11,727 85,582 -
Total Deferred Outflows of Resources 297,662 231,619 529,281 -

NET POSITION
Net Investment in Capital Assets 21,518,528 11,862,976 33,381,504 1,171,101 Restricted for Capital Projects 12,599 - 12,599 -
Restricted for Debt Service 7,568 6,308 13,876 -
Unrestricted 11,572,494 22,801,391 34,373,885 4,952,442 Total Net Position $ 33,111,189 $ 34,670,675 $ 67,781,864 $ 6,123,543

CITY OF NORCO

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(33)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds

OPERATING REVENUES
Sales and Charges for Services $ 13,648,861 $ 7,453,837 $ 21,102,698 $ 1,958,044 Connection Fees - 8,892 8,892 -
Miscellaneous 11,187 6,863 18,050 -
Total Operating Revenues 13,660,048 7,469,592 21,129,640 1,958,044

OPERATING EXPENSES
General and Administrative 698,459 607,234 1,305,693 1,247,684 Operations 8,344,596 3,306,588 11,651,184 -
Amortization - 771,427 771,427 7,544
Depreciation 1,520,995 1,050,612 2,571,607 208,850
Total Operating Expenses 10,564,050 5,735,861 16,299,911 1,464,078 OPERATING INCOME 3,095,998 1,733,731 4,829,729 493,966

NONOPERATING REVENUES (EXPENSES)
Investment Earnings 7,210 155,541 162,751 4,312
Interest Expense and Fiscal Charges (902,972) (809,275) (1,712,247) - Amortization of Premium 141,344 147,184 288,528 -
Total Nonoperating Revenues
(Expenses) (754,418) (506,550) (1,260,968) 4,620
INCOME BEFORE TRANSFERS 2,341,580 1,227,181 3,568,761 498,586 CAPITAL CONTRIBUTIONS 12,599 - 12,599 -
TRANSFERS OUT (129,102) (129,102) (258,204) -
CHANGE IN NET POSITION 2,225,077 1,098,079 3,323,156 498,586 Net Position - Beginning of Year, As Restated 30,886,112 33,572,596 64,458,708 5,624,957 NET POSITION - END OF YEAR $ 33,111,189 $ 34,670,675 $ 67,781,864 $ 6,123,543

CITY OF NORCO

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(34)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers $ 13,832,331 $ 8,163,698 $ 21,996,029 $ - Cash Received from Interfund Services Provided - - - 1,941,213 Cash Payments to Suppliers (9,742,506) (2,990,122) (12,732,628) (1,044,254) Cash Payments to Employees for Services (2,103,920) (2,020,889) (4,124,809) (307,267) Net Cash Provided by Operating
Activities 1,985,905 3,152,687 5,138,592 589,692

CASH FLOWS FROM NONCAPITAL FINANCING

ACTIVITIES
Cash Paid to Other Funds (159,641) (129,102) (288,743) - Net Cash Used by Noncapital Financing Activities (159,641) (129,102) (288,743) -

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition and Construction of Capital Assets (9,206,993) (110,722) (9,317,715) (160,920) Capital Development Impact Fees 12,599 - 12,599 -
Principal Payments - Capital Lease - (290,949) (290,949) - Principal Payments - Bonds (495,000) (514,997) (1,009,997) - Interest and Fiscal Charges (866,977) (815,612) (1,682,589) - Net Cash Used by Capital and Related
Financing Activities (10,556,371) (1,732,280) (12,288,651) (160,920)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest Income 32,197 191,094 223,291 16,290
Issuance of Notes Receivable (235,396) (241,070) (476,466) - Repayment of Notes Receivable - 250,062 250,062 -
Net Cash Provided by (Used in) Investing
Activities (203,199) 200,086 (3,113) 16,290
NET INCREASE IN CASH AND CASH EQUIVALENTS (8,933,306) 1,491,391 (7,441,915) 445,062 Cash and Cash Equivalents - Beginning of Year 19,367,254 15,382,880 34,750,134 5,820,648 CASH AND CASH EQUIVALENTS - END OF YEAR $ 10,433,948 $ 16,874,271 $ 27,308,219 $ 6,265,710

CASH AND CASH EQUIVALENTS ARE REPORTED

ON THE STATEMENT OF NET POSITION AS FOLLOWS
Cash and Investments $ 10,426,374 $ 16,867,963 $ 27,294,337 $ 6,265,710 Cash and Investments with Fiscal Agents 7,574 6,308 13,882 - Total Cash and Cash Equivalents $ 10,433,948 $ 16,874,271 $ 27,308,219 $ 6,265,710

CITY OF NORCO

STATEMENT OF CASH FLOWS (CONTINUED)

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(35)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds

RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED BY OPERATING ACTIVITIES
Operating Income $ 3,095,998 $ 1,733,731 $ 4,829,729 $ 493,966 Adjustments to Reconcile Operating Income to Net Cash
Provided by Operating Activities:

Amortization - 771,427 771,427 7,544
Depreciation 1,520,995 1,050,612 2,571,607 208,850
(Increase) Decrease in Assets and Deferred Outflows:

Accounts Receivable (95,966) 431,783 335,817 (16,831)
Prepaids (8) - (8) (3,235)
Inventories 13,404 - 13,404 -
Deferred Outflows:

Amount from Pension Plans 60,189 (32,610) 27,579 -
Amount from Other Postemployment Benefits (28,523) (26,426) (54,949) - Increase (Decrease) in Liabilities and Deferred Inflows:

Accounts Payable and Accrued Liabilities (2,097,139) (257,192) (2,354,331) 32,642 Deposits Payable 32,852 21,253 54,105 -
Unearned Revenues 235,397 241,070 476,467 -
Retentions Payable 183,055 - 183,055 -
Compensated Absences - - - (50,365)
Net Pension Obligation 81,927 172,225 254,152 -
Net OPEB Obligation (864,721) (804,349) (1,669,070) -
Claims and Judgements - - - (82,879)
Deferred Inflows:

Amount from Pension Plans (99,539) (97,788) (197,327) - Amount from Other Postemployment Benefits (52,016) (51,049) (103,065) - Net Cash Provided by Operating Activities $ 1,985,905 $ 3,152,687 $ 5,138,592 $ 589,692

CITY OF NORCO

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2021
See accompanying Notes to Financial Statements.
(36)
Successor
Agency
Private-Purpose Custodial
Trust Fund Funds
ASSETS
Cash and Investments $ 3,420,448 $ 4,689,489
Cash and Investments with Fiscal Agents 4,789,006 1,731,654 Receivables, Net:

Accounts - 570,813
Interest 926 1,934
Due from Other Governments - 106,890
Prepaids 124,131 -
Property Held for Resale 65,689 -
Total Assets 8,400,200 7,100,780

DEFERRED OUTFLOWS OF RESOURCES
Loss on Debt Refunding 3,002,441 -

LIABILITIES
Accounts Payable - 1,338,888
Deposits Payable - 917,907
Note Payable 820,000 -
Accrued Interest on Debt 945,829 -
Long-Term Liabilities:

Due Within One Year 3,230,000 -
Due in More than One Year 63,508,170 -
Total Liabilities 68,503,999 2,256,795

NET POSITION
Held in Trust for the Successor Agency and
Other Purposes (57,101,358) -
Restricted for:

Waste Management - -
Debt Service for Special Assessment Debt - 4,843,985
Total Net Position $ (57,101,358) $ 4,843,985

CITY OF NORCO

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(37)
Successor
Agency
Private-Purpose Custodial
Trust Fund Funds

ADDITIONS
RPTTF Property Tax Distribution $ 6,643,609 $ -
Collections for Others - 9,233,941
Investment Earnings 2,023 5,855
Total Additions 6,645,632 9,239,796

DEDUCTIONS
Administrative Allowance 250,000 -
Payment for collections to Waste Management - 6,224,474 Administrative Expenses 679 143,241
Payments on Special Assessment Debt:

Principal - 1,369,917
Interest 2,566,794 1,341,770
Amortization of Bond Discounts and Premiums 285,570 -
Total Deductions 3,103,043 9,079,402
CHANGE IN NET POSITION 3,542,589 160,394
Net Position - Beginning of the Year, As Restated (60,643,947) 4,683,591 NET POSITION - END OF THE YEAR $ (57,101,358) $ 4,843,985

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NOTES TO FINANCIAL STATEMENTS

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CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(41)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of the Reporting Entity
The City of Norco (the City) was incorporated on December 28, 1964 as a general law city and operates under a Council/City Manager form of government. It is governed by an elected five-member council.

As required by generally accepted accounting principles, these financial statements present the City (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City’s elected officials have a continuing full or partial accountability for fiscal matters of the other entities. 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 exclusions 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, component unit 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. The following component unit of the City has been included in the financial reporting entity as a blended component unit. A description of the component unit and the method of incorporating its financial information in the accompanying financial statements is summarized as follows:

Norco Public Financing Authority
The Norco Public Financing Authority (the Authority) is a Joint Exercise of Powers Authority under the Laws of the state of California. The Authority is authorized to issue bonds under the Marks-Roos Local Bond Pooling Act of 1985 (Article 1 through 4, section 6500). The City and the former Norco Community Redevelopment Agency (the former Agency) formed the Authority by execution of the Joint Exercise of Powers Agreement. The purpose of the Authority is to provide financing to the former Agency and the City for various project purposes. The Authority and its activity, if any, are presented as a blended component unit since its governing board is substantially the same as the City’s. Separate financial statements were not prepared for the Authority.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(42)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government-wide and Fund Financial Statements
The government-wide financial statements include a statement of net position and a statement of activities. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. Certain eliminations have been made as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34 in regard to interfund activities, payables, and receivables. All internal balances in the statement of net position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column.

Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.

Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and (2) grants and contributions, including special assessment, that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenue are reported instead as general revenues. In the statement of activities, internal service fund transactions have been eliminated; however, those transactions between the governmental and business-type activities have not been eliminated.

Separate financial statements are provided for governmental, proprietary, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(43)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds.

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. Accrual basis of accounting refers to when revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the cash flows. Accordingly, all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying statement of net position. The statement of activities presents changes in net position. The types of transactions reported as program revenues for the City are reported in three categories (1) charges for services, (2) operating grants and contributions, and (3) capital grants and contributions.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified-accrual basis of accounting. The current financial resources measurement focus means that only current assets, deferred outflows of resources, current liabilities and deferred inflows of resources are generally included on their balance sheets. Under the modified accrual basis of accounting, revenues are recognized in these funds when susceptible to accrual (i.e. when they are both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers property taxes collected after year-end, as available if they are collected within 60 days of the end of the current fiscal period. Other revenues susceptible to accrual include sales tax, state gasoline tax, utility users tax, investment income, and certain other intergovernmental revenues. Reimbursable grant revenues are considered to be available if they are collected within six months of the end of the current fiscal period. Grant funds earned but not received are recorded as a receivable, and grant funds received before the revenue recognition criteria have been met are reported as unearned revenues. Expenditures in the governmental funds are generally recognized in the accounting period in which the related fund liability is incurred, if measurable, except for unmatured principal and interest on general long-term debt, as well as compensated absences and claims and judgments, which are recognized when due.

The City reports the following major Governmental Funds:

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(44)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
The General Fund includes Measure R funds, a one-cent sales tax, for investment in infrastructure and vital services that was approved by voters on the November 6, 2018 ballot. Measure R allows the City to preserve its quality of life, and restore deteriorating streets, trails, parks, facilities and equestrian amenities. Measure R will also prevent additional cuts to the City’s public safety services in order to maintain safe levels of sheriff and fire protection without risking emergency response times.

With the approval of Measure R, the sales tax rate in the City increased by 1%, from

7.75% to 8.75% effective April 1, 2019.

The Housing Successor Agency Low and Moderate Income Housing (LMIH) Special Revenue Fund. This fund accounts for assets received from dissolution of the former Norco Community Redevelopment Agency dedicated to low and moderate income housing activities pursuant to the California Health and Safety Code.

The City reports the following major Proprietary Funds:

The Water Fund is used to account for the provision of water services to the residences and businesses of the City.

The Sewer Fund is used to account for the revenues and expenses in connection with the operation and improvement of the City’s sewer system.

Additionally, the City reports the following fund types:

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

The Capital Project Funds are used to account for major capital acquisition and construction separately from their ongoing operating activities, including those financed by special assessments.

The Internal Service Funds are used by the City to account for data processing, fleet management and benefits and insurance services provided to other City departments or agencies on a cost reimbursement basis and to allocate costs of compensated absences and claims and judgments charges to the funds on a pro rata basis.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(45)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
The Fiduciary Funds are used to account for the receipt of assets, liabilities, special assessments and deposits received from individuals, private organizations or other governments. These resources are held by the City in a fiduciary capacity and remittances are made as distributions to other government, others and for payments for debt for which the City is not obligated. Fiduciary fund balances are not property of the City of Norco.

The following are Fiduciary Funds of the City:

The Private Purpose Trust Fund is the Successor Agency to the former Agency. The private purpose trust fund is reported using the “economic resources measurement focus” and the “accrual basis of accounting.”
The Custodial Funds account for assets held by the City as a custodian for bonded assessment districts, collections for on behalf of individuals, private organizations or other governments. The custodial funds use the accrual basis of accounting.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-inlieu of taxes and other charges between the City’s water and sewer function and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues for the Water and Sewer enterprise funds and of the City’s internal service funds are charges to customers for sales and services.

Operating expenses for these same enterprise funds include the cost of sales and services, administration expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(46)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Interfund Receivables and Payables
Activity between funds in the fund financial statements that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans). All other outstanding balances between funds are reported as “advances to/from other funds”.

Any residual balances outstanding between the governmental activities and businesstype activities are reported in the government-wide financial statements as “internal balances.”
E. Property Taxes
The County of Riverside collects property taxes for the City. Tax liens attach annually as of 12:01 A.M. on the first day in March preceding the fiscal year for which the taxes are levied. The tax levy covers the fiscal period July 1 to June 30. All secured personal property taxes and one-half of the taxes on real property are due November 1, the second installment is due February 1. All taxes are delinquent, if unpaid, on December 10 and April 10, respectively. Unsecured personal property taxes become due on the first of March each year and are delinquent, if unpaid, on August 31.

F. Cash and Cash Equivalents
For purpose of the statement of cash flows, the City considered cash and cash equivalents as short term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. The City follows the practice of pooling cash and investments of all funds.

G. Investments
The City reports its investments at fair value in the financial statements. All investment income, including changes in the fair value of investments, is recognized as revenue in the operating statement.

H. Inventories and Prepaids
Inventories of materials and supplies are carried at cost on a first-in, first-out basis. The City uses the consumption method of accounting for inventories. Special reporting treatments are also applied to governmental fund inventories to indicate that they do not represent “available spendable resources,” even though they are a component of net current assets. Such amounts are designated as an unspendable component of fund balance.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(47)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Inventories and Prepaids (Continued)
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

The City uses the consumption method of accounting for prepaids.

I. Land Held for Resale
Land held for resale is recorded at the lower of cost or net realizable value.

J. Compensated Absences
Vacation pay is payable to employees at the time a vacation is taken or upon termination of employment. Vacation accruals and the maximum number of hours an employee can accrue are based on the employee’s length of service with the City as outlined in the various Memorandum of Understanding and Salary Resolutions.

Sick leave is payable when an employee is unable to work because of illness. Upon termination, regular employees with 10 years continuous service will be paid 50% for any unused sick leave. Managers, mid managers, and confidential employees with five years continuous service are also paid 50% for any unused sick leave.

The total amount of liability for compensated absences is segregated between shortterm and long term with both portions reflected in the government-wide statements. The short-term portion is determined to be the amount due to employees for future absences which is attributable to services already rendered and which is expected to be paid during the next fiscal year.

K. Capital Assets
Capital assets, which include property, plant and equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than or equal to $5,000 ($50,000 for infrastructure assets) and an estimated useful life of at least two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value.

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(48)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Capital Assets (Continued)
Property, plant and equipment, and infrastructure assets of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives.

Buildings 50 Years
Building Improvements 5 – 50 Years
Public Domain Infrastructure 20 – 50 Years
System Infrastructure 10 – 60 Years
Vehicles 5 – 20 Years
Office Equipment 5 – 10 Years
Computer Equipment 5 – 10 Years
L. Deferred Outflows/Inflows 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 will not be recognized as an outflow of resources (expense/expenditure) until that time. The City has the following items that qualify for reporting in this category:
• Deferred loss on debt refunding reported in the government-wide statement of net position. A deferred loss on debt refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.
• Deferred outflows related to pensions and OPEB equal to employer contributions made after the measurement date of the net pension liability and OPEB liability. • Deferred outflows related to pensions for differences between expected and actual experience. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.
• Deferred outflows related to pensions and OPEB resulting from the net difference between projected and actual earnings on investments of the pension plan fiduciary net position and OPEB liability. These amounts are amortized over five years.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(49)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Deferred Outflows/Inflows of Resources (Continued)
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 the following items that qualify for reporting in this category:
• Deferred inflows from unavailable revenues, which arise only under a modified accrual basis of accounting, are reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources, which are taxes and grants. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. • Deferred inflows from pensions and OPEB resulting from changes in assumptions. These amounts are amortized over a closed period equal to the average expected remaining service lives of all employees that are provided with pensions and OPEB through the plans.
• Deferred inflows related to pensions for the changes in employer’s proportion and differences between the employer’s contributions and the employer’s proportionate share of contributions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans. • Deferred inflows related to OPEB for differences between expected and actual experience. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with OPEB through the plan.

M. Use of Estimates
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, and necessarily include amounts based on estimates and assumptions by management. Actual results could differ from those amounts.

N. Long-Term Liabilities
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(50)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. Long-Term Liabilities (Continued)
In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses.

O. Unearned Revenues
In the government-wide financial statements and the fund financial statements, unearned revenues represent cash advances by various grantors that have not been spent; therefore, no revenue has been recognized.

P. 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’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. 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.

Q. Postemployment Benefits Other Than Pensions (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’s OPEB Plan and additions to/deductions from the OPEB Plans’ fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the City’s OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value.

R. Net Position
The government wide financial statements, proprietary fund statements and fiduciary fund statements utilize a net position presentation. Net position is classified in the following categories:

Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt and capital related payable that is attributed to the acquisition, construction, or improvement of the assets.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(51)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) R. Net Position (Continued)
Restricted Net Position – This amount is restricted by enabling legislation, such as external creditors, grantors, contributors, or laws or regulations of other governments.

Unrestricted Net Position – This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” Sometimes the City will fund outlays for a particular purpose from both restricted 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 policy to consider restricted net position to have been depleted before unrestricted net position is applied.

S. Fund Balances
The following fund balance classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

Nonspendable – This category represents amounts that cannot be spent because they are either (a) not in a spendable form (such as inventory) or (b) legally or contractually required to be maintained intact.

Restricted – This category represents amounts constrained to specific purposes by their providers (such as grantors, bondholders and higher levels of government), through constitutional provisions or by enabling legislation.

Committed – This category represents amounts constrained to specific purposes by a government itself, using the highest level of decision-making authority. Committed fund balances encompass the portion of net fund resources, the use of which is constrained by limitations that the government imposes upon itself at its highest level of decision making, normally through the adoption of a resolution by the governing body, and that remain binding unless removed in the same manner. The City Council is considered the highest authority for the City.

Assigned – This category represents amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The City Council has established a resolution that authorized the City Manager for that purpose.

Unassigned – This category includes all remaining fund balance; positive amounts are reported only in a general fund.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(52)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) S. Fund Balances (Continued)
The City Council establishes, modifies and/or rescinds fund balance commitments by passage of a resolution.

The City considers that both, restricted and unrestricted amounts to have been spent when an expenditure is incurred for which both types of fund balances is available; the City also considers committed, assigned, and or unassigned amounts to have been used in that order when an expenditure is incurred and any of those classifications apply to the expenditure.

T. Encumbrances
Encumbrances are estimations of costs related to unperformed contracts for goods and services. These commitments are recorded for budgetary control purposes in the general, special revenue, and similar governmental funds. Encumbrances outstanding at year-end represent the estimated amount of the expenditure ultimately to result if unperformed contracts at year-end are completed. They do not constitute expenditures or estimated liabilities. As of June 30, 2021, there were no outstanding encumbrances for governmental funds.

U. Excess of Expenditures Over Appropriations
Excess of expenditures over appropriations in individual funds are as follows:

Fund/Function Expenditures Appropriations Excess
Nonmajor Special Revenue Funds:

Landscape Maintenance District #2 $ 157,831 $ 150,340 $ 7,491 V. Deficit Net Position and Fund Balances
As of June 30, 2021, the following funds had deficit net position or fund balances:

Nonmajor Special Revenue Funds:

Landscape Maintenance District #2 $ (38,811)
Deficit fund balances are expected to be funded through collection of future revenues or transfers from the general fund.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(53)
NOTE 2 CASH AND INVESTMENTS
Cash and Investments
Cash and investments are reported in the accompanying statement of net position and statement of fiduciary net position as follows:

Statement of Net Position:

Cash and Investments $ 74,110,752
Cash and Investments with Fiscal Agents 130,964
Statement of Fiduciary Net Position:

Cash and Investments 8,109,937
Cash and Investments with Fiscal Agents 6,520,660
Total Cash and Investments $ 88,872,313
Cash and investments as of June 30, 2021 consist of the following:

Cash on Hand $ 8,010
Deposits with Financial Institutions 3,108,405
Investments 85,755,898
Total Cash and Investments $ 88,872,313
Investments Authorized by the California Government Code and the City’s Investment Policy
The table below identifies the investment types that are authorized by the City’s investment policy. The table also identifies certain provisions of the City’s investment policy that address interest rate risk, credit risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum Maximum
Maximum Percentage of Investment in
Authorized Investment Type Maturity Portfolio * One Issuer Local Agency Bonds 5 Years None None
United States (U.S.) Treasury Securities 5 Years None None U.S. Government Sponsored Agency
Securities 5 Years None None
Banker's Acceptances 180 Days 40% 30%
Commercial Paper 270 Days 25% 10%
Negotiable Certificates of Deposit 5 Years 30% None
Non-Negotiable Certificates of Deposit 2 Years 25% None State of California Obligations 5 Years None None
Medium-
Term Notes 5 Years 30% None
Money Market Mutual Funds N/A 20% 10%
Mortgage Pass-
Through securities 5 Years 20% None
County Pooled Investment Funds N/A None None
California Local Agency Obligations 5 Years None None
Local Agency Investment Fund N/A None None
* Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(54)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee 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 trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum Percentage Investment in
Authorized Investment Type Maturity Allowed One Issuer
U.S. Treasury Obligations None None None
U.S. Government Sponsored Agency
Securities None None None
Banker’s Acceptances 180 Days None None
Commercial Paper 270 Days None None
Money Market Mutual Funds N/A None None
Investment Contracts 30 Years None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

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

Remaining Maturity (in Months)
12 Months 13 to 24 25 to 60
Investment Type Total or Less Months Months
State Investment Pool $ 74,959,698 $ 74,959,698 $ - $ - U.S. Government Sponsored
Agency Securities 4,973,050 - - 4,973,050
Held by Trustee:

Money Market Funds 146,296 146,296 - -
U.S. Government Sponsored
Agency Securities 5,676,854 - - 5,676,854
Total Investments $ 85,755,898 $ 75,105,994 $ - $ 10,649,904

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(55)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by Standard and Poor’s or by Moody’s Corporation, nationally recognized statistical rating organizations.

Presented below is the minimum rating required by (where applicable) the City’s investment policy or debt agreements, and the actual rating as of year-end for each investment type.

The state investment pool does not have a rating provided by a nationally organized statistical rating organization.

Minimum Ratings as
Investment Type Total Legal Rating of Year End
State Investment Pool $ 74,959,698 N/A Not Rated
U.S. Government Sponsored Agency
Securities 4,973,050 N/A AA+
Held by Trustee:

Money Market Funds 146,296 A/A1 AAA
U.S. Government Sponsored Agency
Securities 5,676,854 N/A AA+
Total Investments $ 85,755,898
N/A - Not Applicable
Concentration of Credit Risk
The investment policy of the City contains certain limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments are as follows:

Reported
Issuer Investment Type Amount
Federal Farm Credit Bank U.S. Government Sponsored $ 4,973,050 Agency Security

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(56)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Concentration of Credit Risk (Continued)
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, $3,024,653 of the City’s deposits with financial institutions in excess of Federal Depository Insurance Corporation (FDIC) limit of $250,000 was held in collateralized accounts as required by the California Government Code.

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 records maintained by LAIF, which are recorded on an amortized cost basis.

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 quoted prices for similar assets in active markets, and Level 3 inputs are significant unobservable inputs.

Investments in commercial paper and U.S. government sponsored agency securities are valued using quoted prices in an active market for similar assets (Level 2 measurement).

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(57)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value Measurements (Continued)
The City has the following recurring fair value measurements as of June 30, 2021:

Level 1 Level 2 Level 3 Total
U.S. Government Sponsored
Agency Securities $ - $ 4,973,050 $ - $ 4,973,050
Held by Trustee:

U.S. Government Sponsored
Agency Securities - 5,676,854 - 5,676,854
Total Investments $ - $ 10,649,904 $ - 10,649,904
Investments not Subject to Fair
Value Hierarchy:

State Investment Pool 74,959,698
Held by Trustee:

Money Market Mutual Funds 146,296
Total Investment Portfolio $ 85,755,898
NOTE 3 RECEIVABLES
Due from Other Governments
Due from other governments, as of year-end, for the government’s individual major funds, and nonmajor funds in the aggregate are as follows:

Nonmajor
Type of Revenue General Funds Total
Assessments $ - $ 21,565 $ 21,565
Gas Tax - 71,365 71,365
Sales Tax 1,838,868 - 1,838,868
Measure A - 260,631 260,631
Measure R 1,455,328 - 1,455,328
Grants and Contributions - 145,557 145,557
American Rescue Plan Act - 99,748 99,748
Other 169,986 114,964 284,950
Totals $ 3,464,182 $ 713,830 $ 4,178,012

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(58)
NOTE 4 CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2021 was as follows:

Beginning Ending
Governmental Activities Balance Additions Deletions Balance Capital Assets, Not Being Depreciated:

Land $ 101,161,035 $ - $ - $ 101,161,035
Construction in Progress 3,391,234 2,921,977 (4,373,770) 1,939,441 Total Capital Assets, Not Being
Depreciated 104,552,269 2,921,977 (4,373,770) 103,100,476 Capital Assets, Being Depreciated:

Buildings and Improvements 17,090,749 1,223,605 - 18,314,354 Improvements Other than Buildings 5,626,747 882,668 (289,950) 6,219,465 Vehicles and Equipment 3,971,288 199,121 (279,901) 3,890,508 Infrastructure 130,177,786 2,530,047 (441,157) 132,266,676 Intangible 436,609 - - 436,609
Total Capital Assets, Being
Depreciated 157,303,179 4,835,441 (1,011,008) 161,127,612 Less Accumulated Depreciation/Amortization for:

Buildings and Improvements (8,237,959) (389,868) - (8,627,827) Improvements Other than Buildings (2,492,678) (259,021) 130,529 (2,621,170) Vehicles and Equipment (2,659,857) (226,837) 242,011 (2,644,683) Infrastructure (69,710,308) (2,731,489) 230,621 (72,211,176) Intangible (412,705) (7,544) - (420,249)
Total Accumulated Depreciation/
Amortization (83,513,507) (3,614,759) 603,161 (86,525,105) Total Capital Assets, Being
Depreciated, Net 73,789,672 1,220,682 (407,847) 74,602,507 Total Governmental Activities
Capital Assets, Net $ 178,341,941 $ 4,142,659 $ (4,781,617) $ 177,702,983

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(59)
NOTE 4 CAPITAL ASSETS (CONTINUED)
Beginning Ending
Business-Type Activities Balance Additions Deletions Balance Capital Assets, Not Being Depreciated:

Land and Improvements $ 1,863,896 $ - $ - $ 1,863,896
Construction in Progress 6,131,720 9,224,192 (4,999,256) 10,356,656 Total Capital Assets, Not Being
Depreciated 7,995,616 9,224,192 (4,999,256) 12,220,552
Capital Assets, Being Depreciated:

Buildings and Improvements 1,579,694 - - 1,579,694
Utility Plant 18,088,046 3,354,450 - 21,442,496
Wastewater Capacity Rights 25,322,031 283,512 25,605,543 Pipelines 75,833,040 1,673,047 (38,019) 77,468,068
Vehicles and Equipment 456,635 66,166 (12,480) 510,321
Fire Hydrants 2,143,196 9,777 - 2,152,973
Meters 3,568,680 - - 3,568,680
Total Capital Assets, Being
Depreciated 126,991,322 5,386,952 (50,499) 132,327,775
Less Accumulated Depreciation for:

Buildings and Improvements (793,289) (41,590) - (834,879) Utility Plant (7,003,084) (437,385) - (7,440,469)
Wastewater Capacity Rights (9,648,999) (771,427) - (10,420,426) Pipelines (37,889,671) (1,630,402) - (39,520,073)
Vehicles and Equipment (190,601) (53,914) - (244,515)
Fire Hydrants (1,516,862) (51,154) - (1,568,016)
Meters (2,175,809) (357,162) - (2,532,971)
Total Accumulated Depreciation (59,218,315) (3,343,034) - (62,561,349) Total Capital Assets, Being
Depreciated, Net 67,773,007 2,043,918 (50,499) 69,766,426 Total Business-Type Activities
Capital Assets, Net $ 75,768,623 $ 11,268,110 $ (5,049,755) $ 81,986,978

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(60)
NOTE 4 CAPITAL ASSETS (CONTINUED)
Depreciation and amortization expense was charged to functions of the primary government as follows:

Governmental Activities:

General Government $ 123,921
Public Safety 199,056
Streets and Highways 2,235,409
Culture and Leisure 839,979
Capital Assets Held by the Government's Internal
Service Funds are Charged to the Various
Functions Based on Their Usage of the Assets:

Amortization 7,545
Depreciation 208,849
Total Depreciation Expense - Governmental
Activities $ 3,614,759
Business-Type Activities:

Water - Depreciation Expense $ 1,520,995
Sewer - Amortization Expense 771,427
Sewer - Depreciation Expense 1,050,612
Total Depreciation Expense - Business-Type
Activities $ 3,343,034
NOTE 5 RETIREMENT PLANS
A. General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (fire) and Miscellaneous (all other) Employee Pension Plans, costsharing multiple employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS) in the PERF C Risk Pool. Benefit provisions under the Plans are established by State statute and City 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 at www.calpers.ca.gov.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(61)
NOTE 5 RETIREMENT PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) 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 an average three years of full-time employment. Members with five years of total service are eligible to retire· at age 50 to 62 with statutorily reduced benefits. For employees hired into a plan with the 2.7% at 55 formula, eligibility for retirement is age 55 with at least five years of service. PEPRA miscellaneous members become eligible for retirement upon attainment of age 62 with at least five years of service. All members are eligible for nonduty disability benefits after five years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

The Plans’ provisions and benefits in effect at the measurement date of June 30, 2020, and the contribution requirements for the fiscal year ended June 30, 2021, are summarized as follows:

Miscellaneous
Prior to On or After
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.7%@55 2%@62
Benefit Vesting Schedule 5 Years of Service 5 Years of Service Benefit Payments Monthly for Life Monthly for Life
Retirement Age 50 - 55 50 - 67
Monthly Benefits, as a % of Eligible Compensation 2.0% to 2.7% 1.0% to 2.5% Required Employee Contribution Rates 8% 6.25%
Required Employer Contribution Rates:

Normal Cost Rate 13.515% 7.732%
Employer Payment of Unfunded Liability $ 1,138,979 $ 13,967 Safety
Prior to
Hire Date January 1, 2013
Benefit Formula 2%@50
Benefit Vesting Schedule 5 Years of Service
Benefit Payments Monthly for Life
Retirement Age 50
Monthly Benefits, as a % of Eligible Compensation 2.00% Required Employee Contribution Rates (1) 0.00%
Required Employer Contribution Rates:

Normal Cost Rate (1) 0.00%
Employer Portion of Unfunded Liability $ 691,954
(1) The City has no active safety members and therefore the only required contribution for fiscal year ended June 30, 2021 was the employer portion of the unfunded liability.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(62)
NOTE 5 RETIREMENT PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) 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 CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

The City is required to contribute the difference between the actuarially determined rate and the contribution rate 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. The City currently does not pay for plan member contributions. Employer contributions for the miscellaneous plan and safety plans for fiscal year 2021 were $1,571,215 and $691,954 respectively.

B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2021, the City reported net pension liabilities for its proportionate share of the net pension liability of the PERF C Risk Pool as follows:

Proportionate
Share of
Net Pension
Liability
Miscellaneous $ 13,334,676
Safety 8,034,135
Total Net Pension Liability $ 21,368,811
The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2020, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City’s proportionate share of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(63)
NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
The City’s change in proportionate share of the net pension liability for the PERF C Risk Pool, in terms of percentages, as of the measurement dates of June 30, 2019 and 2020 was as follows:

Miscellaneous Safety
Proportion - June 30, 2019 0.31831% 0.12018%
Proportion - June 30, 2020 0.31613% 0.12059%
Change - Increase (Decrease) -0.00218% 0.00041%
For the year ended June 30, 2021, the City recognized pension expense of $2,698,996 ($1,819,420 for miscellaneous and $879,576 for safety). At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Miscellaneous Safety Total
Deferred Deferred Deferred Deferred Deferred Deferred
Outflows Inflows Outflows Inflows Outflows Inflows
of Resources of Resources of Resources of Resources of Resources of Resources Pension Contributions Subsequent
to Measurement Date $ 1,571,215 $ - $ 691,954 $ - $ 2,263,169 $ - Differences Between Expected
and Actual Experience 687,176 - 623,006 - 1,310,182 -
Change in Assumptions - (95,109) - (26,762) - (121,871) Change in Employer's Proportion
and Differences Between the
the Employer's Contributions
and the Employer's Proportionate
Share of Contributions - (189,028) - (451,088) - (640,116) Net Differences Between Projected
and Actual Earnings on Plan
Investments 396,129 - 174,615 - 570,744 -
Total $ 2,654,520 $ (284,137) $ 1,489,575 $ (477,850) $ 4,144,095 $ (761,987)

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(64)
NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
$1,571,215 and $691,954 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 for the miscellaneous and safety pension plans, respectively. 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, Miscellaneous Safety Total
2022 $ (14,881) $ (52,936) $ (67,817)
2023 341,261 142,650 483,911
2024 282,795 142,564 425,359
2025 189,993 87,493 277,486
2026 - - -
Thereafter - - -
Actuarial Assumptions
The total pension liability for the June 30, 2020 the measurement period was determined by an actuarial valuation as of June 30, 2019, with update procedures used to roll forward the total pension liability to June 30, 2020. The total pension liability was based on the following assumptions:

Miscellaneous Safety
Valuation Date June 30, 2019 June 30, 2019
Measurement Date June 30, 2020 June 30, 2020
Actuarial Cost Method Entry-Age Normal Entry-Age Normal Cost Method Cost Method
Actuarial Assumptions:

Discount Rate 7.15% 7.15%
Inflation 2.50% 2.50%
Salary Increases (1) (1)
Mortality Rate Table (2) (2)
Postretirement Benefit Increase (3) (3)
(1) Varies by entry age and service.
(2) Derived using CalPERS’ Membership Data for all Funds. The mortality rates include 15 years of projected on-going mortality improvement using 90% of Scale MP 2016 published by the Society of Actuaries.
(3) Contract COLA up to 2.50% until Purchasing Power Protection Allowance Floor on Purchasing Power applies.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(65)
NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
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 of benefits for cash flows as the one calculated using both short term and long term returns. The expected rate of return was then set 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:

New Real Return Real Return
Strategic Years Years
Asset Class (a) Allocation 1 - 10 (b) 11+ (c)
Global Equity 50.00% 4.80% 5.98%
Fixed Income 28.00 1.00% 2.62%
Inflation Assets 0.00 0.77% 1.81%
Private Equity 8.00 6.30% 7.23%
Real Assets 13.00 3.75% 4.93%
Liquidity 1.00 0.00% -0.92%
Total 100.00%
(a) 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.
(b) An expected inflation of 2.0% used for this period. (c) An expected inflation of 2.92% used for this period.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(66)
NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
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.

Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the City’s proportionate share of the net pension liability of the PERF C Risk Pool, calculated using the discount rate, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Miscellaneous Safety Total
1% Decrease 6.15% 6.15% 6.15%
Net Pension Liability $ 19,146,877 $ 11,615,759 $ 30,762,636 Current Discount Rate 7.15% 7.15% 7.15%
Net Pension Liability $ 13,334,676 $ 8,034,135 $ 21,368,811 1% Increase 8.15% 8.15% 8.15%
Net Pension Liability $ 8,532,235 $ 5,095,075 $ 13,627,310 Pension Plans Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Liquidation of Pension Liabilities
The pension liability for governmental activities is primarily liquidated from the general fund, while the pension liability for business-type activities is liquidated from the enterprise funds.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(67)
NOTE 5 RETIREMENT PLANS (CONTINUED)
C. Payable to the Pension Plans
At June 30, 2021, the City had no outstanding amount of contributions to the pension plans required for the year ended June 30, 2021.

NOTE 6 LONG-TERM LIABILITIES
Change in Long-Term Liabilities
The following is a schedule of changes in long-term debt of the City for the fiscal year ended June 30, 2021:

Beginning Ending Due Within
Balance Additions Deletions Balance One Year

GOVERNMENTAL ACTIVITIES
Other Long-Term Liabilities:

Claims and Judgments $ 560,813 $ 22,685 $ (105,563) $ 477,935 $ 189,706 Compensated Absences 845,253 337,186 (387,551) 794,888 198,723 Governmental Activities
Long-Term Liabilities $ 1,406,066 $ 359,871 $ (493,114) $ 1,272,823 $ 388,429

BUSINESS-TYPE ACTIVITIES
Direct Borrowings:

WRCRWA Lease $ 6,175,028 $ - $ (290,948) $ 5,884,080 $ 296,477 Total Direct Borrowings 6,175,028 - (290,948) 5,884,080 296,477 Other Debt:
2019 Revenue Refunding Bonds 37,130,000 - (1,010,000) 36,120,000 1,045,000 Add Premium on Issuance of Bonds 7,109,375 - (328,130) 6,781,245 - Other Debt, Net 44,239,375 - (1,338,130) 42,901,245 1,045,000 Business-Type Activities
Long-Term Liabilities $ 50,414,403 $ - $ (1,629,078) $ 48,785,325 $ 1,341,477 For governmental activities, claims and judgments and compensated absences are generally liquidated by the Internal Service Funds.

Governmental Activities
A. Accrued Employee Benefits and Claims and Judgments Payable The City’s policy relating to compensated absences is described in Note 1.J. Claims and judgments are described in Note 11.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
B. Direct Borrowings
WRCRWA Lease
During 2014, the WRCRWA obtained a financing agreement from the State Water Resources Control Board with ultimate drawdowns on this financing of $71,570,889 accruing interest at a rate of 1.9% per annum to finance the expansion of a Wastewater Treatment Plant. The City, as a member of the WRCRWA, agreed to purchase additional wastewater capacity rights for 9.10% of the annual debt service requirement for a period of 20 years beginning in fiscal year 2018-19. As of June 30, 2021, the debt payments to be made by the City for the revolving loan will be as follows:

Debt
Fiscal Years Ending June 30, Service
2022 $ 408,275
2023 408,275
2024 408,275
2025 408,275
2026 408,275
2027-2031 2,041,374
2032-2036 2,041,374
2037-2038 816,550
Total Minimum Lease Payments 6,940,673
Less: Amount Representing Interest (1,056,593)
Present Value of Minimum Lease Payments $ 5,884,080
The assets acquired through this lease are as follows:

Wastewater Capacity Rights (Expansion) $ 7,812,297
Less: Accumulated Amortization (1,119,410)
Total $ 6,692,887
During fiscal year 2021, the City restated the net position of the business-type activities and sewer enterprise fund to adjust for wastewater capacity rights (expansion) not previously capitalized, as described in Note 18.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
C. Revenue Bonds
During December 2019, the City issued $37,130,000 Enterprise Revenue Refunding Bonds, Series 2019A, to advance refund the outstanding Enterprise Revenue Refunding Bonds, Issue 2009 and to finance the acquisition and construction of certain improvements to the City’s water system and sewer system. The refunding portion of this debt issuance reduced total debt service payments over 21 years by $14,330,330 and resulted in an economic gain (difference between present values of the debt service payments on the old and new debt) of $10,431,054. The bonds are dated December 1, 2019 with interest paid at a rate from 3.00% to 5.00% payable semiannually on April 1 and October 1, commencing on April 1, 2020. The balance outstanding on these bonds at June 30, 2021 was $36,120,000.

The bonds are shown in the Water and Sewer Funds and the debt service requirements are as follows:
2019 Revenue Refunding Bonds
Fiscal Years Ending June 30, Principal Interest Total
2022 $ 1,045,000 $ 1,569,050 $ 2,614,050
2023 1,095,000 1,526,250 2,621,250
2024 1,135,000 1,481,650 2,616,650
2025 1,180,000 1,435,350 2,615,350
2026 1,225,000 1,387,250 2,612,250
2027-2031 7,045,000 5,967,375 13,012,375
2032-2036 8,935,000 4,058,000 12,993,000
2037-2041 9,160,000 1,902,500 11,062,500
2042-2046 2,710,000 797,600 3,507,600
2047-2050 2,590,000 212,200 2,802,200
Total $ 36,120,000 $ 20,337,225 $ 56,457,225
NOTE 7 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The composition of interfund balances at June 30, 2021, is as follows:

Due To/From Other Funds
Receivable Fund Payable Fund Amount
General Fund Nonmajor Funds $ 319,079
Water Enterprise Fund General Fund 30,242
Water Enterprise Fund Nonmajor Funds 17,332
Total $ 366,653

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
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NOTE 7 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (CONTINUED) Due To/From Other Funds (Continued)
The amounts loaned from the General Fund to the Nonmajor Funds are short term loans to fund operations of the various funds. The receivable by the Water Enterprise Fund is amounts due from the General Fund and Nonmajor Funds for accrued water charges.

The composition of interfund balances at June 30, 2021, is as follows:

Interfund Transfers
Transfer In Transfer Out Amount
General Fund Water Enterprise Fund (1) $ 129,102
Sewer Enterprise Fund (1) 129,102
Total $ 258,204
(1) To allocate estimated annual costs related to future street repairs.

NOTE 8 NOTES RECEIVABLE
Wastewater Treatment Capacity
During 2014, the City entered into an Agreement for the Assignment of California Department of Corrections and Rehabilitation (CDCR) Wastewater Discharge Rights. The purpose of this agreement was to transfer the Santa Ana Regional Interceptor (SARI) right of 750,000 gallons per day of the Inland Brine Line treatment and pipeline conveyance to the City. The City then sold this excess wastewater treatment capacity to the City of Corona.

The sale is evidenced by a note receivable in the amount of $9,864,651 plus estimated interest accruing at 3% per annum over 20 years. The outstanding balance on this note receivable at June 30, 2021 was $6,703,810, of which $2,320,941 is recorded in the General Fund and $4,382,869 is recorded in the Sewer Enterprise Fund.

Silverlakes Property Construction
During 2011, the City entered into a Funding, Construction and Acquisition Agreement with Balboa Management Group, LLC for the construction and acquisition of the Silverlakes Property. Under this agreement the City agreed to finance the actual construction costs of the facilities up to a maximum of $6,000,000.

The note bears interest at a rate of 5.9% per annum, or such lower rate which is equal to the actual effective rate of the Norco Financing Authority Enterprise Revenue Funding Bonds issue of 2009, until paid in full and shall be due in full no later than August 1, 2039. The outstanding balance on this note receivable at June 30, 2021 was $7,289,534, of which $3,609,094 is recorded in the Water Enterprise Fund and $3,680,440 is recorded in the Sewer Enterprise Fund.

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NOTE 8 NOTES RECEIVABLE (CONTINUED)
First Time Home Buyer Loans
First time home buyer loans are available to qualifying low to moderate-income residents with a maximum loan amount of $80,000. Loans are due in 30 years or upon sale of property. Deferred loans are available to qualifying residents with a maximum loan amount of $40,000, up to $60,000 with executive approval. A 0% loan is available for seniors and the disabled and is not payable until sale or refinancing of the property. The 3% loan is available to qualified households without an age restriction and is due in 15 years or upon sale or refinancing of the property. At June 30, 2021, the outstanding balance on these loans receivable, net of a $81,930 allowance, was $2,651,795.

Developer Loan
On May 22, 2008, the former Agency entered into a Loan Agreement with a Developer to provide a loan of $5,100,000 to provide a portion of the funds to finance the rehabilitation and conversion of eighty-six units of low-and very-low income housing units in Heritage Park Senior Citizen Apartment Complex. The financial assistance is in the form of a residual receipts loan which is to be repaid over a fifty-seven-year affordability covenant period. The Loan is secured by a Second Deed ·of Trust against the property. The loan payments are 50% of the residual receipts with simple interest at 1%. The complex will remain as a low/moderate income senior housing complex over the entire term of the loan. At June 30, 2021, the outstanding balance on this loan receivable was $4,509,377.

SERAF Loan Receivable
On May 10, 2010, the former Agency was required to make a State mandated payment to the Supplemental Education Revenue Augmentation Fund (SERAF). Due to a lack of funding at the time, the former Agency was allowed to borrow the amount needed from its Low and Moderate Income Housing Fund. At June 30, 2021, the outstanding balance on this noninterest bearing loan receivable from the Successor Agency was $820,000.

Sewer Connection Fee Program Loans Receivable
The former Agency administered several loan programs to its low to moderate-income residents. Balances under the Sewer Connection Fee Program are forgiven after fifteen years with the loan amount equal to the actual cost. Due to the nature of this program and the probability of forgiveness of these loans, they are not reflected on the statements as receivables.

Car Dealer Loan Receivable
In March 2016, the City entered into an agreement to sell a parcel of land acquired by the City from the former Agency to a car dealer in return for a loan receivable with a total principal balance of $805,000. The loan receivable has a term of 10 years and bears interest at a rate of 2% annually for the first five years and 3% annually for the remaining five years.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 8 NOTES RECEIVABLE (CONTINUED)
Car Dealer Loan Receivable (Continued)
In connection with the loan, the City has entered into an economic incentive agreement for tax sharing with the car dealer for five years, whereby the first $200,000 of sales tax revenues generated by the car dealer will be earned by the City, the next $100,000 of sales tax revenue will be earned by car dealer, and any amount in excess of $300,000 will be split 50/50 between the City and the car dealer. The car dealer’s portion of sales tax will be used to satisfy the loan receivable, and in the event that the loan is not repaid within the first five years, an installment payment plan will be required on a monthly basis until the entire loan is repaid. As of June 30, 2021, the outstanding balance on this loan receivable was paid in full.

Cal Homes Program
Loans were available to qualifying low and very low-income residents through the Cal Homes program to assist with the cost of rehabilitating owner-occupied residences. Loans carried interest rates of either 0% (for eligible senior citizens) or 3% (for nonsenior citizens).

Loans are due up to 30 years after origination or in the event the property is sold or refinanced. The balance outstanding at June 30, 2021, was $414,665.

NOTE 9 FUND BALANCE
The City has established fund balance accounts to report the amounts in the following funds which represent nonspendable and spendable resources:

Housing
Successor
Agency
LMIH Nonmajor Total
General Special Governmental Governmental
Fund Revenue Fund Funds Funds
Nonspendable:

Long-Term Receivables $ 2,320,941 $ - $ - $ 2,320,941
Prepaids 4,134 - 2,500 6,634
Restricted by:

Granting Agencies, Developers,
and Assessment Districts - - 5,450,979 5,450,979
Low and Moderate
Income Housing - 16,778,372 - 16,778,372
Donor Restrictions 115,657 - 115,657
Committed for:

Measure R Projects 9,925,562 9,925,562
Unassigned 19,949,630 - (38,811) 19,910,819
Total Fund Balances $ 32,315,924 $ 16,778,372 $ 5,414,668 $ 54,508,964

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 9 FUND BALANCE (CONTINUED)
The general fund balance includes the balances related to the special asset fund which was committed by the adoption of a resolution by City Council. The components of fund balance related to the special asset fund include nonspendable fund balance of $2,325,075, and committed fund balance of $3,314,500, for a total fund balance of $5,639,575. The general fund balance also includes balances related to the Measure R, which includes committed fund balance of $4,735,960 and unassigned fund balance of $5,189,602.

City Council has also established a stabilization arrangement for the general fund balance through the adoption of a resolution. This arrangement requires that the City maintain reserves for unforeseen emergencies in the amount of 25% of the estimated general fund expenditures included in the budget. These reserves can be utilized by the City at the discretion of the City Council. At June 30, 2021, the fund balance reserved for this stabilization arrangement totaled $5,708,550, which is included in unassigned fund balance of the general fund in the accompanying financial statements.

NOTE 10 ASSESSMENT BONDS
Included within the City are certain community facilities districts which were financed by bonds issued pursuant to the Improvement Bond Act of 1915 under proceedings conducted under the provisions of the Municipal Improvement Act of 1913.

As of June 30, 2021, the future assessments liability of property owners for amounts payable to bondholders for these Districts are as follows:

Principal Interest Total
Community Facilities District 97-1
2018 Special Tax Refunding Bond $ 3,630,000 $ 602,296 $ 4,232,296 Community Facilities District 2001-1
2017 Special Tax Refunding Bond 23,495,000 8,865,725 32,360,725 Community Facilities District
2002-1 2013 Refinanced Norco 50 953,888 237,115 1,191,003 Totals $ 28,078,888 $ 9,705,136 $ 37,784,024
Since the City is not liable for special assessment district act or community facility district defaults, no liability has been recognized on the City’s books and accordingly, none of the outstanding principal on the bonds is presented in the financial statements. For all completed projects, the City collects the assessments and remits the collections to pay the bondholders. Therefore, subsequent assessment collections and remittances are accounted for in a custodial fund.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 11 RISK MANAGEMENT
The City is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

The City is a member of the Public Entity Risk Management Authority (PERMA), a public entity risk pool currently operating as a common risk management and insurance program for 22 California Cities, 7 special districts and 3 transit agencies. The City pays an annual premium to the pool for its general liability and workers’ compensation insurance coverage.

For its general liability insurance, the City, through PERMA, has a self-insured retention amount of $125,000 per occurrence. Claims above the $125,000 up to $1,000,000 are shared by the pool. Claims above $1,000,000 up to $50,000,000 are covered by excess insurance purchased through the pool.

For workers’ compensation, the self insurance retention is $250,000 per claim, with a maximum limit of $5,000,000. The City retains a risk of loss due to the fact that actual losses may exceed estimated claims or overage amounts.

Claims, expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. At June 30, 2021, the amount of these liabilities was $477,934. The amount represents an estimate of $336,370 for reported claims through June 30, 2021, and $141,564 estimate of incurred but not reported claims. This liability is the City’s best estimate based on available information.

Changes in the reported liability since July 1, 2020 resulted from the following:

Current
Year Claims
Beginning and Changes Claim Ending
Fiscal Year Liability in Estimates Payments Liability
2021 $ 560,814 $ 22,685 $ 105,564 $ 477,935
2020 426,746 401,747 267,679 560,814
There was no significant reduction in insurance coverage by major categories of risk and no settlements which exceeded the insurance coverage for the past three fiscal years.

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JUNE 30, 2021
(75)
NOTE 12 OTHER POSTEMPLOYMENT BENEFITS
A. General Information about the OPEB Plan
Plan Description
The City provides postemployment health care benefits for eligible City retirees and their beneficiaries through CalPERS, an agent multiple-employer postemployment health care plan. Retirees from the City enrolled in the Public Employees Medical Insurance Program through CalPERS are eligible for these benefits. The plan does not issue a publicly available financial report. These health insurance benefits are authorized through City resolutions/Memorandums of Understanding defining health care benefits and contribution levels and through the contractual agreement between the City and CalPERS. The City contributes up to $1,250 of the current monthly required premium costs of active and nonvested retired employees hired prior to 2004. Additional contributions are made into a prefunded trust account as funds become available.

Employees Covered
As of the June 30, 2020 measurement date, the following current and former employees were covered by the benefit terms under the plan:

Inactive Employees or Beneficiaries Currently
Receiving Benefits 83
Inactive Employees or Beneficiaries Entitled to
But Not Yet Receiving Benefits 11
Active Employees 51
Total 145
Contributions
Benefit provisions and contribution requirements are established and may be amended through agreements and memorandums of understanding between the City, its management employees, and unions representing the City’s employees. The plan does not require employee contributions. Administrative costs of this plan are financed by the general fund.

The annual contribution is based on the actuarially determined contribution. For fiscal year ended June 30, 2021, the City contributed $1,364,011 which included $300,000 payment to the trust, $109,000 estimated implied subsidy and $955,011 for premiums.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
B. 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, 2020 with updated procedures to roll forward the total OPEB liability to the measurement date. A summary of the principal assumptions and methods used to determine the total OPEB liability is shown below.

Actuarial Assumptions
The total OPEB liability in the June 30, 2020 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Valuation Date June 30, 2019
Measurement Date June 30, 2020
Actuarial Cost Method Entry-Age Normal Cost Method
Contribution Policy City is effectively contributing full ADC Actuarial Assumptions:

Discount Rate 6.75%
Inflation 2.75%
Projected Salary Increase 3.00% per annum, in aggregate Expected Long-Term Investment Rate
of Return 6.75%
Medical Trend Non-Medicare - 7.25% for 2021, decreasing to an ultimate rate of 4.0% in 2076
Medicare - 6.3% for 2021, decreasing to
an ultimate rate of 4.0% in 2076
Cap Increases Premium caps - medical trend
Dollar caps - 0%
Mortality, Retirement, Disability, Termination CalPERS 1997-2015 Experience Study Mortality Improvement Mortality projected fully generational with Scale MP-2019
Healthcare Participation for Future Retirees No state vesting schedule - 100% if currently covered, 90% if currently waived
State vesting schedule - 80% with 10 years
of service, 95% with 15 years of service,
100% with 20 years of service
The actuarial assumptions used in the June 30, 2020 valuation were based on a standard set of assumptions the actuary has used for similar valuations, modified as appropriate for the City.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(77)
NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
B. Net OPEB Liability (Continued)
Long-Term Expected Rate of Return
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. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan’s target asset allocation as of June 30, 2020 are summarized in the following table:

New Long-Term
Strategic Expected Real
Asset Class Allocation Rate of Return
CERBT:

Global Equity 59.00% 4.82%
Fixed Income 25.00 1.47%
TIPS 5.00 1.29%
Commodities 3.00 0.84%
REITs 8.00 3.76%
Total 100.00%
Discount Rate
The discount rate used to measure the total OPEB liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that City’s contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries.

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

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(78)
NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
C. Changes in the Net OPEB Liability
The changes in the net OPEB liability are as follows:

Increase (Decrease)
Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability (Asset)
Balance at June 30, 2020
(June 30, 2019 Measurement Date) $ 17,074,889 $ 9,863,632 $ 7,211,257 Changes in the Year:

Service Cost 386,463 - 386,463
Interest on the Total OPEB Liability 1,142,355 - 1,142,355 Changes in Assumptions (335,762) - (335,762)
Contribution - Employer - 1,377,588 (1,377,588)
Net Investment Income - 346,958 (346,958)
Benefit Payments (1,075,132) (1,075,132) -
Administrative Expenses - (7,278) 7,278
Net Changes 117,924 642,136 (524,212)
Balance at June 30, 2021
(June 30, 2020 Measurement Date) $ 17,192,813 $ 10,505,768 $ 6,687,045 Change of Assumptions
The Patient Protection and Affordable Care Act excise tax was repealed in December 2019, which decreased the total OPEB liability by approximately $308,000.

Change of Benefit Terms
There were no changes of benefit terms.

The liability for governmental activities is primarily liquidated from the general fund while the liability for business-type activities is liquidated from the enterprise funds.

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (5.75%) or one percentage point higher (7.75%) than the current discount rate:
1% Decrease Discount Rate 1% Increase
(5.75%) (6.75%) (7.75%)
Net OPEB Liability $ 8,714,252 $ 6,687,045 $ 5,000,132

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
C. Changes in the Net OPEB Liability (Continued)
Sensitivity of the Net OPEB Liability to Changes in Health-Care Cost Trend Rates The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than the current healthcare cost trend rates:

Current
Healthcare Cost
1% Decrease * Trend Rates ** 1% Increase ***
Net OPEB Liability $ 4,908,233 $ 6,687,045 $ 8,746,601
* Non-Medicare: 6.25% for 2021, decreasing to an ultimate rate of 3% in 2076 / Medicare: 5.3% for 2021, decreasing to an ultimate rate of 3% in 2076 ** Non-Medicare: 7.25% for 2021, decreasing to an ultimate rate of 4% in 2076 / Medicare: 6.3% for 2021, decreasing to an ultimate rate of 4% in 2076 *** Non-Medicare: 8.25% for 2021, decreasing to an ultimate rate of 5% in 2076 / Medicare: 7.3% for 2021, decreasing to an ultimate rate of 5% in 2076 D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2021, the City recognized OPEB expense of $365,401. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Deferred
Outflows Inflows
of Resources of Resources
OPEB Contributions Subsequent to Measurement
Date $ 1,364,011 $ -
Differences Between Actual and Expected
Experience - (993,087)
Change in Assumptions - (311,911)
Differences Between Projected and Actual Earnings 196,213 - Total $ 1,560,224 $ (1,304,998)
$1,364,011 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. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(80)
NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)
Year Ending June 30, Amount
2022 $ (504,456)
2023 (455,126)
2024 (175,755)
2025 26,552
2026 -
Thereafter -
E. Payable to the OPEB Plan
At June 30, 2021, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2021.

NOTE 13 SUCCESSOR AGENCY – PRIVATE-PURPOSE TRUST FUND
On December 29, 2011, the California Supreme Court upheld Assembly Bill X1 26, (the Bill) that provides for the dissolution of all redevelopment agencies in the state of California. On September 22, 2013, as part of the fiscal year 2015-2016 state budget package, the legislature passed and the Governor signed SB 107, which made technical and substantive amendments to the existing Bill.

On January 11, 2012, the City Council met and created the Successor Agency to the former Norco Community Redevelopment Agency in accordance with the Bill as part of the City of Norco Resolution Number 2012-01. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable, contractual commitments).

In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the state of California were dissolved and ceased to operate as a legal entity on February 1, 2012. After the date of dissolution, January 31, 2012, the assets, liabilities, and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City of Norco.

Successor Agency Capital Assets
The Successor agency capital assets at June 30, 2021, consist of:

Buildings and Improvements $ 60,862
Improvements Other than Buildings 507,000
Capital Assets Being Depreciated, Gross 567,862
Accumulated Depreciation (567,862)
Capital Assets Being Depreciated, Net $ -

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 13 SUCCESSOR AGENCY – PRIVATE-PURPOSE TRUST FUND (CONTINUED) Successor Agency Long-Term Debt
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Other Debt:

Bonds Payable:
2009 TARB (School
District Pass-Through) $ 9,455,000 $ - $ (325,000) $ 9,130,000 $ 350,000 2017A RDA Bond
(2005 and 2010 Refunds) 15,920,000 - (1,925,000) 13,995,000 2,010,000 2017B RDA Bond 21,730,000 - (315,000) 21,415,000 320,000 (2005 and 2010 Refunds)
2014 Refunding TAB 12,135,000 - - 12,135,000 -
2014 TARB (School
District Pass-Through) 8,320,000 - (520,000) 7,800,000 550,000 Payable 67,560,000 - (3,085,000) 64,475,000 3,230,000
Plus (Less) Deferred Amounts:

Premium 2,707,082 - (358,076) 2,349,006 -
Discounts (92,439) - 6,603 (85,836) -
Total Long-Term Debt $ 70,174,643 $ - $ (3,436,473) $ 66,738,170 $ 3,230,000 The following amount is classified as a deferred outflow of resources.

Beginning Ending
Balance Additions Deletions Balance
Deferred Losses on Refundings $ 3,267,084 $ - $ (264,643) $ 3,002,441 Future debt service requirements are as follows:

Fiscal Years Ending June 30, Principal Interest Total
2022 $ 3,230,000 $ 2,837,487 $ 6,067,487
2023 3,360,000 2,698,586 6,058,586
2024 3,510,000 2,551,833 6,061,833
2025 3,655,000 2,397,526 6,052,526
2026 3,825,000 2,236,165 6,061,165
2027-2031 24,390,000 8,354,086 32,744,086
2032-2036 22,505,000 2,392,377 24,897,377
Total $ 64,475,000 $ 23,468,061 $ 87,943,061
In April 2009, the former Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Bonds (School District Pass Through), Issue of 2009 in an aggregate principal amount of $12,200,000. The bonds are dated April 30, 2009 with interest paid at a rate from

3.25% to 7.00% payable semiannually on March 1 and September 1, commencing on September 1, 2009. The bonds are limited obligations of the former Agency’s payable solely from Pledged Tax Revenues otherwise required by the Pass Through Agreement to be passed through to the Corona Norco Unified School District.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(82)
NOTE 13 SUCCESSOR AGENCY – PRIVATE-PURPOSE TRUST FUND (CONTINUED) Successor Agency Long-Term Debt (Continued)
In August 2014, the Successor Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds, Issue of 2014, in the aggregate principal of $20,525,000.

The bonds pay interest at a rate from 2.0% to 5.0% payable semiannually on March 1 and September 1, commencing on March 1, 2015. The bonds were issued to refinance the former Agency’s previously issued Norco Redevelopment Project Area No. One, 2001 Tax Allocation Refunding Bonds with an outstanding principal balance of $22,465,000.

In August 2014, the Successor Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds (School District Pass Through), Issue of 2014, in the aggregate principal of $10,970,000. The bonds pay interest at a rate from 2.0% to 5.0% payable semiannually on March 1 and September 1, commencing on March 1, 2015. The bonds were issued to refinance the former Agency’s previously issued Norco Redevelopment Project Area No. One, 2001 Tax Allocation Refunding Bonds (School District Pass Through) with an outstanding principal balance of $3,605,000 and the Norco Redevelopment Area Project No. One, Tax Allocation Refunding Bonds (School District Pass Through), Issue of 2004 with an outstanding principal balance of $8,870,000.

In December 2017, the Successor Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds, Issue of 2017A, in the aggregate principal amount of $17,880,000. These bonds were issued to advance refund the Norco Redevelopment Project Area No. 1 Refunding Tax Allocation Bonds, Issue of 2005 and a portion of the Norco Redevelopment Project Area No. 1 Refunding Tax Allocation Bonds, Issue of 2010.

Additionally, in December 2017, the Successor Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds, Issue of 2017B, in the aggregate principal amount of $22,665,000. These bonds were used to advance refund the remaining portion of the Norco Redevelopment Project Area No. 1 Refunding Tax Allocation Bonds, Issue of 2010. The bonds pay interest at rates from 1.901% to 4.0% payable semiannually on March 1 and September 1.

Successor Agency Deficit Net Position
At June 30, 2021, deficit net position was reported for the Successor Agency PrivatePurpose Trust Fund in the amount of $(57,101,358). The deficit is expected to be eliminated with future payments from the County of Riverside Redevelopment Property Tax Fund to the Successor Agency for its long-term debt.

NOTE 14 RISKS AND UNCERTAINTIES
Grants
Amounts received or receivable from granting agencies are subject to audits and adjustments by those granting agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount of expenditures that may be disallowed by the grantor cannot be determined at this time, although the management of the City expects such-amounts, if any, to be immaterial to the financial statements taken as a whole.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(83)
NOTE 14 RISKS AND UNCERTANTIES (CONTINUED)
Successor Agency
Deductions (expenses) incurred by the Successor Agency for the year ended June 30, 2021 (and subsequent years in which the Successor Agency is in operation), are subject to review by various State agencies and the County in which the Successor Agency resides. If any expenses incurred by the Successor Agency are disallowed by the State agencies or County, the City, acting as the Successor Agency, could be liable for the repayment of the disallowed costs from either its own funds or by the State withholding remittances normally paid to the City.

NOTE 15 NORCO SILVERLAKES GROUND LEASE
On or about July 6, 2011, the City (Landlord) and Balboa Management Group, LLC (Tenant), entered into a Ground Lease, Development, and Shared Use Agreement with the purpose of the development, management and operation of the property known as Silverlakes into an Equestrian and Sports Park. This agreement has an original term of 30 years, with options to extend the lease to maximum lease duration of 99 years. The “Annual Minimum Rent” payable for the first five years from and after the Term Commencement Date shall be $396,480. The Annual Minimum Rent shall be paid in 12 equal monthly installments payable in advance on or before the first day of each calendar month.

On August 19, 2015, the City entered into an additional Ground Lease Agreement with Balboa Management Group, LLC to lease the 8-acre property adjacent to the Silverlakes Equestrian and Sports Park to be used as a parking lot for the facility. This agreement has an original term of 30 years with options to extend the lease to maximum lease duration of 99 years. The lease agreement allows for annual rent of $26,000 per year on the commencement date.

In April 2020, the lease agreement was amended to defer the monthly rent payments for 6 months for the period from April 1, 2020 to September 1, 2020. Due to the ongoing impacts of the Coronavirus pandemic, additional amendments were made to defer the payments until September 2021. These deferred payments will be paid in 24 monthly installments commencing on September 1, 2022.

The carrying value of the land leased to the Tenant is $5,500,000, which is not subject to depreciation.

Rent Adjustments
Annual rent shall be subject to adjustment for both agreements as follows:
(a) On the first day of the 6th Lease Year, the Annual Minimum Rent shall be increased by 8% of the Annual Minimum Rent in effect as of the Term Commencement Date; (b) On the first day of the 16th Lease Year, the Annual Minimum Rent shall be increased by 8% of the Annual Minimum Rent in effect immediately prior to the 16th year Adjustment Date;
(c) On the first day of the 26th Lease Year, the Annual Minimum Rent shall be increased by 8% of the Annual Minimum Rent in effect immediately prior to the 26th year Adjustment Date, and

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 15 NORCO SILVERLAKES GROUND LEASE (CONTINUED)
Rent Adjustments (Continued)
(d) On first day of the 31st Lease Year and on each five year anniversary thereof occurring throughout the Extended Term, the Annual Minimum Rent shall be adjusted by the percentage change in the Consumer Price Index measured from the immediately preceding Adjustment Date to the instant Adjustment Date (as measured pursuant to the procedure described on the lease agreement), but in no event shall an increase be more than 10% or less than 3% of the Annual Minimum Rent in effect immediately prior to the applicable Adjustment Date.

Future estimated revenues from the agreements for the next five years are as follows:

For Year Ending June 30, Amount
2022 $ 380,232
2023 456,278
2024 741,018
2025 797,967
2026 513,226
NOTE 16 TAX ABATEMENT AGREEMENT
As of June 30, 2021, the City provides a tax abatement through one economic incentive agreement with a local business under the authority of AB 562. For the year ended June 30, 2021, the City abated transient occupancy taxes of approximately $68,007 in relation to a ten-year economic incentive agreement to incentivize the development of a 96-unit hotel in the City of Norco.

NOTE 17 JOINT VENTURES
Western Riverside County Regional Wastewater Authority
The City serves as a voting member of Western Riverside County Regional Wastewater Authority (WRCRWA). WRCRWA was formed in 1992 pursuant to the provisions of Article 1, Chapter 5, Division 7, Title 1 of the Government Code of the State of California relating to the joint exercise of powers common to public agencies, for the purpose of constructing, maintaining, operating, and managing facilities for the collection, transmission, treatment and disposal of wastewater, the reclamation of wastewater, and the use of reclaimed wastewater for any beneficial purpose.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(85)
NOTE 17 JOINT VENTURES (CONTINUED)
Western Riverside County Regional Wastewater Authority (Continued) WRCRWA is composed of five member agencies: City of Norco, Jurupa Community Services District, Western Municipal Water District, Home Gardens Sanitary District, and the City of Corona. The member agencies support the operating costs and capital costs through fixed and variable rates established by WRCRWA’s Board of Directors. The governing body of WRCRWA is a Board of Directors, which consists of ten individuals, two appointed by each member. Members are deemed to have an ownership interest in the WRCRWA and new members may only be admitted upon unanimous consent of the existing members.

Upon withdrawal from the WRCRWA, any member is entitled to receive its proportionate share of the WRCRWA assets or the equivalent value thereof and is responsible for discharge of its proportionate share of the WRCRWA’s liabilities. The City has recorded their investment in the WRCRWA as wastewater capacity rights which is further disclosed in Note 4.

WRCRWA owns and operates a 14.0 Million Gallons per Day (MGD) tertiary wastewater treatment plant. The plant’s existing capacity owned by its member agencies are shown as follows:

Current
Member Agencies MGD
City of Norco 2.70
Jurupa Community Services District 6.00
City of Corona 2.37
Western Municipal Water District 1.93
Home Gardens Sanitary District 1.00
Total 14.00
Audited financial information for WRCRWA can be obtained at Western Riverside County Regional Wastewater Authority, 14634 River Road, Eastvale, CA 92880.

Chino Basin Desalter Authority
The Chino Basin Desalter Authority (the CDA) was formed in September 2001, as a Joint Powers Authority to acquire all assets and liabilities from Santa Ana Watershed Project Authority Project #14. The purchase was consummated in February 2002. The CDA is comprised of the cities of Chino, Chino Hills, Ontario, Norco, the Jurupa Community Services District, the Santa Ana River Water Company, and Inland Empire Utilities Agency.

In August of 2008, Western Municipal Water District was added as an additional member of the CDA. The City serves as a voting member without an equity interest.

Financial data is available at the CDA’s main office located at 2151 S. Haven Avenue, Suite 202, Ontario, CA 91761.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(86)
NOTE 17 JOINT VENTURES (CONTINUED)
Chino Basin Watermaster
Pursuant to the City’s membership with the Chino Basin Watermaster, the City has been allocated a portion of water in storage. At June 30, 2021, the City is entitled to approximately 2,585-acre feet of water in storage with the Chino Basin Watermaster. The City accounts for the rights to use this water in storage on the lower of cost or net realizable value. Since there has been no explicit cost to this right of use, there is no asset recorded in the accompanying financial statements.

NOTE 18 RESTATEMENT
The City adopted the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities, which became effective during the year ended June 30, 2021. The intention of the Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how these activities should be reported.

The implementation of the Statement required the City to make prior period adjustments. As a result, the beginning net positions of Fiduciary Funds were restated and increased by $4,683,591.

The City also restated the net position of the business-type activities and sewer enterprise fund to adjust for wastewater capacity rights (expansion) not previously capitalized. As a result, the beginning net positions of Business-Type Activities and Sewer Enterprise Fund were restated and increased by $283,514.

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REQUIRED SUPPLEMENTARY INFORMATION

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CITY OF NORCO

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY CalPERS MISCELLANEOUS PENSION PLAN
LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (89)
Miscellaneous
Fiscal Year Ended 2021 2020 2019 2018 2017 2016 2015
Measurement Period June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Plan's Proportion of the Net
Pension Liability 0.316130% 0.124400% 0.125637% 0.125779% 0.128940% 0.136334% 0.124419% Plan's Proportionate Share of
the Net Pension Liability $ 13,334,676 $ 12,746,874 $ 12,106,728 $ 12,473,869 $ 11,157,305 $ 9,357,835 $ 7,741,911 Plan's Covered Payroll $ 3,956,651 $ 3,747,924 $ 3,568,437 $ 3,448,615 $ 3,019,524 $ 2,785,104 $ 2,627,277 Plan's Proportionate Share of
the Net Pension Liability as a
Percentage of Covered Payroll 337.02% 340.10% 339.27% 361.71% 369.51% 336.00% 294.67% Plan's Proportionate Share of
the Fiduciary Net Position as a
Percentage of the Plan's Total
Pension Liability 69.47% 75.26% 75.26% 73.31% 74.06% 78.40% 79.28% Plan's Proportionate Share of
Aggregate Employer Contributions $ 1,355,637 $ 1,219,000 $ 1,063,573 $ 1,009,239 $ 914,689 $ 866,330 $ 706,377 Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

From fiscal year June 30, 2015 to June 30, 2016:

GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense.

From fiscal year June 30, 2016 to June 30, 2017:

There were no changes in assumptions.

From fiscal year June 30, 2017 to June 30, 2018:

In fiscal year 2017-2018, the financial reporting discount rate was reduced from 7.65% to 7.15%. Deferred outflows of resources and deferred inflows of resources for changes of assumptions represent the unamortized portion of this assumption change and the unamortized portion of the changes of assumptions related to prior measurement periods.

From fiscal year June 30, 2018 to June 30, 2019:

In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate.

From fiscal year June 30, 2019 to June 30, 2020:

There were no changes in assumptions.

From fiscal year June 30, 2020 to June 30, 2021:

There were no changes in assumptions.
* Fiscal year 2015 was the first year of implementation and therefore only seven years are shown.

CITY OF NORCO

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY CalPERS SAFETY PENSION PLAN
LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (90)
Safety
Fiscal Year Ended 2021 2020 2019 2018 2017 2016 2015
Measurement Period June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Plan's Proportion of the Net
Pension Liability 0.120590% 0.073210% 0.073212% 0.070751% 0.069627% 0.065974% 0.056770% Plan's Proportionate Share of
the Net Pension Liability $ 8,034,135 $ 7,501,999 $ 7,054,917 $ 7,016,572 $ 6,024,914 $ 4,528,386 $ 3,532,516 Plan's Covered Payroll $ - $ - $ - $ - $ - $ - $ -
Plan's Proportionate Share of
the Net Pension Liability as a
Percentage of Covered Payroll n/a n/a n/a n/a n/a n/a n/a Plan's Proportionate Share of
the Fiduciary Net Position as a
Percentage of the Plan's Total
Pension Liability 69.54% 75.26% 75.26% 73.31% 74.06% 78.40% 79.28% Plan's Proportionate Share of
Aggregate Employer Contributions $ 949,263 $ 796,010 $ 750,439 $ 586,952 $ 570,356 $ 568,237 $ 481,850 Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

From fiscal year June 30, 2015 to June 30, 2016:

GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense.

From fiscal year June 30, 2016 to June 30, 2017:

There were no changes in assumptions.

From fiscal year June 30, 2017 to June 30, 2018:

In fiscal year 2017-2018, the financial reporting discount rate was reduced from 7.65% to 7.15%. Deferred outflows of resources and deferred inflows of resources for changes of assumptions represent the unamortized portion of this assumption change and the unamortized portion of the changes of assumptions related to prior measurement periods.

From fiscal year June 30, 2018 to June 30, 2019:

In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate.

From fiscal year June 30, 2019 to June 30, 2020:

There were no changes in assumptions.

From fiscal year June 30, 2020 to June 30, 2021:

There were no changes in assumptions.
* Fiscal year 2015 was the first year of implementation and therefore only seven years are shown.

CITY OF NORCO

SCHEDULE OF CONTRIBUTIONS
CalPERS MISCELLANEOUS PENSION PLAN
LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (91)
Miscellaneous
Fiscal Year Ended 2021 2020 2019 2018 2017 2016 2015
Contractually Required Contribution
(Actuarially Determined) $ 1,571,215 $ 1,414,690 $ 1,259,910 $ 1,113,674 $ 1,024,502 $ 909,938 $ 629,318 Contributions in Relation to
the Actuarially Determined
Contributions (1,571,215) (1,414,690) (1,259,910) (1,113,674) (1,024,502) (909,938) (629,318) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - Covered Payroll $ 4,313,788 $ 3,956,651 $ 3,747,924 $ 3,568,437 $ 3,448,615 $ 3,019,524 $ 2,785,104 Contributions as a Percentage
of Covered Payroll 36.42% 35.75% 33.62% 31.21% 29.71% 30.14% 22.60% Notes to Schedule:

Valuation Date 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012 Methods and Assumptions Used to
Determine Contribution Rates:

Actuarial Cost Method Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Amortization Method (1) (1) (1) (1) (1) (1) (1)
Asset Valuation Method Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value 15 Year Smoothed
Method
Inflation 2.500% 2.625% 2.75% 2.75% 2.75% 2.75% 2.75%
Salary Increases (2) (2) (2) (2) (2) (2) (2)
Investment Rate of Return 7.15% (3) 7.25% (3) 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement Age (4) (4) (4) (4) (4) (4) (4)
Mortality (5) (5) (5) (5) (5) (5) (5)
(1) Level percentage of payroll, direct rate smoothing
(2) Depending on age, service, and type of employment
(3) Net of administrative expenses
(4) 50 for all plans with the exception of 52 for Miscellaneous PEPRA 2%@62** (5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
* Fiscal year 2015 was the first year of implementation and therefore only seven years are shown.