Norco City Council
February 1, 2023

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this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney’s fees and all other costs of such action.

3.5.5 Indemnification. To the furthest extent allowed by law, including California Civil Code section 2782, Contractor shall indemnify, hold harmless and defend City and its officers, officials, employees, agents and volunteers from any and all loss, liability, fines, penalties, forfeitures, costs and damages (whether in contract, tort or strict liability, including but not limited to personal injury, death at any time and property damage) incurred by City, Contractor or any other person, and from any and all claims, demands and actions in law or equity (including attorney's fees and litigation expenses), arising or alleged to have arisen directly or indirectly out of performance of this Agreement.

Contractor’s obligations under the preceding sentence shall apply regardless of whether City or any of its officers, officials, employees, agents or volunteers are passively negligent, but shall not apply to any loss, liability, fines, penalties, forfeitures, costs or damages caused by the active or sole negligence, or the willful misconduct, of City or any of its officers, officials, employees, agents or volunteers.

If Contractor should subcontract all or any portion of the work to be performed under this Agreement, Contractor shall require each subcontractor to indemnify, hold harmless and defend City and its officers, officials, employees, agents and volunteers in accordance with the terms of the preceding paragraph.

This section shall survive termination or expiration of this Agreement.

3.5.6 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both parties.

3.5.7 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County.

3.5.8 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.5.9 City’s Right to Employ Other Contractors. City reserves right to employ other contractors in connection with this Project.

3.5.10 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties.

3.5.11 Assignment or Transfer. Contractor shall not assign, hypothecate or transfer, either directly or by operation of law, this Agreement or any interest herein without the prior written consent of the City. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer.

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3.5.12 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be work days (Monday through Friday, excluding holidays). All references to Contractor include all personnel, employees, agents, and subcontractors of Contractor, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content or intent of this Agreement.

3.5.13 Amendment; Modification. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.5.14 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel or otherwise.

3.5.15 No Third-Party Beneficiaries. There are no intended third-party beneficiaries of any right or obligation assumed by the Parties.

3.5.16 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.

3.5.17 Prohibited Interests. Contractor maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Contractor, to solicit or secure this Agreement. Further, Contractor warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Contractor, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. Contractor further agrees to file, or shall cause its employees or subcontractors to file, a Statement of Economic Interest with the City’s Filing Officer as required under state law in the performance of the Services. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

3.5.18 Equal Opportunity Employment. Contractor represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Contractor shall also comply with all

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relevant provisions of City’s Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted.

3.5.19 Labor Certification. By its signature hereunder, Contractor certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Workers’ Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Services.

3.5.20 Authority to Enter Agreement. Contractor has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement.

Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

3.5.21 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.

3.6 Subcontracting.

3.6.1 Prior Approval Required. Contractor shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.

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NAME OF CONTRACTOR: CT&T Concrete Paving Inc.
*By:
_______________________________
Signature
_______________________________
Name
_______________________________
Title
NOTE: SIGNATURES OF CORPORATE OFFICIALS MUST BE NOTARIZED.

Attach Certificate of Acknowledgement
OWNER: CITY OF NORCO, a municipal corporation
*By:
_______________________________
Robin Grundmeyer, Mayor
ATTEST:
_______________________________
Dana Roa, CMC, City Clerk
APPROVED AS TO FORM:
_______________________________
Harper & Burns, LLP, City Attorney

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EXHIBIT A
CITYWIDE ADA IMPROVEMENT PROJECT No. 54300.2

CONCRETE WALKWAY REPLACEMENT
The work to be done consists of furnishing all materials, equipment, tools, labor, and incidentals as required by the Plans, Specifications, and Contract Documents for the above stated project. The general items of work to be done hereunder consist of the removal and replacement of concrete walkways at the Norco Senior Center located at 2690 Clark Avenue, Norco, CA 92860 and the Wayne Makin Shearer Sports Complex located at 3364 Western Avenue, Norco, CA 92860 to the satisfaction and acceptance of the Facilities and Maintenance Director.

The services shall be performed in accordance with the Standard Specifications for Public Works Construction (Green Book), latest edition, including all current supplements, addenda, and revisions thereof (hereinafter referred to as “Standard Specifications”) incorporated herein by this reference. Any provisions which supplement or modify the Standard Specifications are attached hereto as Special Provisions and incorporated herein by this reference.

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EXHIBIT B
Proposal Document

City Council

STAFF REPORT
Date: February 1, 2023 Agenda Item:

2.F.

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

Report on Fiscal Year 2021-2022 Audited Financial Reports RECOMMENDATION:

Receive and file the Fiscal Year (FY) 2021-2022 Audited Financial Reports SUMMARY:

Provided for review is the City’s Annual Comprehensive Financial Report (ACFR) and other related reports for the fiscal year-ended June 30, 2022. 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 2021-2022. 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 are the following financial and related reports (Attachments 1-6) for the fiscal year ended June 30, 2022:

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. Auditors' Single Audit Report

6. Measure R Transactions and Use Tax Fund Financial Statements and Staff Report of January 25, 2023 to Measure R Citizens' Oversight Committee.

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 25, 2023. 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 2021-2022 Audited Financial Reports and auditing processes are consistent with Strategic Direction #3 - Economic Development and Financial Stability: Assure financial stability by expanding development efforts, diversifying revenue sources and continuing prudent financial management.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Attachment #1
Attachment #2
Attachment #3
Attachment #4
Attachment #5
Attachment #6

CITY OF NORCO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL STATEMENTS AND

SUPPLEMENTARY INFORMATION
YEAR ENDED JUNE 30, 2022

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CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2022

INTRODUCTORY SECTION

LETTER OF TRANSMITTAL I

ORGANIZATION CHART IX

DIRECTORY OF CITY OFFICIALS X

GFOA CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL

REPORTING XII

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

FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 23
STATEMENT OF ACTIVITIES 24

FUND FINANCIAL STATEMENTS

GOVERNMENTAL FUNDS
BALANCE SHEET 29

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL
FUNDS TO THE STATEMENT OF NET POSITION 30

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 31

RECONCILIATION OF THE STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 32

PROPRIETARY FUNDS
STATEMENT OF NET POSITION 33

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET
POSITION 35
STATEMENT OF CASH FLOWS 36

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2022

FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET POSITION 38
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION 39
NOTES TO FINANCIAL STATEMENTS 43

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION
LIABILITY 91
SCHEDULE OF CONTRIBUTIONS – DEFINED BENEFIT PENSION PLANS 93

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS 95
SCHEDULE OF CONTRIBUTIONS – OPEB PLAN 96
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND 97
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 98

INDIVIDUAL FUND SCHEDULES AND COMBINING FINANCIAL

STATEMENTS

COMBINING NONMAJOR GOVERNMENTAL FUNDS
NONMAJOR GOVERNMENTAL FUND DESCRIPTIONS 103
COMBINING BALANCE SHEET 106

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES 112

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, 2022
SB1 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, 2022
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, 2022

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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(i)
December 19, 2022
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, 2022 (FY 2022). This report provides a comprehensive view of the results of the City’s financial activities and financial position for FY 2022.

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, 2022, 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, 2022, 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, 2022, the City did expend over $750,000 in federal grants and therefore, did meet the threshold set by the OMB for a Single Audit. Consequently, the independent auditors will issue a 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. The Inland Empire remains one of the top economic and population areas in the state with 2.2 million in civilian labor force and 2 million in civilian employment. The Inland Empire’s labor market has fully recovered from the COVID19 pandemic and continues to show strength. The Inland Empire’s unemployment rate, at 3.7%, is now lower than its pre-pandemic level of 4.1% in February 2020. More than 280,000 jobs have been added since the national lockdown in April 2020, surpassing the 228,000 jobs that were lost at that time. Employment growth in the Inland Empire outpaced the state and nation during this period. By contrast, California’s overall labor force has declined by -1.5%, or -299,600 workers. According to the latest data from U.S. Labor Department and the State of California Employment Development Department (EDD), the unemployment rate of 3.7% in the Inland Empire was lower than the state’s unemployment rate of 4.2% but higher than the national unemployment rate of 3.6%.

EDD’s most reported unemployment rate for the City of Norco as November 2022 was 3.9%. 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 at a rate of 1.4% increase from January 2021 to January 2022. The City limits cover an area of approximately 15 square miles, with a current permanent population of approximately 24,909 according to the most recent data as of January 2022 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 $121,894 which is 145% 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.

(iii)
The Community Development Department 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 Department. 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 1,800 impounded animals annually.

Through the City Manager’s Office, 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.

The City’s Facilities and Maintenance Department is responsible for the upkeep and maintenance of all public buildings, and facilities. It creates a safe and secure environment for the public to utilize and is responsible for maintenance and operations, capital outlay, and improvements of facilities as well as scheduling and managing all events at the George Ingalls Equestrian Event Center which includes all grounds, two covered arena(s), Nellie Weaver Hall banquet room, Pikes Peak Park, Pole Barn area, George Ingalls Veterans Memorial Plaza and adjacent parking lots. In addition, the Department maintains, improves and develops City parks and recreation areas that provide residents with facilities in which to enjoy passive and active recreation and to protect our environment and its resources while providing safe and secure spaces to recreate.

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 Finance Department 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 on an annual basis 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).

(iv)
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 or Finance Director. 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-toactual 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.

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. According to the Center for Economic Forecasting’s short-term outlook for business activity in the Inland Empire remains positive, with the first quarter’s momentum expected to continue throughout calendar year 2022. However, inflation is a potential problem and which is the highest levels in decades. While the economy has plenty of momentum and will keep growing in the near term, it could eventually stagnate.

Although hotel and leisure activities slowed down significantly during the coronavirus pandemic, this sector of the City’s economy and related revenue continue to rebound. In addition to increased leisure activities, increased revenues from Transient Occupancy Tax is anticipated. Retail sales and property values are projected to have slower growth over the near term. The City’s direct taxable retail sales during FY 2021-2022 was over $922 thousands. Based on strong demand in automobiles, especially used cars sales, tax revenues are projected to remain strong during FY 2023. However, lack of dealer inventory remains the key factor in preventing better results. Sales tax from new and used cars is the dominant category in the City’s retail taxable sales. Real property values rose during the fiscal year and are projected to continue to slightly grow in FY 2023; however, due to rising interest rates, real property sales are expected to slow in FY 2023. The region’s median single-family-home price jumped by 4.8%, a stronger growth rate than overall Southern California region increase of 3.2%. The City anticipates that property tax revenue growth should slightly slow in FY 2023.

Other key general revenues such as franchise fees, motor vehicle license fees and charges for services are expected to remain stable during FY 2023. Development impact fees are expected to remain the same in FY 2023 due to two (2) major developments that commenced development in the City in FY 2022 and will continue development in phases. Development impact fees are collected and used to mitigate the impacts on infrastructure from new developments.

Lease income was negatively impacted due to deferral of lease payment on the Silverlakes property. Lease income in FY 2023 is expected to increase due to a full year of lease payments. 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 nonpayment 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: In early FY 2022, City staff, elected and appointed officials to develop a new Strategic Plan. This plan focuses on economic development and financial resiliency; infrastructure improvements; communication and customers service; human capital; and public safety and wellness. The

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economic and financial resiliency component seeks to continue 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 2022, City Council adopted the FY 2022 Strategic Priorities. The Strategic Priorities consists of five strategic directions that are dedicated to fulling 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 third 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 2023.

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 $33 million to $44.4 million.

Excluding Special Asset Revenue and Measure R, fund balance of the General Fund grew by $1.8 million to $24.1 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 $17.8 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 and will continue for the next couple of years.

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 additional contributions which will be based on the financial performance of the General Fund in future years.

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 received $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. Current Memorandums of Understanding (MOU) and salary resolutions with all of the City’s employee bargaining units expired June 30, 2022 resulting in renegotiating an 8% cost of living adjustments and increase the amount of health insurance subsidy to be paid by the City from $1,250 to $1,500 monthly for those employees and their dependents enrolled in any of the available health plans, effective July 1, 2022. These MOUs and salary negotiations will likely result in cost increases to future year budgets.

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8. 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.

9. To improve the quality of life and safety in the City, homeless services and programs were expanded during the fiscal year. The program provides emergency hotel/motel housing and outreach placement services to residents experiencing homelessness. These services are expected to continue in FY 2023 to serve more homeless residents.

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’s annual contribution is based on the actuarially determined contribution. For FY 2022, the City contributed $1.5 million which included $0.4 million to the CERBT trust. 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. Effective July 1, 2022, the contribution was increased to $1,500 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, 2022, the City has made significant progress in funding OPEB liabilities through this Trust Account. As of June 30, 2022, the City’s OPEB Trust Account had a balance of $12.5 million.

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 third full year of operation in FY 2022, 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 2023.

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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, 2022, 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 $52.1 million in infrastructure improvements and replacement during FY 2023. In particular, the City will make significant investments on streets, water, storm drain, sewer, parks and public facilities as follows:
a. Street improvements $4.7 million
b. Storm drains $13.1 million
c. Water system improvements $7.3 million
d. Sewer system improvements $7.5 million
e. Road maintenance and rehabilitation $0.7 million
f. Public facilities $0.4 million
g. Various Measure R funded projects $16.7 million

2. During FY 2022, several capital projects were completed as follows:
a. Completion of various improvements at Ingalls Park and Parmenter Park b. Completion of building improvements at Fire Station 57, Riley Gym, EV charging stations at City Hall, animal control facilities, and City Hall renovation. c. Completion of roof improvement at various locations
d. Pavement of various streets; Crestview Ave. (North to Sixth Street), Sierra Avenue (Sixth St to Detroit and citywide street sign replacements.
e. Completion of various storm drain improvement projects including Parmenter Park Storm Drain. f. Completion of equestrian trail fence replacement projects at various locations including the City’s western themed Sixth Street.
g. Completion of various facilities improvements including replacement of Riley Gym’s floor, Animal Control’s meet and greet adoption area, Fire Station 57 improvements, EV charging stations at City Hall, and City Hall renovation.
h. Completion of various park improvements including Ingalls Event Center Americans with Disabilities Act (ADA) parking pads and replacement of ball field sports lights. i. Acquisition of utility service trucks, passenger van, and other equipment.

3. Several economic development projects were also initiated and/or completed during the fiscal year including:
a. 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

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million square feet light industrial project with some retail component which will be built in phases.

Phase I is expected to be completed in FY 2022-2023. Completion of future phases are dependent on market conditions.
b. During the FY 2020-2021, 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. Saddle Ranch Phase Project is expected to be completed in FY 2022-2023. This project will also generate significant one-time development impact fees and ongoing property tax and sales tax revenues. c. In FY 2020, In early FY 2021-2022, the construction was completed on a CarMax automobile dealership store at the corner of Second Street and Valley View Avenue. This project will generate significant sales tax revenue, and increase 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 submitted to the State of California, Department of Housing and Community Development for review and approval. The State approved the General Plan Housing Element update in October 2022.

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, 2022. This is the nineteenth 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.

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 Finance Department 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.

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INDEPENDENT AUDITORS’ REPORT
City Council Members
City of Norco
Norco, California
Report on the Audit of the Financial Statements
Opinions
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, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City of Norco’s basic financial statements as listed in the table of contents.

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

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

Emphasis of Matters
As discussed in Note 1 to the financial statements, effective July 1, 2021, the City adopted new accounting guidance, GASB No. 87, Leases. The guidance requires lessees to recognize right-to-use asset and corresponding lease liability and lessors to recognize a lease receivable and corresponding deferred inflow of resources for all leases with lease terms greater than twelve months.

As discussed in Note 17 to the financial statements, the net position of the governmental activities, business-type activities, sewer enterprise fund and fund balance of the general fund were restated as of July 1, 2021 to correct misstatements in the 2021 financial statements.

Our opinions are not modified with respect to these matters.

CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

CliftonLarsonAllen LLP
CLAconnect.com

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

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

City Council Members
City of Norco
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Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the managements’ discussion and analysis, schedule of proportionate share of the net pension liability, schedule of contributions – defined benefit pensions plans, schedule of changes in the net OPEB liability and related ratios, schedule of contributions – OPEB plan, and budgetary comparison schedule – general fund be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Norco’s basic financial statements. The individual fund schedules and combining financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the individual fund schedules and combining financial statements and internal service funds is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

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

City Council Members
City of Norco
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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2022, on our consideration of the City of Norco’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 of Norco’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 City of Norco’s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP
Irvine, California
December 19, 2022

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MANAGEMENT’S DISCUSSION AND ANALYSIS

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CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
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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, 2022. 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 $408.4 million and deferred outflow of resources of $7.3 million exceeded its total liabilities of $79.1 million and deferred inflows of resources of $28.6 million at the close of fiscal year 2022 by $308.0 million (net position). Of this amount, $61.6 million (unrestricted net position) may be used to meet City’s obligations to citizens and creditors.  The City’s total net position increased by $21.2 million during the year. The increase was a result of revenues exceeding expenses in the governmental activities by $16.3 million and business type activities by $4.9 million.
 As of June 30, 2022, the City’s governmental funds reported combined fund balance of $67.4 million, a net increase of $12.0 million from prior fiscal year. A total of $2.2 million is nonspendable, $37.9 million is committed or restricted and $27.3 million is unassigned.  At the end of fiscal year 2022, committed fund balance for the general fund was $12.6 million; unassigned fund balance was $27.5 million. The total spendable fund balance of $39.2 million, which includes $0.1 million in donation revenue, represents 144.3% of total fiscal year 2021-2022 general fund expenditures.
 The City’s total long-term debt decreased by a net $0.8 million during fiscal year 2021-2022 primarily due to the debt service payment for the 2019 Enterprise Revenue Refunding Bonds offset by increase in claims liabilities.

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 (ACFR) 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, 2022
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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, 2022, 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, 2022
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The basic governmental fund financial statements can be found on pages 37-40 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 41-45 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 46-47 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 49-95 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 96-105 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, 2022, total City assets of $408.4 million, deferred loss on debt refunding of $0.8 million, and deferred outflow of resources amounts related to OPEB plan of $2 million and pension plans of $4.5 million, exceeded total liabilities of $79.1 million and deferred inflow of resources amounts related to lease receivable of $13.3 million, OPEB of $3.4 million and pension plans of $11.9 million by $308.0 million.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
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For comparative purposes, management has included data from the fiscal year ended June 30, 2021 as summarized below:
2022 2021 2022 2021 2022 2021 %
Change
Assets:

Current and other assets $ 95,513,456 $ 65,976,932 $44,834,612 $42,534,016 $140,348,068 $ 108,510,948 29% Capital assets (net of depreciation) 183,756,155 177,702,983 84,262,505 81,986,978 268,018,660 259,689,961 3% Total assets 279,269,611 243,679,915 129,097,117 124,520,994 408,366,728 368,200,909 11% Deferred Outflow of Resources:

Deferred loss on debt refunding - - 803,741 839,543 803,741 839,543 -4% Amount related to other post employment benefits 1,343,400 1,029,748 677,967 530,476 2,021,367 1,560,224 30% Amount related to pension plans 3,556,877 3,280,807 905,096 863,288 4,461,973 4,144,095 8% Total deferred outflow of resources 4,900,277 4,310,555 2,386,804 2,233,307 7,287,081 6,543,862 11% Liabilities:

Current and other liabilities 8,149,492 4,803,269 4,378,476 3,289,514 12,527,968 8,092,783 55% Long-term liabilities 15,380,659 22,960,361 51,197,292 55,153,642 66,577,951 78,114,003 -15% Total liabilities 23,530,151 27,763,630 55,575,768 58,443,156 79,105,919 86,206,786 -8% Deferred Inflow of Resources:

Amount related to lease receivable 13,286,239 - - - 13,286,239 - 100% Amount related to other post employment benefits 2,258,266 861,299 1,139,666 443,699 3,397,932 1,304,998 160% Amounts related to pension plans 9,441,641 676,405 2,470,874 85,582 11,912,515 761,987 1463% Total deferred inflow of resources 24,986,146 1,537,704 3,610,540 529,281 28,596,686 2,066,985 1283% Net position:

Net investment in capital assets 182,078,689 176,797,895 36,596,095 33,381,504 218,674,784 210,179,399 4% Restricted 25,833,667 21,842,280 1,830,956 26,475 27,664,623 21,868,755 27% Unrestricted 27,741,235 20,048,961 33,870,562 34,373,885 61,611,797 54,422,846 13% Total net position $ 235,653,591 $218,689,136 $72,297,613 $67,781,864 $307,951,204 $ 286,471,000 7% Governmental Activities Business-type Activities Total
City of Norco, California
Statement of Net Position
Net position for the fiscal year ended June 30, 2022 increased by 7% 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 $218.7 million as of June 30, 2022. 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, $27.7 million for fiscal year 2022 and $21.9 million for fiscal year 2021, represent resources that are subject to restrictions on how they can be used. The remaining balance, unrestricted net position, is $61.6 million and $54.4 million for fiscal years 2022 and 2021, respectively.

The deferred loss on debt refunding is reported in the statement of net position for the business-type activities beginning in fiscal year 2014 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

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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.

On July 1, 2021, the City adopted the GASB issued GASB Statement No. 87, Leases. This Standard requires the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases as inflows of resources or outflows of resources based on the payment provision of the contract. GASB Statement No. 87 establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this standard, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources.

The amounts related to pension plans have been recorded starting in fiscal year 2016 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 starting in fiscal year 2018 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.

For comparative purposes, management has included data from the fiscal year ended June 30, 2021 as summarized below:

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Governmental activities Business-type activities Total
2022 2021 2022 2021 2022 2021 % Change
Revenues:

Program Revenues:

Charges for services $ 8,494,486 $ 5,954,075 $ 23,516,597 $ 32,011,083 21,129,640 $ $ 27,083,715 18% Operating grants and contributions 3,124,093 2,407,654 - - 3,124,093 2,407,654 30% Capital grants and contributions 6,297,305 147,472 1,931,129 12,599 8,228,434 160,071 5040% General revenues 31,954,456 25,390,426 (115,150) 162,751 31,839,306 25,553,177 25% Total revenues 49,870,340 33,899,627 25,332,576 21,304,990 75,202,916 55,204,617 36% Expenses:

General Government 9,639,441 6,590,791 - - 9,639,441 6,590,791 46% Public safety 10,991,835 11,842,671 - 10,991,835 - 11,842,671 -7% Streets and Highw ays 8,627,523 5,167,004 - - 8,627,523 5,167,004 67% Community development 1,974,201 2,110,070 - - 1,974,201 2,110,070 -6% Culture and leisure 2,637,799 3,000,679 - - 2,637,799 3,000,679 -12% Water - - 12,368,339 11,325,678 12,368,339 11,325,678 9% Sew er - 7,740,315 - 6,397,952 7,740,315 6,397,952 21%
Total expenses 33,870,799 28,711,215 20,108,654 17,723,630 53,979,453 46,434,845 16% Change in net position before transfers 15,999,541 5,188,412 5,223,922 3,581,360 21,223,463 8,769,772 142% Transfers 266,905 258,204 (266,905) (258,204) - - N/A
Change in net position 16,266,446 5,446,616 4,957,017 3,323,156 21,223,463 8,769,772 142% Net position - beginning 218,689,136 213,242,520 67,781,864 64,458,708 286,471,000 277,701,228 3% Restatement 256,741 - - 256,741 - 100%
To transfer revenue to the correct fund/activity 441,268 (441,268) - - - - N/A Net position - ending $ 235,653,591 $ 72,297,613 218,689,136 $ $ 307,951,204 67,781,864 $ $ 7% 286,471,000 City of Norco, California
Statement of Changes in Net Position
During the year, total net position increased by $21.2 million primarily due to general revenues derived from the sales, property and other taxes and program revenues derived from capital grants and contributions due to increase in development impact fees revenue. Further analysis is provided below.

Governmental activities: Total net position from governmental activities increased by $16.3 million during the year primarily due to the increase in sales tax, intergovernmental revenues and capital contributions and grants. In terms of the general fund, revenues exceeded expenses by $11.1 million including tax revenues derived from Measure R and development fee revenues. The City sales tax receipt during the fiscal year was boosted by strong performance in all major industry groups.

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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 increased in FY 2021-2022 as compared to prior year due to increase in development impact fees revenue.

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Sales taxes are derived from taxable transactions originating from the City. During the fiscal year ended June 30, 2022, 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 $4.9 million during the fiscal year as charges for services revenue for sewer operations and capital contributions and grants for water operations are increased. 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. There were no rate increases in FY 21-22. The net position of the water fund increased by $2.9 million as total revenues exceeded total expenses. The water fund had operating income of $1.9 million before investment losses, interest expense and fiscal changes of $0.8 million, transfers out of $0.1 million and capital contribution of $1.9 million. The net position of the sewer fund increased by $1.7 million as total revenues exceeded total expenses. The sewer fund had operating income of $2.6 million before investement losses and interest expense and fiscal changes of $0.7 million and transfers out of $0.1 million.

Water fund expenses make up 62 percent of total business-type activities expenses while sewer fund expenses make up the remaining 38 percent of total expenses. Total charges for services from businesstype activities consist of 58 percent derived from water fund and 42 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.

As of June 30, 2022, the City’s governmental funds reported combined ending fund balances of $67.4 million, an increase of $12.2 million. Of the $67.4 million, $2.2 million is non-spendable representing the

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long-term amount of a note receivable from the City of Corona for the sale of donated assets; $25.3 million, or 38 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, 2022 was $12.6 million. Unassigned fund balance of $27.3 million represent amount that is available for future appropriation.

In the general fund, revenues exceeded expenditures by $11.3 million. This excess of revenues over expenditures was as a result of better than anticipated receipt of taxes and development fee revenues.

The Housing Successor Agency’s Low Moderate-Income Housing Special Revenue Fund’s fund balance decreased by $0.2 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 $1.1 million mainly due to increase in development fees and intergovernmental revenues.

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 $10.8 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 $2.9 million due to total revenues exceeding total expenses largely as a result of increase in capital contributions. The net position of the sewer fund increased by $1.7 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 $0.6 million decrease in the net position of the internal service funds was due to charges for services less than expenses in 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, 2022, total fund balance was $44.4 million which consists of $12.6 million committed by a resolution of the City Council to fund future operations; $2.2 million that is not available for spending due to the long-term nature of associated receivable; $2.1 million restricted related to pension trust contribution and $27.5 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 $27.5 million represents 99 percent of total general fund recurring expenditures for the fiscal year. The general fund’s total fund balance increased by $11.3 million during the fiscal year due to total revenues exceeding total expenditures by $11.0 million and an increase of $0.3 million from other financing sources.

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In comparing the general fund actual revenues and expenditures to final budget, total revenues exceeded budget by $4.1 million while total expenditures were under budget by $11.2 million. The favorable revenue variance was due to more than anticipated receipts from taxes and development fees. The favorable increase in taxes is related to sales taxes, property taxes, and residual property tax increment.

The City sales tax receipt during the fiscal year was boosted by strong performance in all major industry groups including: autos and transportation; state and county pools; restaurants and hotels; fuel and service stations; general consumer goods; building and construction; food and drugs; and business and industry.

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, 2022 amounted to $268 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 increased by $6.1 million for governmental activities and increased $2.3 million for business-type activities.

During FY 2021-2022, several capital projects were completed as follows:
 Completion of various improvements at Ingalls Park and Parmenter Park  Completion of building improvements at Fire Station 57, Riley Gym, EV charging stations at City Hall, animal control facilities, and City Hall renovation.  Completion of roof improvement at various locations
 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, EV charging stations at City Hall, and City Hall renovation.
 Completion of various park improvements including Ingalls Event Center Americans with Disabilities Act (ADA) parking pads and replacement of ball field sports lights.  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 $7.2 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 2022-2023, the City will make significant investments on streets, water, storm drain, sewer, parks and public facilities as follows:
 Street improvements $4.7 million
 Storm drains $13.1 million
 Water system improvements $7.3 million
 Sewer system improvements $7.5 million
 Road maintenance and rehabilitation $0.7 million
 Various Measure R funded projects $16.7 million

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Additional information on the City’s capital assets can be found in the Note 4 to the basic financial statements and a summary is provided below.

City of Norco
Capital Assets (net of depreciation)
June 30, 2022
Land $ 101,161,035 $ 1,863,896 $ 103,024,931
Building and improvements 10,023,145 1,035,308 11,058,453 Equipment and machinery 6,116,007 306,233 6,422,240
Infrastructure 61,879,172 61,855,166 123,734,338
Intangible 174,778 14,489,964 14,664,742
Construction in progress 4,402,018 4,711,938 9,113,956
Total capital assets, net $ 183,756,155 $ 84,262,505 $ 268,018,660 Total
Governmental
Activities
Business-type
Activities
Long-term debt: At the end of fiscal year 2022, the City’s total long debt outstanding was $49.3 million.

Of this amount, $47.2 million is debt of the sewer and water enterprise funds while $2.1 million represents debt of governmental activities representing leases payable, claims, judgment, and compensated absences. Outstanding long-term debt of the City is summarized below and additional information can be found in the Note 6 to basic financial statements.

City of Norco
Outstanding Long Term Debt
June 30, 2022
Leases payable $ 168,647 $ 28,398 $ 197,045
WRCRWA lease 5,587,602 5,587,602
Revenue bonds - 41,528,115 41,528,115
Compensated absences 814,964 - 814,964
Claims and judgment 1,149,341 - 1,149,341
Total long-term debt $ 2,132,952 $ 47,144,115 $ 49,277,067 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 2021-2022 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 2021-2022 with a net deficit. Fortunately, the worst-case scenario did not materialize as total actual revenues came in better than anticipated. It

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is anticipated the Pandemic will still have significant negative impact on local government revenues in the upcoming fiscal years.
 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. In addition, the City Council approved additional appropriation from ARPA funds to provide emergency clean up and environmental observation of work to be performed at the Santa Ana River homeless encampments. The remaining funds will be appropriated in future fiscal years. As a result of the ARPA budget adoption and additional budget amendments approved by City Council, the amended General Fund reserves amount were expected to increase.
 Measure R transactions and use tax, a one-cent sales 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 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 its recovery efforts. 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 third full year of implementation with a total revenue of $8.6 million.  During FY 2021-2022 the City experienced sales tax increases for a 21.4 percent increase in sales tax receipts over FY 2020-2021 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 2022-2023.  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. With the pandemic, the number of visitors to the facility has significantly decreased resulting in decrease to TOT.

However, with the worst of COVID-19 behind us, FY 2021- 2022 numbers reflect an uptrend in TOT that staff believes will continue in subsequent fiscal years.  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 $211.5 million or 5.7 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 County-wide 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) directed County Assessors to apply a 1.036 percent inflation factor (CCPI – California Consumer Price Index) to statewide property values for taxation for FY 2021-2022, falling below the 2 percent cap.

By enacting a 1.036 percent CCPI rather than the 2 percent maximum, taxpayers saved – and conversely state and local governments saw smaller increases in property tax revenues.

Subsequently, the California State Board of Equalization advised county Assessors to use 2 percent as Proposition 13's inflation factor for FY 2022-2023.

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 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 sewer rate increases were implemented. It is anticipated that the current sewer rates will generate 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 no increase to sewer rates during FY 2021-2022; and no increase to water and sewer rates is planned for FY 2022-2023.
 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 2021-2022, the City’s pension contribution for the safety plan increased to $712,881 from $691,954 in FY 2020- 2021. With the anticipation of future contributions for all pension plans to increase, in FY 2021- 2022, the City Council approved additional pension contributions through Internal Revenue Code Section 115 Post-Employment Benefits Trust Program to be administered by Public Agency Retirement Services (PARS) and U.S Bank, as Trustee. In March 2022, the City had made $1.0 million from the Special Asset Revenue Fund contribution to the Trust. Ongoing contributions will continue based on a percentage of general fund surplus, if any, savings from the annual prepayment of Unfunded Annual Liability (UAL) as long as CalPERS offers the discount and from contributions previously made to pre-fund the OPEB Trust.  Current Memorandums of Understanding (MOU) and salary resolutions with all of the City’s employee bargaining units expired June 30, 2022 resulting in renegotiating an 8% cost of living adjustments and increase the amount of health insurance subsidy to be paid by the City from $1,250 to $1,500 monthly for those employees and their dependents enrolled in any of the available health plans, effective July 1, 2022. 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 which will be built in phases.

Phase I is expected to be completed in FY 2022-2023. Completion of future phases are dependent on market conditions. When completed, this project will generate significant one-time development impact fees and ongoing property tax and sales tax revenues. The City also estimates that this project will generate over 1,700 permanent jobs.  During the FY 2020-2021, 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. Saddle Ranch Phase Project is expected to be completed in FY 2022-2023, this project will also generate significant one-time development impact fees and ongoing property tax and sales tax revenues.  In early FY 2021-2022, the construction was completed on a CarMax automobile dealership store at the corner of Second Street and Valley View Avenue. This project will generate significant sales tax revenue, and increase employment and property tax base.

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 Other significant commercial projects ongoing 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. In addition, projects approved for development include a 109-room Hotel, Coffee Shop and Restaurant on Hamner Ave between 5th Street and Sixth Street.

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, 2022
See accompanying Notes to Financial Statements.
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Governmental Business-Type
Activities Activities Total
ASSETS
Cash and Investments 60,394,581 $ 29,617,693 $ 90,012,274 $ Cash and Investments with Fiscal Agents 117,105 13,887 130,992 Restricted Cash 57,964 - 57,964
Receivables, Net:

Accounts 915,727 3,522,414 4,438,141
Interest 140,286 112,279 252,565
Notes 9,870,543 11,147,979 21,018,522
Due from Other Governments 5,237,561 - 5,237,561
Internal Balances (325,024) 325,024 -
Inventories - 95,336 95,336
Deposits 2,456,582 - 2,456,582
Prepaids 37,654 - 37,654
Property Held for Resale 3,324,238 - 3,324,238
Lease Receivable 13,286,239 - 13,286,239
Capital Assets not Being Depreciated/Amortized:

Land and Construction in Progress 105,563,053 6,575,834 112,138,887 Capital Assets, Net of Accumulated Depreciation/Amortization 78,193,102 77,686,671 155,879,773 Total Assets 279,269,611 129,097,117 408,366,728

DEFERRED OUTFLOWS OF RESOURCES
Deferred Loss on Debt Refunding - 803,741 803,741
Amounts Related to Other Postemployment Benefits 1,343,400 677,967 2,021,367 Amounts Related to Pension Plans 3,556,877 905,096 4,461,973 Total Deferred Outflow of Resources 4,900,277 2,386,804 7,287,081

LIABILITIES
Accounts Payable and Accrued Liabilities 7,120,786 2,807,018 9,927,804 Accrued Interest Payable - 440,120 440,120
Retentions Payable 403,697 152,040 555,737
Unearned Revenues 618,609 576,810 1,195,419
Deposits Payable 6,400 402,488 408,888
Noncurrent Liabilities:

Due Within One Year 462,288 1,403,791 1,866,079
Due in More than One Year: 1,670,664 45,740,324 47,410,988 Net OPEB Liability 2,214,335 1,117,495 3,331,830
Net Pension Liability 11,033,372 2,935,682 13,969,054
Total Liabilities 23,530,151 55,575,768 79,105,919

DEFERRED INFLOWS OF RESOURCES
Amounts Related to Leases Receivable 13,286,239 - 13,286,239 Amounts Related to Other Postemployment Benefits 2,258,266 1,139,666 3,397,932 Amounts Related to Pension Plans 9,441,641 2,470,874 11,912,515 Total Deferred Inflow of Resources 24,986,146 3,610,540 28,596,686

NET POSITION
Net Investment in Capital Assets 182,078,689 36,596,095 218,674,784 Restricted for:

Capital Projects 5,424,809 1,817,075 7,241,884
Community Development 894,103 - 894,103
Low and Moderate Income Housing 16,591,918 - 16,591,918 Public Safety 811,770 - 811,770
Debt Service - 13,881 13,881
Pensions 2,111,067
Unrestricted 27,741,235 33,870,562 61,611,797
Total Net Position $ 235,653,591 $ 72,297,613 $ 307,951,204

CITY OF NORCO

STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2022
See accompanying Notes to Financial Statements.
(24)
Program Revenues
Operating Capital
Charges for Contributions Contributions
Functions/Programs Expenses Services and Grants and Grants Governmental Activities:

General Government 9,639,441 $ 2,082,234 $ 469,652 $ 142,700 $ Public Safety 10,991,835 1,130,231 244,278 154,158
Streets and Highways 8,627,523 983,499 2,198,933 3,372,301 Community and Economic Development 1,974,201 3,003,618 140,065 2,211,977 Culture and Leisure 2,637,799 1,294,904 71,165 416,169
Total Governmental Activities 33,870,799 8,494,486 3,124,093 6,297,305 Business-Type Activities:

Water 12,368,339 13,746,965 - 1,931,129
Sewer 7,740,315 9,769,632 - -
Total Business-Type Activities 20,108,654 23,516,597 - 1,931,129 Total Primary Government $ 53,979,453 $ 32,011,083 $ 3,124,093 $ 8,228,434 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 (Loss)
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, 2022
See accompanying Notes to Financial Statements.
(25)
Net (Expense) Revenue and
Changes in Net Position
Governmental Business-Type
Activities Activities Total
$ (6,944,855) $ - $ (6,944,855)
(9,463,168) - (9,463,168)
(2,072,790) - (2,072,790)
3,381,459 - 3,381,459
(855,561) - (855,561)
(15,954,915) - (15,954,915)
- 3,309,755 3,309,755
- 2,029,317 2,029,317
- 5,339,072 5,339,072
(15,954,915) 5,339,072 (10,615,843)
5,408,797 - 5,408,797
1,057,978 - 1,057,978
2,025,163 - 2,025,163
604,599 - 604,599
20,376,348 - 20,376,348
31,265 - 31,265
(553,147) (115,150) (668,297)
3,003,453 - 3,003,453
266,905 (266,905) -
32,221,361 (382,055) 31,839,306
16,266,446 4,957,017 21,223,463
219,387,145 67,340,596 286,727,741
$ 235,653,591 $ 72,297,613 $ 307,951,204

(26)

THIS PAGE INTENTIONALLY LEFT BLANK

(27)

FUND FINANCIAL STATEMENTS

(28)

THIS PAGE INTENTIONALLY LEFT BLANK

CITY OF NORCO

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2022
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
ASSETS
Cash and Investments 43,415,340 $ 3,577,256 $ $ 6,955,676 $ 53,948,272 Cash and Investments with Fiscal Agents - 117,105 - 117,105 Receivables, Net:

Accounts 557,170 - 316,957 874,127
Interest 100,791 19,250 10,575 130,616
Notes 2,179,620 7,276,258 414,665 9,870,543
Due from Other Governments 4,131,868 - 1,105,693 5,237,561 Prepaids 4,164 - 3,000 7,164
Deposits - 2,456,582 - 2,456,582
Property Held for Resale - 3,324,238 - 3,324,238
Leases Receivable 13,286,239 - - 13,286,239
Due from Other Funds 301,510 - - 301,510
Total Assets $ 63,976,702 $ 16,770,689 $ 8,806,566 $ 89,553,957

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities $ 5,640,081 $ 178,771 $ 983,043 $ 6,801,895 Retentions Payable 201,194 - 202,503 403,697
Due to Other Funds 27,662 - 320,592 348,254
Deposits Payable - - 6,400 6,400
Unearned Revenues 420,509 - 198,100 618,609
Total Liabilities 6,289,446 178,771 1,710,638 8,178,855

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues 13,320,993 - 612,593 13,933,586

FUND BALANCES
Nonspendable 2,183,784 - 3,000 2,186,784
Restricted 2,111,067 16,591,918 6,627,229 25,330,214
Committed 12,607,576 - - 12,607,576
Unassigned 27,463,836 - (146,894) 27,316,942
Total Fund Balances 44,366,263 16,591,918 6,483,335 67,441,516 Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 63,976,702 $ 16,770,689 $ 8,806,566 $ 89,553,957

CITY OF NORCO

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL

FUNDS TO THE STATEMENT OF NET POSITION
JUNE 30, 2022
See accompanying Notes to Financial Statements.
(30)
Fund Balances of Governmental Funds $ 67,441,516
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. 182,321,936 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, excluding $278,280 allocated to business-type activities 5,290,129 Interest receivable on certain long-term loans and certain grants and loans 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. 647,347
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 1,343,400 Deferred Inflows of Resources Related to OPEB (2,258,266) Net OPEB Liability (2,214,335)
Deferred Outflows of Resources Related to Pensions 3,556,877 Deferred Inflows of Resources Related to Pensions (9,441,641) Net Pension Liability (11,033,372)
Net Position of Governmental Activities $ 235,653,591

CITY OF NORCO

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
See accompanying Notes to Financial Statements.
(31)
Housing
Successor Agency
Low and Moderate Total
Income Housing Nonmajor Total
Special Governmental Governmental
General Revenue Fund Funds Funds

REVENUES
Taxes 29,472,885 $ - $ $ 1,139,688 $ 30,612,573
Assessments - - 788,192 788,192
Licenses and Permits 2,608,829 - - 2,608,829
Fines and Forfeitures 593,357 - - 593,357
Development Fees 2,000,000 - 3,657,076 5,657,076
Intergovernmental 200,900 - 4,867,504 5,068,404
Charges for Services 3,723,904 - 279,376 4,003,280
Investment Earnings (586,733) (76,718) (84,000) (747,451) Lease Income 438,430 - - 438,430
Reimbursements 4,956 - - 4,956
Other 306,355 133,684 245,057 685,096
Total Revenues 38,762,883 56,966 10,892,893 49,712,742

EXPENDITURES
Current:

General Government 7,423,414 - 3,242,903 10,666,317
Public Safety 9,922,238 - 175,050 10,097,288
Streets and Highways 895,132 - 5,770,093 6,665,225
Community and Economic Development 1,533,160 243,420 82,217 1,858,797 Culture and Leisure 2,703,603 - 544,210 3,247,813
Capital Outlay:

Special Assessment 5,193,726 - - 5,193,726
Other - - 3,700 3,700
Total Expenditures 27,671,273 243,420 9,818,173 37,732,866 Excess (Deficiency) of Revenues
Over (Under) Expenditures 11,091,610 (186,454) 1,074,720 11,979,876

OTHER FINANCING SOURCES (USES)
Transfers In 268,405 - 17,878 286,283
Transfers Out (7,685) - (11,693) (19,378)
Total Other Financing Sources (Uses) 260,720 - 6,185 266,905 NET CHANGE IN FUND BALANCES 11,352,330 (186,454) 1,080,905 12,246,781 Fund Balances - Beginning of Year, as Restated 33,013,933 16,778,372 5,402,430 55,194,735 FUND BALANCES - END OF YEAR $ 44,366,263 $ 16,591,918 $ 6,483,335 $ 67,441,516

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, 2022
See accompanying Notes to Financial Statements.
(32)
Net Change in Fund Balance - Total Governmental Funds $ 12,246,781 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.

Contribution from developers 50,000
Capital Outlays 9,354,060
Depreciation (3,614,006)
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 (2,254) Grant Revenue not Available to Pay for Current-Period Expenditures 197,928 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. 1,115,800 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 reported within the governmental activities, excluding income of $278,280 reported in business-type activities. (833,414) 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 (2,248,449) Change in Net Position of Governmental Activities $ 16,266,446

CITY OF NORCO

STATEMENT OF NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2022
See accompanying Notes to Financial Statements.
(33)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds
ASSETS

CURRENT ASSETS
Cash and Investments 11,799,451 $ 17,818,242 $ 29,617,693 $ 6,446,309 $ Restricted Cash - - - 57,964
Cash and Investments with Fiscal Agents 7,572 6,315 13,887 - Receivables, Net:

Accounts 2,257,687 1,264,727 3,522,414 41,600
Interest 18,818 93,461 112,279 9,670
Notes 266,861 266,861 -
Prepaids - - - 30,490
Due from Other Funds 46,744 - 46,744 -
Inventories 95,336 - 95,336 -
Total Current Assets 14,492,469 19,182,745 33,675,214 6,586,033

NONCURRENT ASSETS
Notes Receivable 3,210,109 7,671,009 10,881,118 -
Capital Assets not Being Depreciated
Amortized:

Land 1,863,896 - 1,863,896 -
Construction in Progress 3,025,812 1,686,126 4,711,938 - Capital Assets Being Depreciated/Amortized:

Buildings and Improvements 1,239,573 669,306 1,908,879 - Utility Plant 24,480,172 7,471,123 31,951,295 -
Wastewater Capacity Rights - 25,605,543 25,605,543 -
Pipelines 46,236,482 31,275,527 77,512,009 -
Fire Hydrants 2,152,973 - 2,152,973 -
Meters 1,827,287 1,741,393 3,568,680 -
Vehicles and Equipment 174,026 432,876 606,902 3,530,729 Right-to-Use Lease Asset 17,466 17,466 34,932 207,453
Intangible Assets: - - - 436,609
Less Accumulated Depreciation/
Amortization (33,813,333) (31,841,209) (65,654,542) (2,740,572) Total Noncurrent Assets 50,414,463 44,729,160 95,143,623 1,434,219 Total Assets 64,906,932 63,911,905 128,818,837 8,020,252

DEFERRED OUTFLOWS OF RESOURCES
Deferred Loss on Debt Refunding 479,790 323,951 803,741 - Amounts from Other Postemployment Benefits 346,260 331,707 677,967 - Amounts from Pension Plans 462,264 442,832 905,096 -
Total Deferred Outflows of Resources 1,288,314 1,098,490 2,386,804 -

CITY OF NORCO

STATEMENT OF NET POSITION (CONTINUED)

PROPRIETARY FUNDS
JUNE 30, 2022
See accompanying Notes to Financial Statements.
(34)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds

LIABILITIES

CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 1,695,340 $ 1,111,678 $ 2,807,018 $ 318,891 Accrued Interest Payable 220,067 220,053 440,120 -
Retentions Payable 92,355 59,685 152,040 -
Deposits Payable 212,391 190,097 402,488 -
Unearned Revenues 285,582 291,228 576,810 -
Lease Payable 3,340 3,340 6,680 -
Compensated Absences - - - 203,742
Loan Obligation - 302,111 302,111 39,671
Claims and Judgements - - - 218,875
Bonds Payable 538,675 556,325 1,095,000 -
Total Current Liabilities 3,047,750 2,734,517 5,782,267 781,179

NONCURRENT LIABILITIES
Compensated Absences - - - 611,222
Lease payable 10,859 10,859 21,718 -
Loan Obligation - 5,285,491 5,285,491 128,976
Claims and Judgements - - - 930,466
Bonds Payable 23,175,678 17,257,437 40,433,115 -
Net OPEB Obligation 570,742 546,753 1,117,495 -
Net Pension Liability 1,499,352 1,436,330 2,935,682 -
Total Noncurrent Liabilities 25,256,631 24,536,870 49,793,501 1,670,664 Total Liabilities 28,304,381 27,271,387 55,575,768 2,451,843

DEFERRED INFLOWS OF RESOURCES
Amounts from Other Postemployment Benefits 582,066 557,600 1,139,666 - Amounts from Pension Plans 1,261,958 1,208,916 2,470,874 - Total Deferred Outflows of Resources 1,844,024 1,766,516 3,610,540 -

NET POSITION
Net Investment in Capital Assets 23,436,648 13,159,447 36,596,095 1,434,219 Restricted for Capital Projects 1,817,075 - 1,817,075 - Restricted for Debt Service 7,566 6,315 13,881 -
Unrestricted 10,785,552 22,806,730 33,592,282 4,134,190 Total Net Position $ 36,046,841 $ 35,972,492 72,019,333 $ 5,568,409 Adjustment to Reflect the Consolidation of Internal
Service Fund Activities to Enterprise Funds. 278,280
Net Position of Business-Type Acitivities $ 72,297,613

CITY OF NORCO

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

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2022
See accompanying Notes to Financial Statements.
(35)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds

OPERATING REVENUES
Sales and Charges for Services $ 13,535,804 $ 9,676,902 $ 23,212,706 $ 2,262,107 Connection Fees 19,850 - 19,850 -
Miscellaneous 191,311 92,730 284,041 19,942
Total Operating Revenues 13,746,965 9,769,632 23,516,597 2,282,049

OPERATING EXPENSES
General and Administrative 1,020,211 1,188,320 2,208,531 2,466,812 Operations 9,164,721 4,260,072 13,424,793 -
Amortization - 723,099 723,099 7,544
Depreciation 1,625,482 1,025,992 2,651,474 274,751
Total Operating Expenses 11,810,414 7,197,483 19,007,897 2,749,107 OPERATING INCOME (LOSS) 1,936,551 2,572,149 4,508,700 (467,058)

NONOPERATING REVENUES (EXPENSES)
Investment Earnings (Loss) (87,557) (27,593) (115,150) (88,741) Interest Expense and Fiscal Charges (869,035) (834,929) (1,703,964) - Amortization of Premium 162,579 165,551 328,130 -
Gain (Loss) on Disposal of Assets (3,203) - (3,203) 665 Total Nonoperating Revenues
(797,216) (696,971) (1,494,187) (88,076)
1,139,335 1,875,178 3,014,513 (555,134)
1,931,129 - 1,931,129 -
(134,812) (132,093) (266,905) -
2,935,652 1,743,085 4,678,737 (555,134)
33,111,189 34,229,407 6,123,543
$ 36,046,841 $ 35,972,492 $ 5,568,409
(Expenses)

INCOME (LOSS) BEFORE TRANSFERS

CAPITAL CONTRIBUTIONS

TRANSFERS OUT

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

NET POSITION - END OF YEAR
Adjustment to Reflect the Consolidation of Internal
Service Fund Activities to Enterprise Funds. 278,280
$ 4,957,017

CITY OF NORCO

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2022
See accompanying Notes to Financial Statements.
(36)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers 13,707,035 $ 9,586,529 $ 23,293,564 $ - $ Cash Received from Interfund Services Provided - - - 2,258,949 Cash Payments to Suppliers (8,336,998) (2,792,367) (11,129,365) (1,307,216) Cash Payments to Employees for Services (1,706,698) (1,538,869) (3,245,567) (301,317) Net Cash Provided by Operating
Activities 3,663,339 5,255,293 8,918,632 650,416

CASH FLOWS FROM NONCAPITAL FINANCING

ACTIVITIES
Cash Paid to Other Funds (133,981) (132,093) (266,074) - Net Cash Provided (Used) by Noncapital
Financing Activities (133,981) (132,093) (266,074) -

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition and Construction of Capital Assets (2,714,430) (2,903,943) (5,618,373) (337,962) Capital Development Impact Fees 1,931,129 - 1,931,129 - Proceeds from Disposal of Capital Assets - - - 665
Principal Payments - Lease (3,267) (3,267) (6,534) (38,806) Principal Payments - Capital Lease - (296,477) (296,477) - Principal Payments - Bonds (514,106) (530,893) (1,044,999) - Interest and Fiscal Charges (889,451) (791,978) (1,681,429) - Net Cash Used by Capital and
Related Financing Activities (2,190,125) (4,526,558) (6,716,683) (376,103)

CASH FLOWS FROM INVESTING ACTIVITIES
Change in Fair Value (220,804) (312,111) (532,915) (108,994) Interest Income 122,522 273,455 395,977 15,280
Repayment of Notes Receivable 132,124 392,300 524,424 - Net Cash Provided (Used) by Investing
Activities 33,842 353,644 387,486 (93,714)

NET INCREASE IN CASH AND
CASH EQUIVALENTS 1,373,075 950,286 2,323,361 180,599
Cash and Cash Equivalents - Beginning of Year 10,433,948 16,874,271 27,308,219 6,265,710 CASH AND CASH EQUIVALENTS - END OF YEAR $ 11,807,023 $ 17,824,557 $ 29,631,580 $ 6,446,309

CASH AND CASH EQUIVALENTS ARE

REPORTED ON THE STATEMENT OF

NET POSITION AS FOLLOWS
Cash and Investments $ 11,799,451 $ 17,818,242 $ 29,617,693 $ 6,446,309 Cash and Investments with Fiscal Agents 7,572 6,315 13,887 - Total Cash and Cash Equivalents $ 11,807,023 $ 17,824,557 $ 29,631,580 $ 6,446,309

CITY OF NORCO

STATEMENT OF CASH FLOWS (CONTINUED)

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2022
See accompanying Notes to Financial Statements.
(37)
Governmental
Activities
Business-Type Activities - Enterprise Funds Internal Service Water Sewer Total Funds

RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH PROVIDED BY OPERATING

ACTIVITIES
Operating Income (Loss) 1,936,551 $ 2,572,149 $ 4,508,700 $ (467,058) $ Adjustments to Reconcile Operating Income (Loss)
to Net Cash Provided by Operating Activities:

Amortization - 723,099 723,099 7,544
Depreciation 1,625,482 1,025,992 2,651,474 274,751
(Increase) Decrease in Assets and
Deferred Outflows:

Accounts Receivable (26,654) (175,497) (202,151) (23,100) Prepaids 8 - 8 (1,059)
Inventories (278) - (278) -
Deferred Outflows:

Amount from Pension Plans 27,966 (69,774) (41,808) -
Amount from Other Postemployment
Benefits (78,682) (68,809) (147,491) -
Increase (Decrease) in Liabilities and
Deferred Inflows:

Accounts Payable and Accrued Liabilities 342,526 459,362 801,888 225,819 Deposits Payable 2,589 8,573 11,162 -
Unearned Revenues (15,865) (16,179) (32,044) -
Retentions Payable (179,731) 59,685 (120,046) -
Compensated Absences - - - 20,077
Net Pension Obligation (940,849) (218,191) (1,159,040) - Net OPEB Obligation (576,086) (580,014) (1,156,100) -
Claims and Judgements - - - 613,442
Deferred Inflows:

Amount from Pension Plans 1,188,103 1,197,189 2,385,292 - Amount from Other Postemployment
Benefits 358,259 337,708 695,967 -
Net Cash Provided by Operating
Activities $ 3,663,339 $ 5,255,293 $ 8,918,632 $ 650,416

CITY OF NORCO

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2022
See accompanying Notes to Financial Statements.
(38)
Successor
Agency
Private-Purpose Custodial
Trust Fund Funds
ASSETS
Cash and Investments 3,339,224 $ 4,232,112 $
Cash and Investments with Fiscal Agents 4,539,306 1,627,156 Receivables, Net:

Accounts - 646,319
Interest 3,507 4,119
Due from Other Governments - 78,866
Prepaids 109,808 -
Property Held for Resale 65,689 -
Total Assets 8,057,534 6,588,572

DEFERRED OUTFLOWS OF RESOURCES
Loss on Debt Refunding 2,737,797 -

LIABILITIES
Accounts Payable - 570,869
Deposits Payable - 1,166,110
Note Payable 420,000 -
Accrued Interest on Debt 899,529 -
Due to Others - 20,426
Long-Term Liabilities:

Due Within One Year 3,360,000 -
Due in More than One Year 59,796,698 -
Total Liabilities 64,476,227 1,757,405

NET POSITION
Held in Trust for the Successor Agency and
Other Purposes (53,680,896) -
Restricted for:

Waste Management - 397
Debt Service for Special Assessment Debt - 4,830,770
Total Net Position $ (53,680,896) $ 4,831,167

CITY OF NORCO

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
YEAR ENDED JUNE 30, 2022
See accompanying Notes to Financial Statements.
(39)
Successor
Agency
Private-Purpose Custodial
Trust Fund Funds

ADDITIONS
RPTTF Property Tax Distribution 6,668,123 $ - $
Collections for Others - 9,639,233
Investment Earnings (Loss) (278,979) (132,118)
Total Additions 6,389,144 9,507,115

DEDUCTIONS
Administrative Allowance 250,000 -
Payment for collections to Waste Management - 6,618,890 Administrative Expenses - 149,551
Payments on Special Assessment Debt:

Principal - 1,463,638
Interest 2,433,112 1,287,854
Amortization of Bond Discounts and Premiums 285,570 -
Total Deductions 2,968,682 9,519,933
CHANGE IN NET POSITION 3,420,462 (12,818)
Net Position - Beginning of the Year (57,101,358) 4,843,985 NET POSITION - END OF THE YEAR $ (53,680,896) $ 4,831,167

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NOTES TO FINANCIAL STATEMENTS

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CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(43)
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 activity is reported in the water and sewer enterprise funds and is 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, 2022
(44)
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, 2022
(45)
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, 2022
(46)
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.

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.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(47)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
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.

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.”

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(48)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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.

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.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(49)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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.

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

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(50)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position includes a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The category of deferred outflow of resources reported in the statement of net position is related to debt refunding, pensions, and other postemployment benefits. The deferred charge on refunding resulted from the difference between 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 on pension and other postemployment benefits are more fully discussed in Note 5 and 13.

In addition to liabilities, the statement of financial position and the governmental funds balance sheet includes a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. In the government-wide financial statements, the City’s deferred inflows of resources reported on the statement of net position relate to pension and other postemployment benefits, which are more fully discussed in Note 5 and 13. The statement of net position and the governmental funds balance sheet also reports a deferred inflow of resources related to leases.

Under the modified accrual basis of accounting, deferred inflows of resources also include revenues not collected within the availability period after the fiscal year-end. The City has reported deferred inflows of resources related to unavailable revenues for property taxes and grants. These amounts are deferred and will be recognized as an inflow of resources in the period that amounts become available.

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, 2022
(51)
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. Leases
Lessee
The City is a lessee for noncancellable leases of equipment. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the applicable governmental activities or business-type activities in the government-wide and in the proprietary fund financial statements. The City recognizes lease liabilities with an initial individual value of $5,000 or more. At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(52)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) R. Leases (Continued)
Lessor
The City recognizes a lease receivable and a deferred inflow of resources in the applicable governmental activities or business-type activities in the government-wide and in the governmental and proprietary fund financial statements. At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

S. 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.

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.

T. 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.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) T. Fund Balances (Continued)
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 – Consists of the residual amount for the general fund that is not contained in the other classifications. The general fund is the only fund that reports a positive unassigned fund balance. Any deficit fund balance within the other governmental fund types is reported as unassigned.

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.

U. 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, 2022, there were no outstanding encumbrances for governmental funds.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(54)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) V. Deficit Net Position and Fund Balances
As of June 30, 2022, the following funds had deficit net position or fund balances:

Nonmajor Special Revenue Funds:

Landscape Maintenance District #2 (756) $
Nonmajor Capital Projects Funds
Storm Drain (146,138)
Internal Service Fund:

Benefits and Insurance (730,973)
Deficit fund balances are expected to be funded through collection of future revenues or transfers from the general fund.

W. Adoption of New Accounting Standards
GASB Statement No. 87, Leases
In June 2017, the GASB issued GASB Statement No. 87, Leases. This standard requires the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and as inflows of resources or outflows of resources recognized based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this standard, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources.

The City adopted the requirements of the guidance effective July 1, 2021 and has applied the provisions of this standard to the beginning of the period of adoption.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(55)
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 90,012,274 $
Cash and Investments with Fiscal Agents 130,992
Restricted Cash 57,964
Statement of Fiduciary Net Position:

Cash and Investments 7,571,336
Cash and Investments with Fiscal Agents 6,166,462
Total Cash and Investments $ 103,939,028
Cash and investments as of June 30, 2022 consist of the following:

Cash on Hand $ 6,957
Deposits with Financial Institutions 724,559
Investments in Section 115 Trust - PARS 2,111,067
Investments 101,096,445
Total Cash and Investments $ 103,939,028
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 TypeMaturity 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 Days40% 30%
Commercial Paper 270 Days25% 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, 2022
(56)
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 TypeMaturity Allowed One Issuer
U.S. Treasury Obligations None None None
U.S. Government Sponsored Agency
Securities None None None
Banker’s Acceptances 180 DaysNone None
Commercial Paper 270 DaysNone 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 68,054,199 $ 68,054,199 $ - $ $ - Money Market Mutual Funds 58,814 58,814 - -
US Treasury Bills 11,854,860 11,854,860 - -
U.S. Government Sponsored
Agency Securities 14,831,129 - 14,831,129 -
Held by Trustee:

Money Market Funds 414,895 414,895 - -
U.S. Government Sponsored
Agency Securities 5,882,548 - 2,041,841 3,840,707
Total Investments $ 101,096,445 $ 80,382,768 $ 16,872,970 $ 3,840,707

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(57)
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 68,054,199 $ N/A Not Rated
Money Market Mutual Funds 58,814 A/A1 AAA
US Treasury Bills 11,854,860 N/A Exempt
U.S. Government Sponsored Agency
Securities 14,831,129 N/A AA+
Held by Trustee:

Money Market Funds 414,895 A/A1 AAA
U.S. Government Sponsored Agency
Securities 5,882,548 N/A AA+
Total Investments $ 101,096,445
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 Home Loan Bank U.S. Government Sponsored 14,831,129 $ Agency Security

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(58)
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, 2022, 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.

Investment in Section 115 Trust - PARS
The City established a trust account with Public Agency Retirement Services (PARS) to hold assets that are legally restricted for use in administering the City’s CalPERS pension plans.

The Section 115 Pension trust’s investments are managed by a third-party portfolio manager under guidelines approved by the City.

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, 2022
(59)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value Measurements (Continued)
The City has the following recurring fair value measurements as of June 30, 2022:

Level 1 Level 2 Level 3 Total
US Treasury Bills $ 11,854,860 $ - $ - $ 11,854,860
U.S. Government Sponsored
Agency Securities - 14,831,129 - 14,831,129
Held by Trustee:

U.S. Government Sponsored
Agency Securities - 5,882,548 - 5,882,548
Total Investments $ 11,854,860 $ 20,713,677 $ - $ 32,568,537 Investments not Subject to Fair
Value Hierarchy:

Money Market Mutual Funds $ 58,814
State Investment Pool 68,054,199
Held by Trustee:

Money Market Mutual Funds 414,895
Total Investment Portfolio $ 101,096,445
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 - $ $ 19,293 $ 19,293
Gas Tax - 114,991 114,991
Sales Tax 2,209,984 - 2,209,984
Measure A - 258,052 258,052
Measure R 1,757,704 - 1,757,704
Grants and Contributions - 285,346 285,346
Other 164,180 428,011 592,191
Totals $ 4,131,868 $ 1,105,693 $ 5,237,561

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(60)
NOTE 4 CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2022 was as follows:

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

Land 101,161,035 $ - $ $ 101,161,035 - $
Construction in Progress 1,939,441 9,393,053 (6,930,476) 4,402,018 Total Capital Assets, Not Being
Depreciated 103,100,476 9,393,053 (6,930,476) 105,563,053 Capital Assets, Being Depreciated:

Buildings and Improvements 18,314,354 819,791 - 19,134,145 Improvements Other than Buildings 6,219,465 1,157,325 - 7,376,790 Vehicles and Equipment 3,890,508 699,337 - 4,589,845
Infrastructure 132,266,676 4,602,989 136,869,665
Right to Use Asset 207,453 - - 207,453
Intangible 436,609 - - 436,609
Total Capital Assets, Being
Depreciated 161,335,065 7,279,442 - 168,614,507
Less Accumulated Depreciation/Amortization for:

Buildings and Improvements (8,627,827) (483,173) - (9,111,000) Improvements Other than Buildings (2,621,170) (255,583) - (2,876,753) Vehicles and Equipment (2,644,683) (329,192) - (2,973,875) Infrastructure (72,211,176) (2,779,317) - (74,990,493)
Right to Use Asset - (41,491) - (41,491)
Intangible (420,249) (7,544) - (427,793)
Total Accumulated Depreciation/
Amortization (86,525,105) (3,896,300) - (90,421,405)
Total Capital Assets, Being
Depreciated, Net 74,809,960 3,383,142 - 78,193,102
Total Governmental Activities
Capital Assets, Net $ 177,910,436 $ 12,776,195 $ (6,930,476) $ 183,756,155 -

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(61)
NOTE 4 CAPITAL ASSETS (CONTINUED)
Beginning
Balance Ending
Business-Type Activities As Restated Additions Deletions Balance Capital Assets, Not Being Depreciated:

Land and Improvements $ 1,863,896 $ - $ 1,863,896 - $
Construction in Progress 10,356,656 5,521,792 (11,166,510) 4,711,938 Total Capital Assets, Not Being
Depreciated 12,220,552 5,521,792 (11,166,510) 6,575,834 Capital Assets, Being Depreciated:

Buildings and Improvements 1,579,694 329,185 - 1,908,879 Utility Plant 21,442,496 10,796,586 (284,587) 31,954,495 Wastewater Capacity Rights 25,605,543 - 25,605,543
Pipelines 77,468,068 43,941 77,512,009
Vehicles and Equipment 510,321 96,581 606,902
Fire Hydrants 2,152,973 - 2,152,973
Meters 3,568,680 - - 3,568,680
Right to Use Asset 34,932 - - 34,932
Total Capital Assets, Being
Depreciated 132,362,707 11,266,293 (284,587) 143,344,413 Less Accumulated Depreciation for:

Buildings and Improvements (834,879) (38,692) - (873,571) Utility Plant (7,440,469) (506,822) 278,180 (7,669,111) Wastewater Capacity Rights (10,420,426) (723,099) - (11,143,525) Pipelines (39,520,073) (1,671,869) - (41,191,942)
Vehicles and Equipment (244,515) (56,154) - (300,669)
Fire Hydrants (1,568,016) (13,789) - (1,581,805)
Meters (2,532,971) (357,162) - (2,890,133)
Right to Use Asset - (6,986) (6,986)
Total Accumulated Depreciation (62,561,349) (3,374,573) 278,180 (65,657,742) Total Capital Assets, Being
Depreciated, Net 69,801,358 7,891,720 (6,407) 77,686,671 Total Business-Type Activities
Capital Assets, Net $ 82,021,910 $ 13,413,512 $ (11,172,917) $ 84,262,505 -
-
-
-

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(62)
NOTE 4 CAPITAL ASSETS (CONTINUED)
Depreciation and amortization expense was charged to functions of the primary government as follows:

Governmental Activities:

General Government 270,191 $
Public Safety 197,139
Streets and Highways 2,367,303
Culture and Leisure 820,864
Capital Assets Held by the Government's Internal
Service Funds are Charged to the Various
Functions Based on Their Usage of the Assets:

Amortization 7,544
Depreciation 233,259
Total Depreciation Expense - Governmental
Activities $ 3,896,300
Business-Type Activities:

Water - Depreciation Expense $ 1,625,482
Sewer - Amortization Expense 723,099
Sewer - Depreciation Expense 1,025,992
Total Depreciation Expense - Business-Type
Activities $ 3,374,573
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, 2022
(63)
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 retireꞏ 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, 2021, and the contribution requirements for the fiscal year ended June 30, 2022, 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 - 62
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 13.350% 7.590%
Employer Payment of Unfunded Liability 1,235,292 $ $ 13,569 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 712,881 $
(1) The City has no active safety members and therefore the only required contribution for fiscal year ended June 30, 2022 was the employer portion of the unfunded liability.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(64)
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 2022 were $1,721,181 and $712,881 respectively.

B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2022, 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 8,752,780 $
Safety 5,216,274
Total Net Pension Liability 13,969,054 $
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, 2021, 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, 2020 rolled forward to June 30, 2021 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, 2022
(65)
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, 2020 and 2021 was as follows:

Miscellaneous Safety
Proportion - June 30, 2020 0.12256% 0.07384%
Proportion - June 30, 2021 0.16184% 0.09645%
Change - Increase (Decrease) 0.03928% 0.02261%
For the year ended June 30, 2022, the City recognized pension expense of $5,866,956 ($4,819,304 for miscellaneous and $1,047,652 for safety). At June 30, 2022, 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 $ 1,721,181 $ - $ 712,881 $ - $ 2,434,062 $ - Differences Between Expected
and Actual Experience 981,530 - 891,196 - 1,872,726 -
Change in Assumptions - - - - - -
Change in Employer's Proportion - (510,128) 16,687 (103,805) 16,687 (613,933) Differences between the Employer's
contributions and the employer's
proportionate share of contribution 138,498 - - (553,182) 138,498 (553,182) Net Differences Between Projected
and Actual Earnings on Plan
Investments - (7,640,714) - (3,104,686) - (10,745,400)
Total $ 2,841,209 $ (8,150,842) $ 1,620,764 $ (3,761,673) $ 4,461,973 $ (11,912,515)

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(66)
NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
$1,721,181 and $712,881 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, 2023 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
2023 $ (1,524,792) $ (623,088) $ (2,147,880)
2024 (1,616,687) (644,123) (2,260,810)
2025 (1,777,836) (732,212) (2,510,048)
2026 (2,111,501) (854,367) (2,965,868)
2027 - - -
Thereafter - - -
Actuarial Assumptions
The total pension liability for the June 30, 2021 the measurement period was determined by an actuarial valuation as of June 30, 2020, with update procedures used to roll forward the total pension liability to June 30, 2021. The total pension liability was based on the following assumptions:

Miscellaneous Safety
Valuation Date June 30, 2020 June 30, 2020
Measurement Date June 30, 2021 June 30, 2021
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, 2022
(67)
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, 2022
(68)
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 $ 14,713,965 $ 8,787,457 $ 23,501,422 Current Discount Rate 7.15% 7.15% 7.15%
Net Pension Liability $ 8,752,780 $ 5,216,274 $ 13,969,054 1% Increase 8.15% 8.15% 8.15%
Net Pension Liability $ 3,824,752 $ 2,282,989 $ 6,107,741 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.

C. Payable to the Pension Plans
At June 30, 2022, the City had no outstanding amount of contributions to the pension plans required for the year ended June 30, 2022.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(69)
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, 2022:

Beginning
Balance Additions Deletions Ending Due Within
As Restated Additions Deletions Balance One Year

GOVERNMENTAL ACTIVITIES
Direct Borrowings:

Leases payable 207,453 $ - $ $ (38,806) $ 168,647 $ 39,671 Other Long-Term Liabilities:

Claims and Judgments 477,935 991,083 (319,677) 1,149,341 218,875 Compensated Absences 794,888 414,956 (394,880) 814,964 203,742 Governmental Activities
Long-Term Liabilities $ 1,480,276 $ 1,406,039 $ (753,363) $ 2,132,952 $ 462,288

BUSINESS-TYPE ACTIVITIES
Direct Borrowings:

Leases payable $ 34,932 $ - $ (6,534) $ 28,398 $ 6,680
Loan Oblgation (WRCRWA) 5,884,080 - (296,478) 5,587,602 302,111 Total Direct Borrowings 5,919,012 - (303,012) 5,616,000 308,791 Other Debt:
2019 Revenue Refunding Bonds 36,120,000 - (1,045,000) 35,075,000 1,095,000 Add Premium on Issuance of Bonds 6,781,245 - (328,130) 6,453,115 - Other Debt, Net 42,901,245 - (1,373,130) 41,528,115 1,095,000 Business-Type Activities
Long-Term Liabilities $ 48,820,257 $ - $ (1,676,142) $ 47,144,115 $ 1,403,791 For governmental activities, claims and judgments and compensated absences are generally liquidated by the Internal Service Funds.

The City restated the long-term liabilities as of July 1, 2021 to reflect the leases payable for the governmental and business-type 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 12.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(70)
NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
B. Direct Borrowings
Loan Obligation - WRCRWA
During 2014, the Western Riverside County Regional Wastewater Authority (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, 2022, the debt payments to be made by the City for the revolving loan will be as follows:

Loan Obligation - WRCRWA
Fiscal Years Ending June 30, Principal Interest Total
2023 $ 106,164 302,111 $ 408,275 $
2024 307,850 100,425 408,275
2025 313,700 94,575 408,275
2026 319,660 88,615 408,275
2027 325,733 82,542 408,275
2028-2032 1,723,887 317,487 2,041,374
2033-2037 1,893,999 147,375 2,041,374
2038 400,662 7,613 408,275
Total 5,587,602 944,796 6,532,398
The assets acquired are as follows:

Wastewater Capacity Rights (Expansion) 7,812,297 $
Less: Accumulated Amortization (1,438,119)
Total $ 6,374,178
C. Leases Payable
The City leases equipment as well as certain operating and office facilities for various terms under long-term, noncancelable lease agreements. The leases expire at various dates through 2026 and with no renewal option.

Total future minimum lease payments under lease agreements are as follows:

Year Ending June 30 Principal Interest Total
2023 $ 46,351 $ 7,038 $ 53,389
2024 48,329 5,150 53,479
2025 50,204 3,184 53,388
2026 52,161 1,139 53,300
Totals $ 197,045 $ 16,511 $ 213,556
$ $ $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(71)
NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
D. 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, 2022 was $35,075,000.

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
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 1,275,000 1,330,875 2,605,875
2028-2032 7,395,000 5,606,375 13,001,375
2033-2037 9,330,000 3,657,425 12,987,425
2038-2042 7,640,000 1,535,200 9,175,200
2043-2047 2,820,000 687,000 3,507,000
2048-2050 1,980,000 120,800 2,100,800
Total $ 35,075,000 $ 18,768,175 $ 53,843,175
NOTE 7 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The composition of interfund balances at June 30, 2022, is as follows:

Due To/From Other Funds
Receivable Fund Payable Fund Amount
General Fund Nonmajor Funds $ 301,510
Water Enterprise Fund General Fund 27,662
Water Enterprise Fund Nonmajor Funds 19,082
Total $ 348,254
$ $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(72)
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, 2022, is as follows:

Interfund Transfers
Transfer In Transfer Out Amount
General Fund Water Enterprise Fund (1) $ 134,812
Sewer Enterprise Fund (1) 132,093
Other Governmental Funds(2) 1,500
Other Governmental Funds General Fund (3) 7,685
Other Governmental Funds Other Governmental Funds(4) 10,193 Total $ 286,283
(1) To allocate estimated annual costs related to future street repairs. (2) To allocate administrative overhead costs.
(3) To fund Gold Star families memorial project.
(4) To close fund.

NOTE 8 LEASES RECEIVABLE
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 six 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.

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NOTE 8 LEASES RECEIVABLE (CONTINUED)
The carrying value of the land leased to the Tenant is $5,500,000, which is not subject to depreciation.

In addition to the Silverlakes ground leases, the City acting as lessor, leases communication tower spaces to various telecommunication companies under long-term, noncancelable lease agreements. The leases expire at various dates and provide for renewal options ranging from one year to twenty-five years. As of July 1, 2021, the City restated the financial statements to include $13,724,657 in leases receivable with an offset of a similar amount to deferred inflows in the General fund.

During the year ended June 30, 2022, the City recognized $438,418 and $173,258 in lease revenue and interest revenue, respectively, pursuant to these contracts. Certain leases provide for increases in future minimum annual rental payments based on defined increases in the Consumer Price Index, subject to certain minimum increases.

Total future minimum lease payments to be received under lease agreements are as follows:

Year Ending June 30 Principal Interest Total
2023 $ 449,448 $ 197,519 $ 646,967
2024 801,060 189,409 990,469
2025 877,479 178,921 1,056,400
2026 612,136 168,736 780,872
2027 590,627 159,873 750,500
2028-2032 3,289,642 645,552 3,935,194
2033-2037 3,477,318 356,501 3,833,819
2038-2042 2,899,207 122,677 3,021,884
2043-2045 239,322 5,032 244,354
Totals $ 13,236,239 $ 2,024,220 $ 15,260,459
NOTE 9 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, 2022 was $6,304,926, of which $2,179,620 is recorded in the General Fund and $4,125,306 is recorded in the Sewer Enterprise Fund.

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NOTE 9 NOTES RECEIVABLE (CONTINUED)
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, 2022 was $7,022,673, of which $3,476,970 is recorded in the Water Enterprise Fund and $3,545,703 is recorded in the Sewer Enterprise Fund.

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, 2022, the outstanding balance on these loans receivable, net of a $81,930 allowance, was $2,368,595.

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 86 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 57 year affordability covenant period. The Loan is secured by a Second Deed ꞏof 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, 2022, the outstanding balance on this loan receivable was $4,487,663.

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, 2022, the outstanding balance on this noninterest bearing loan receivable from the Successor Agency was $420,000.

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 15 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.

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JUNE 30, 2022
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NOTE 9 NOTES RECEIVABLE (CONTINUED)
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, 2022, was $414,665.

NOTE 10 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 2,179,620 $ - $ $ - $ 2,179,620
Prepaids 4,164 - 3,000 7,164
Restricted by:

Granting Agencies, Developers,
and Assessment Districts - - 6,627,229 6,627,229
Low and Moderate
Income Housing - 16,591,918 - 16,591,918
Pension Benefits 2,111,067 - - 2,111,067
Committed for:

Measure R Projects 12,607,576 - - 12,607,576
Unassigned 27,463,836 - (146,894) 27,316,942
Total Fund Balances $ 44,366,263 $ 16,591,918 $ 6,483,335 $ 67,441,516 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 $2,179,620. The general fund balance also includes balances related to the Measure R, which includes committed fund balance of $12,607,576 and unassigned fund balance of $29,574,903.

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, 2022, the fund balance reserved for this stabilization arrangement totaled $5,920,204, which is included in unassigned fund balance of the general fund in the accompanying financial statements.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
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NOTE 11 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, 2022, 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 $ 3,315,000 $ 492,565 $ 3,807,565 Community Facilities District 2001-1
2017 Special Tax Refunding Bond 22,415,000 7,723,375 30,138,375 Community Facilities District
2002-1 2013 Refinanced Norco 50 885,250 201,372 1,086,622 Totals $ 26,615,250 $ 8,417,312 $ 35,032,562
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.

NOTE 12 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, 2022, the amount of these liabilities was $1,149,341. The amount represents an estimate of $1,094,611 for reported claims through June 30, 2022, and $54,730 estimate of incurred but not reported claims.

This liability is the City’s best estimate based on available information.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
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NOTE 12 RISK MANAGEMENT (CONTINUED)
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 $ 426,746 $ 401,747 $ 267,679 $ 560,814
2022 560,814 908,203 319,676 1,149,341
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.

NOTE 13 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 contributed up to $1,250 of the current monthly required premium costs of active and nonvested retired employees hired prior to 2004 for fiscal year 2022.

Effective July 1, 2022 the contribution was increased to $1,500 from $1,250. Additional contributions are made into a prefunded trust account as funds become available.

Employees Covered
As of the June 30, 2021 measurement date, the following current and former employees were covered by the benefit terms under the plan:

Inactive Employees or Beneficiaries Currently
Receiving Benefits 91
Inactive Employees or Beneficiaries Entitled to
But Not Yet Receiving Benefits 10
Active Employees 67
Total 168
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.

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NOTE 13 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
A. General Information about the OPEB Plan (Continued)
Contributions (Continued)
The annual contribution is based on the actuarially determined contribution. For the measurement period 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. For fiscal year 2022, the City contributed $1,486,702 which included $400,000 payment to the trust, $126,000 estimated implied subsidy and $960,702 for premiums.

B. Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2021 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2021. 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, 2021 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Valuation Date June 30, 2021
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method
Contribution Policy City is effectively contributing full ADC Actuarial Assumptions:

Discount Rate 6.25%
Inflation 2.50%
Projected Salary Increase 3.00% per annum, in aggregate Expected Long-Term Investment Rate
of Return 6.75%
Medical Trend Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076
Medicare (Non-Kiaser) - 5.65% for 2023,
decreasing to an ultimate rate of 3.75% in 2076
Medicare (Kiaser) - 4.60% for 2023,
decreasing to an ultimate rate of 3.75% 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

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NOTE 13 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
B. Net OPEB Liability (Continued)
Actuarial Assumptions (Continued)
The actuarial assumptions used in the June 30, 2021 valuation were based on a standard set of assumptions the actuary has used for similar valuations, modified as appropriate for the City.

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, 2021 are summarized in the following table:

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

Global Equity 59.00% 4.56%
Fixed Income 25.00 0.78%
TIPS 5.00 -0.08%
Commodities 3.00 1.20%
REITs 8.00 4.60%
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.

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NOTE 13 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, 2021
(June 30, 2020 Measurement Date) 17,192,813 $ 10,505,767 $ 6,687,046 $ Changes in the Year:

Service Cost 391,160 - 391,160
Interest on the Total OPEB Liability 1,151,089 - 1,151,089 Differences Between Actual and
Expected Experience (1,324,810) - (1,324,810)
Changes in Assumptions 675,366 - 675,366
Changes in Benefit Terms - - -
Contribution - Employer - 1,364,011 (1,364,011)
Net Investment Income - 2,890,404 (2,890,404)
Benefit Payments (1,061,595) (1,061,595) -
Administrative Expenses - (6,394) 6,394
Net Changes (168,790) 3,186,426 (3,355,216)
Balance at June 30, 2022
(June 30, 2021 Measurement Date) $ 17,024,023 $ 13,692,193 $ 3,331,830 Change of Assumptions
The inflation adjustment was reduced from 2.75% to 2.5% which reduced the discount rate, medical trend, and the aggregate payroll increased by .25%.

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 (5.25%) or one percentage point higher (7.25%) than the current discount rate:
1% Decrease Discount Rate 1% Increase
(5.25%) (6.25%) (7.25%)
Net OPEB Liability $ 5,325,981 $ 3,331,830 $ 1,670,881

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NOTE 13 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 1,674,869 $ 3,331,830 $ 5,249,653 $
* Non-Medicare: 5.50% for 2023, decreasing to an ultimate rate of 2.75% in 2076 / Medicare: 4.65% for 2023, decreasing to an ultimate rate of 2.75% in 2076 ** Non-Medicare: 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076 / Medicare: 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076 *** Non-Medicare: 7.5% for 2023, decreasing to an ultimate rate of 4.75% in 2076 / Medicare: 6.65% for 2023, decreasing to an ultimate rate of 4.75% in 2076 D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2022, the City recognized OPEB expense of $365,401. At June 30, 2022, 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 $ 1,486,702 $ -
Differences Between Actual and Expected
Experience - (1,628,109)
Change in Assumptions 534,665 (216,146)
Differences Between Projected and Actual Earnings - (1,553,677) Total $ 2,021,367 $ (3,397,932)

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NOTE 13 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)
$1,486,702 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 ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

Year Ending June 30, Amount
2023 $ (1,026,626)
2024 (747,255)
2025 (544,948)
2026 (544,438)
2027 -
Thereafter -
E. Payable to the OPEB Plan
At June 30, 2022, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2022.

NOTE 14 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.

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NOTE 14 SUCCESSOR AGENCY – PRIVATE-PURPOSE TRUST FUND (CONTINUED) Successor Agency Capital Assets
The Successor agency capital assets at June 30, 2022, 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 $ -
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) $ 9,130,000 $ - $ (350,000) $ 8,780,000 $ 370,000 2017A RDA Bond
(2005 and 2010 Refunds) 13,995,000 - (2,010,000) 11,985,000 2,090,000 2017B RDA Bond 21,415,000 - (320,000) 21,095,000 325,000 (2005 and 2010 Refunds)
2014 Refunding TAB 12,135,000 - 12,135,000 -
2014 TARB (School
District Pass-Through) 7,800,000 - (550,000) 7,250,000 575,000 Payable 64,475,000 - (3,230,000) 61,245,000 3,360,000
Plus (Less) Deferred Amounts:

Premium 2,349,006 - (358,076) 1,990,930 -
Discounts (85,836) - 6,604 (79,232) -
Total Long-Term Debt $ 66,738,170 $ - $ (3,581,472) $ 63,156,698 $ 3,360,000 The following amount is classified as a deferred outflow of resources.

Beginning Ending
Balance Additions Deletions Balance
Deferred Losses on Refundings $ 3,002,441 $ - $ (264,644) $ 2,737,797 Future debt service requirements are as follows:

Fiscal Years Ending June 30, Principal Interest Total
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 4,425,000 2,066,678 6,491,678
2028-2032 25,760,000 7,267,043 33,027,043
2033-2036 16,710,000 1,412,743 18,122,743
Total $ 61,245,000 $ 20,630,575 $ 81,875,575

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NOTE 14 SUCCESSOR AGENCY – PRIVATE-PURPOSE TRUST FUND (CONTINUED) Successor Agency Long-Term Debt (Continued)
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.

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 1.90% to 4.0% payable semiannually on March 1 and September 1.

Successor Agency Deficit Net Position
At June 30, 2022, deficit net position was reported for the Successor Agency PrivatePurpose Trust Fund in the amount of $(53,680,896). 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.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
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NOTE 15 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.

Successor Agency
Deductions (expenses) incurred by the Successor Agency for the year ended June 30, 2022 (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 16 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.

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. Assets purchased from WRCRWA as wastewater capacity rights which is further disclosed in Note 4. The District’s participation in WRCRWA is accounted for as a joint venture without equity interest.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(86)
NOTE 16 JOINT VENTURES (CONTINUED)
Western Riverside County Regional Wastewater Authority (Continued) 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.

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, 2022, the City is entitled to approximately 2,795-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.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
(87)
NOTE 17 RESTATEMENT
Net Position and Fund Balances as of July 1, 2021 were restated as follows:

Sewer
Govenmental Business-Type General Enterprise
Activities Activities Fund Fund
Net Position/Fund Balance as
Orginally Reported, July 1, 2022 218,689,136 $ 67,781,864 $ 32,315,924 $ 34,670,675 $ To increase net position/fund
balance to reduce liablity for
deposits which should have
been reported as revenue
have been reported as revenue 256,741 - 256,741 -
To transfer revenue revenue
to the correct fund/activity 441,268 (441,268) 441,268 (441,268) Net Position/Fund Balance as
Restated, July 1, 2022 $ 219,387,145 $ 67,340,596 $ 33,013,933 $ 34,229,407

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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. (91)
Miscellaneous
Fiscal Year Ended 2022 2021 2020 2019 2018 2017 2016 2015 Measurement Period June 30, 2021 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 0.161840% 0.122557% 0.124400% 0.125637% 0.125779% 0.128940% 0.136334% 0.124419% Plan's Proportionate Share of
the Net Pension Liability 8,752,780 $ 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 4,313,788 $ 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 202.90% 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 80.61% 69.47% 75.26% 75.26% 73.31% 74.06% 78.40% 79.28% Plan's Proportionate Share of
Aggregate Employer
Contributions 1,431,557 $ 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, 2022:

There were no changes in assumptions.
* Fiscal year 2015 was the first year of implementation and therefore only eight 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. (92)
Safety
Fiscal Year Ended 2022 2021 2020 2019 2018 2017 2016 2015 Measurement Period June 30, 2021 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 0.096450% 0.073840% 0.073210% 0.073212% 0.070751% 0.069627% 0.065974% 0.056770% Plan's Proportionate Share of
the Net Pension Liability 5,216,274 $ 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 n/a Plan's Proportionate Share of
the Fiduciary Net Position
as a Percentage of the Plan's
Total Pension Liability 80.34% 69.54% 75.26% 75.26% 73.31% 74.06% 78.40% 79.28% Plan's Proportionate Share of
Aggregate Employer
Contributions $ 1,138,700 $ 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, 2022:

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

CITY OF NORCO

SCHEDULE OF CONTRIBUTIONS
CalPERS MISCELLANEOUS PENSION PLAN
LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (93)
Miscellaneous
Fiscal Year Ended 2022 2021 2020 2019 2018 2017 2016 2015 Contractually Required
Contribution
(Actuarially Determined) $ 1,721,181 $ 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 (1,721,181) (1,571,215) (1,414,690) (1,259,910) (1,113,674) (1,024,502) (909,938) (629,318) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - Covered Payroll $ 4,611,224 $ 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 37.33% 36.42% 35.75% 33.62% 31.21% 29.71% 30.14% 22.60% Notes to Schedule:

Valuation Date 6/30/2019 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 Entry Age Amortization Method (1) (1) (1) (1) (1) (1) (1) (1)
Asset Valuation Method Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value 15 Year Smoothed
Method
Inflation 2.500% 2.500% 2.625% 2.75% 2.75% 2.75% 2.75% 2.75% Salary Increases (2) (2) (2) (2) (2) (2) (2) (2)
Investment Rate of Return 7.15% (3) 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) (4)
Mortality (5) (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 eight years are shown.

CITY OF NORCO

SCHEDULE OF CONTRIBUTIONS
CalPERS SAFETY PENSION PLAN
LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (94)
Safety
Fiscal Year Ended 2022 2021 2020 2019 2018 2017 2016 2015 Contractually Required
Contribution
(Actuarially Determined) $ 712,881 $ 691,954 $ 626,617 $ 442,868 $ 352,670 $ 286,893 $ 50,202 $ - Contributions in Relation to
the Actuarially Determined
Contributions (712,881) (691,954) (626,617) (442,868) (352,670) (286,893) (50,202) - Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - Covered Payroll $ - $ - $ - $ - $ - $ - $ - $ -
Contributions as a Percentage
of Covered Payroll n/a n/a n/a n/a n/a n/a n/a n/a
Notes to Schedule:

Valuation Date 6/30/2019 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 Entry Age Amortization Method (1) (1) (1) (1) (1) (1) (1) (1)
Asset Valuation Method Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value 15 Year Smoothed
Method
Inflation 2.500% 2.500% 2.625% 2.75% 2.75% 2.75% 2.75% 2.75% Salary Increases (2) (2) (2) (2) (2) (2) (2) (2)
Investment Rate of Return 7.15% (3) 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) (4)
Mortality (5) (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 eight years are shown.

CITY OF NORCO

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (95)
Fiscal Year End 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Measurement Date 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 Total OPEB Liability:

Service Cost $ 391,160 $ 386,463 $ 370,509 $ 359,717 $ 349,240 Interest on Total OPEB Liability 1,151,089 1,142,355 1,232,375 1,194,701 1,160,164 Actual Versus Expected Experience (1,324,810) - (1,820,659) - - Assumption Changes 675,366 (335,762) (93,065) - -
Benefit Payments (1,061,595) (1,075,132) (1,002,349) (1,011,788) (1,004,657) Net Change in Total OPEB Liability (168,790) 117,924 (1,313,189) 542,630 504,747 Total OPEB Liability - Beginning of Year 17,192,813 17,074,889 18,388,078 17,845,448 17,340,701 Total OPEB Liability - End of Year (a) 17,024,023 17,192,813 17,074,889 18,388,078 17,845,448 Plan Fiduciary Net Position:

Contributions - Employer 1,364,011 1,377,588 1,304,406 1,411,788 1,404,657 Net Investment Income 2,890,404 346,958 564,067 632,351 723,361 Benefit Payments (1,061,595) (1,075,132) (1,002,349) (1,011,788) (1,004,657) Administrative Expenses (6,395) (7,278) (3,990) (14,830) (3,693) Net Change in Plan Fiduciary Net Position 3,186,425 642,136 862,134 1,017,521 1,119,668 Plan Fiduciary Net Position - Beginning of Year 10,505,768 9,863,632 9,001,498 7,983,977 6,864,309 Plan Fiduciary Net Position - End of Year (b) 13,692,193 10,505,768 9,863,632 9,001,498 7,983,977 Net OPEB Liability - Ending (a)-(b) $ 3,331,830 $ 6,687,045 $ 7,211,257 $ 9,386,580 $ 9,861,471 Plan Fiduciary Net Position as a Percentage of the
Total OPEB Liability 80.43% 61.11% 57.77% 48.95% 44.74% Covered Payroll $ 4,101,592 $ 4,242,679 $ 4,035,704 $ 3,836,205 $ 3,610,147 Net OPEB Liability as Percentage of
Covered Payroll 81.2% 157.6% 178.7% 244.7% 273.2%
Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

There were no changes in assumptions for the measurement periods ended June 30, 2017, 2018 and 2020.

For the measurement period ended June 30, 2019, the mortality improvement scale was updated to Scale MP-2019 * Fiscal year 2018 was the first year of implementation and therefore only five years are shown.

CITY OF NORCO

SCHEDULE OF CONTRIBUTIONS

OPEB PLAN
LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (96)
Fiscal Year End 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Actuarially Determined Contribution $ 827,000 $ 803,000 $ 1,050,000 $ 1,019,000 $ 1,201,000 Contributions In Relation to the Actuarially
Determined Contributions (1,486,702) (1,364,011) (1,377,588) (1,304,406) (1,411,788) Contribution Deficiency (Excess) $ (659,702) $ (561,011) $ (327,588) $ (285,406) $ (210,788) Covered Payroll $ 4,419,396 $ 4,101,592 $ 4,242,679 $ 4,035,704 $ 3,836,205 Contributions as a Percentage of
Covered Payroll 33.64% 33.26% 32.47% 32.32% 36.80%
Notes to Schedule:

Valuation Date 6/30/2021 6/30/2019 6/30/2017 6/30/2017 6/30/2017 Methods and Assumptions Used to Determine
Contribution Rates:

Actuarial Cost Method Entry Age (1) Entry Age (1) Entry Age (1) Entry Age (1) Entry Age (1) Amortization Method (1) (1) (1) (1) (1)
Amortization Period (2) (2) (3) (4) (5)
Asset Valuation Method (6) (6) (6) (6) (6)
Discount Rate 6.75% 6.75% 6.75% 6.75% 7.25%
Inflation 2.75% 2.75% 2.75% 2.75% 3.00%
Salary Increases 3.00% 3.00% 3.00% 3.00% 3.00%
Medical Trend (7) (7) (8) (8) (9)
Mortality (10) (10) (10) (10) (11)
Mortality Improvement (12) (12) (13) (13) (14)
(1) Level percentage of pay
(2) 29-year and 28 year average fixed period for 2020/21 and 2021/2022 (3) 23-year average fixed period for 2019/20
(4) 24-year fixed average period on average for 2018/19 (5) 22-year fixed period on average for 2017/18
(6) Investment gains and losses spread over 5-year rolling period Non-Medicare - 7.25% for 2021, decreasing to an ultimate rate of 4.0% in 2076 (7) Medicare - 6.3% for 2021, decreasing to an ultimate rate of 4.0% in 2076 Non-Medicare - 7.5% for 2019 and 2020, decreasing to an ultimate rate of 4.0% in 2076 (8) Medicare - 6.5% for 2019 and 2020, decreasing to an ultimate rate of 4.0% in 2076 Non-Medicare - 7.0% for 2017, decreasing to an ultimate rate of 5.0% in 2021 (9) Medicare - 7.2% for 2017, decreasing to an ultimate rate of 5.0% in 2021 (10) CalPERS 1997-2015 experience study
(11) CalPERS 1997-2011 experience study
(12) Mortality projected fully generational with Scale MP-2019 (13) Postretirement mortality projected fully generational with Scale MP-17 (14) Mortality projected fully generational with Scale MP-14 modified to converge in 2022 * Fiscal year 2018 was the first year of implementation and therefore only five years are shown.

CITY OF NORCO
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
YEAR ENDED JUNE 30, 2022
See accompanying Note to Required Supplementary Information. (97)
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Taxes $ 23,300,185 $ 27,665,348 $ 29,472,885 $ 1,807,537 Licenses and Permits 1,154,714 2,165,719 2,608,829 443,110 Fines and Forfeitures 528,714 496,032 593,357 97,325
Development Fees - - 2,000,000 2,000,000
Intergovernmental 21,118 31,565 200,900 169,335
Charges for Services 3,235,549 3,465,731 3,723,904 258,173 Investment Earnings 165,762 139,705 (586,733) (726,438) Lease Income 896,498 611,758 438,430 (173,328)
Reimbursements 25,310 25,310 4,956 (20,354)
Other 59,645 83,482 306,355 222,873
Total Revenues 29,387,495 34,684,650 38,762,883 4,078,233

EXPENDITURES
Current:

General Government 7,601,031 7,571,463 7,423,414 148,049 Public Safety 12,219,957 11,169,957 9,922,238 1,247,719 Streets and Highways 931,698 1,031,698 895,132 136,566
Community and Economic
Development 1,924,899 1,924,899 1,533,160 391,739
Culture and Leisure 2,611,724 2,783,107 2,703,603 79,504 Capital Outlay 10,815,074 14,440,033 5,193,726 9,246,307 Total Expenditures 36,104,383 38,921,157 27,671,273 11,249,884 Excess (Deficiency) of Revenues
Over (Under) Expenditures (6,716,888) (4,236,507) 11,091,610 15,328,117

OTHER FINANCING SOURCES (USES)
Transfers In 369,454 376,654 268,405 (108,249)
Transfers Out (15,408) (28,093) (7,685) 20,408
Total Other Financing Sources
(Uses) 354,046 348,561 260,720 (87,841)
NET CHANGE IN FUND BALANCE (6,362,842) (3,887,946) 11,352,330 15,240,276 Fund Balance - Beginning of Year 33,013,933 33,013,933 33,013,933 - FUND BALANCE - END OF YEAR $ 26,651,091 $ 29,125,987 $ 44,366,263 $ 15,240,276

CITY OF NORCO

NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2022
(98)
NOTE 1 GENERAL BUDGET POLICIES
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds except for the Major Housing Successor Agency Low and Moderate Income Housing Special Revenue Fund, the Nonmajor CalHome Grant Special Revenue Fund and the Nonmajor Facility Improvement Capital Projects Fund. The legal level of budgetary control is the fund level.

Each City department is required to submit requests for annual appropriation to the City manager that are used as the starting point for developing a proposed budget. The City manager presents a proposed budget to Council for review through staff and council budget workshops. At the completion of the budget workshops, the City council is required to have one public hearing to further review the proposed budget. At the conclusion of the public hearings, the budget is required to be adopted by a majority vote of the City council no later than June 30, which is the close of the City’s fiscal year. The Council made several supplemental budgetary appropriations throughout the year, these supplemental appropriations were immaterial. The appropriated budget is prepared by fund and department. Within each department, the budget is further detailed by expenditure type (e.g., salaries and benefits). At fiscal year-end, all operating budget appropriations lapsed.

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COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

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COMBINING NONMAJOR GOVERNMENTAL FUNDS

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CITY OF NORCO

NONMAJOR GOVERNMENTAL FUNDS

FUND DESCRIPTIONS
JUNE 30, 2022
(103)
Special Revenue Funds
Special Revenue Funds. Are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.

Miscellaneous Grants – To account for the receipt and expenditure of miscellaneous grants not accounted for in a separate fund.

Community Development Block Grant – To account for federal grants under the Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) Program.

Gas Tax – To account for the repair and maintenance of streets and traffic signals of the City.

Financing is through the State Highway Users Tax Sections 2105, 2106, 2107, and 2107.5 of the Streets and Highways Code.

SB1 Road Maintenance Rehabilitation – To account for road maintenance and rehabilitation of local street and road systems. Financing is through transportation taxes allocated under the Road Repair and Accountability Act of 2017.

Measure A – To account for the construction, reconstruction, alteration, and maintenance of the streets of the City. Financing is through the Riverside County Transportation Commission half-cent sales tax.

National Pollutant Discharge Elimination System (NPDES) – To account for the proceeds of the charge 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 Proposition 218.

Air Quality Improvement Trust – To account for the receipt of AB 2766 funds to implement programs that reduce air pollution from motor vehicles. Local Governments receive forty percent of the motor vehicle registration fee surcharge of $4 per vehicle collected by the Department of Motor Vehicles.

Supplemental Law Enforcement Block Grant – To account for grant funds used for front line law enforcement services.

Landscape Maintenance District #1 – To account for the cost of operation, maintenance, and servicing of the improvements for the Beazer Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

Landscape Maintenance District #2 – To account for the cost of operation, maintenance, and servicing of the improvements for the Norco Estates/Western Pacific Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

Landscape Maintenance District #3 – To account for the cost of operation, maintenance, and servicing of the improvements for the Centex Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

Landscape Maintenance District #4 – To account for the cost of operation, maintenance, and servicing of the improvements for the Norco Ridge Ranch Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

CITY OF NORCO

NONMAJOR GOVERNMENTAL FUNDS

FUND DESCRIPTIONS
JUNE 30, 2022
(104)
Landscape Maintenance District #5 – To account for the cost of operation, maintenance, and servicing of the improvements for the K. B. Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

CalHome Grant – To account for the receipt and expenditure of the CalHome grant program.

American Rescue Plan Act (ARPA) – To account for the receipt and expenditure of the American Rescue Plan Act of 2021 program.

CITY OF NORCO

NONMAJOR GOVERNMENTAL FUNDS

FUND DESCRIPTIONS
JUNE 30, 2022
(105)
Capital Projects Funds
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.

Storm Drain – To account for the construction of channels and storm drains to mitigate the storm water run-off impacts caused by new development. Financing is through an impact fee imposed on all new development in the City.

General Government Improvement – To account for the construction of general government facilities such as a new government center, additional library facilities, and other general capital needs.

Financing is through an impact fee imposed on all new development in the City.

Fire Improvement – To account for the construction of fire stations and the purchase of fire equipment.

Financing is through an impact fee imposed on all new development in the City.

Trails Improvement – To account for the acquisition, improvement, and development of equestrian pedestrian trails. Financing is through an impact fee imposed on all new development in the City.

Park Improvement – To account for the acquisition, improvement, and development of park and open space land and recreational facilities. Financing is through an impact fee imposed on all new development in the City.

Public Meeting – To account for the construction of additional community center space.

Street Improvement – To account for the cost of street improvements including widening and reconstruction, traffic signals, street landscaping, intersection improvements, and freeway interchange improvements. Financing is through an impact fee imposed on all new development in the City.

Aquatics Center – To account for the cost of expanding the aquatics center to meet the added demands created by the construction of additional residential dwelling units.

Animal Control – To account for the expansion of the animal control facilities and will increase the number of response and investigator vehicles.

Facility Improvement – To account for resources that are to be used for the replacement or major capital improvements of City facilities such as libraries and community centers.

CITY OF NORCO

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2022
(106)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Prepaids
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Deposits Payable
Unearned Revenues
Total Liabilities
Deferred Inflows of Resources:

Unavailable Revenues
Fund Balances (Deficits):

Nonspendable
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Special Revenue Funds
Community SB1 Road
Miscellaneous Development Maintenance
Grants Block Grant Gas Tax Rehabilitation Measure A
$ - $ - $ 111,098 $ 233,176 $ 776,260
82,280 - - - -
- - 149 298 1,656
- - - - -
285,346 - 114,991 48,209 258,052
- - - - -
$ 367,626 $ - $ 226,238 $ 281,683 $ 1,035,968
$ 61,921 $ - $ 27,235 $ - $ 388,491
9,479 - - 53,437 43,266
270,377 - - - -
- - - - -
- - - - -
341,777 - 27,235 53,437 431,757
- - - - -
- - - - -
25,849 - 199,003 228,246 604,211
- - - - -
25,849 - 199,003 228,246 604,211
$ 367,626 $ - $ 226,238 $ 281,683 $ 1,035,968

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2022
(107)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Prepaids
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Deposits Payable
Unearned Revenues
Total Liabilities
Deferred Inflows of Resources:

Unavailable Revenues
Fund Balances (Deficits):

Nonspendable
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Special Revenue Funds
Supplemental
Air Quality Law Landscape Landscape
Improvement Enforcement Maintenance Maintenance
NPDES Trust Block Grant District #1 District #2
$ 143,864 19,019 $ - $ $ 3,238 $ -
- - - - 10,009
- 224 - - (30)
- - - - -
51,492 9,310 - 158 3,632
- 3,000 - - -
$ 70,511 $ 156,398 $ - $ 3,396 $ 13,611
$ 23,118 $ - $ - $ 2,244 $ 8,311
- - - - -
- - - 417 6,056
- - - - -
- - - - -
23,118 - - 2,661 14,367
- - - - -
- 3,000 - - -
47,393 153,398 - 735 -
- - - - (756)
47,393 156,398 - 735 (756)
$ 70,511 $ 156,398 $ - $ 3,396 $ 13,611

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2022
(108)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Prepaids
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Deposits Payable
Unearned Revenues
Total Liabilities
Deferred Inflows of Resources:

Unavailable Revenues
Fund Balances (Deficits):

Nonspendable
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Special Revenue Funds
Landscape Landscape Landscape American
Maintenance Maintenance Maintenance CalHome Rescue Plan District #3 District #4 District #5 Grant Act
$ 366,426 15,640 $ 152,885 $ 64,405 $ 401,742 $
1,683 57 - - -
15 522 224 104 -
- - - 414,665 -
1,898 9,999 3,606 - -
- - - - -
$ 19,236 $ 377,004 $ 156,715 $ 479,174 $ 401,742
$ 5,517 $ 30,928 $ 3,995 $ - $ 203,642
- - - - -
4,497 8,595 1,203 - -
- 6,400 - - -
- - - - 198,100
10,014 45,923 5,198 - 401,742
- - - 414,665 -
- - - - -
9,222 331,081 151,517 64,509 -
- - - - -
9,222 331,081 151,517 64,509 -
$ 19,236 $ 377,004 $ 156,715 $ 479,174 $ 401,742

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2022
(109)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Prepaids
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Deposits Payable
Unearned Revenues
Total Liabilities
Deferred Inflows of Resources:

Unavailable Revenues
Fund Balances (Deficits):

Nonspendable
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Special
Revenue Funds Capital Projects Funds
General
Total Special Government Fire Trails
Revenue Funds Storm Drain Improvement Improvement Improvement $ - 2,287,753 $ $ 547,358 $ 810,502 $ 205,858
94,029 197,928 - - -
3,162 2 938 1,268 328
414,665 - - - -
786,693 - - - -
3,000 - - - -
$ 3,589,302 $ 197,930 $ 548,296 $ 811,770 $ 206,186
$ 755,402 $ 115,724 $ 7,526 $ - $ -
106,182 969 23,376 - -
291,145 29,447 - - -
6,400 - - - -
198,100 - - - -
1,357,229 146,140 30,902 - -
414,665 197,928 - - -
3,000 - - - -
1,815,164 - 517,394 811,770 206,186
(756) (146,138) - - -
1,817,408 (146,138) 517,394 811,770 206,186
$ 3,589,302 $ 197,930 $ 548,296 $ 811,770 $ 206,186

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2022
(110)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Prepaids
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Deposits Payable
Unearned Revenues
Total Liabilities
Deferred Inflows of Resources:

Unavailable Revenues
Fund Balances (Deficits):

Nonspendable
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Capital Projects Funds
Park Public Street Aquatics Animal
Improvement Meeting Improvement Center Control
$ 660,405 $ 120,053 $ 2,153,440 $ - $ 43,350
- - 25,000 - -
1,030 194 3,463 - 75
- - - - -
- - 319,000 - -
- - - - -
$ 661,435 $ 120,247 $ 2,500,903 $ - $ 43,425
$ 254 $ - $ 104,137 $ - $ -
- - 71,976 - -
- - - - -
- - - - -
- - - - -
254 - 176,113 - -
- - - - -
- - - - -
661,181 120,247 2,324,790 - 43,425
- - - - -
661,181 120,247 2,324,790 - 43,425
$ 661,435 $ 120,247 $ 2,500,903 $ - $ 43,425

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2022
(111)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Prepaids
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Deposits Payable
Unearned Revenues
Total Liabilities
Deferred Inflows of Resources:

Unavailable Revenues
Fund Balances (Deficits):

Nonspendable
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Capital Projects Funds
Total
Nonmajor
Facility Total Capital Governmental
Improvement Projects Funds Funds
$ 126,957 $ 4,667,923 $ 6,955,676
- 222,928 316,957
115 7,413 10,575
- - 414,665
- 319,000 1,105,693
- - 3,000
$ 127,072 $ 5,217,264 $ 8,806,566
$ - $ 227,641 $ 983,043
- 96,321 202,503
- 29,447 320,592
- - 6,400
- - 198,100
- 353,409 1,710,638
- 197,928 612,593
- - 3,000
127,072 4,812,065 6,627,229
- (146,138) (146,894)
127,072 4,665,927 6,483,335
$ 127,072 $ 5,217,264 $ 8,806,566

CITY OF NORCO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
(112)

REVENUES
Taxes
Assessments
Development Fees
Intergovernmental
Charges for Services
Investment Earnings (Loss)
Other
Total Revenues

EXPENDITURES
Current:

General Government
Public Safety
Streets and Highways
Community and Economic Development
Culture and Leisure
Capital Outlay:

Other
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures

OTHER FINANCING SOURCES (USES)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)

NET CHANGE IN FUND BALANCES
Fund Balances (Deficits) - Beginning of Year

FUND BALANCES (DEFICITS) - END

OF YEAR
Special Revenue Funds
Community SB1 Road
Miscellaneous Development Maintenance
Grant Block Grant Gas Tax Rehabilitation Measure A
$ - $ - $ - $ - $ 1,019,731
- - - - -
- - - - -
273,263 14,049 639,729 541,742 -
194,309 - - - -
- - (1,069) (2,269) (13,652)
- - - - -
467,572 14,049 638,660 539,473 1,006,079
- - - - -
13,133 - - - -
- - 488,901 527,247 1,181,666
82,217 - - - -
372,225 14,049 - - -
- - - - -
467,575 14,049 488,901 527,247 1,181,666
(3) - 149,759 12,226 (175,587)
- - - - -
- - - - -
- - - - -
(3) - 149,759 12,226 (175,587)
25,852 - 49,244 216,020 779,798
$ 25,849 $ - $ 199,003 $ 228,246 $ 604,211

CITY OF NORCO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
(113)

REVENUES
Taxes
Assessments
Development Fees
Intergovernmental
Charges for Services
Investment Earnings (Loss)
Other
Total Revenues

EXPENDITURES
Current:

General Government
Public Safety
Streets and Highways
Community and Economic Development
Culture and Leisure
Capital Outlay:

Other
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures

OTHER FINANCING SOURCES (USES)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)

NET CHANGE IN FUND BALANCES
Fund Balances (Deficits) - Beginning of Year

FUND BALANCES (DEFICITS) - END

OF YEAR
Special Revenue Funds
Supplemental
Air Quality Law Landscape Landscape
Improvement Enforcement Maintenance Maintenance
NPDES Trust Block Grant District #1 District #2
$ - 119,957 $ $ - $ - $ -
- - - 10,297 159,783
- - - - -
- 34,163 161,285 - -
- - - - -
7 (1,696) - - 60
- - - - -
119,964 32,467 161,285 10,297 159,843
- - - - -
- - 161,285 - -
148,117 - - 12,033 121,788
- - - - -
- - - - -
- - - - -
148,117 - 161,285 12,033 121,788
(28,153) 32,467 - (1,736) 38,055
- - - - -
- (1,500) - - -
- (1,500) - - -
(28,153) 30,967 - (1,736) 38,055
75,546 125,431 - 2,471 (38,811)
$ 47,393 $ 156,398 $ - $ 735 $ (756)

CITY OF NORCO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
(114)

REVENUES
Taxes
Assessments
Development Fees
Intergovernmental
Charges for Services
Investment Earnings (Loss)
Other
Total Revenues

EXPENDITURES
Current:

General Government
Public Safety
Streets and Highways
Community and Economic Development
Culture and Leisure
Capital Outlay:

Other
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures

OTHER FINANCING SOURCES (USES)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)

NET CHANGE IN FUND BALANCES
Fund Balances (Deficits) - Beginning of Year

FUND BALANCES (DEFICITS) - END

OF YEAR
Special Revenue Funds
Landscape Landscape Landscape American
Maintenance Maintenance Maintenance CalHome Rescue Plan District #3 District #4 District #5 Grant Act
$ - $ - $ - $ - $ -
89,466 464,122 64,524 - -
- - - - -
- - - - 2,884,273
- - - - -
(131) (4,196) (1,828) (849) -
- 57 - - -
89,335 459,983 62,696 (849) 2,884,273
- - - - 2,884,273
- - - - -
92,598 481,440 50,943 - -
- - - - -
- - - - -
- - - - -
92,598 481,440 50,943 - 2,884,273
(3,263) (21,457) 11,753 (849) -
- - - - -
- - - - -
- - - - -
(3,263) (21,457) 11,753 (849) -
12,485 352,538 139,764 65,358 -
$ 9,222 $ 331,081 $ 151,517 $ 64,509 $ -

CITY OF NORCO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
(115)

REVENUES
Taxes
Assessments
Development Fees
Intergovernmental
Charges for Services
Investment Earnings (Loss)
Other
Total Revenues

EXPENDITURES
Current:

General Government
Public Safety
Streets and Highways
Community and Economic Development
Culture and Leisure
Capital Outlay:

Other
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures

OTHER FINANCING SOURCES (USES)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)

NET CHANGE IN FUND BALANCES
Fund Balances (Deficits) - Beginning of Year

FUND BALANCES (DEFICITS) - END

OF YEAR
Special
Revenue Funds Capital Projects Funds
General
Total Special Government Fire Trails
Revenue Funds Storm Drain Improvement Improvement Improvement $ - 1,139,688 $ $ - $ - $ -
788,192 - - - -
- 289,533 153,076 129,411 202,538
4,548,504 - - - -
194,309 85,067 - - -
(25,623) 1,175 (7,709) (10,310) (2,727)
57 - 240,000 - 5,000
6,645,127 375,775 385,367 119,101 204,811
2,884,273 - 358,630 - -
174,418 - - 632 -
3,104,733 1,132,984 - - 36,768
82,217 - - - -
386,274 - - - -
- - - - -
6,631,915 1,132,984 358,630 632 36,768
13,212 (757,209) 26,737 118,469 168,043
- - 7,685 - -
(1,500) - - - -
(1,500) - 7,685 - -
11,712 (757,209) 34,422 118,469 168,043
1,805,696 611,071 482,972 693,301 38,143
$ 1,817,408 $ (146,138) $ 517,394 $ 811,770 $ 206,186

CITY OF NORCO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
(116)

REVENUES
Taxes
Assessments
Development Fees
Intergovernmental
Charges for Services
Investment Earnings (Loss)
Other
Total Revenues

EXPENDITURES
Current:

General Government
Public Safety
Streets and Highways
Community and Economic Development
Culture and Leisure
Capital Outlay:

Other
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures

OTHER FINANCING SOURCES (USES)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)

NET CHANGE IN FUND BALANCES
Fund Balances (Deficits) - Beginning of Year

FUND BALANCES (DEFICITS) - END

OF YEAR
Capital Projects Funds
Park Public Street Aquatics Animal
Improvement Meeting Improvement Center Control
$ - $ - $ - $ - $ -
- - - - -
401,645 14,524 2,441,602 - 24,747
- - 319,000 - -
- - - - -
(8,574) (1,502) (28,167) 18 (540)
- - - - -
393,071 13,022 2,732,435 18 24,207
- - - - -
- - - - -
- - 1,495,608 - -
- - - - -
157,936 - - - -
3,700 - - - -
161,636 - 1,495,608 - -
231,435 13,022 1,236,827 18 24,207
- - - - -
- - - (10,193) -
- - - (10,193) -
231,435 13,022 1,236,827 (10,175) 24,207
429,746 107,225 1,087,963 10,175 19,218
$ 661,181 $ 120,247 $ 2,324,790 $ - $ 43,425

CITY OF NORCO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
(117)

REVENUES
Taxes
Assessments
Development Fees
Intergovernmental
Charges for Services
Investment Earnings (Loss)
Other
Total Revenues

EXPENDITURES
Current:

General Government
Public Safety
Streets and Highways
Community and Economic Development
Culture and Leisure
Capital Outlay:

Other
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures

OTHER FINANCING SOURCES (USES)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)

NET CHANGE IN FUND BALANCES
Fund Balances (Deficits) - Beginning of Year

FUND BALANCES (DEFICITS) - END

OF YEAR
Capital Projects Funds
Total
Nonmajor
Facility Total Capital Governmental
Improvement Projects Funds Funds
$ - $ - $ 1,139,688
- - 788,192
- 3,657,076 3,657,076
- 319,000 4,867,504
- 85,067 279,376
(41) (58,377) (84,000)
- 245,000 245,057
(41) 4,247,766 10,892,893
- 358,630 3,242,903
- 632 175,050
- 2,665,360 5,770,093
- - 82,217
- 157,936 544,210
- 3,700 3,700
- 3,186,258 9,818,173
(41) 1,061,508 1,074,720
10,193 17,878 17,878
- (10,193) (11,693)
10,193 7,685 6,185
10,152 1,069,193 1,080,905
116,920 3,596,734 5,402,430
$ 127,072 $ 4,665,927 $ 6,483,335

(118)

THIS PAGE INTENTIONALLY LEFT BLANK

CITY OF NORCO

NONMAJOR SCHEDULES OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2022
(119)
The budgetary comparison statement is presented as required supplementary information for the General Fund as provided for by GASB Statement No. 34. The City did not adopt a budget for the Housing Successor Agency Low- and Moderate-Income Housing Special Revenue Fund.

The schedules for the remaining funds are presented to aid in additional analysis and are not a required part of the financial statements.

The City did not adopt a budget for the CalHome Grant Special Revenue Fund and Facility Improvement Capital Projects Fund.

CITY OF NORCO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL

MISCELLANEOUS GRANTS SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2022
(120)
Budget Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Intergovernmental $ 541,003 $ 579,766 $ 273,263 $ (306,503) Charges for Services - 194,309 194,309 -
Total Revenues 541,003 774,075 467,572 (306,503)

EXPENDITURES
Current:

Public Safety 13,178 16,678 13,133 3,545
Community and Economic
Development 204,500 204,500 82,217 122,283
Culture and Leisure 323,325 552,897 372,225 180,672
Total Expenditures 541,003 774,075 467,575 306,500
NET CHANGE IN FUND BALANCE - - (3) (3)
Fund Balance (Deficit) - Beginning
of Year 25,852 25,852 25,852 -

FUND BALANCE (DEFICIT) - END
OF YEAR $ 25,852 $ 25,852 $ 25,849 $ (3)

CITY OF NORCO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL

COMMUNITY DEVELOPMENT BLOCK GRANT SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2022
(121)
Budget Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Intergovernmental $ 104,126 $ 173,472 $ 14,049 $ (159,423) Total Revenues 104,126 173,472 14,049 (159,423)

EXPENDITURES
Community and Economic
Development 92,108 159,709 - 159,709
Culture and Leisure 12,018 13,763 14,049 (286)
Total Expenditures 104,126 173,472 14,049 159,423

NET CHANGE IN FUND BALANCE - - - -
Fund Balance (Deficit) - Beginning
of Year - - - -

FUND BALANCE (DEFICIT) - END
OF YEAR $ - $ - $ - $ -

CITY OF NORCO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL

GAS TAX SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2022
(122)
Budget Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Intergovernmental $ 671,759 $ 714,185 $ 639,729 $ (74,456) Investment Earnings (Loss) 200 200 (1,069) (1,269)
Total Revenues 671,959 714,385 638,660 (75,725)

EXPENDITURES
Current:

Streets and Highways 698,105 698,105 488,901 209,204
Total Expenditures 698,105 698,105 488,901 209,204
NET CHANGE IN FUND BALANCE (26,146) 16,280 149,759 133,479 Fund Balance - Beginning of Year 49,244 49,244 49,244 - FUND BALANCE - END OF YEAR $ 23,098 $ 65,524 $ 199,003 $ 133,479

CITY OF NORCO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
SB1 ROAD MAINTENANCE REHABILITATION SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2022
(123)
Budget Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Intergovernmental $ 472,477 $ 560,542 $ 541,742 $ (18,800) Investment Earnings (Loss) 1,348 1,348 (2,269) (3,617)
Total Revenues 473,825 561,890 539,473 (22,417)

EXPENDITURES
Current:

Streets and Highways 600,000 600,000 527,247 72,753
Total Expenditures 600,000 600,000 527,247 72,753
NET CHANGE IN FUND BALANCE (126,175) (38,110) 12,226 50,336 Fund Balance - Beginning of Year 216,020 216,020 216,020 - FUND BALANCE - END OF YEAR $ 89,845 $ 177,910 $ 228,246 $ 50,336

CITY OF NORCO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL

MEASURE A SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2022
(124)
Budget Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Taxes $ 727,000 $ 727,000 $ 1,019,731 $ 292,731
Investment Earnings (Loss) 5,043 5,043 (13,652) (18,695) Total Revenues 732,043 732,043 1,006,079 274,036

EXPENDITURES
Current:

Streets and Highways 1,230,000 1,230,000 1,181,666 48,334 Total Expenditures 1,230,000 1,230,000 1,181,666 48,334 NET CHANGE IN FUND BALANCE (497,957) (497,957) (175,587) 322,370 Fund Balance - Beginning of Year 779,798 779,798 779,798 - FUND BALANCE - END OF YEAR $ 281,841 $ 281,841 $ 604,211 $ 322,370

CITY OF NORCO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL

NPDES SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2022
(125)
Budget Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Taxes $ 135,000 $ 135,000 $ 119,957 $ (15,043)
- - 7 7
Total Revenues 135,000 135,000 119,964 (15,036)

EXPENDITURES
Current:

Streets and Highways 183,771 183,771 148,117 35,654
Total Expenditures 183,771 183,771 148,117 35,654
NET CHANGE IN FUND BALANCE (48,771) (48,771) (28,153) 20,618 Fund Balance - Beginning of Year 75,546 75,546 75,546 - FUND BALANCE - END OF YEAR $ 26,775 $ 26,775 $ 47,393 $ 20,618

CITY OF NORCO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL

AIR QUALITY IMPROVEMENT TRUST SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2022
(126)
Budget Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Intergovernmental $ 33,000 $ 33,000 $ 34,163 $ 1,163
Investment Earnings - - (1,696) (1,696)
Total Revenues 33,000 33,000 32,467 (533)

EXPENDITURES
Current:

General Government 50,000 50,000 - 50,000
Total Expenditures 50,000 50,000 - 50,000
Excess (Deficiency) of
Revenues Over (Under)
Expenditures (17,000) (17,000) 32,467 49,467

OTHER FINANCING USES
Transfers Out (1,500) (1,500) (1,500) -
Total Other Financing Uses (1,500) (1,500) (1,500) -
NET CHANGE IN FUND BALANCE (18,500) (18,500) 30,967 49,467 Fund Balance - Beginning of Year 125,431 125,431 125,431 - FUND BALANCE - END OF YEAR $ 106,931 $ 106,931 $ 156,398 $ 49,467