ROSE BOWL OPERATING COMPANY
(A COMPONENT UNIT OF THE
CITY OF PASADENA, CALIFORNIA)
BASIC FINANCIAL STATEMENTS
WITH INDEPENDENT AUDITORS’ REPORT
YEAR ENDED JUNE 30, 2021
ROSE BOWL OPERATING COMPANY
(A COMPONENT UNIT OF THE CITY OF PASADENA, CALIFORNIA)
BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
TABLE OF CONTENTS
FINANCIAL SECTION
Independent Auditors’ Report
Management’s Discussion and Analysis
1 BASIC FINANCIAL STATEMENTS
Statement of Net Position 19
Statement of Revenues, Expenses, and Changes in Net Position 20 Statement of Cash Flows 21
Notes to the Basic Financial Statements 22
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Proportionate Share of Net Pension Liability 42 Schedule of Plan Contributions 44
OTHER REPORT
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards 46 3 CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member‐firm‐disclaimer for details.
CliftonLarsonAllen LLP
CLAconnect.com
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INDEPENDENT AUDITORS’ REPORT
Board of Directors
Rose Bowl Operating Company
Pasadena, California
Report on the Financial Statements
We have audited the accompanying financial statements of each enterprise fund of the Rose Bowl Operating Company (the Company), a component unit of the City of Pasadena, California as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Company’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Board of Directors
Rose Bowl Operating Company
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Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each enterprise fund of the Rose Bowl Operating Company as of June 30, 2021, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted
in the United States of America require that the
management’s discussion and analysis, and the schedules of changes in the net pension liability and related ratios of the defined benefit plans be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the informat ion because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2021, on our consideration of the Company’s internal control over financial reporting and 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 Company’s internal control over financial reporting or on compliance. The report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Company’s internal control over financial reporting and compliance
CliftonLarsonAllen LLP
Irvine, California
December 23, 2021
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Rounding adjusted
ROSE BOWL OPERATING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
TABLE OF CONTENTS
I. OVERVIEW OF THE FINANCIAL STATEMENTS
II. EXECUTIVE SUMMARY
III. FINANCIAL STATEMENTS
IV. FINANCIAL ANALYSIS
a. Statistical and Fiscal Trends
b. Net Event and Operations Income Comparison
c. Expense Comparison
d. Non-Operating Income/Expenses
e. Balance Sheet Highlights
The objective of management’s discussion and analysis is to help readers of the Rose Bowl Operating Company’s (“RBOC”) financial statements better understand the financial position and operating activities for the fiscal year ended June 30, 2021, with select ed comparative information with the year ended June 30, 2020. This discussion should be read in conjunction with the financial statements. Unless otherwise indicated, years (2020, 2021) in this discussion refer to the fiscal year ended June 30.
I. OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis intends to serve as an introduction to the RBOC’s basic financial statements.
The RBOC’s financial statements consist of two components: 1) fund financial statements and 2) notes to the financial statements.
BASIC FINANCIAL STATEMENTS
The statement of net position presents information on all the RBOC’s assets and deferred outflows of resources, liabilities and deferred inflows, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the RBOC is improving or deteriorating.
The statement of revenues, expenses, and changes in net position presents information showing how the RBOC’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
The statement of cash flows presents information on the cash inflows and outflows of cash during the fiscal year, directly attributing cash flows to types of sources and uses and reconciling those cash flows to the changes in net position for the fiscal year.
The basic financial statements can be found on pages 19-21 of this report.
NOTES TO THE BASIC FINANCIAL STATEMENTS
The notes provide additional information that is essential to a full understanding of the data provided in the financial statements. The notes to the financial statements can be found on pages 22-41 of this report.
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Rounding adjusted
II. EXECUTIVE SUMMARY (STADIUM AND GOLF COURSE)
In Fiscal 2021, Stadium and Golf Course had some significant changes to events and operations impacting net income in general due to the below highlights:
The impact of COVID-19 on the cancellation of major events was mostly mitigated by RBOC cost reductions and the City of Pasadena payments of the RBOC bond debt.
Legacy Connections continues successful fundraising efforts
Increased Enterprise events net income was due to campus availability with no major events occurring and staff setting record sales volume.
Increased Flea market net event income due to increased attendance.
Golf operations set new record rounds, rates, and revenues.
Lower Payroll/Benefits were mainly due to 5 retired positions not yet backfilled and salary reductions of 10% to 12% for salaried staff for most of the year.
Decreased Investment gain from lower investments values due to the market.
Increased Non-Operating revenues from the City of Pasadena contributions toward bond debt and Legacy Connections transfer.
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Rounding adjusted
III. FINANCIAL STATEMENTS
Nonoperating Revenues (Expenses):
Investment gain (loss) (122,228) 18,496 (103,732) 960,391 (1,064,124) Interest expense (12,312,912) - (12,312,912) (12,327,400) 14,488 Other nonoperating revenues 16,458,182 94,848 16,553,030 5,889,665 10,663,366 Total Nonoperating Revenues
(Expens es ) 4,023,043 113,344 4,136,386 (5,477,344) 9,613,730 Income (Los s ) Before Trans fers (12,924,774) 762,708 (12,162,066) (12,281,433) 119,367 Cha nge s i n Ne t Posi tion (12,924,774) 762,708 (12,162,066) (12,281,433) 119,367 Net Position:
Beginning of Year (18,603,552) ### 17,421,302 (1,182,250) 11,099,183 (12,281,433) End of Year (31,528,326)$ 18,184,010$ (13,344,316)$ (1,182,250) $ (12,162,067) * 2020 Golf displacement made up of parking revenues (net) and Golf displacement.
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FINANCIAL STATEMENTS (Continued)
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IV. FINANCIAL ANALSYS
a. Statistical and Fiscal Trends
Stadium:
Stadium statistics reflect that while the stadium did not host major ev ents, Enterprise events utilized the campus for longer event days and in innovative manners as in drive through theater programming, graduations, and filming. Enterprise Event trends in the below charts reflect a growing number of days per event and net event income.
Events Statistics and Net Event Income Comparison:
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Rounding adjusted
Enterprise events net income during 2021 is $1.975M ($628K higher than 2020). Average monthly net income in 2021 is $165K and 5-year monthly average net income was $123K. The Flea Market(iii) operated for 9 months during 2020 and 3 months of during 2021 due to COVID-19. The monthly average net event income was $98K in 2021, higher than the past 5-year monthly average of $93K. The current year is higher than average mainly due to higher attendance at the outdoors event.
Major events net income includes UCLA (i) 4 events with no fans where revenues were mainly due to advertising revenues. The Rose Bowl Game(ii) did not occur at the Rose Bowl in 2021, the net income is reflective of the displacement hold of the event net of expenses in preparation for the event.
Stadium Net Event Income Comparison:
$‐
$1,000,000
$2,000,000
$3,000,000
2016 2017 2018 2019 2020 2021
Net Event Income
Enterprise Events Flea Market
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FINANCIAL ANALYSIS (Continued)
Golf Complex:
Golf Complex trends reflect Golf volume increase s driven by higher demand for outdoor sports during COVID-19. A 5-year trends show golf regaining popularity in 2021 with 179,280 annual rounds and $7.1M in gross revenues. The Golf Complex Net Income $1.5M is higher than a 5-year average of $1.36M.
Below are key statistics of green fees year to year comparison and 5-year trends:
Golf operations for 10 months during 2020 due to COVID-19.
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Rounding adjusted
FINANCIAL ANALYSIS (Continued)
b. Net Event and Operations Income co mparison (Stadium and Golf Complex)
Below is a year-to-year comparison of Net Event and Operations Income excluding Depreciation and Nonoperating Revenues.
Changes to Combined Net Event and Operations Income:
Stadium
Key changes to Net Event and Operations Income were mainly due to the stadium not hosting major events - with lower event revenues of approximately $19.9M and associated lower event expenses of $8.9M.
Overhead (or fixed) expenses were reduced by $1.7M, mainly due to Payroll/benefits and Service/supplies.
Other significant factors impacting the 2021 financials include the City of Pasadena paying approximately $12.3M in gross interest expenses and Investment Gains/(Loss) decrease by $986K from 2020. The net impact was a Stadium loss of $3.646M or $2.028M better than 2020.
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Rounding adjusted
FINANCIAL ANALYSIS (Continued)
Golf Complex
The Golf Complex Net Operating Income increased by $1M mainly due to $1.675M increase in green fees revenues based on play and rates. Other revenue sources as Restaurant, Parking and Events decreased by $500K. During 2021 Overhead (or fixed) expenses increased by $115K mainly due to increased golf operations, public safety/COVID-19 and 12 months of operations versus 10 months of operations in 2020.
Golf Investment Gain/ (Loss) decreased by $78K due to market valuation of investments. Internally- RBOC designated a set aside of $380K for future golf capital projects, resuming a practice from 2018 and prior.
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FINANCIAL ANALYSIS (Continued)
c. Expense Comparison
Overhead Expenses:
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Rounding adjusted
FINANCIAL ANALYSIS (Continued)
Event Expenses:
Drive through theaters program offering was ne w in 2021 and drove the Event Production expenses category (which includes plumbing, lighting, theater etc.); whereas major event or attendance driven expenses such as security, public safety, rentals, catering, shuttle expenses - were drastically lower in 2021.
Enterprise Events cost recovery were 82% of cost in 2021 and 80% in 2020 - driven by additional expenses not included in Facility License Fee (Rent).
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Rounding adjusted
FINANCIAL ANALYSIS (Continued)
d. Non-Operating Income/Expense:
Contribution from Legacy Connections, Federal Government subsidies (on bonds), Cell site annual space rental and utilities cost recovery are received consistently and annually.
Non-Recurring contributions in 2021 include a net bond debt contribution from the City of Pasadena and a non-refundable ticketing contract initial payment from AXS.
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Rounding adjusted
FINANCIAL ANALYSIS (Continued)
e. Balance Sheet Highlights:
On full accrual basis the Net Position decreased by $12,162,067, as outlined by the Statement of Revenue and Expenses (Income Statement) and below Statement of Net Position (Balance Sheet).
Key areas of changes in Assets include Cash, Accounts receivables, Net Assets:
Unrestricted Cash balances at year end increased by $587K; ma inly due to Golf operations increased by $1.925M and Stadium cash decreased by $1.337M from 2020 at year end, due to lack of major events (Stadium) and increased golf play (Golf Complex).
Accounts Receivables decreased by $873K due to Events accounts receivable lower by $1.1M and Non- Events accounts receivables higher by $218K.
Stadium accounts receivables decreased by $995K main ly due to the no major events at year end $1.1M and Non-Events higher by $106K mainly due to payroll tax refunds due at year end.
Golf Course accounts receivable increased by $121K mainly due to concessionaire accounts receivable and in transit golf credit card receipts.
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Rounding adjusted
Balance Sheet highlights (Continued)
Change in Capital reflect Assets decreased by $12.060M mainly due to $7.457M in depreciation net of activated assets in Total Other capital assets and Construction in progress (CIP) lower by $4.602M. Two large dollar asset activations (video board and stadium LED lights) make up the majority of the $4.181M in lower CIP at the stadium.
Summary:
2021 2020 Variance
Stadium 159,251,627$ 166,480,249$ (7,228,622)$
Golf Course 6,910,299 7,139,300 (229,002) Total Other capital assets, net 166,161,926$ 173,619,549$ (7,457,624)$ Combined Construction in progress 135,105$ 4,737,926$ (4,602,821)$ Change in Capital (12,060,445)$
Detail:
Stadium
June 30, 2021 June 30, 2020 Variance
Building and improvements 254,138,172 $ 248,246,982 $ 5,891,189 $ Machinery and equipment 17,872,958 17,814,153 58,805 Sub-total 272,011,129 266,061,135 5,949,994
Less accumulated depreciation (112,759,502) (99,580,887) (13,178,616) Total NBV/Other Capital Asset, net 159,251,627$ 166,480,249 $ (7,228,622)$ Construction in Progress 134,135 $ 4,315,499 $ (4,181,364)$ Golf Course
June 30, 2021 June 30, 2020 Variance
Building and improvements 8,854,714 $ 12,964,653 $ (4,109,939)$ Machinery and equipment 6,495,855 1,378,406 5,117,449 Sub-total 15,350,569 14,343,059 1,007,510 Less accumulated depreciation (8,440,271) (7,203,759) (1,236,512) Total NBV/Other Capital Asset, net 6,910,299$ 7,139,300 $ (229,002)$ Reference: Balance Sheet: Other capital asset, net
Construction in Progress 970 $ 422,427 $ (421,457)$
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Rounding adjusted
Balance Sheet highlights (Continued)
CHANGE IN DEBT
Debt decreased by $2.608M (from $209.6M to $207M) mainly due to principal payments on the 2010 and 2018 Bonds ($3.4M), 1 year of the 2016 bond premium amortization ($550K), net of accreted interest amortization
(i) $1.482M.
(i) Accreted Interest is a discount rate on bonds amortized over the life of the bond.
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REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the RBOC’s finances. Questions concerning any of the information provided in this re port, or requests for additional financial information, should be addressed to the Office of the Controller, Rose Bowl Operating Company, 1001 Rose Bowl Dr., Pasadena, California 91103.
ROSE BOWL OPERATING COMPANY
STATEMENT OF NET POSITION
JUNE 30, 2021
See accompanying Notes to Basic Financial Statements.
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Rose Bowl Golf Course Total
Assets:
Current:
Cash and investments 7,094,714$ 12,841,069$ 19,935,783$ Accounts receivable, net of allowance of
$353,141 for the Rose Bowl 2,420,429 315,559 2,735,988
Inventory 861 13,842 14,703
Prepaid expenses 92,109 7,802 99,911
Total Current Assets 9,608,113 13,178,272 22,786,385 Noncurrent:
Due from City of Pasadena 455,325 - 455,325 Cash and investments, restricted 15,352,313 - 15,352,313 Capital Assets:
Construction in progress 134,135 970 135,105
Depreciable capital assets 159,251,628 6,910,299 166,161,927 Total Noncurrent Assets 175,193,401 6,911,269 182,104,670 Total Assets 184,801,514 20,089,541 204,891,055 Deferred Outflows of Resources:
Deferred refunding charge 2,157,461 - 2,157,461
Deferred outflows related to net pension liability 916,478 24,249 940,727 Total Deferred Outflows of Resources 3,073,939 24,249 3,098,188 Liabilities:
Current:
Accounts payable and accrued expenses 1,817,812 923,109 2,740,921 Accrued salaries and benefits 590,413 40,412 630,825
Accrued interest payable 3,140,299 - 3,140,299
Due to City of Pasadena 445,181 - 445,181
Deposits 1,003,662 - 1,003,662
Unearned revenues 2,372,958 49,622 2,422,580
Current portion of long-term advance 100,000 - 100,000
Current portion of compensated absences 167,438 7,008 174,446 Current portion of long-term debt 3,845,000 51,769 3,896,769 Total Current Liabilities 13,482,763 1,071,920 14,554,683 Noncurrent:
Long-term advance 600,000 - 600,000
Compensated absences 47,318 5,726 53,044
Long-term debt, net of current portion 202,538,236 569,455 203,107,691 Net pension liability 2,714,639 282,128 2,996,767
Total Noncurrent Liabilities 205,900,193 857,309 206,757,502 Total Liabilities 219,382,956 1,929,229 221,312,185 Deferred Inflows of Resources:
Deferred inflows related to net pension liability 20,823 551 21,374 Net Position:
Net investment in capital assets (14,128,889) 6,217,040 (7,911,849) Restricted for debt service 15,352,313 - 15,352,313 Unrestricted (32,751,750) 11,966,970 (20,784,780) Total Net Position (31,528,326)$ 18,184,010$ (13,344,316)$
ROSE BOWL OPERATING COMPANY
STATEMENT OF REVENUES, EXPENSES,
AND CHANGES IN NET POSITION
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Basic Financial Statements.
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Rose Bowl Golf Course Total
Operating Revenues:
Green fees and other golf revenues -$ 2,487,962$ 2,487,962$ Advertising revenue 830,000 - 830,000 Facility rentals and parking revenues 4,034,478 15,678 4,050,156 Concessions 109,193 - 109,193 Pro shop - 32,628 32,628 Restaurant - 188,677 188,677 Admission tax - - - Cost recoveries 3,113,743 - 3,113,743 Total Operating Revenues 8,087,414 2,724,945 10,812,359 Operating Expenses:
Salaries and benefits 3,825,152 217,839 4,042,991 General and administrative 3,610,074 607,984 4,218,058 Depreciation 13,178,616 1,236,512 14,415,128 Events and parking 4,421,388 13,246 4,434,634 Total Operating Expenses 25,035,230 2,075,581 27,110,811 Operating Income (Loss) (16,947,816) 649,364 (16,298,452) Nonoperating Revenues (Expenses):
Investment income (loss) (122,228) 18,496 (103,732) Interest expense (12,312,912) - (12,312,912) Contribution from the City of Pasadena 11,515,463 - 11,515,463 Other nonoperating revenues 4,942,719 94,848 5,037,567 Total Nonoperating Revenues (Expenses) 4,023,042 113,344 4,136,386 Changes in Net Position (12,924,774) 762,708 (12,162,066) Beginning of Year (18,603,552) 17,421,302 (1,182,250) End of Year (31,528,326)$ 18,184,010$ (13,344,316)$
ROSE BOWL OPERATING COMPANY
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Basic Financial Statements.
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Rose Bowl Golf Course Total
Cash Flows from Operating Activities:
Cash received from customers 7,298,885$ 2,811,490$ 10,110,375$ Cash payments to employees for services (3,779,307) (219,259) (3,998,566) Cash payments to suppliers for goods and services (9,107,882) (142,431) (9,250,313) Other cash receipts 3,943,743 - 3,943,743 Net Cash Provided (Used) by Operating Activities (1,644,561) 2,449,800 805,239 Cash Flows from Non-Capital Financing Activities:
Non-capital contributions 13,722,226 94,848 13,817,074 Net Cash Provided by Non-Capital Financing Activities 13,722,226 94,848 13,817,074 Cash Flows from Capital and Related Financing Activities:
Acquisition of capital assets (1,768,631) (586,053) (2,354,684) Payment on advance (100,000) - (100,000) Federal interest subsidy on bonds payable 2,735,956 - 2,735,956 Principal payments on long-term debt (3,310,000) (51,769) (3,361,769) Interest payments on long-term debt (11,210,225) - (11,210,225) Net Cash Used by Capital and Related Financing Activities (13,652,900) (637,822) (14,290,722) Cash Flows from Investing Activities:
Proceeds from sale of investments 15,500,000 - 15,500,000 Purchase of investment (15,500,000) - (15,500,000) Interest received 419,807 18,496 438,303 Net Cash Provided by Investing Activities 419,807 18,496 438,303 Net Increase (Decrease) in Cash and Cash Equivalents (1,155,428) 1,925,322 769,894 Cash and Cash Equivalents at Beginning of Year, as restated 8,558,465 10,915,747 19,474,212 Cash and Cash Equivalents at End of Year 7,403,037$ 12,841,069$ 20,244,106$ Reconciliation of Cash and Investments to Amounts
Reported on the Statement of Net Position:
Cash and investments 7,094,714$ 12,841,069$ 19,935,783$ Cash and investments, restricted 15,352,313 - 15,352,313 Total Reported on Statement of Net Position 22,447,027 12,841,069 35,288,096 Less: Investments (15,043,990) - (15,043,990) Cash and Cash Equivalents at End of Year 7,403,037$ 12,841,069$ 20,244,106$ Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities:
Operating income (loss) (16,947,816)$ 649,364$ (16,298,452)$ Adjustments to Reconcile Operating Income (Loss) to
Net Cash Provided (Used) by Operating Activities:
Depreciation 13,178,616 1,236,512 14,415,128 Change in allowance for doubtful accounts (124,496) - (124,496) (Increase) decrease in accounts receivables 1,119,708 (121,595) 998,113 (Increase) decrease in inventory - (4,029) (4,029) (Increase) decrease in prepaid expenses (58,137) 636 (57,501) (Increase) decrease in due from City of Pasadena 16,156 - 16,156 (Increase) decrease in deferred outflows related to pension liability 114,566 29,797 144,363 Increase (decrease) in accounts payable and accrued expenses (755,551) 706,810 (48,741) Increase (decrease) in accrued salaries and benefits (162,199) 1,493 (160,706) Increase (decrease) in due to City of Pasadena (138,236) - (138,236) Increase (decrease) in deposits payable 686,616 - 686,616 Increase (decrease) in accrued compensated absences (36,872) 1,741 (35,131) Increase (decrease) in net pension liability 199,722 8,181 207,903 Increase (decrease) in deferred revenue 1,332,734 (16,478) 1,316,256 Increase (decrease) in deferred inflows related to pension liability (69,372) (42,632) (112,004) Net Cash Provided (Used) by Operating Activities (1,644,561)$ 2,449,800$ 805,239$ Non-Cash Capital and Related Financing Activities:
Accretion of interest on bonds payable 1,482,345$ -$ 1,482,345$ Amortization of deferred charge and bond discounts/premiums (347,797)$ -$ (347,797)$
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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I. SIGNIFICANT ACCOUNTING POLICIES
Note 1: Organization and Summary of Significant Accounting Policies
a. Basis of Presentation
The Rose Bowl Operating Company (the Company) was incorporated on January 18, 1994, as a legally separate enti ty with the primary purpose of returning economic and civic value to the City of Pa sadena, California, (the City) by managing a world class stadium and a professional quality golf course complex, Brookside Municipal Golf Course (the Golf Course), in a residential open-space environment. A fourteen- member Board of Directors governs the Company. The Board of Directors consists of the City Manager, two members from the City Mayor’s office, seven members appointed by the City, one member from the Pasadena Tour nament of Roses Association (a separate not-for-profit entity unrelated either to th e City or the Company), one member from the University of California, Los Angeles (UCL A), one member from the joint City Council, and one non-voting member from the Pas adena Center Operating Company. These operations constitute part of the overall financial reporting entity of the City and are accounted for as a discretely presented component unit in the City’s Annual Comprehensive Financial Report consist ent with accounting principles generally accepted in the United States of Amer ica. Revenues and expenses of the Company include direct revenues and expenses and certain allocations from the City.
b. Basis of Accounting
The Company is accounted for as an enterprise fund (proprietary fund type). A fund is an accounting entity with a self-balancing set of accounts established to record the financial position and results of operations of a specific governmental activity. The activities of enterprise funds closely resemble those of ongoing businesses in which the purpose is to conserve and add to basic resources while meeting operating expenses from current revenues. Enterprise funds account for operations that provide services on a continuous basis and are substantially financed by re venues derived from user charges. The Company utilizes the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred.
c. Classification of Revenues
Operating revenues consist of charges to customers for sales and use of the facilities.
Nonoperating rev enues consist of investment earnings and other nonoperating income. Capital contributions consist of contributed capital assets.
d. Capital Assets
Capital assets are recorded at cost and are depreciated over the estimated useful life of the asset using the straight-line method of depreciation. The Company capitalizes all assets with a historical cost of at least $10,000 consistent with City practice. The cost of normal maintenance and reports that do not add value to the assets or materially extend asset lives are not capitalized.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 1: Organization and Summary of Si gnificant Accounting Policies (Continued)
d. Capital Assets (Continued)
The estimated useful lives of the assets are as follows:
Building and improvements 1 - 55 years
Improvements other than building 1 - 95 years
Machinery and equipment 1 - 93 years
e. Cash Equivalents
For the purposes of the statement of cash flows, investments are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insi gnificant risk of changes in value because of changes in interest rates, and have an original maturity date of three months or less. On the statement of cash flows for the Rose Bo wl operations, cash and cash equivalents at the beginning of the year has been restated by $15,586,025 to remove an investment that did not meet the criteria of a cash equivalent.
f. Investments
Investments are reported in the accompanying statements at fair value. Changes in fair value that occur during the fiscal year are recognized as investment earnings
reported for that fiscal year.
Investment earnings includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments.
g. Compensated Absences
Only full-time employees accrue vacation. Vacation time is accrued two to four weeks per year, depending on how long an employee has been with the Company. The Company also grants employees personal paid time o ff. Regular full-time and part-time (24 hours per week minimum) employees are eligible to accrue personal time off with pay. Full-time employees may accrue up to 20 personal days per calendar year. Part- time employees who work 24 hours per week or more are eligible to accrue personal paid time off on a pro rata basis. It is the Company’s policy to permit employees to accumulate earned but unused vacation benefits from year to year up to a maximum of two times a full-time employee’s annual va cation amount. Personal paid time off is not accumulated from year to year. All accumula ted compensated absences are recorded as an expense and a liability at the time the benefit is earned.
h. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financ ial position reports a separate section for deferred outflows of resources. This sepa rate financial statement element, deferred outflows of resources, repres ents a consumption of net posit ion that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The Compan y has two items that qualify for reporting in this category:
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 1: Organization and Summary of Si gnificant Accounting Policies (Continued)
h. Deferred Outflows/Inflows of Resources (Continued)
1. The deferred outflows relating to the net pension liability reported in the statement of net position. These outflows are the results of contributions made after the measurement period, which re duces the net pension liab ility in the following year; differences between expected and actual experience, changes in proportion and differences between employer contributions, and proportionate share of contributions, which are amortized to pension expense over a closed period equal to the average of the expected remaining service lives of all employees that are provide pension benefits through the plan; and, the net differences between projected and actual earnings on plan investments are amortized over five years.
2. The deferred charge on refunding results in the difference in the carrying value of refunded debt and its reacquisition price. The amount is deferred and amortized over the life of the refunded debt.
In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Company has one item that qualifies for reporting in this category:
1. The deferred inflows relating to the net pension liability are the results of changes in assumptions, which are amortized to pension expense over a closed period equal to the average of the expected remaining service lives of all employees that are provide pension benefits through the plan.
i. Use of Estimates
The preparation of financial statements in conf ormity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount s of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
j. Net Position
Sometimes the Company will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unres tricted resources. In order to calculate the amounts to report as restricted – net posit ion 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 government’s policy to consider restrict ed – net position to have been depleted before unrestricted – net position is applied.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 1: Organization and Summary of Si gnificant Accounting Policies (Continued)
k. Pensions
For purposes of measuring the net pensi on liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Company’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 term s. Investments are reported at fair value.
The General Fund has typically been used in prior years to liquidate pension liabilities.
Note 2: Cash and Investments
Cash and Investments as of June 30, 2021, are classified in the accompanying financial statements as follows:
Statement of net position:
Cash and investments 19,935,783 $
Cash and investments, restricted 15,352,313
Total cash and investments 35,288,096 $
Cash and investments as of June 30, 2021, consist of the following:
Cash on hand 3,000$
Deposits with financial institutions 6,819,209
Cash with fiscal agent - deposits 171,970
Investment in the City cash and investment pool 28,293,917 Total cash and investments 35,288,096$
Investments Authorized by the California Government Code and the Company’s Investment Policy
The table below identifies the investment types that are authorized for the Company by the California Government Code and the Company’s investment policy. The table also identifies certain provisions of the California Government Code (or the Company’s investment policy, if more restrictive) that address interest rate risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the Company, rather than the general provisions of the California Government Code or the Company’s investment policy.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 2: Cash and Investments (Continued)
Authorized *Maximum *Maximum
by Percentage Investment
Investment *Maximum of in One
Investment Types Authorized by State Law Policy Maturity Portfolio Issuer Local Agency Bonds Yes 5 years None None
U.S. Treasury Obligations Yes 5 years None None
U.S. Agency Securities Yes 5 years None None
Bankers' Acceptances Yes 180 days 40% 30%
Commercial Paper Yes 270 days 15% 10%
Negotiable Certificates of Deposit Yes 5 years 30% None Repurchase Agreements Yes 1 year None None
Reverse Repurchase Agreements Yes 92 days 20% None
Medium-Term Notes Yes 5 years 30% 5%
Mutual Funds Yes N/A 20% 10%
Money Market Mutual Funds Yes N/A 20% 10%
Mortgage Pass-Through Securities Yes 5 years 20% None
County Pooled Investment Funds Yes N/A None None
Local Agency Investment Fund Yes N/A None None
Joint Power Agency Pools (Other Investment Pools) Yes N/A None None
*Based on state law requirements or investment policy requirements, whichever is more restrictive.
Investments Authorized by Debt Agreements
Investments of debt proceeds hel d by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the Company’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 and concentration of credit risk.
Maximum Minimum
Authorized Investment Type Maturity Rating
U.S. Treasury Obligations None N/A
U.S. Agency Securities None N/A
State and Local Agency Bonds None Aa
Bankers' Acceptances 360 Days Aa
Commercial Paper 270 Days Aa
Negotiable Certificates of Deposit None Aa
Repurchase Agreements None Aa
Money Market Mutual Funds N/A Aaa
Investment Contracts None Aa
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 2: Cash and Investments (Continued)
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 ma rket interest rates. One of the ways that the Company manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing ca sh 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.
The Company’s investments in the City cash and investment pool are pooled the City of Pasadena. See the City’s of Pasadena’s June 30, 2021, Annual Comprehensive Financial Report for more information about interest rate risk for the pooled cash and investments.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulf ill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the Company’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type.
Ratings at End
Minimum
Investment Type Legal Rating Not Rated
Investments in the City
cash and investment pool 28,293,917$ N/A 28,293,917 $ Total 28,293,917 $ 28,293,917 $
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government w ill 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.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 2: Cash and Investments (Continued)
The California Government Code and the Company’s investment policy do not contain legal or policy requirements that would limit t he exposure to custodial credit risk for deposits or investments, other than the following provision for d eposits: 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 market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure Company deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public dep osits. As of June 30, 2021, $500,000 of the Company’s deposits (bank balances) were insured by the Federal Deposit Insurance Corporation and $56,015 were uninsured and uncollateralized.
Fair Value Hierarchy
The Company categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are quoted prices for similar assets in active markets; Level 3 inputs are significant unobservable inputs.
The Company’s investments in the City cash and investment pool are not subject to the fair value hierarchy. Further details on the City’s cash and investment pool fair value hierarchy can be found in the City’s Comprehensive Annual Financial Report for the fiscal year ended June 30, 2021.
Note 3: Capital Assets
Rose Bowl
Capital Assets activity for the year ended June 30, 2021, is as follows:
Balance at Balance at
July 1, 2020 Transfers Additions Deletions June 30, 2021 Capital assets being depreciated:
Buildings and improvements 209,232,153 $ - $ - $ - $ 209,232,153$ Improvements other than buildings 39,014,829 5,891,190 - - 44,906,019 Machinery and equipment 17,814,153 - 58,805 - 17,872,958 Total depreciable capital assets 266,061,135 5,891,190 58,805 - 272,011,130 Less accumulated depreciation:
Buildings and improvements (54,283,508) - (7,627,665) - (61,911,173) Improvements other than buildings (32,642,512) - (3,899,861) - (36,542,373) Machinery and equipment (12,654,866) - (1,651,090) - (14,305,956) Total accumulated depreciation (99,580,886) - (13,178,616) - (112,759,502) Net depreciable assets 166,480,249 5,891,190 (13,119,811) - 159,251,628 Capital assets not depreciated:
Construction in progress 4,315,499 (5,891,190) 1,802,765 (92,939) 134,135 Capital assets, net 170,795,748 $ - $ (11,317,046)$ (92,939) $ 159,385,763$
Depreciation expense for the year was $13,178,616.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 3: Capital Assets (Continued)
Golf Course
Capital asset activity for the year ended June 30, 2021, is as follows:
Balance at Balance at
July 1, 2020 Transfers Additions Deletions June 30, 2021 Capital assets being depreciated:
Buildings and improvements 4,926,144 $ (3,287,620) $ - $ -$ 1,638,524$ Improvements other than buildings 8,174,083 3,903,430 - 12,077,513 Machinery and equipment 1,242,832 391,700 - - 1,634,532 Total depreciable capital assets 14,343,059 1,007,510 - - 15,350,569 Less accumulated depreciation:
Buildings and improvements (2,594,851) 1,476,511 (11,722) - (1,130,062) Improvements other than buildings (4,046,114) (2,092,214) (379,845) - (6,518,173) Machinery and equipment (562,793) 615,703 (844,945) - (792,035) Total accumulated depreciation (7,203,758) - (1,236,512) - (8,440,270) Net depreciable assets 7,139,301 1,007,510 (1,236,512) - 6,910,299 Capital assets not depreciated:
Construction in progress 422,427 (1,007,510) 586,053 - 970 Capital assets, net 7,561,728$ -$ (650,459)$ -$ 6,911,269$
Depreciation expense for the year was $1,236,512.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 4: Long-Term Debt
Rose Bowl
Long-Term liabilities for the year ended June 30, 2021, are as follows:
Balance at Additions/ Deletions/ Balance at Due in
July 1, 2020 Accretions Amortizations June 30, 2021 One Year 2010A Tax-Exempt Lease
Revenue Bonds:
Current Interest Bonds 1,655,000 $ - $ 1,655,000$ -$ -$ Capital Appreciation Bonds 21,800,191 1,482,345 23,282,536 - 2010B Taxable Build America Lease
Revenue Bonds 106,660,000 - - 106,660,000 - 2010D Taxable Recovery Zone
Economic Development Lease
Revenue Bonds 7,400,000 - - 7,400,000 - 2016A Tax-Exempt Lease Revenue
Bonds 21,865,000 - - 21,865,000 1,980,000 2016A Bond Premium 3,713,867 - 550,202 3,163,665 - 2018A Tax-Exempt Lease Revenue
Bonds 30,585,000 - - 30,585,000 - 2018A Bond Premium 4,253,123 - 184,919 4,068,204 - 2018B Taxable Lease Revenue
Bonds 11,060,000 - 1,655,000 9,405,000 1,865,000 2018B Bond Discount (52,765) - (6,595) (46,170) - Subtotal - Bonded Long-Term
Liabilities 208,939,416 1,482,345 4,038,526 206,383,235 3,845,000 Compensated Absences 251,628 159,314 196,186 214,756 167,438 Total Long-Term Liabilities 209,191,044$
1,641,659$ 4,234,712$ 206,597,991$ 4,012,438$
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 4: Long-Term Debt (Continued)
2010 Rose Bowl Lease Revenue Bonds
On November 18, 2010, the City of Pasadena issued four series of lease revenue bonds, Series 2010A through D (Rose Bowl Renovation Project) in the aggregate amount of $155,873,265. Series A in the amount of $36,808,265 contained $25,220,000 of current interest bonds maturing between fiscal year 2019-2020 and fiscal year 2026-2027, with the remaining $11,588,265 in the form of capital app reciation bonds maturing serially from fiscal year 2026-2027 to 2032-2033. Series B contai ned $106,660,000 of taxable Build America Bonds. These bonds are in two coupons, the initial series maturing during fiscal year 2033-2034 and the final maturing during fiscal year 2042-2043. Series C contained $5,005,000 of taxable bonds which have fully ma tured as of fiscal year 2019-2020. Finally, Series D contained $7,400,000 of taxable Recovery Zone Economic Development Bonds that have one maturity during fiscal year 2042-2043. The bonds, except for the capital appreciation bonds in Series 2010A, commenced interest payments on March 1, 2011, and are payable semiannually. The Company received $154,878,301 of the proceeds from the bonds. The bonds were issued to finance improvements to the Rose Bowl Stadium, to fund capitalized interest on a por tion of the 2010 Bonds, to fund a Bond Reserve Fund, and to pay the costs of issuance of the 2010 Bonds. Renovations of the existing Rose Bowl Stadium are proposed to continue to allow use by the UCLA Bruins football team, the Rose Bowl Game, Bowl Championship Series (BCS) games, soccer matches, concerts, and special events as well as to bring certain building systems up to current City Building Code requirements and improve public safety.
The 2010B bonds were issued for purposes of the American Recovery and Reinvestment Act of 2009 signed into law on February 17, 2009 (the Recovery Act). Pursuant to the Recovery Act, the City expects to receive a cash subsidy payment from the United States Treasury equal to 35% of the interest payable by the City on or about each interest payment date. The cash payment does not constitute a full faith and credit guarantee of the United States Government but is required to be paid by the Treasury under the Recovery Act. Any cash subsidy payments received by the City do not constitute revenues that can offset interest expense and are not pledged under the indenture to secure the 2010 bonds.
The 2010D bonds were issued for purposes of the Recovery Act. Pursuant to the Recovery Act, the City expects to receive a cash subsidy pay ment from the United States Treasury equal to 45% of the interest payable by the City on or about each interest payment date. The cash payment does not constitute a full faith and credit guarantee of the United States Government but is required to be paid by the Treasury under the Recovery Act. Any cash subsidy payments received by the City do not c onstitute revenues that can offset interest expense and are not pledged under the indenture to secure the 2010 bonds.
For the year ended June 30, 2021, the Treasury made subsidy payments totaling $2,735,956 towards the interest due on the 2010B and 201D bonds which has been included in other nonoperating revenues.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 4: Long-Term Debt (Continued)
2010 Rose Bowl Lease Revenue Bonds (Continued)
The total annual debt service requirements for the 2010 Lease Revenue Bonds including accretion as of June 30, 2021, are as follows:
June 30 Series A Series B Series D Interest Total
2022 -$ -$ -$ 8,138,391$ 8,138,391$ 2023 - - - 8,138,391 8,138,391 2024 - - - 8,138,391 8,138,391 2025 - - - 8,138,391 8,138,391 2026 - - - 8,138,391 8,138,391 2027-2031 28,525,000 - - 60,717,759 89,242,759 2032-2036 13,400,000 27,655,000 - 48,902,082 89,957,082 2037-2041 - 57,475,000 - 23,232,430 80,707,430 2042-2043 - 21,530,000 7,400,000 3,135,112 32,065,112 Total 41,925,000 106,660,000$ 7,400,000$ 176,679,338$ 332,664,338$ Less: Future Accretion (18,642,464)
23,282,536$
Principal Payments
Disclosure Related to Long-Term Debt Under GASB 88
In case of default, the following is the course of action:
(a) Upon the happening of any of the events & defaul t, then it shall be lawful for the Authority or its assignee, subject to the terms of the Lease, with the consent of the Majority Holder, to (i) exercise any and all remedies available or granted to it under the Sublease or pursuant to law, to the extent not inconsis tent with the remedies granted under the Sublease or (ii) by mandamus or other suit, action or proceeding at la w or in equity to enforce the Authority’s or its assignee’s rights against the City and to compel the City to perform and carry out its duties and obligations under the law and its covenants and agreements with the City as provided in the Sublease. Upon the breach of any agreemen t, condition, covenant or term contained in the Sublease required to be observed or perform ed by the City, the Authority or its assignee may not exercise any rights of entry upon or repossession of the Leased Property. In the event of such default, the Authority or its assi gnee must thereafter maintain the Sublease in full force and effect and may only recover rent and other monetary charges as they become due, all without terminating the City’s right to possession of the Leased Property, regardless of whether or not the City has abandoned the Leased Property; THIS SHALL BE THE SOLE
AND EXCLUSIVE REMEDY AVAILABLE AGAINST THE CITY UNDER THE SUBLEASE OR OTHERWISE. THE AUTHORITY SHALL HAVE NO RIGHT UPON AN EVENT OF DEFAULT UNDER THE SUBLEASE BY THE CITY TO ACCELERATE THE RENTAL PAYMENTS.
TERMINATE THE SUBLEASE OR RE-ENTER THE LEASED PROPERTY.
2016 Rose Bowl Lease Revenue Bonds
On September 20, 2016, the City issued a 2016 Lease Revenue Bond, Series 2016A in the aggregate amount of $27,642,127. The bond was is sued to refund a portion of the 2010 Lease Revenue Series A Bond. Series 2016A contained $23,385,000 of refunding bonds for the 2010 Lease Revenue Series A Bond.
Principal is payable in annual installm ents ranging from $1,980,000 to $5,130,000 commencing April 1, 2022 and ending April 1, 2027.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 4: Long-Term Debt (Continued)
2016 Rose Bowl Lease Revenue Bonds (Continued)
The balance outstanding at June 30, 2021 is comprised of the principal amount of $21,865,000, plus unamortized deferred bond premium of $3,163,665, for a total of $25,028,665.
The annual debt service requirements for the 2016 Lease Revenue Bond as of June 30, 2021, is as follows:
June 30 Principal Interest Total
2022 1,980,000$ 1,093,250$ 3,073,250$
2023 2,255,000 994,250 3,249,250
2024 4,310,000 881,500 5,191,500
2025 4,705,000 666,000 5,371,000
2026 5,130,000 430,750 5,560,750
2027 3,485,000 174,250 3,659,250
Total 21,865,000$ 4,240,000$ 26,105,000$
2018 Rose Bowl Lease Revenue Bonds
On November 14, 2018, the City issued two 2018 Lease Revenue Bonds (Rose Bowl Renovation Project), Series 2018A and 2018B in the aggregate amount of $43,100,000. The 2018 bonds were issued to defease and refund all the 2013 Lease Revenue Bonds (Rose Bowl Renovation Project) and pay costs of issuance of the 2018 bonds.
The Series 2018A balance outstanding at June 30, 2021 is comprised of the principal amount of $30,585,000, plus unamortized deferred b ond premium of $4,068,204, for a total of $34,653,204.
The Series 2018B balance outstanding at June 30, 2021 is comprised of the principal amount of $9,405,000, plus unamortized deferred bo nd discount of ($46,170), for a total of $9,358,830.
The annual debt service requirements for t he 2018 Lease Revenue Bonds as of June 30, 2021, are as follows:
June 30 Series A Series B Interest Total
2022 -$ 1,865,000$ 1,820,099$ 3,685,099$ 2023 - 2,155,000 1,753,966 3,908,966 2024 - 665,000 1,706,568 2,371,568 2025 - 915,000 1,678,781 2,593,781 2026 - 1,165,000 1,642,038 2,807,038 2027-2031 5,000,000 2,640,000 7,348,476 14,988,476 2032-2036 9,315,000 - 5,265,875 14,580,875 2037-2041 11,185,000 - 2,709,875 13,894,875 2042-2043 5,085,000 - 256,375 5,341,375 Total 30,585,000$ 9,405,000$ 24,182,053$ 64,172,053$ Principal Payments
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 4: Long-Term Debt (Continued)
Pledge of Stadium Revenues
In accordance with the Company’s bond indenture, the Company has pledged all of the future revenues to secure repayment of the af orementioned bonds. Proceeds from the bonds provided financing for improvements to the Rose Bowl Stadium. The bonds are payable from net revenues and are payable through maturity . Annual principal and interest payments on the bonds are expected to require less than 67% of net revenues. The total principal and interest remaining to be paid on the bonds ar e $422,941,391. Principal and interest paid for the current year and total net revenues were $14,500,326 and $24,545,596, respectively.
Golf Course
Long-Term liabilities for the year ended June 30, 2021, are as follows:
Balance at Additions/ Deletions/ Balance at Due in
July 1, 2020 Accretions Amortizations June 30, 2021 One Year Golf Equipment Finance 672,993 $ - $ 51,769$ 621,224 $ 51,769 $ Compensated Absences 10,993 7,791 6,050 12,734 7,008 Total Long-Term Liabilities 683,986 $ 7,791 $ 57,819 $ 633,958 $ 58,777 $
Golf Equipment Finance
On June 15, 2018, the Company entered into an agreement with American Golf Corporation to finance $776,530 worth of golf equipment to be paid over a 15-year period at $51,769 per year. There is no interest charged on this financing.
Note 5: Net Position
Net position for the Rose Bowl Stadium at June 30, 2021, consisted of the following:
Net investment in capital assets:
Property, plant, and equipment, net 159,385,763 $
Less:
Net carrying value of capital-related debt (173,208,393) Accounts payable on capital assets (306,259)
Total net investment in capital assets (14,128,889)
Restricted for debt service 15,352,313
Unrestricted net deficit (32,751,750)
Total net position (31,528,326) $
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 5: Net Position (Continued)
Net position for the Golf Course at June 30, 2021, consisted of the following:
Net investment in capital assets:
Property, plant, and equipment, net 6,911,269 $
Less:
Outstanding debt issued to construct capital assets (621,224) Accounts payable on capital assets (73,005)
Total net investment in capital assets 6,217,040
Unrestricted net position (designated):
Designated for future CIP and major maintenance 422,427 Designated for debt service 672,993
Total designated net position 1,095,420
Undesignated net position 10,871,550
Total unrestricted net position 11,966,970
Total net position 18,184,010 $
Note 6: Defined Benefit Pension Plan
Miscellaneous Plan:
Description of Plan
The Rose Bowl Operating Company participates in cost-sharing multiemployer defined benefit pension plans (Miscellaneous and PEPRA) administered by the California Public Employees’ Retirement System (CalPERS) . All qualified permanent and probationary employees are eligible to participate. Benefit provisions under the Plans are established by State statue and the Company’s Board of Directors.
Benefits Provided
CalPERS provides serv ice retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who mu st be public employees and beneficiaries.
Benefits are based on years of cr edited service, equal to one year of full-time employment.
Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 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 Public Employees’ Pension Reform Act of 2013 (PEPRA) r equires new benefits and member contributions for new members as defined by PEPRA, that are hired after January 1, 2013. These PEPRA members in pooled plans are reflected in the new Miscellaneous and Safety risk pools created by the CalPERS Board in response to the passage of PEPRA, beginning with the June 30, 2013, risk-pool valuations. The PEPRA Plan of the Company went into effect during the fiscal year ending June 30, 2014.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 6: Defined Benefit Pension Plan (Continued)
The Plans provisions and benefits in effect for the current year, are summarized as follows:
PEPRA
Miscellaneous* Miscellaneous
Prior to January 1, 2013
Hire date January 1, 2013 and after
Benefit formula 2.5% @ 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 and up 52 and up
Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 1.0% to 2.5% Required employee contribution rates 8.00% 6.75%
Required employer contribution rates 12.361% 7.73%
Required employer unfunded liability payment 241,208 $ 3,216 $ * Closed to new entrants.
Contribution Description:
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate.
Funding contributions for the Miscellaneou s Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuaria lly 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 accru ed liability. The Company is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the fiscal year ended June 30, 2021, the Company made contributions to the Plans totaling $513,532.
Pension Liabilities (Assets), Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension
As of June 30, 2021, the Company reported a net pension liability for its proportionate share of the net pension liability of each Plan of $2,996,767.
The Company’s net pension liability (asset) for the Plans is me asured as the proportionate share of the net pension liability. The net pension liability (asset ) of the Plan is measured as of June 30, 2020, and the total pension liability for the Plan used to calculate the net pension liability (asset) was determined by an actuarial valuation as of June 30, 2019, rolled forward to June 30, 2020, using standard update procedure s. The Company’s proportion of the net pension liability was based on a projection of t he Company’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The Company’s proportionate share of the net pension liability for the Plans as of June 30, 2019 and 2020, was as follows:
Miscellaneous
Proportion - June 30, 2019 0.06964%
Proportion - June 30, 2020 0.07105%
Change - Increase (Decrease) 0.00141%
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 6: Defined Benefit Pension Plan (Continued)
For the year ended June 30, 2021, the Co mpany recognized pension expense of $748,832 for the Plans. At June 30, 2021, the Company reported deferred outflow s of resources and deferred inflows of resources related to pension from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Pension contributions subsequent to measurement
date 513,532 $ - $
Difference between expected and actual
experience 154,433 -
Changes in assumptions - (21,374) Net difference between projected and actual
earnings on pension plan investments 89,024 - Changes in proportion and difference between
employer contributions and proportionate share of
contributions 183,738 -
Total 940,727 $ (21,374) $
The $513,532 reported as deferred outflows of resources relat ed to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts report ed as deferred outflows of resources and deferred inflows of reso urces related to pensions will be re cognized as pension expense as follows:
Deferred
Outflow (Inflow)
Year Ended June 30, of Resources
2022 121,285 $
2023 145,660
2024 96,177
2025 42,699
Total 405,821 $
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 6: Defined Benefit Pension Plan (Continued)
Actuarial Assumptions
For the measurement period ended June 30, 2020 (the measurement date), the total pension liability was determined by rolling forward the Ju ne 30, 2019, total pension liability. The June 30, 2019 and the June 30, 2020, total pension liabilities were based on the following actuarial methods and assumptions:
Actuarial Cost Method Entry age Normal in accordance with the requirements of GASB Statement No. 68.
Actuarial Assumptions
Discount Rate 7.15%
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Investment Rate of Return 7.15% Net of Pension Plan Investment and Administrative Expenses; includes Inflation.
Mortality Rate Table (1) Derived using CalPERS' Membership Data for all Funds.
Post Retirement Benefit Contract COLA up to 2.50% until Purchasing Increase Power Protection Allowance Floor on
Purchasing Power applies, 2.50% thereafter.
(1) The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates includes 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017, that can be found on the CalPERS website.
All other actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial experience study for the period from 1997 to 2015, including updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at CalPERS’ website.
Change in Assumptions
For the measurement date, June 30, 2020, there were no changes of assumptions.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 6: Defined Benefit Pension Plan (Continued)
Discount Rate
The discount rate used to measure the total pension liability was 7.15% for each Plan. The projection of cash flows used to determine the di scount rate assumed that contributions from plan members will be made at stat utorily required rates, actuarially determined. Based on those assumptions, the Plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments wa s applied to all periods of projected benefit payments to determine the total pension liability.
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 expect ations as well as the expected pension fund cash flows. Using historical returns of a ll the funds’ asset classes, expected compound (geometric) returns were calculated over the sh ort-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 equivalent 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
Strategic Real Return Real Return
Asset Class1 Allocation Years 1-102 Years 11+**
Global Equity 50.00% 4.80% 5.98%
Global Debt Securities 28.00% 1.00% 2.62%
Inflation Assets - 77.00% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% - -0.92%
(1) In the System's CAFR, Fixed Income is included in Global Debt Securities, Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity.
(2) An expected inflation of 2.0% used for this period. (3) An expected inflation of 2.92% used for this period.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 6: Defined Benefit Pension Plan (Continued)
Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate
The following presents the net pension liability (asset) of the Plan as of the measurement date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability (asset) would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15 percent) than the current rate:
Discount Current Discount
Rate - 1% Discount Rate Rate + 1%
(6.15%) (7.15%) (8.15%)
Plan's Net Pension
Liability/(Assets) 4,699,589 $ 2,996,767 $ 1,589,780 $
Note 7: Advance From Vendor
During the year ended June 30, 2018, the Company signed an agreement with Levy Premium Food Service to buy out the contract of SodexoMagic. This agreement provided the Company an advance of $1,000,000 to purchas e capital improvements. The Company must reimburse the vendor $100,000 per year over 10 years expiring on June 30, 2028. The total amount due at June 30, 2021, was $700,000. Any unpaid or unrecouped portion of the advance shall be reimbursed to Levy Premium Food Service as a precondition to the effectiveness of termination of the agreement for any reason.
Note 8: Self-Insurance Program
The Company is entitled to indemnity from the Ci ty, and its losses are included in the City’s general liability self-insurance program and under the excess general liability policies. RBOC carries statutory workers’ compensation insu rance with no retention. Tenants of the Rose Bowl provide insurance, naming the City of Pasadena as additional insured on their policies.
See the City of Pasadena’s financial statements for further details.
Note 9: Golf Course Management Agreement
The Golf Course is operated and maintained by American Golf Corporation (AGC) under the terms of an agreement, effective June 15, 2018, and expires on June 30, 2028. The agreement entitles AGC to a base management fee of $325,000 per year and increased annually thereafter based upon the change in the CPI for each ensuing operating year. The increase shall not be more than 5% annually, and in no event shall there be a decrease, even if there is a decrease in the CPI. In addition, if the net operating income exceeds the targeted net operating income, AGC shall be entitled to an incentive management fee in each operating year equal to the lesser of the am ount by which the net operating income exceeds the targeted net operating income or $40,000. In each operating year that net operating income exceeds the targeted net operating income by more than $40,000, AGC shall be entitled to a second incentive management fee equal to 15% of the net operating income in excess the base target.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
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Note 10: Related Party Transactions
During the current year, the Company incurred charges for the use of the City’s building maintenance (electricians, plumbers), locks miths, printing, and mail services. These nonevent expenses totaled $1,420,532 and are included within general and administrative expenses. During the current year, the Company also paid the City for police, fire, and public works services, primarily for events, amount ing to $246,383. At June 30, 2021, amounts payable to the City totaled $445,181.
During the current year, the City contributed $11,515,463 to the Company by making payments towards the debt service requirement s of the bonds described in Note 4 on behalf of the Company.
In addition, at June 30, 2021, Company has amo unts receivable from the City related to the 2006 bond refunding in the amount of $455,325, which will be received through annual payments from the City through 2043.
Note 11: Subsequent Events
The City of Pasadena agreed to make a c ontribution of approximately $9,428,000 to the Company by making payments towards the debt service requirements of the bonds described in Note 4 on behalf of the Company during the fiscal year ended June 30, 2022.
On November 5, 2021, the Company was awarded federal financial assistance in the amount of $10,000,000 through the shuttered venue opera tors grant from the U.S. Small Business Administration. The purpose of this grant is to provide capital to help an organization survive the COVID-19 pandemic.
ROSE BOWL OPERATING COMPANY
SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
CALPERS MISCELLANEOUS PENSION PLAN
Last Ten Years*
(42)
Fiscal year ended June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 Measurement period June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 Plan's proportion of the net pension liability 0.07105% 0.06964% 0.06867% 0.06821% Plan's proportionate share of the net
pension liability 2,996,767$ 2,788,864$ 2,587,867$ 2,688,676$ Plan's covered payroll 3,273,956$ 3,083,082$ 2,798,456$ 2,583,602$ Plan's proportionate share of the net
pension liability as a percentage of its
covered - payroll 91.53% 90.46% 92.47% 104.07%
Plan's proportionate share of the fiduciary
net position as a percentage of the Plan's
total pension liability 76.58% 75.26% 77.69% 75.39%
Plan's proportionate share of aggregate
employer contributions 437,821$ 355,030$ 302,458$ 262,966$ Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Changes in Assumptions:
From fiscal year June 30, 2015 to June 30, 2016
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:
The discount rate was reduced from 7.65% to 7.15%.
From fiscal year June 30, 2018 to June 30, 2019:
From fiscal year June 30, 2019 to June 30, 2020:
There were no changes in assumptions.
From fiscal year June 30, 2020 to June 30, 2021:
There were no changes in assumptions.
* Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation, therefore, only seven years are shown.
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 expenses.
Demographic assumptions and inflation rate were changed in accordance with the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate.
ROSE BOWL OPERATING COMPANY
SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (CONTINUED)
CALPERS MISCELLANEOUS PENSION PLAN
Last Ten Years*
(43)
Fiscal year ended June 30, 2017 June 30, 2016 June 30, 2015 Measurement period June 30, 2016 June 30, 2015 June 30, 2014 Plan's proportion of the net pension liability 0.06766% 0.07266% 0.02717% Plan's proportionate share of the net
pension liability 2,350,455$ 1,993,478$ 1,690,891$ Plan's covered payroll 2,183,555$ 2,292,759$ 2,304,751$ Plan's proportionate share of the net
pension liability as a percentage of its
covered - payroll 107.64% 86.95% 73.37%
Plan's proportionate share of the fiduciary
net position as a percentage of the Plan's
total pension liability 75.87% 78.40% 76.63%
Plan's proportionate share of aggregate
employer contributions 410,605$ 211,985$ 103,894$
ROSE BOWL OPERATING COMPANY
SCHEDULE OF THE PLAN CONTRIBUTIONS – MISCELLANEOUS COST SHARING PLAN
Last Ten Years*
(44)
Fiscal year ended June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 Contractually required contribution
(actuarially determined) 513,532$ 537,091$ 470,264$ 403,984$ Contributions in relation to the actuarially
determined contributions (513,532) (537,091) (470,264) (403,984) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 2,655,214$ 3,273,956$ 3,083,082$ 2,798,456$ Contributions as a percentage of covered
payroll 19.34% 16.40% 15.25% 14.44%
Notes to Schedule:
Valuation Date 6/30/2018 6/30/2017 6/30/2016 6/30/2015
Methods and Assumptions Used to
Determine
Contribution Rates:
Actuarial cost method Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1)
Asset valuation method Market Value Market Value Market Value Market Value Inflation 2.63% 2.63% 2.75% 2.75%
Salary increases (2) (2) (2) (2)
Investment rate of return 7.25% (3) 7.25% (3) 7.375% (3) 7.50% (3) Retirement age (4) (4) (4) (4)
Mortality (5) (5) (5) (5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation (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 1st year of implementation, therefore, only seven years are shown.
ROSE BOWL OPERATING COMPANY
SCHEDULE OF THE PLAN CONTRIBUTIONS – MISCELLANEOUS COST SHARING PLAN (CONTINUED)
Last Ten Years*
(45)
Fiscal year ended June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution
(actuarially determined) 371,534$ 317,561$ 324,587$ Contributions in relation to the actuarially
determined contributions (371,534) (317,561) (324,587) Contribution deficiency (excess) -$ -$ -$ Covered payroll 2,583,602$ 2,373,593$ 1,922,101$ Contributions as a percentage of covered
payroll 14.38% 13.38% 16.89%
Notes to Schedule:
Valuation Date 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
Amortization method (1) (1) (1)
Asset valuation method Market Value Market Value 15 Year Smoothed
Market Method
Inflation 2.75% 2.75% 2.75%
Salary increases (2) (2) (2)
Investment rate of return 7.50% (3) 7.50% (3) 7.50% (3) Retirement age (4) (4) (4)
Mortality (5) (5) (5)
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CliftonLarsonAllen LLP
CLAconnect.com
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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of Directors
Rose Bowl Operating Company
Pasadena, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of each enterprise fund of the Rose Bowl Operating Company (the Company), a component unit of the City of Pasadena, California, as of and for the year ended June 30, 2021 and the related notes to the basic financial statements, which collectively comprise the Company’s basic financial statements, and have issued our report thereon dated December 23, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Company’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we do not expr ess an opinion on the effectiveness of the Company’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis . A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Company’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Board of Directors
Rose Bowl Operating Company
(47)
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Company’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Company’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Company’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
CliftonLarsonAllen LLP
Irvine, California
December 23, 2021