Finance Committee
February 14, 2022

PASADENA CENTER OPERATING COMPANY

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(10)

OPERATING REVENUES
Occupancy Fees 900,313$
Ice Skating Center 263,834
Commissions 183,030
Total Operating Revenues 1,347,177

OPERATING EXPENSES
Pasadena Center 2,965,826
Ice Skating Center 354,496
Pasadena Convention and Visitors Bureau 1,079,594
Depreciation Expense 4,194,486
Total Operating Expenses 8,594,402
OPERATING LOSS (7,247,225)

NONOPERATING REVENUES (EXPENSES)
Contributions from City of Pasadena (Transient Occupancy Taxes) 4,181,042 Tourism Business Improvement District Taxes 1,368,681
Facility Restoration Fee 5,000
Investment Income 260,702
Interest Expense (6,061,556)
Total Nonoperating Revenues (Expenses) (246,131)
INCOME BEFORE CAPITAL CONTRIBUTIONS (7,493,356)
CAPITAL CONTRIBUTIONS 12,676
CHANGES IN NET POSITION (7,480,680)
Net Position - Beginning of Year 456,064
NET POSITION - END OF YEAR (7,024,616)$

PASADENA CENTER OPERATING COMPANY

STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(11)

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers 1,370,685$
Cash Payments to Suppliers for Goods and Services (2,202,808) Cash Payments to Employees for Services (2,376,231)
Net Cash Used by Operating Activities (3,208,354)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Contributions from the City of Pasadena (Transient Occupancy Taxes) 3,845,380 Receipt of Tourism Business Improvement District Taxes 1,226,791 Net Cash Provided by Noncapital Financing Activities 5,072,171

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets (885,485) Principal Paid on Long-Term Debt (5,606,049)
Interest Paid on Long-Term Debt (5,265,915)
Facility Restoration Fee for Capital Improvements 5,000 Net Cash Used by Capital and Related Financing Activities (11,752,449)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income Received (151,476)
Net Cash Used by Investing Activities (151,476)
NET DECREASE IN CASH AND CASH EQUIVALENTS (10,040,108)
Cash and Cash Equivalents - Beginning of Year 28,405,322 CASH AND CASH EQUIVALENTS - END OF YEAR 18,365,214$

RECONCILIATION TO STATEMENT OF NET POSITION
Cash and Cash Equivalents 7,246,445$
Restricted Cash and Cash Equivalents 11,118,769
Total Reconciliation to Statement of Net Position 18,365,214$

PASADENA CENTER OPERATING COMPANY

STATEMENT OF CASH FLOWS (CONTINUED)
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(12)

RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH USED BY OPERATING ACTIVITIES:

Operating Loss (7,247,225)$
Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities:

Depreciation 4,194,486
(Increase) Decrease in Assets:

Accounts Receivable 224,799
Prepaid Items 14,552
Increase (Decrease) in Liabilities:

Accounts Payable and Other Liabilities (147,054)
Accrued Salaries and Benefits (46,621)
Advance Deposits Payable (201,291)
Net Cash Used by Operating Activities (3,208,354)$

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING

AND FINANCING ACTIVITY
Amortization of Deferred Refunding Charges 349,432$
Accretion of Interest on Long-Term Debt 723,564$
Amortization of Service Concession Arrangement 12,676$

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(13)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
Pasadena Center Operating Company (the Company) was formed in 1973 as a nonprofit corporation under Section 501(c)(4) of the Internal Revenue Code for the purpose of managing and operating the Pasadena Center and the Pasadena Convention and Visitors Bureau. The Pasadena Center is comprised of the Civic Auditorium, which includes the auditorium and adjacent land, and the Conference Center, which includes the Conference Center, Exhibition Hall, and related parking facilities.

The Company operates under an agreement with the City of Pasadena (the City) whereby the Company maintains and operates the Pasadena Center and the Pasadena Convention and Visitors Bureau. The Pasadena City Council appoints the members of the Company’s board of directors. The Company’s 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 Comprehensive Annual Financial Report consistent with accounting principles generally accepted in the United States of America (U.S. GAAP).

Basis of Presentation
The Company’s financial statements are presented in conformance with Governmental Accounting Standards Board (GASB) Statement No. 34, which established standards for external financial reporting for all state and local governmental entities. The basic financial statements include the statement of net position, statement of revenues, expenses, and changes in net position, and statement of cash flows.

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 revenues 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.

Classification of Revenues and Expenses
The Company classifies its revenues and expenses into the following classifications:
operating revenues, operating expenses, nonoperating revenues, and nonoperating expenses.

Operating revenues consist of charges to customers for sales and use of the facilities, with the relating costs considered operating expenses. Nonoperating revenues consist of contributions from the City of Pasadena of their transient occupancy taxes, tourism business improvement district taxes, investment income, and other nonoperating income. Capital contributions consist of contributed capital assets.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(14)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Cash Equivalents
For the purpose of the statement of cash flows, cash equivalents 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 insignificant risk of changes in value because of changes in interest rates and have an original maturity date of three months or less.

Investments
Investments are reported in the accompanying statements at fair value, except for certain certificates of deposit and investment contracts that are reported at cost because they are not transferable, and they have terms that are not affected by changes in market interest rates. 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.

Prepaid Assets
Certain payments to vendors, which reflect costs applicable to future accounting periods are recorded as prepaid assets.

Capital Assets
Capital assets are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated assets are valued at their estimated acquisition value on the date received. The Company capitalizes all assets with a historical cost of at least $10,000 consistent with City practice. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized.

Depreciation is computed utilizing the straight-line method over the following estimated useful lives:

Buildings 50 Years
Building Improvements 3 to 30 Years
Machinery and Equipment 3 to 30 Years
Furniture and Fixtures 10 Years
Compensated Absences
The Company has a paid time off (PTO) policy in effect. It is the Company’s policy to permit employees to accumulate earned but unused PTO benefits. PTO hours can accrue up to a maximum of one and one-half times the annual allowable amount (maximum of 27 to 42 days, 216 to 336 hours). The Company pays all earned PTO benefits upon termination. All accumulated PTO is recorded as an expense and a liability at the time the benefit is earned.

This is included in accrued salaries and benefits on the statements of net position.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(15)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position
Net position represents the difference between assets and liabilities on the statement of net position. Net positions were classified in the following categories: net investment in capital assets, restricted, and unrestricted.

Net investment in capital assets consists of the cost of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction, or improvement of those assets, as applicable.

Net position is reported as restricted when there are limitations imposed on the use either through the enabling legislation adopted by the Company’s board of directors, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. All other net position is reported as unrestricted.

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

Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and 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.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(16)
NOTE 2 CASH AND INVESTMENTS
Summary of Cash and Investments
Cash and investments as of June 30, 2021, are classified in the accompanying financial statements as follows:

Cash and Cash Equivalents 7,246,445$
Restricted Cash and Cash Equivalents 11,118,769
Total Cash and Investments 18,365,214$
Cash and investments as of June 30, 2021, consist of the following:

Cash on Hand 11,100$
Deposits With Financial Institutions 4,262,835
City of Pasadena Investment Pool 2,972,510
Cash and Investments With Fiscal Agent:

Money Market Mutual Funds 11,118,769
Total Cash and Investments 18,365,214$
Deposits
At June 30, 2021, the carrying amount of the Company’s deposits was $4,262,835 and the bank balance was $4,283,421. The $20,586 difference represents outstanding checks and other reconciling items. All of the Company’s cash and cash equivalents as of June 30, 2021 were collateralized or insured with securities held by pledging financial institutions in the Company’s name.

Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code does 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 the Company’s deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(17)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by the California Government Code The table below identifies the investment types that are authorized for the Company by the California Government Code. Other than what is in the Government Code, the Company has no other investment policy.

Investment Types Authorized by *Maximum *Maximum
Authorized by the Investment *Maximum Percentage Investment in California Government Code Policy Maturity of Portfolio One 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 held 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 the 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
Investments Contracts None Aa

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(18)
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 market interest rates. One of the ways that the Company manages its exposure to interest rate risk is by purchasing a combination of short- term and long-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 Company’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 Company’s investments by maturity:
12 Months 12 to 60
Investment Type Fair Value or Less Months
City of Pasadena Investment Pool 2,972,510$ 2,972,510$ -$ Fiscal Agent:

Money Market Mutual Funds 11,118,769 11,118,769 -
Total 14,091,279$ 14,091,279$ -$
Remaining Maturity
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 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.

Minimum
Legal
Investment Type Fair Value Rating Aaa Not Rated
City of Pasadena Investment Pool 2,972,510$ N/A -$ 2,972,510$ Fiscal Agent:

Money Market Mutual Funds 11,118,769 Aaa 11,118,769 - Total 14,091,279$ 11,118,769$ 2,972,510$
Ratings at End of Year
Concentration of Credit Risk
The investment policy of the Company contains no limitations on the amount that can be invested in anyone issuer beyond that stipulated by the California Government Code.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(19)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value Hierarchy
The Company categorizes its fair value measurements within the fair value hierarchy established by U.S. GAAP. 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 investment pool and the fiscal agent money market mutual funds are not subject to the fair value hierarchy. Further details on the City’s investment pool fair value hierarchy can be found in the City’s Comprehensive Annual Financial Report for the year ended June 30, 2021.

NOTE 3 TOURISM BUSINESS IMPROVEMENT DISTRICT TAXES AND CONTRIBUTIONS OF

CITY TRANSIENT OCCUPANCY TAXES
Tourism Business Improvement District (TBID) Taxes
The TBID was established in March 2003. The TBID is an assessment levied against each hotel and motel business in the City. The assessment is calculated as a percentage of each day’s Gross Occupancy Revenue and is passed through to guests. The rate of assessment is set annually by resolution of the City Council but cannot exceed 2.89%. For the fiscal year ended June 30, 2021, the rate was set at 2.89%. The purpose of the TBID is to market Pasadena as a destination by funding activities, programs, expenses, and services of the Pasadena Convention & Visitors Bureau. Marketing activities of the Pasadena Convention & Visitors Bureau and the Pasadena Conference Center are financed by the TBID. For the year ended June 30, 2021, TBID taxes were $1,368,681, of which $202,575 was due from the City at June 30, 2021.

Contributions of City Transient Occupancy Taxes (TOT)
The Company receives support from the City equal to the sum of the annual debt service payments on the 2006A and 2008A expansion project bonds and an allowance of $500,000 to be used by the Company for maintenance, repairs, capital improvements and or debt service. A portion of this support is retained by the City to pay for the Company’s insurance.

Annual capital improvements to the Convention Center, Civic Auditorium and Ice Skating Center are approved by the City. For the year ended June 30, 2021, net TOT revenue was $4,181,042, of which $741,936 was due from the City at June 30, 2021.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(20)
NOTE 4 CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2021, is as follows:

Balance at Transfers Balance at
June 30, 2020 Additions and Deletions June 30, 2021
Capital Assets Being Depreciated:

Buildings and Improvements 183,162,666$ -$ 1,065,232$ 184,227,898$ Machinery and Equipment 1,881,441 - - 1,881,441 Furniture and Fixtures 366,934 - - 366,934 Total Depreciable Capital Assets 185,411,041 - 1,065,232 186,476,273 Less Accumulated Depreciation:

Buildings and Improvements (58,040,114) (4,106,297) - (62,146,411) Machinery and Equipment (1,058,379) (75,064) - (1,133,443) Furniture and Fixtures (287,437) (13,125) - (300,562) Total Accumulated Depreciation (59,385,930) (4,194,486) - (63,580,416) Net Depreciable Assets 126,025,111 (4,194,486) 1,065,232 122,895,857 Land 2,423,473 - - 2,423,473 Construction in Progress 300,263 885,485 (1,065,232) 120,516 Capital Assets, Net 128,748,847$ (3,309,001)$ -$ 125,439,846$ Depreciation expense for the year ended June 30, 2021, was $4,194,486.

NOTE 5 LONG-TERM DEBT
Long-term debt for the year ended June 30, 2021, is as follows:

Balance at Additions/ Payments/ Balance at Due in
June 30, 2020 Accretion Prepayments June 30, 2021 One Year Certificates of Participation
2006 Series A 16,485,000$ -$ (5,145,000)$ 11,340,000$ 5,490,000$ Accreted Interest (1,507,413) 723,564 - (783,849) - Certificates of Participation
2008 Series A 134,720,000 - - 134,720,000 - Energy Conservation Loan 774,600 - (293,841) 480,759 305,560 Ice Skating Loan 2012 167,208 - (167,208) - - Total 150,639,395$ 723,564$ (5,606,049)$ 145,756,910$ 5,795,560$

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(21)
NOTE 5 LONG-TERM DEBT (CONTINUED)
2006 Certificates of Participation
On August 23, 2006, the City issued the 2006 Certificates of Participation, 2006 Series A and B in the amount of $162,639,972. The Certificates of Participation were issued to finance the cost of improvements to the Pasadena Conference Center and related facilities, establish a reserve fund per the Trust Agreement, and finance the cost of execution and delivery of the Certificates of Participation.
2006 Series A of the Certificates of Participation were issued as Capital Appreciation Certificates. These certificates of participation appreciate in value based on annual accretion of the initial amount at a rate of interest that will result in each such capital appreciation certificate of participation appreciating to its maturity value on its final maturity date.

Accretion will commence on August 23, 2006. Interest accretes at a yield ranging from

3.85% to 4.81%. By their nature, there are no regular interest payments associated with capital appreciation certificates of participation; interest on the debt results from the difference between the amounts paid by the investors when the debt was issued and the significantly larger value at maturity. Each year, the outstanding balance is increased by the accreted value associated with the certificates of participation. Principal on the 2006 Series A Certificates of Participation is payable in annual installments ranging from $415,000 to $5,850,000 commencing February 2010 and ending February 2023. 2006 Series B of the Certificates of Participation was refunded by the 2008 Series A Certificates of Participation (see note below).

The annual requirements to repay the outstanding Certificates of Participation 2006 Series A at June 30, 2021, are as follows:

Principal
Year Ending June 30,
Payment Accretion
2022 5,490,000$ (512,288)$
2023 5,850,000 (271,561)
Total 11,340,000$ (783,849)$
2008 Certificates of Participation
On April 15, 2008, the City issued the 2008 Refunding Certificates of Participation, 2008 Series A in the amount of $134,720,000. These certificates of participation were issued to refund the City’s Certificates of Participation (Conference Center Project), 2006 Series B Certificates of Participation and finance the costs of execution of the 2008 Series A Certificates of Participation. The refunded certificates of participation were repaid in April 2008 and the liability has been removed from the statement of net position. Interest on 2008 Series A Certificates of Participation were issued at a variable rate with the reassignment of the synthetic fixed rate swap of 3.536%. Principal is payable in annual installments ranging from $6,775,000 to $11,445,000 commencing February 1, 2024, and ending February 1, 2035.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(22)
NOTE 5 LONG-TERM DEBT (CONTINUED)
2008 Certificates of Participation (Continued)
The annual requirements to repay the outstanding Certificates of Participation 2008 Series A at June 30, 2021, are as follows:

Principal Interest Hedging
Year Ending June 30, Payment Payment Derivative, Net Total 2022 -$ 148,367$ 4,554,513$ 4,702,880$
2023 - 148,367 4,554,513 4,702,880
2024 6,775,000 145,258 4,457,804 11,378,062
2025 7,480,000 137,473 4,215,711 11,833,184
2026 8,260,000 128,878 3,948,572 12,337,450
2027-2031 54,370,000 483,560 14,752,769 69,606,329
2032-2035 57,835,000 130,639 3,506,123 61,471,762
Total 134,720,000$ 1,322,542$ 39,990,005$ 176,032,547$ The above table incorporates the net receipts/payments of the hedging derivative instrument associated with this debt issue. These amounts assume that current interest rates on variable rate bonds and the current reference rates of hedging derivative instruments will remain the same for their term. As these rates vary, interest payments on variable-rate bonds and net receipts/payments on the hedging derivative instruments will vary. Refer to Note 6 for additional information regarding the derivative instruments associated with the debt of the Company.

Energy Conservation Loan
The Company received approval from the City in June 2008 to commence a project designed to conserve energy through use of more efficient air conditioning systems and energy efficient lighting. The project budget cost was $4,581,071; $1,560,000 was pledged by Pasadena Water and Power (PWP) as a rebate based on energy savings and $3,000,000 was covered by a loan from the California Energy Commission with an interest rate of 3.95% for 13 years. The payments on this $3,000,000 loan are budgeted at approximately $320,000 for 13 years.

The annual requirements to repay the outstanding loan from the State of California Energy Conservation Commission at June 30, 2021, are as follows:

Principal Interest Total Debt
Year Ending June 30,
Payment Payment Service
2022 305,562$ 16,011$ 321,573$
2023 175,197 3,822 179,019
Total 480,759$ 19,833$ 500,592$
Ice Skating Loan 2012
The Company borrowed $1,500,000 per City Council Action in August 2012 for construction of the new Ice Skating Center. The term of the loan is ten years with a fixed interest rate of

2.5%. The principal and interest payment of $171,388 is due annually in March. The final payment on this loan was made during the fiscal year ended June 30, 2021.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(23)
NOTE 6 DERIVATIVE INSTRUMENT LIABILITY
The Company has entered into a floating to fixed interest rate swap in order to hedge the change in cash flows with respect to certain variable debt as described below. This structure results in a lower borrowing cost by accessing interest rate markets more attractive than traditional fixed rate debt structures of the time. The greater liquidity and flexibility of the swap market has offered the Company significant cost savings opportunities in the swap the Company has engaged in.

Conference Center Variable Rate Demand Refunding Certificates of Participation (COP)
On September 18, 2006, the Company entered into an interest rate swap agreement with DEPFA Bank related to the $135,500,000 Conference Center Auction Rate Certificates Series 2006B. The objective was to effectively change the Company’s variable interest rate to a synthetic fixed rate of 3.536%. Under the terms of the swap, the Company pays the counterparty the fixed rate of 3.536% and receives a floating rate equal to 64% of the one- month LIBOR rate. The swap has a notional amount of $133,000,000 representing a hedge ratio of 98.7% and declines according to the schedule set forth in the contract until the final principal payment on the certificates in 2034.

Objective and Terms
Notional Effective Maturity Counterparty
Type Objective Amount Date Date Terms Credit Rating
Pay Fixed Interest Hedge of Changes 133,000,000$ 4/1/2011 2/1/2034 Pay 3.536% A1/AA- Rate Swap in Cash Flows on Receives 64%
the 2008A COPs LIBOR Index
In 2011, due to its declining credit ratings, DEPFA Bank was replaced by RBC as the counterparty for the swap. Pursuant to GASB Statement No. 64, the replacement did not require any change in accounting treatment.

On April 15, 2008, the Company issued the 2008 Refunding COPs, Series 2008A in the amount of $134,720,000. These certificates were issued to refund the Company’s Certificates of Participation (Conference Center Project), Series 2006B and finance the cost of execution of the 2008A Certificates of Participation backed by a letter of credit from Bank of America. The final maturity on the 2008A COPs was extended by one year to 2035 in order to reduce the reserve requirement and consequently, reduce the size of the issue by approximately $800,000. The refunded certificates are considered to be defeased, and the liability has been removed from the Company’s statement of net position and recorded as a deferred amount upon refunding. During the fiscal year ended June 30, 2011, the Company entered into a new agreement to take advantage of a more advantageous interest rate adjustment mode than the 2008 Series Bonds previously had. As a result, the former derivative instrument terminated, and the new instrument has off-market terms. As a result, an up-front payment was received. The up-front payment is reported as a borrowing. The borrowing is amortized over the life of the swap and amortizes using the effective interest method for the life of the swap with adjustments to interest expense during each fiscal year.

The original balance of the borrowing was $8,935,613. As of the year ended June 30, 2021, the balance was $4,613,215.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(24)
NOTE 6 DERIVATIVE INSTRUMENT LIABILITY (CONTINUED)
Objective and Terms (Continued)
The deferred amount is amortized over the life of the swap using the effective interest method for the life of the swap with adjustments to interest expense during each fiscal year as follows:

Beginning Accrued Ending
Year Ending June 30, Balance Interest Payment Balance
2022 4,613,215$ 199,651$ (646,380)$ 4,166,486$
2023 4,166,486 179,003 (646,380) 3,699,109
2024 3,699,109 157,461 (635,404) 3,221,166
2025 3,221,166 136,068 (601,344) 2,755,890
2026 2,755,890 115,332 (563,760) 2,307,462
2027 2,307,462 95,454 (522,409) 1,880,507
2028 1,880,507 76,649 (477,171) 1,479,985
2029 1,479,985 59,154 (427,721) 1,111,418
2030 1,111,418 43,226 (373,774) 780,870
2031 780,870 29,157 (315,009) 495,018
2032 495,018 17,258 (251,140) 261,136
2033 261,136 7,877 (181,805) 87,208
2034 87,208 1,487 (88,695) -
Total 1,117,777$ (5,730,992)$
The Company categorizes its fair value measurements within the fair value hierarchy established by U.S. GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the asset or liability. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are quoted prices in active markets for similar assets; Level 3 inputs are significant unobservable inputs.

The Company has the following recurring fair value measurements as of June 30, 2021:

Measurements by Fair Value Level Total Level 1 Level 2 Level 3 Derivative Instrument Liability 25,068,456$ -$ 25,068,456$ -$ The fair value balance and notional amount of the derivative instrument outstanding at June 30, 2021, classified by type, and the changes in fair value of such derivative instruments for the year then ended are as follows:

Classification Amount Classification Amount Notional
Cash Flow Hedge:

Pay-Fixed Interest Rate Deferred
Swaps Outflow (8,338,494)$ Liability 25,068,456$ 133,000,000$ Changes in Fair Value Fair Value at June 30, 2021

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(25)
NOTE 6 DERIVATIVE INSTRUMENT LIABILITY (CONTINUED)
Objective and Terms (Continued)
The fair values of the interest rate swaps were estimated using the zero-coupon method.

This method calculates the future net settlement payments required by the swap, assuming that the current forward rates implied by the yield curve correctly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement on the swaps.

Credit Risk
The Company is exposed to credit risk on hedging derivative instruments to the extent the value of the swap is positive from the Company’s perspective. The aggregate fair value of hedging derivative instruments was negative as of June 30, 2021, and therefore the Company had no credit risk exposure.

Interest Rate Risk
The purpose of the swap is to eliminate interest rate risk on the associated hedged bonds and therefore the swap, in combination with related bonds does not create interest rate risk for the Company.

Basis Risk
The Company is exposed to basis risk on its pay-fixed interest rate swap because the variable-rate payments received by the Company on these hedging derivative instruments are based on a rate or index other than interest rates the Company pays on its hedged variable-rate debt, which is typically remarketed every seven days. As of June 30, 2021, the weighted-average interest rate on the Company’s hedged variable-rate debt is 0.01433%, while 64% of LIBOR is 0.0594%.

Termination Risk
The Company or its counterparty may terminate a derivative instrument if the other party fails to perform under the terms of the contract. The derivative contract uses the International Swap Dealers Association Master Agreement which includes standard termination events such as failure to pay and bankruptcy. In addition, the Company may optionally terminate the agreement on any date. If at the time of a termination, the Company may be required to make a termination payment to its counterparty. If the Company had to terminate the Swap for any reason on June 30, 2021, the maximum exposure/loss would have been $30,683,055.

Rollover Risk
The Company is exposed to rollover risk on hedging derivative instruments that are hedges of debt that mature or may be terminated prior to the maturity of the hedged debt. When these hedging derivative instruments terminate prior to the maturity of the related debt, the Company will be re-exposed to the risks being hedged by the hedging derivative instrument.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(26)
NOTE 7 NET POSITION
Net position at June 30, 2021, consisted of the following:

Net Investment in Capital Assets:

Property, Plant, and Equipment, Net 125,439,846$
Less: Net Carrying Value of
Capital-Related Debt (120,331,238)
Total Net Investment in Capital Assets 5,108,608
Restricted Net Position:

Public Art 867,377
Organ Repair and Maintenance 2,863
Total Restricted Net Position 870,240
Unrestricted Net Position:

Undesignated (13,003,464)
Total Unrestricted Net Position (13,003,464)
Total Net Position (7,024,616)$
Net position restrictions are as follows:

Public Art – The $1.2 million capital public art project was originally appropriated for the development of onsite public art. The funds, less monies spent on artist selection, were reallocated for permanent public art in the Civic Center area through the 2013 Public Art Master Plan, which also established the Civic Center Public Art Advisory Group comprised of arts and historic preservation professionals.

Organ Repair and Maintenance – This is the remaining balance of a $15,000 grant which was received for the repair and maintenance of the Moller organ located in the Pasadena Civic Auditorium.

NOTE 8 SERVICE CONCESSION ARRANGEMENTS
Centerplate
In the fiscal year ended June 30, 2009, the Company entered into an agreement with Boston Culinary Group, which then changed to Distinctive Gourmet Services, but is now called Centerplate (CP), that allows CP the exclusive right to operate the food services concession for the Company. The agreement covered the period March 1, 2009, through June 30, 2014. In exchange for this exclusive right, CP agreed to contribute up to $1,000,000 for capital asset purchases at the new kitchen in the Conference Center Expansion Project. An amendment to the agreement was made and entered into on January 6, 2012 to extend the term of the agreement for five years, expiring on June 30, 2021 with an additional five-year extension that is eligible, contingent upon mutual agreement between CP and the Company.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(27)
NOTE 8 SERVICE CONCESSION ARRANGEMENTS (CONTINUED)
Centerplate (Continued)
With the amended agreement, CP was additionally granted the exclusive right to operate a Starbucks Café at the Pasadena Center in the space formerly leased by Lovebirds Café & Bakery. CP’s ability to operate the Starbucks Café runs concurrently with the initial agreement entered into on March 1, 2009 and covers the period through June 30, 2021. A second amendment to the agreement was entered into on June 28, 2019 to extend the agreement an additional five years expiring on June 30, 2024.

Prior to July 1, 2019, CP provided $975,000 for Kitchen space and $399,960 for Café space.

As of June 30, 2021, CP has contributed a total of $1,580,184. This has been recorded as advances on contracts and is being amortized over the lease period including extensions.

The sum of $1,310,610 has been recognized as capital contributions to date. The remaining $269,574 is recorded as a deferred inflow of resources.

NOTE 9 DEFINED CONTRIBUTION RETIREMENT PLAN
Plan Description
Eligible employees of the Company participate in the Pasadena Center Operating Company 401(k) Profit Sharing Plan (the Plan), which is a defined contribution retirement plan covering all employees except those whose employment is governed by a collective bargaining agreement. To be eligible to participate in the Plan, an employee must be age 21 and have completed 90 consecutive days of employment. To be eligible for the employer’s match, an employee must be age 21 and have completed one full year of employment and must have 1,000 hours of service in a twelve-month period.

Funding Policy
An employee may either defer an amount of their salary on a pre-tax basis, or contribute after tax dollars to a Roth 401k account up to the maximums allowed by federal law. The Company will make a contribution equal to 5% of eligible employees’ pay regardless of whether an employee contributes to the Plan. Employee contributions are vested immediately. Employer match contributions prior to July 1, 2004, are subject to vesting on a graduating basis, beginning at two years and becoming fully vested after five years of service. Employer match contributions after July 1, 2004, are vested immediately. The Company matched $165,442 for the fiscal year ended June 30, 2021. The total closing balance on the Plan’s assets are $7,399,359 for the fiscal year ended June 30, 2021.

PASADENA CENTER OPERATING COMPANY

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
(28)
NOTE 10 RELATED PARTY TRANSACTIONS
During the current year, the Company incurred charges for the use of the City’s building maintenance, electricians, plumbers, locksmiths, printing, and mail services. These nonevent expenses totaled $1,060,004 and had a total of $2,620 in events expenses for a grand total of $1,062,624 of related party expenses. The expenses are included within general and administrative expenses. At June 30, 2021, there were no amounts payable to the City.

In addition to the revenues and receivables described in Note 3, the Company has $22,121 due from the City related to interest earned on cash and investments pooled with the City at June 30, 2021.

NOTE 11 RISK MANAGEMENT
The Company is entitled to indemnity from the City; however, the Company purchases a Special Liability Insurance Program (SLIP) for general liability and employment practice coverage. The City manages the Company’s claims and tenders to the insurance carrier third party administrator. The Company carries statutory workers’ compensation insurance with no retention. The company requires licensees to provide insurance or purchase Special Events Liability Insurance from the Company. The City buys liability insurance on the parking structures at the Convention Center. The Company buys separate liability insurance on the ice rink. There are lawsuits pending that are being defended by an insurance company without a reservation of rights. During the past three fiscal years, no settlements or judgements exceeded insurance coverage.

NOTE 12 SUBSEQUENT EVENT
On September 22, 2021, the Company received federal financial assistance in the amount of $2,144,012 through the shuttered venue operators 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.

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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
Board of Directors
Pasadena Center 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 Pasadena Center 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, and have issued our report thereon dated December 15, 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 opinion 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 express 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 entity’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.

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

Board of Directors
Pasadena Center Operating Company
(30)
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 entity’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

CliftonLarsonAllen LLP
Irvine, California
December 15, 2021

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
Attachment D

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 Discuss
ion 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 Othe
r 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
(1)
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
(2)
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 discussio
n 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

(3)
Rounding adjusted

ROSE BOWL OPERA

TING 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. FINA
NCIAL

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 FINANCIA

L 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.

(4)
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.

(5)
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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Rounding adjusted
FINANCIAL STATEMENTS (Continued)

(7)
Rounding adjusted
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:

(8)
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

(9)
Rounding adjusted
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 operati
ons for 10 months during 2020 due to COVID-19.

(10)
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 Com
plex
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.

(12)
Rounding adjusted
FINANCIAL ANALYSIS (Continued)
c. Expense Comparison
Overhead Expenses:

(13)
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).

(14)
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.

(15)
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.

(16)
Rounding adjusted
Balance Shee
t 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)$

(17)
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 amor tized over the life of the bond.

(18)
Rounding adjusted

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.
(19)
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 Defe
rred 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.
(20)

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.
(21)

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 35,288,09 6 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
(22)

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
(23)

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
(24)

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
(25)

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
(26)

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
(27)

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
(28)

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
(29)

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
(30)
Note 4: Long-Term
Debt
Rose Bowl
Long-Te
rm 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
(31)

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 contained $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
(32)

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
(33)

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
(34)

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
(35)

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
(36)

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
(37)
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 rep
orted 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
(38)
Note 6: Defined Benefit Pension Plan (Continued)
Actuarial Assumptions
For the measurement period ende
d 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 as
sumptions 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
(39)

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
(40)

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
(41)

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
(46)
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

PASADENA COMMUNITY ACCESS CORPORATION
(A COMPONENT UNIT OF THE CITY OF

PASADENA, CALIFORNIA)

FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Attachment E

PASADENA COMMUNITY ACCESS CORPORATION

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 3

BASIC FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 7

STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN NET
POSITION 8
STATEMENT OF CASH FLOWS 9
NOTES TO BASIC FINANCIAL STATEMENTS 10
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 19

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. (1)
CliftonLarsonAllen LLP
CLAconnect.com
INDEPENDENT AUDITORS’ REPORT
Board of Directors
Pasadena Community Access Corporation
Pasadena, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Pasadena Community Access Corporation (the Corporation), 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 Corporation’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 an opinion 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 opinion.

Board of Directors
Pasadena Community Access Corporation
(2)
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Pasadena Community Access Corporation, as of June 30, 2021, and the changes in its financial position and its cash for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters
Prior Year Summarized Financial Information
The June 30, 2020 financial statements were audited by White Nelson Diehl Evans LLP, whose practice became part of CliftonLarsonAllen LLP as of November 1, 2020, and whose report dated October 30, 2020, expressed an unmodified opinion on the respective financial statements of Pasadena Community Access Corporation from which the prior year summarized financial information was derived.

Report on Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis 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 information 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 November 2, 2021, on our consideration of the Corporation’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 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 Corporation’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Corporation’s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP
Irvine, California
November 2, 2021

PASADENA COMMUNITY ACCESS CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
(3)
Our discussion and analysis of the Pasadena Community Access Corporation’s (a component unit of the City of Pasadena, California) (the Corporation) financial performance provides an overview of the Corporation’s financial activities for the fiscal year ended June 30, 2021. Please read it in conjunction with the Corporation’s financial statements, which begin on page 7.

FINANCIAL HIGHLIGHTS
The Corporation’s net position for the fiscal year ending June 30, 2021 was $425,140, a decrease of $91 or 0%.

During the year, the Corporation had operating expenses that were $138 more than the $1,014,588 generated from the operating agreement, service contracts, and other revenues from the Corporation’s programs from the fiscal year ended June 30, 2021. This compares to last year, when operating expenses exceeded revenues by $40,319. Excluding depreciation, this year’s operating expenses were $48,563 less than operating revenue, while last year’s operating expense were $465 less than operating revenue.

Total operating cost of all the Corporation’s programs was $1,014,726. The programmatic activities of the Corporation remained unchanged.

USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Net Position (on pages 7 and 8) provide information about the activities of the Corporation as a whole and present a long-term view of the Corporation’s finances. As the Corporation operates as a business-type activity, no additional fund statements are necessary. When the Corporation charges customers for the services it provides— whether to outside customers or to the City of Pasadena or other governments—these services are reported similarly to the way a business operates.

A Statement of Cash Flows is also presented using the direct method, which portrays inflows and outflows for specific classes of operations along with an indirect reconciliation of increases to net cash provided by operations. There were no non-cash entries during the year.

Reporting the Corporation’s Results as a Whole
Our analysis of the Corporation as a whole begins on page 4. One of the most important questions asked about the Corporation’s finances is, “Is the Corporation as a whole better off or worse off as a result of this year’s activities?” The Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Net Position report information about the Corporation as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting , which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.

PASADENA COMMUNITY ACCESS CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
(4)
These two statements report the Corporation’s net position and changes in them. You can think of the Corporation’s net position—the difference between assets and liabilities—as one way to measure the Corporation’s financial health, or financial position. Over time, increases or decreases in the Corporation’s net position are one indicator of whether its financial health is improving or deteriorating.

You will need to consider other nonfinancial factors, however, such as changes in the Corporation’s long-term contractual revenues and the condition of the Corporation’s equipment and other assets, to assess the overall health of the Corporation.

THE CORPORATION AS A WHOLE
The Corporation’s net position decreased from a year ago, from $425,231 to $425,140. Our analysis below focuses on the net position (Table 1) and changes in net position (Table 2) of the Corporation’s activities.

June 30, 2021 June 30, 2020
Current and Other Assets 681,979$ 481,832$
Capital Assets, Net 131,413 180,114
Total Assets 813,392 661,946
Current Liabilities (388,252) (236,715)
Net Position:

Net Investment in Capital Assets 131,413 180,114
Unrestricted 293,727 245,117
Total Net Position 425,140$ 425,231$
Table 1
Unrestricted Net Position —The part of net position that can be used to finance day-to-day operations without constraints established by debts, contribution restrictions, or other legal requirements— changed from $245,117 at June 30, 2020, to $293,727 at end of the fiscal year. Unless restricted by donation or grant covenant (of which the Corporation has no such restrictions at the present time), the Corporation generally can use this net position to finance continuing operations in the coming fiscal year.

PASADENA COMMUNITY ACCESS CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
(5)
Percentage
Changes
June 30, 2021 June 30, 2020 from 2020
Revenues:

Operating Revenues:

Operating Agreement 967,000$ 967,000$ - %
Service Contracts 10,145 18,000 (43.6)
Production and Other Operating Revenue 37,443 29,619 26.4 Total Operating Revenues 1,014,588 1,014,619 -
Nonoperating Revenues:

Public, Education and Gov’t (PEG) Revenue 41,066 300,050 (86.3) Interest Income 47 38 23.7
Total Nonoperating Revenues 41,113 300,088 (86.3)
Total Revenues 1,055,701 1,314,707 (19.7)
Operating Expenses:

Salaries and Benefits 678,454 740,741 (8.4)
Production Expense 18,701 17,307 8.1
Occupancy Expense 210,250 197,713 6.3
Contractual Services 29,100 26,225 11.0
General and Administrative 29,520 32,168 (8.2)
Depreciation 48,701 40,784 19.4
Total Operating Expenses 1,014,726 1,054,938 3.8
Nonoperating Expenses:

PEG Grants Awarded to Other Agencies 41,066 203,000 (79.8) Total Nonoperating Expenses 41,066 203,000 (79.8)
Total Expenses 1,055,792 1,257,938 (16.1)
(100.2)
Changes in Net Position (91) 56,769
Net Position - Beginning of Year 425,231 368,462 15.4 Net Position - End of Year 425,140$ 425,231$ -
Table 2
Year Ended
Although the Corporation’s total cost of programs and services had a net decrease of 16.1% ($202,146), a closer look shows that Operating expenses decreased 3.8% ($40,212), while PEG grants awarded to other agencies decreased from $203,000 to $41,066. The Corporation’s revenues had a net decrease of 19.7% ($259,006), resulting from a combination of virtually flat operating revenue and decreased unearned revenue recognition of PEG revenue in nonoperating revenue.

Budgetary Highlights
Over the course of the year, the board of directors reviewed the budget during meetings. There were no budget reforecasts submitted for approval.

The Corporation’s adopted operating budget was $1,056,900 for the fiscal year ended June 30, 2021.

Actual operating revenues were $42,312 less than budget, and operating expenses were $42,174 less than budget.

PASADENA COMMUNITY ACCESS CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
(6)

CAPITAL ASSETS
At the end of 2021, the Corporation had $131,411 invested in capital assets, net of accumulated depreciation. (See Table 3 below.) This amount represents a net decrease (including additions and disposals) of $48,701 or 27% less than last year.

June 30, 2021 June 30, 2020
Production Equipment 437,420$ 437,420$
Leasehold Improvements 93,897 93,897
Less: Accumulated Depreciation (399,904) (351,203) Property and Equipment, Net 131,413$ 180,114$
Table 3

More detailed information about the Corporation’s capital assets is presented in Note 3 to the financial statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The Corporation’s Board of Directors considered many factors when setting the fiscal year 2022 budget. Significant budget expense increases include occupancy costs of the rent escalator and common area expenses built into the lease and personnel health insurance increases. Revenue from the Operating Agreement is expected to be flat due to the COVID-19 pandemic. A transfer from the emergency reserve account is necessary to balance the budget.

CONTACTING THE CORPORATION’S FINANCIAL MANAGEMENT
This financial report is designed to provide our stakeholders including donors, customers, and the City of Pasadena’s officials with a general overview of the Corporation’s finances and to show the Corporation’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Corporate Office at 150 S. Los Robles Avenue, Suite 101, Pasadena, California 91101. Our main office number is 626-794-8585 and our email is [email protected].

PASADENA COMMUNITY ACCESS CORPORATION

STATEMENT OF NET POSITION
JUNE 30, 2021
(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2020) See accompanying Notes to Basic Financial Statements.
(7)

2021 2020
ASSETS

CURRENT ASSETS
Cash 331,578$ 288,564$
Accounts Receivables 2,740 1,813
Prepaid Assets 3,587 2,828
Deposits 12,420 12,420
Restricted Cash 331,654 176,207
Total Current Assets 681,979 481,832

NONCURRENT ASSETS
Capital Assets, Net of Accumulated Depreciation 131,413 180,114 Total Assets 813,392 661,946

LIABILITIES

CURRENT LIABILITIES
Accounts Payable 3,645 8,869
Accrued Salaries and Benefits 19,134 19,348 Compensated Absences 33,819 32,291
Unearned Revenue 331,654 176,207
Total Current Liabilities 388,252 236,715
Total Liabilities 388,252 236,715

NET POSITION
Investment in Capital Assets 131,413 180,114
Unrestricted 293,727 245,117
Total Net Position 425,140$ 425,231$

PASADENA COMMUNITY ACCESS CORPORATION

STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2021
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2020) See accompanying Notes to Basic Financial Statements.
(8)
2021 2020

OPERATING REVENUES
Operating Agreement 967,000$ 967,000$
Service Contracts 10,145 18,000
Production and Other Operating Revenue 37,443 29,619
Total Operating Revenues 1,014,588 1,014,619

OPERATING EXPENSES
Salaries and Benefits 678,454 740,741
Production Expense 18,701 17,307
Occupancy Expense 210,250 197,713
Contractual Services 29,100 26,225
General and Administrative 29,520 32,168
Depreciation Expense 48,701 40,784
Total Operating Expenses 1,014,726 1,054,938
OPERATING LOSS (138) (40,319)

NONOPERATING REVENUES (EXPENSES)
Public, Education, and Government (PEG) Revenue 41,066 203,000 PEG Grants Awarded to Other Agencies (41,066) (203,000) Interest Income 47 38
Total Nonoperating Revenues 47 38
LOSS BEFORE CAPITAL CONTRIBUTIONS (91) (40,281)
CAPITAL CONTRIBUTIONS - 97,050
CHANGES IN NET POSITION (91) 56,769
Net Position - Beginning of Year 425,231 368,462
NET POSITION - END OF YEAR 425,140$ 425,231$

PASADENA COMMUNITY ACCESS CORPORATION

STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2021
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2020) See accompanying Notes to Basic Financial Statements.
(9)
2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers 37,443$ 29,619$
Cash Received from Contracts 976,218 985,135
Cash Paid to Employees for Services (677,140) (728,959) Cash Paid to Suppliers for Goods and Services (293,554) (270,383) Net Cash Provided by Operating Activities 42,967 15,412

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
PEG Grant Funding Received from City of Pasadena 196,513 248,977 PEG-Eligible Grants Awarded (41,066) (203,000)
Net Cash Provided by Noncapital Financing Activities 155,447 45,977

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition of Capital Assets - (97,050)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income 47 38
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 198,461 (35,623) Cash - Beginning of Year 464,771 500,394
CASH - END OF YEAR 663,232$ 464,771$

RECONCILIATION TO STATEMENT OF NET POSITION
Cash 331,578$ 288,564$
Restricted Cash 331,654 176,207
Total Reconciliation to Statement of Net Position 663,232$ 464,771$

RECONCILIATION OF OPERATING LOSS TO NET

CASH PROVIDED BY OPERATING ACTIVITIES
Operating Loss (138)$ (40,319)$
Adjustments to Reconcile Operating Loss to Net
Cash Provided by Operating Activities:

Depreciation 48,701 40,784
(Increase) Decrease in Accounts Receivable (927) 135
(Increase) Decrease in Prepaid Assets (759) 308
Increase (Decrease) in Accounts Payable and Accrued Expenses (3,910) 14,504 Total Adjustments 43,105 55,731
Net Cash Provided by Operating Activities 42,967$ 15,412$

NONCASH NONCAPITAL FINANCING ACTIVITIES
Recognition of Unearned PEG Revenue as Nonoperating Revenue 41,066$ 203,000$

NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES
Recognition of Unearned PEG Revenue as Capital Contributions -$ 97,050$

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
(10)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The Pasadena Community Access Corporation (the Corporation) was organized in 1983 as a nonprofit, telecommunications resource for the City of Pasadena, California (the City). The Corporation was organized to perform the community access function of the Pasadena telecommunications system pursuant to the Cable Communications Ordinance of the City. In 2011, the City Council determined that the Corporation should be reported as a discretely presented component unit of the City in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).

The board of directors consists of 11 members with representatives from each of the seven City Council Districts, the Mayor, the City Manager, Pasadena Community College (PCC), and Pasadena Unified School District (PUSD). Residency is required except for the City Manager, PCC, and PUSD representatives. 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 Comprehensive Annual Financial Report consistent with U.S. GAAP. Revenues and expenses of the Corporation include direct revenues and expenses and certain allocations from the City.

B. Basis of Presentation
The Corporation’s basic financial statements are presented in conformance with Governmental Accounting Standards Board (GASB) Statement No. 34, which established standards for external financial reporting for all state and local governmental entities. The basic financial statements include the statement of net position, statement of revenues, expenses, and changes in net position, and statement of cash flows.

C. Basis of Accounting
The Corporation 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 revenues derived from user charges. The Corporation utilizes the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred.

D. Classification of Revenues and Expenses
The Corporation classifies its revenues and expenses into the following classifications:
operating revenues, operating expenses, nonoperating revenues, and nonoperating expenses.

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
(11)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Classification of Revenues and Expenses (Continued)
Operating revenues consist of management and operating fees, production services fees, and program services fees, with relating costs to provide these services considered operating expenses. Nonoperating revenues consist of voluntary nonexchange grants revenue and investment earnings. Nonoperating expenses consist of capital grants made to PCC and PUSD for cable telecommunications equipment.

E. Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents 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 insignificant risk of changes in value because of changes in interest rates, and have an original maturity date of three months or less.

F. Prepaid Assets
Certain payments to vendors, which reflect costs applicable to future accounting periods, are recorded as prepaid assets.

G. Capital Assets
The Corporation capitalizes capital assets having an estimated useful life in excess of one year and acquisition cost of at least $5,000. Capital assets, which include production equipment are recorded at cost and are depreciated over the estimated useful life of the asset using the straight-line method of depreciation. Donated capital assets are recorded at acquisition value as of the date of the donation. All significant expenditures exceeding $5,000 for repairs, renewals, and betterments that materially prolong the useful lives of the assets are capitalized.

The estimated useful lives of the assets are as follows:

Leasehold Improvements 6 Years
Furniture and Fixtures 5 Years
Production Equipment 5 Years

H. Compensated Absences
Regular full-time and part-time employees accrue vacation. Vacation time is accrued two to four weeks per year, depending on how long an employee has been with the Corporation. Part-time employees who work 20 hours per week or more are eligible to accrue vacation on a pro rata basis. It is the Corporation’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 vacation amount. All accumulated compensated absences are recorded as an expense and a liability at the time the benefit is earned.

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
(12)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Net Position
Net position represents the difference between assets and liabilities on the statement of net position. Net positions were classified in the following categories: net investment in capital assets and unrestricted.

Net investment in capital assets consists of the cost of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction, or improvement of those assets, as applicable.

Net position is reported as restricted when there are limitations imposed on the use either through the enabling legislation adopted by the Corporation’s Board of Directors, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. All other net position is reported as unrestricted.

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

J. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and 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.

K. Prior Year Data
Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with U.S. GAAP.

Accordingly, such information should be read in conjunction with the Corporation’s prior year financial statements, from which this selected financial data was derived. Some of the prior year data has been reclassified to conform with the current year presentation.

Advances from other agencies has ben reclassified as unearned revenue on the statement of net position. A portion of nonoperating PEG revenue has been reclassified to capital contributions on the statement of revenues, expenses, and changes in net position. Capital grants received and PEG-eligible capital grant made have been reclassified as noncapital financing activities on the statement of cash flows and renamed, PEG grant funding received from City of Pasadena and PEG-eligible grants awarded, respectively. Information on noncash activities was also added to the statement of cash flows.

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
(13)
NOTE 2 CASH AND INVESTMENTS
Summary of Cash
As of June 30, 2021, cash were reported in the accompanying financial statements:

Cash on Hand 200$
Deposits with Financial Institutions 331,378
Deposits with Financial Institutions - Restricted 331,654 Total Cash 663,232$

Deposits
At June 30, 2021, the carrying amount of the Corporation’s deposits was $663,032 and the bank balance was $664,289. The $1,257 difference represents outstanding checks and other reconciling items. Balances in the bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Included in the bank balance, the Corporation had a funds in a credit union totaling $75,312. This amount is insured by the National Credit Union Administration (NCUA) up to $250,000.

Restricted Deposits
Restricted deposits, as further described in Notes 6C and 7, are to be utilized for eligible PEG capital expenditures. The total amount of restricted deposits at June 30, 2021 was $331,654.

Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code does 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 the Corporation’s deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2021, the Corporation had uncollateralized deposits in excess of FDIC coverage of $338,977.

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by the California Government Code The table below identifies the investment types that are authorized for the Corporation by the California Government Code. Other than what is in the Government Code, the Corporation has no other investment policy.

Investment Types Authorized by Maximum Maximum
Authorized by the Investment Maximum Percentage Investment in California Government Code Policy Maturity of Portfolio One 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 25% 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% None
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
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 Corporation 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. The Corporation held no investments as of the year ended June 30, 2021.

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 a nationally recognized statistical rating organization. The Corporation held no investments as of the year ended June 30, 2021.

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
(15)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Concentration of Credit Risk
In accordance with GASB Statement No. 40 requirements, the Corporation is considered to be exposed to concentration of credit risk whenever they have invested more than 5% of their total investments in any one issuer. Investments guaranteed by the U.S. Government and investments in mutual funds and external investment pools are excluded from this requirement. The Corporation held no investments as of the year ended June 30, 2021.

NOTE 3 CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2021 is as follows:

July 1, 2020 Additions Dispositions June 30, 2021
Capital Assets Being Depreciated:

Production Equipment 437,420$ -$ -$ 437,420$
Leasehold Improvements 93,897 - - 93,897
Less Accumulated Depreciation for:

Production Equipment (312,078) (33,051) - (345,129) Leasehold Improvements (39,125) (15,650) - (54,775) Total Capital Assets 180,114$ (48,701)$ -$ 131,413$ Depreciation expense for the year ended June 30, 2021 was $48,701.

NOTE 4 DEFINED CONTRIBUTION RETIREMENT PLAN
Effective April 4, 2017, the Corporation adopted a Savings Incentive Match Plan for Employees Individual Retirement Account plan (the Plan) for which all employees who have completed 90 days of service are eligible to participate. The employees of the Corporation may elect to contribute to the Plan (subject to overall limits) in any one plan year. Each year the Corporation will make a matching contribution to the Plan on a dollar-for-dollar basis up to 3% of the employee's compensation, for the employees who are contributing to the Plan.

The Corporation contributed $12,874 to the Plan for the year ended June 30, 2021.

NOTE 5 OPERATING LEASE
The Corporation leases office and production facilities in Pasadena, California, under an operating lease agreement. The lease term expires August 31, 2023. The Corporation is obligated to pay utilities, property taxes, insurance, and normal repairs and maintenance for the space that the Corporation occupies. The current monthly rent, including common area maintenance charge is $13,388. The monthly rent is scheduled to increase to $13,789 effective September 1, 2021.

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
(16)
NOTE 5 OPERATING LEASE (CONTINUED)
The minimum annual lease payments due during the term of the lease are as follows:

Year Ending June 30, Amount
2022 164,666$
2023 169,606
2024 28,406
Total 362,678$
Total rent expense, including common area maintenance charges, for the year ended June 30, 2021 was $176,977 and is included in the occupancy expenses reported in the statement of revenues, expenses and changes in net position.

NOTE 6 OTHER PROVISIONS OF REVENUE AND CONTRACTS
A. Franchise Fees
On December 2, 1983, a 15-year cable franchise agreement (the Agreement) was entered into by and between the City and a cable communications operator (Cable Operator). According to the terms of the Agreement, the Corporation is entitled to receive 2% of the Cable Operator's gross revenues (as defined in the Agreement) in return for providing the public access and public service programming function of the Cable Operator's communications system. This agreement expired during the year ended June 30, 1999. The City committed to continue to fund the agreement, after expiration, until a new agreement could be reached.

Effective October 1, 2000, the City and the Cable Operator entered into a new nonexclusive franchise agreement to operate a cable television system in the City. The agreement expired on October 17, 2005, and was extended on a month-to-month basis under mutual agreement with the Cable Operator while negotiating a franchise renewal.

This agreement ended prior to statewide franchising that took effect in 2008.

The City now receives 5% of the state franchise holders' gross revenues derived from the provision of video service pursuant to California Public Utilities Code Section 5840.

The franchise fee is considered General Fund revenue for the City and, although the City continues to fund the Corporation at approximately 75% of the franchise fee revenue, the funding amount is at the discretion of the Pasadena City Council.

B. Management and Operating Agreement
On February 10, 2015, the Corporation entered into an agreement with the City to provide operation and day-to-day management of the local PEG access system, for a period of 25 years, commencing as of the date of the Agreement, and ending July 1, 2040.

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
(17)
NOTE 6 OTHER PROVISIONS OF REVENUE AND CONTRACTS (CONTINUED) C. 1% Public, Education, and Government (PEG) Allocation Pursuant to Pasadena Municipal Code 18.04.060, it was established that a fee would be paid to the City for the support of public, educational, and governmental access facilities and activities within the City. The Pasadena Municipal Code states that this fee shall be 1% of a cable provider's gross revenues, as defined in California Public Utilities Code Section 5860.

The Corporation serves as a receiving, holding, and disbursing entity for monies intended to promote noncommercial uses of the cable telecommunication medium.

These funds are allocated as grants solely for PEG related purposes.

During the 2020-2021 fiscal year, the Corporation received $196,513 in PEG funding from the City, while awarding $41,066 in PEG funding to PCC and PUSD for eligible PEG capital expenses.

As shown in Note 7, cumulative unspent PEG funding of $331,654 has been classified as unearned revenue within these financial statements.

D. Other Contracts
The Corporation earns additional service contract revenue by providing various production services to Los Angeles County for Altadena Town Council Meetings.

NOTE 7 PEG FUNDING FROM CITY OF PASADENA
As described in Note 6, the Corporation received $196,513 of PEG funding from the City of Pasadena during the year ended June 30, 2021. Unspent PEG funding is classified as unearned revenue within these financial statements until the Corporation has incurred costs on approved capital expenditures.

The changes in unspent PEG funding for the year ended June 30, 2021 were as follows:

Beginning Unearned Revenue 176,207$
PEG Grant:

PEG Revenue Received 196,513
PEG Capital Equipment Expense (41,066)
Capitalized Production Equipment -
PEG Subtotal 155,447
Ending Unearned Revenue 331,654$

PASADENA COMMUNITY ACCESS CORPORATION

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
(18)
NOTE 8 CONCENTRATIONS OF REVENUE
For the year ended June 30, 2021, revenues derived from the City of Pasadena from the management and operating agreement described in Note 6B and the 1% PEG Allocation described in Note 6C accounted for 95% of the Corporation’s total revenue.

NOTE 9 COMPENSATED ABSENCES
Changes in compensated absences as of June 30, 2021 were as follows:

Amount Amount Due
Balance Balance Due Within in More than
July 1, 2020 Incurred Satisfied June 30, 2021 One Year One Year 32,291$ 15,019$ (13,491)$ 33,819$ 33,819$ -$
NOTE 10 RISK MANAGEMENT
The Corporation is covered under Special Liability, Property and Participant Accident policies through Nonprofits Insurance Alliance of California (NIAC). Liability and Participant Accident claims are insured for up to $1,000,000 per occurrence for any amount over the Corporation’s deductible amount of $1,000. Property claims are insured for up to $25,000,000 per occurrence for any amount over the Corporation’s deductible amount of $1,000.

Workers’ compensation claims are covered under a purchased policy through Hartford Accident and Indemnity Company for claims up to $1,000,000 for each occurrence for any amount over the Corporation’s deductible amount of $1,000.

Settled claims have not exceeded any of the Corporation’s coverage amounts in any of the last three fiscal years.

NOTE 11 INCOME TAXES
The Corporation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and applicable state law. The Corporation files Form 990 in the U.S. federal jurisdiction and Form 199 in the state of California.

NOTE 12 RELATED PARTY TRANSACTIONS
As part of the management and operating agreement discussed in Note 6B, the City bills the Corporation for services rendered on the Corporation’s behalf. Services provided to the Corporation for the year ended June 30, 2021 was $20,000. The Corporation did not have an amount payable to the City as of June 30, 2021.

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. (19)
CliftonLarsonAllen LLP
CLAconnect.com
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
Board of Directors
Pasadena Community Access Corporation
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 the Pasadena Community Access Corporation (the Corporation), 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 City’s basic financial statements, and have issued our report thereon dated November 2, 2021
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Corporation’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 Corporation’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Corporation’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 Corporation’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
Pasadena Community Access Corporation
(20)
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Corporation’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 Corporation’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 Corporation’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

CliftonLarsonAllen LLP
Irvine, California
November 2, 2021

PASADENA FIRE & POLICE RETIREMENT SYSTEM

A PENSION TRUST FUND OF THE CITY OF

PASADENA, CALIFORNIA
INDEPENDENT AUDITOR’S REPORT AND

BASIC FINANCIAL STATEMENTS

WITH REQUIRED SUPPLEMENTARY INFORMATION AND

OTHER SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2021
(WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2020)

P A S A D E N A
FIRE &
POLICE

RETIREMENT

S Y S T E M
Attachment F

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is left blank intentionally.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
FOR THE YEAR ENDED JUNE 30, 2021
(WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2020)

TABLE OF CONTENTS
Page
Independent
Auditor’s Report ............................................................................................................ 1 Management’
s Discussion and Analysis (Unaudited) ........................................................................ 5

BASIC F
INANCIAL STATEMENTS:

Statem
ent of Fiduciary Net Position ............................................................................................... 12 Statem
ent of Changes in Fiduciary Net Position ............................................................................ 13 Notes t
o Basic Financial Statements .............................................................................................. 14 REQUI
RED SUPPLEMENTARY INFORMATION (Unaudited):

Schedul
e of Changes in Employer’s Net Pension Liability/(Asset) ................................................ 36 Schedul
e of Employer’s Net Pension Liability/(Asset) and Related Ratios .................................... 37 Schedul
e of Employer Contributions .............................................................................................. 38 Schedul
e of Investment Returns ..................................................................................................... 39 Notes t
o Required Supplementary Information .............................................................................. 40 OTHER
SUPPLEMENTARY INFORMATION:

Addit
ions by Source and Deductions by Type ................................................................................ 46 Comparat
ive Information from Prior Fiscal Years: Interest Rate Risk (Unaudited) ........................ 47

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is left blank intentionally.

www.mgocpa.com
Macias Gini & O’Connell LLP
700 South Flower St., Suite 800
Los Angeles, CA 90017

I
ndependent Auditor’s Report
To the Bo
ard of Retirement
Pasadena Fire and Police Retirement System
Pasadena, California
Repo
rt on the Financial Statements
We have
audited the accompanying statement of fiduciary net position and statement of changes in fiduciary net position of the Pasadena Fire and Police Retirement System (System), a pension trust fund of the City of Pasadena (City), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the System’s basic financial statements as listed in the table of contents.

Mana
gement’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.

Audi
tor’s Responsibility
Our r
esponsibility is to express an opinion 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 audi
t involves performing proc edures 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 bel
ieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

O
pinion
In our op
inion, the financial statements referred to above present fairly, in all material respects, the financial position of the System as of June 30, 2021, and the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America Othe
r Matters
Prio
r-Year Comparative Information
The fi
nancial statements include partial prior -year comparative information. Such information does not include all of the information required to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the System’s financial statements for the fiscal year ended June 30, 2020, from which such partial information was derived.

Requi
red Supplementary Information
Acc
ounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of changes in employer’s net pension liability, schedule of employer’s net pension liability and related ratios, schedule of employer contributions, schedule of investment returns, and notes to required supplementary information 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 information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other S
upplementary Information
Our
audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the System’s basic financial statements. The schedules of additions by source and deductions by type and comparative information from prior fiscal years: interest rate risk are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The ac
companying schedule of additions by source and deductions by type 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. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of additions by source and deductions by type is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The co
mparative information from prior fiscal years: interest rate risk has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

O
ther Reporting Required by Government Auditing Standards In acc
ordance with Government Auditing Standards , we have also issued our report dated October 28, 2021 on our
consideration of the System’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 System’s internal control over financial reporting or on compliance.

That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering the System’s internal control over financial reporting and compliance.

Los An
geles, California
October 28, 2021

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ge is left blank intentionally.

The Pasadena Fire and Police Retirement System (“System” or “Plan”) is a closed, single-employer defined benefit pension plan governed by a Board of Retirement (“Board”) under the provisions of the City of Pasadena (“City”) Charter that provides retirement, disability, and survivor benefits for eligible sworn safety employees of the City. Its operations are reported as a Pension Trust Fund in the City’s financial statements.

The System was established on July 1, 1935 by a vote of the people to formalize retirement benefits for the City’s Fire and Police members, and is governed by the authority in Article XV of the City Charter, and by Chapter 2.250 of the City’s Municipal Code.

The S
ystem serves the City’s sworn employees hired prior to July 1, 1977, except those who elected to transfer to the California Public Employees ’ Retirement System (“CalPERS”) either when the System was closed to new members, or in June 2004. The System is governed by a Board of five members; one member of the City Council, two Pasadena residents appointed by the City Council, and two members of the System elected under the supervision of the System. Board members are elected to terms of four years with no restriction on reappointment. Board members receive no compensation.

The di
scussion and analysis of the System’s financial performance provides an overview of the financial activities for the fiscal year ending June 30, 2021. This discussion and analysis should be read in conjunction with and is qualified in its entirety by the accompanying audited financial statements and notes which begin following this Management ’s Discussion and Analysis. The financial statements, notes, and this discussion and analysis were prepared by management and are the responsibility of management .

Financial and Valuation Highlights
The Plan ended fiscal year 2021 with $134,732,586 in fiduciary net position compared to $125,211,253 in fiduciary net position as of June 30, 2020. The increase in net position by $9,521,333 from the prior period was attributed to investment gains. Earnings in the portfolio were 19.0% net of fees, calculated on a time- weighted rate of return basis, (compared to 2.8 % net of fees for the prior fiscal year), and resulted in $22,353,847 in net investment income. Investment earnings were offset by $12,832,514 in deductions from the portfolio for benefits and administrative expenses . I nvestment earnings of 19.0% (net of fees) were higher than overall market conditions and the portfolio’s benchmark earnings rate of 17.5%.

A cas
h reserve within pooled cash at the City was maintained to meet the required monthly cost of benefits and administration. Rebalancing of investments serves as an ongoing process to maintain balance with the Board’s asset allocation goals, and when necessary, to fund the Plan’s benefit and administrative costs.

During fiscal year 2021, a total of $10,000,000 was withdrawn from the portfolio with the custodian and transferred to the City’s pooled cash account for payment of pension benefits and administration.

The June 30,
2021 actuarial valuation determined that the Actuarial Value of Assets (“AVA”) decreased to $121 million, and the Actuarial Accrued Liability (“AAL”) decreased to $132 million. Accordingly, the AVA Funded Percentage (which is the actuarially determined funding level used to calculate the City’s required minimum contribution) in creased to 92.1% on June 30, 2021. The minimum required AVA Funded Percentage on June 30, 2021 is 80.0%. Thus, there is no required contribution from the City for fiscal year 2022 (due January 1, 20 22) based on the June 30, 2021 actuarial valuation and Amended and Restated Contribution Agreement No. 20,823 (“Agreement No. 20,823”).

The Cit
y’s Net Pension Liability/(Asset) (“NPL”) for the Plan decreased from $8,610,000 on June 30, 2020 to ($7,881,000) on June 30, 2021 primarily due to increases in the Plan's Fiduciary Net Position ("FNP").

The FNP increased by more than nine million primarily due to increased investment earnings. As a result, the Plan’s FNP as a percentage of the Total Pension Liability increased from 93.6% on June 30, 20 20 to 106.2% on June 30, 2021.

Investment Performance
The Board reviews the asset allocation in the Investment Policy Statement ( “IPS”) on an annual basis, including a 10-year return forecast (both geometric and arithmetic) analysis by asset class. The forecasts per asset class are discussed within the context of their individual standard deviation forecasts, the amount of risk each asset assumes for the forecasted returns, and the relationship of that asset/risk within the overall portfolio. Portfolio mix options are discussed given the expected returns in comparison to the current allocations, and the investment advisor provides recommendations to the Board regarding potential changes in the asset allocation mix and for prospective new managers. In addition, fund and asset benchmarks are added and/or changed in the IPS to more accurately evaluate the portfolio and each asset’s performance or when a new asset is acquired.

The S
ystem’s IPS has evolved since the hiring of investment advisor, Verus Investments, in 2011. The June 2011 policy revision adjusted the strategic allocation ranges for equities and fixed income, added allocations to Treasury Inflation Protected Securities (“TIPS”) and Real Estate, and deleted the allocation to Real Estate Investment Trust ( “REIT”). In June 2013 , the policy was revised to add an allocation for Liquid Alternative Investments through adjusting the strategic allocation ranges in equities. The IPS was revised in May 2014 to create a new fixed income asset class for Senior Bank Loans towards the goal of reducing risk. The IPS was revised in February 2015 to eliminate the allocation to Cash, and to move the assets held in Small/Mid Cap Domestic Equities to Small Cap Domestic Equities. Following the 10 -year performance assessment in March 2016, the Board reallocated 2.0% from Domestic Core Equities (decreasing the allocation from 22.0% to 20.0%) to Domestic Core Fixed Income (increasing the allocation from 33.0% to 35.0%) through adoption of the revised IPS on April 20, 2016. During the fiscal year ending June 30, 2017, the IPS was further revised to add a new asset class for Index -Linked Investment-Grade Government Bonds to further prepare for and protect the portfolio from expected inflation.

Portfolio Changes as of June 30, 2021
During the fiscal year ended June 30, 2021, the alternative investment was changed from PIMCO All Asset Institutional to PanAgora Risk Parity Fund in November 2020. The Investment Policy Statement was revised to reflect the latest changes to the asset allocation which were approved by the Board.

Fiduciary Net Position and Total Pension Liability
Funds are accumulated to meet future obligations in the net position restricted for members’ pension benefits in the Statement of Fiduciary Net Position. T otal Pension Liability is not reported in the basic financial statements, but is disclosed in Note 5 to the basic financial statements and in the required supplementary information. The Total P ension Liability is determined by the actuary and is a measure of the present value of actuarial accrued liabilities estimated to be payable in the future to current retirees and beneficiaries. The Net Pension Liability/(Asset) is measured as the Total Pension Liability (“TPL”) less the amount of the pension plan’s Fiduciary Net Position (“FNP”). The System has engaged Bartel Associates, LLC since July 2010 to serve as its independent actuary and to prepare the annual actuarial valuation. The most recent actuarial valuation was prepared as of June 30, 2021, and incorporated the requirements to comply with Governmental Accounting Standards Board (“GASB”) Statement No. 67.

Actuarial Valuation and City Contributions
The System’s funding objective is to meet long- term benefit promises by maintaining a well- funded plan and obtaining optimum returns consistent with the assumptions of prudent risk.

The June 30,
2021 actuarial valuation determined the AVA Funded Percentage, calculated in accordance with Agreement No. 20,823 and Contribution Agreement No. 16,900, to be 92.1% as compared to 89.2% in the prior year. The AVA Funded Percentage increased by 3.6% over what was originally projected for 2021 in the June 30, 2020 valuation (88.5%), and was primarily attributed to the following actuarial changes:

2.3% investment gains (investment return was higher than expected), 0.7% COLA gains (COLA was lower than anticipated), 0. 5% demographic gains ( more deaths than actuarially estimated), and 0.1% benefit payments (lower than anticipated). As required by Contribution Agreement No. 16,900, if the AVA Funded Percentage was below the minimum funding percentage of 80% for fiscal year 2021 , the City would have been required to reimburse the System in the following fiscal year subject to certain reimbursement li mits.

Based on the June 30, 2021 actuarial valuation, the funding deficiency was $0, or 0.0%, below the funding requirement of 80%. A required supplemental contribution is not owed to the System for the fiscal year ending June 30, 2022.

For fundi
ng purposes, the Plan had an approximate market value asset rate of return of 18.5% net of investment and administrative expenses for the year ended Ju ne 30, 2021, compared to 2.8% in the previous year. The assumed rate of return for actuarial purposes is 5.25%. The rate of return as estimated by the actuary is net of investment and administrative expenses, and is different than the long -term expected rate of return used to determine the discount rate in accordance with GASB Statement No. 67.

Financial Statement Overview
This discussion and analysis serves as an introduction to the System’s basic financial statements. These include the following three components:
• Statement of Fiduciary Net Position
• Statement of Changes in Fiduciary Net Position
• Notes to Basic Financial Statements
In ad
dition to the financial statements, this report also contains required supplementary information and other supplementary information that offers comparative data on prior years. 6/30/2021 6/30/2020
Funding D
iscount Rate 5.25% 5.25%
Actuarial Accrued Liability (AAL) 131,926$ 139,285$
Actuarial Value of Assets (AVA) 121,488 124,255
AVA Unfunded Actuarial Accrued Liability 10,438 15,030
AVA Funded Percentage 92.1% 89.2%
Minimum Funding Percentage* 80.0% 80.0%
Contribution Due from the City at 1/1 -$ -$
Valuation Summary
(In Thousands)
Fiscal Year Ending
Source is the June 30, 2021 actuarial valuation prepared by System Actuary, Bartel Associates.
* Minimum Funding Percentage is calculated in accordance with Agreements No. 20,823 and N
o. 16,900 between the City and System.

The Statement of Fiduciary Net Position provides a snapshot of account balances at year -end. It also indicates the assets available for future benefit payments and administration of the Plan as well as current liabilities outstanding at year -end. The assets less liabilities give the reader a clear picture of what funds are available for future payments.

The St
atement of Changes in Fiduciary Net Position, in contrast, provides a summary view of the additions to and the deductions from the plan net position that occurred over the course of the year.

Together
these two statements report the System’s plan net position – the difference between assets and liabilities – as one way to measure the System’s financial situation. Over time, increases and decreases in plan net position are one indicator of whether the System’s financial situation is improving or deteriorating.

Additional factors, such as market conditions, also need to be considered in assessing the System’s overall financial situation.

The financ
ial statements and required disclosures are in compliance with the accounting principles and reporting guidelines as set forth by the GASB, using the accrual basis of accounting. Investments are reported at fair value. Both realized and unrealized investment gains and losses are recognized using trade date accounting.

The N
otes to Basic Financial Statements (Notes) provide additional information and explanations that are essential to a full understanding of the data provided in the financial statements.

The Requi
red Supplementary Information (RSI) that follows the Notes shows the City’s net pension liability/(asset), as well as information reflecting how much the City has contributed in relation to its annual required contributions and other information to comply with GASB Statement No. 67.

The Ot
her Supplement ary Information (OSI) that follows the RSI provides additional comparative information from prior years.

GASB Statement No. 67
The System’s basic financial statements, notes to the basic financial statements, required supplementary information, and notes to the required supplementary information were prepared in accordance with the reporting requirements of GASB Statement No. 67. The most recent ac tuarial valuation as of June 30, 2021, was used to determine the total pension liability.

Net Pension Liability 6/30/2021 6/30/2020
Total Pension Liability 126,852$ 133,821$
Plan Fiduciary Net Position 134,733 125,211
Net Pension Liability/(Asset) (7,881)$ 8,610$
Net Pension Liability Funded % 106.2% 93.6%
Schedule of Net Pension Liability/(Asset)
(In Thousands)
Source for pension liability is the June 30, 2021 GASBS 67 plan actuarial information prepared by System Actuary, Bartel Associates.

Fiscal Year Ending

Total Pension Liability (“TPL”) for the Plan decreased from $133.8 million at June 30, 2020, to $126.9 million at June 30, 2021. In contrast, the Fiduciary Net Position (“FNP”) at June 30, 2020. increased from $125.2 million to $134.7 million at June 30, 2021. The changes in both TPL and FNP resulted in a significant net decrease of NPL from $8.6 million at June 30, 2020 to ($7.9) million (net pension asset) at June 30, 2021.

The N
otes to Basic Financial Statements provide additional disclosures to comply with GASB Statement No. 67 Implementation, as follows:
• Plan Membership,
• Investments (allocation by asset class, expected long- term rate of return by asset class, and the annual money-weighted rate of return),
• Investments greater than 5% of the Plan’s Fiduciary Net Position, • Net Pension Liability/(Asset) (and the components of Net Pension Liability/(Asset)), and • Significant actuarial assumptions used to measure Total Pension Liability.

The inf
ormation reported in the Required Supplementary Information (RSI) section is required to be reported for 10 years; additional years will be reported as they become available :
• Schedule of Changes in Employer’s Net Pension Liability/(Asset), • Schedule of Employer’s Net Pension Liability/(Asset) and Related Ratios, • Schedule of Employer Contributions,
• Schedule of Investment Returns, and
• Notes to the Required Supplementary Information, which includes additional information regarding total pension liability.

The O
ther Supplementary Information section includes the following two schedules:
• Additions by Source and Deductions by Type, and
• Comparative Information from Prior Fiscal Years for Interest Rate Risk .

Condensed Statement of Fiduciary Net Position
As of J
une 30, 2021 and 2020 , the System had $134,732,586 and $125,211,253, respectively, in net position. The net position represents funds restricted for members’ pension benefits. The total pension liability is not reported in the basic financial statements, but is disclosed in the Notes and in the RSI. 2021 2020 $ Ch ange % Change
Current Assets 13,260$ 24,616$ (11,356)$ -46.1% Investments 135,540 105,983 29,557 27.9%
Total Assets 148,800 130,599 18,201 13.9%
Total Liabilities 14,067 5,388 8,679 161.1%
Net Position Restricted for Pensions 134,733$ 125,211$ 9,522$ 7.6% June 30,
(In Thousands)
Condensed Statement of Fiduciary Net Position

Condensed Statement of Changes in Fiduciary Net Position Durin
g the year ended June 30, 2021 , the Plan’s net position increased by $9,521,333. Earnings for the year in the portfolio were 18.5% net of fees, compared to 2.8% net of fees in the prior year.

Earn
ings for the year by asset class were as follows: International Equity ( 40.5% net of fees), Domestic Equity (44.8% net of fees), Real Estate ( 6.7% net of fees) Alternatives (18.2% net of fees), and Domestic Fixed Income (2.9% net of fees on 45.2% of the total portfolio). Ther e was an increase of $18,959,484 in investment earnings from 2020. This is reflective of the dramatic improvement in equity performance this year compared to prior years with 44.8% in 2021 vs. 4.4% in 2020 for Domestic Equities and 40.5% in 2021 vs. -4.1% in 2020 for International Equities.

Deduct
ions from plan net position consisted of benefits payments to beneficiaries and the plan’s administration costs. Total deductions were $12,832,514 and $13,094,583 in fiscal year 2021 and 2020, respectively. Total deductions at June 30, 2021, reflect a decrease of $262,069 compared to the prior year due to decreasing membership.
2021 2020 $ Ch ange % Change
Employer Contributions -$ 23,137$ (23,137)$ n/a Net Investment Earnings 22,354 3,394 18,960 558.6% Total Additions 22,354 26,531 (4,177) -15.7%
Benefit Payments 12,506 12,773 (267) -2.1%
Administrative Expenses 327 321 6 1.9%
Total Deductions 12,833 13,094 (261) -2.0%
Net Increase 9,521$ 13,437$ (3,916)$ 29.1% (In Thousands)
Condensed Statement of Changes in Fiduciary Net Position June 30,

Fiduciary Responsibilities
The System is a fiduciary for the public safety pension plan of the City of Pasadena. Accordingly, the System is responsible for ensuring that the assets reported in the statements are used for the intended purpose of paying expenses and providing retirement benefits to retirees and beneficiaries of the System.

Currently Known Facts, Conditions, or Decisions
In accordance with the amended Agreement No. 20,823, the City made additional contributions to the System related to the sale of the Concord Senior Housing property at 275 E. Cordova, Pasadena, (Concord Property) in fiscal year 2020. The City is committed to transferring $12,560,017, representing the System’s 93% beneficial interest in additional proceeds from the Concord Property sale as additional contributions to the System approximately 18 months after receiving the proceeds from outstanding notes receivable due to the City related to the sale. These contributions are expected to occur no later than March 31, 2022.

Requests for Information
This financial report is designed to provide a general overview of the System’s finances and to account for the money the System receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to:

Pasad
ena Fire & Police Retirement System
100 N. Garfield Avenue, N204
Pasadena, CA 91101
Respec
tfully submitted,
Berna
dette Kastner
Retirement Administrator

PASADENA FIRE & POLICE RETIREMENT SYSTEM

STATEMENT OF FIDUCIARY NET POSITION
JUNE
30, 2021
(WITH COMPARATIVE TOTALS FOR JUNE 30, 2020)
2021 2020
Asse ts
Cash and cash equivalents 2,178,627$ 15,959,198$
Short-term investments 4,124,710 6,122,888
Receivables:

Pending trade sales 6,786,349 2,419,005
Interest 169,918 115,550
Total receivables 6,956,267 2,534,555
Investments, at fair value:

Government and agencies 24,232,920 12,716,435
Fixed income mutual funds 20,169,940 16,244,067
Domestic corporate obligations 23,274,707 20,793,908
International corporate obligations 1,587,182 894,040
Real estate 11,931,126 11,175,291
Equity - Domestic 27,382,351 21,897,212
Equity - International 26,962,063 22,261,952
Total investments 135,540,289 105,982,905
Total assets 148,799,893 130,599,546
Liabilities
Accounts payable and accrued liabilities 61,286 21,310
Pending trade purchases 14,006,021 5,366,983
Total liabilities 14,067,307 5,388,293
Net position restricted for pensions 134,732,586$ 125,211,253$

PASADENA FIRE & POLICE RETIREMENT SYSTEM

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR T
HE YEAR ENDED JUNE 30, 2021
(WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2020) 2021 2020
Additions:

Contributions:

Employer -$ 23,137,382$
Net investment earnings:

Interest 603,309 858,343
Dividends 1,363,394 1,707,719
Net increase in fair value of investments 20,826,387 1,228,582 Total investment earnings 22,793,090 3,794,644
Less investment expenses (439,243) (400,280)
Net investment earnings 22,353,847 3,394,364
Total additions 22,353,847 26,531,746
Deductions:

Benefits paid to participants 12,505,972 12,773,457
Administrative expenses 326,542 321,126
Total deductions 12,832,514 13,094,583
Net increase in net position 9,521,333 13,437,163
Net position restricted for pensions:

Beginning of year 125,211,253 111,774,090
End of year 134,732,586$ 125,211,253$

PASADENA FIRE & POLICE RETIREMENT SYSTEM

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – PENSION PLAN DESCRIPTION
General
The Pasadena Fire & Police Retirement System (“System”) is a single-employer defined benefit pension plan governed by a Board of Retirement (“Board”) under provisions of the City of Pasadena (“City”) Charter.

The Board has sole and exclusive responsibility over the assets of the System and the responsibility to administer the System to assure prompt delivery of benefits and related services as provided in Article XV of the City Charter.

The Sy
stem is governed by a Board of five members; one member of the City Council, two Pasadena residents appointed by the City Council, and two members of the System elected under the supervision of the System. Board members are elected to terms of four years with no restriction on reappointment. Board members receive no compensation. The Board consists of five members, whom on June 30, 2021, were as follows:

Keit
h Jones, Chair
Peter Boyle, Vice Chair
John H. Brinsley, Board Member
Victor Gordo, Board Member
Joe Milligan, Board Member
The Sy
stem covers all sworn fire and police personnel who were employed by the City prior to July 1, 1977, except for those who elected to transfer to the California Public Employees ’ Retirement System (“CalPERS”) when the System closed to new members in June 2004. In June 2004, active members were provided a one-time opportunity to transfer from the System to CalPERS as provided by an agreement with the City. CalPERS administers the retirement benefits for all fire and police members that elected to be transferred to CalPERS.

The Sy
stem is included as a pension trust fund in the financial statements of the City of Pasadena, California. The System provides basic lifetime retirement, disability , and death benefits to members who meet the minimum age and length-of-service requirements.

As of
June 30, 2021, System membership consisted of 179 retirees and beneficiaries who receive benefits.

The average age was 80.6 years and the average monthly benefit was $ 5,773. Since June 30, 2020, the plan experienced 20 deaths: 15 deaths without a beneficiary for a net reduction of 15 participants. On June 30, 2021, total membership in the plan consisted of:
• 67 S
ervice Retirees (average age 80, average monthly benefit $7,236) • 63 Disability Retirees (average age 79.4, average monthly benefit $5,491) • 49 Beneficiaries (average age 82.9, average monthly benefit $4,137) There
are no longer any active employees participating in the System, and t he System is closed to new entrants. Benefit provisions are established and, subject to any constitutional limitations, may be amended by the City Charter.

Pension Plan Benefits
Members are entitled to annual pension benefits beginning at normal retirement age (50) equal to 1/50 of final compensation, times the member’s number of years of service, times an actuarial equivalent based on the actual retirement age. The System permits service retirement at age 50, provided at least 15 years of service have been rendered, or retirement after 25 years of service, regardless of age.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021

NOTE 1 – PENSION PLAN DESCRIPTION (Continued)

Disability Benefits

Generally, active members who become totally disabled receive annual disability benefits that are equal to 50% of final compensation. Members who receive a service disability retirement receive a portion of their benefit tax-free (as determined by the percent disabled at retirement), and 100% lifetime continuance of all benefits to their surviving spouse. In contrast, members who receive a non- service disability retirement receive a 60% lifetime continuance of the benefits payable to their surviving spouse, and the member does not receive tax-free benefits.

Death Benefits

In the case of a death before a member is eligible to retire, there is a refund of the employee contributions, with interest, plus six months’ salary. If the member is eligible to retire, 60% of the earned benefit is payable to the eligible surviving spouse for their lifetime.

Survivor Benefits

Upon the death of a retiree, the qualified surviving spouse is entitled to receive retirement benefits equal to 60% continuance for a service retirement and 100% continuance for a service- connected disability retirement.

Cost of Living Adjustment (“COLA”)

Monthly pension benefits are eligible for an annual cost of living adjustment based on the increase/decrease of the annual average in the Consumer Price Index (“CPI”) for the Los Angeles-Riverside-Orange County, California area for the previous year, January to December, and the change is rounded to the nearest whole percentage. The adjustments are calculated by the actuary, adopted by the Board, and become effective on July 1 of each year. The COLA for fiscal year 2020 was an increase of 3%.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The System follows the accounting principles and reporting guidelines as set forth in Governmental Accounting Standards Board ( “GASB”) Statement No. 67, Financial Reporting for Pension Plans - an amendment of GASB Statement No. 25 . The financial statements are prepared and presented using the accrual basis of accounting. Member and employer contributions are recognized in the period in which the contributions are due pursuant to legal requirements . Benefits are r ecognized when currently due and payable, in accordance with the terms of the System.

Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Cash and Investments

The System’s cash and short-term investments are managed by the City Treasurer and U.S. Bank (master custodian for investment securities).

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash and Investments (Continued)
Cash n
ecessary for the System’s daily operations is pooled with other City funds for short-term investment by the City Treasurer in the City’s Investment Pool (“Pool”). The City is responsible for the control and safekeeping of all instruments of title and for all investments in the Pool. The Pool is an external investment pool and is not registered with the Securities and Exchange Commission. At June 30, 2021, the Pool had a weighted average maturity of 2.58 years. The Pool is not rated. For further information regarding the Pool, refer to the City's Annual Comprehensive Financial Report which can be found on the following website:
https://www.cityofpasadena.net/finance/financial-statements/#comprehensive-annual-financial-report.

Inves
tment transactions are accounted for on the date the securities are purchased or sold (trade date).

Unsettled investment trades as of fiscal year -end are reported in the financial statements on an accrual basis. The corresponding proceeds due from sales are reported on the Statement of Fiduciary Net Position under receivables and labeled as pending trade sales, and amounts payable for purchases are reported under liabilities and labeled as pending trade purchases. Dividend income is recorded on ex-dividend date, and interest income is accrued as earned. The calculation of realized gains and losses is independent of the calculation of the net change in the fair value of System’s investments. Changes in fair value include both realized and unrealized gains and losses on investments.

The Sy
stem has designated $1,250,000 in cash reserves to be invested by the City Treasurer in the P ool.

The funds equal one month of benefits and administrative expenses and are reserved for use in the event of a major emergency or disaster.

Income Taxes
The Internal Revenue Service has ruled that plans such as the System qualify under Section 414(d) of the Internal Revenue Code and are not subject to tax under present income tax laws. On May 11, 2012, the Internal Revenue Service issued a favorable Tax Determination Letter to the System. Working in conjunction with the City Attorney to fulfill the conditions of the favorable determination letter, the System revised the Pasadena Municipal Code and the changes became effective December 6, 2012. Accordingly, no provision for income taxes has been made in the accompanying basic financial statements, as the System is exempt from federal and state income taxes under provisions of the Internal Revenue Code, Section 414(d), and the California Revenue and Taxation Code, Section 23701, respectively. As allowed, the System filed to renew its tax determination status on October 23, 2015. Upon c ompleting an analysis of the Plan document relative to the current Internal Revenue Code, the IRS found that the Plan is in compliance with the provisions of the Internal Revenue Code (no Plan document failures exist). The System received a favorable determination letter on September 30, 2016.

Method Used to Value Investments
Inves
tments are reported at fair value. Fair value for investments of publicly traded stocks and bonds and issues of the U.S. Government and its agencies is based on the last reported sale price as of the fiscal year-end. Fair value of securities denominated in a foreign currency reflects exchange rates in effect at fiscal year-end. Fair value of investments in commingled funds in real estate is based on the fund share price provided by the fund manager which is based on the net asset value.

Fair
value of investments in commingled funds in bank loans is the fund share price provided by the fund manager which is based on the market value of the fund. Valuation for PanAgora’s Risk Parity Multi Asset Group Trust is the fund itself which is reported at NAV and provided by Mellon Global Securities Services under contract to provide these valuation services twice monthly and more frequently if requested. The real property asset manager (Invesco) has 100% of the properties appraised on a quarterly basis by independent third-party appraisers.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Method Used to Value Investments (Continued)
Use of
discounted cash flow models and comparable sales analysis are the primary means of valuing real estate assets with the preponderance of weight given to the discounted cash flow method. Additionally, all valuations are consistent with Uniform Standards of Professional Appraisal Practice (USPAP), the Appraisal Standards Board and the Appraisal Foundation.

Comparative Data
The financial statements include certain prior year summarized comparative information in total but not at the level of detail required for a presentation in conformity with accounting principles generally accepted in the United States. Accordingly, such information should be read in conjunction with the System's financial statements for the year ended June 30, 2020, from which the summarized information was derived.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS
Cash and Investments
Cash and investments on June 30, 2021, were held as follows:

Authorized Investments
The City Charter, Article XV Section 1502, confers the authority and fiduciary responsibility for investing the System’s funds on the Board. As set forth below, Board members are subject to carry out their duties in the manner of a prudent person familiar with such retirement and investment matters acting under similar circumstances. Investments shall be subject to the same terms, limitations, and restrictions as are imposed by the Constitution and laws of the State upon the investment of the CalPERS funds, as now enacted or hereafter amended.

The B
oard is required by statute to use care, skill, prudence and diligence to diversify the investments of the Plan so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly not prudent to do so. The Board also has the authority to establish an investment policy based on professional advice and counsel, and allows for the delegation of investment authority to professional investment managers.

June 30, 2021
Unrestricted Pooled Cash 105,955$
Designated Pooled Cash 1,250,000
Money Market Funds 822,672
Cash and Cash Equivalents 2,178,627
Short-term Investments 4,124,710
Investments 135,540,289
Total Investments 139,664,999
Total Cash and Investments 141,843,626$
Cash and Investments

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Authorized Investments (Continued)
The Sy
stem’s investment policy outlines the responsibility for the investment of the funds and the degree of risk deemed appropriate for the System’s investments. Investment managers are contractually required to carry out their responsibilities in accordance with the Board’s investment policy and to follow specific contractual guidelines.

The Boar
d oversees and guides the System subject to the following basic fiduciary responsibilities:
• Solel
y in the interest of, and for the exclusive purpose of, providing economic benefits to participants and their beneficiaries.
• With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character with like objectives.
• Diversify the investments of the System so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances, it is clearly prudent not to do so. Diversification is applicable to the deployment of the assets as a whole.

Purs
uant to this authority, the Board has authorized investment in the following securities:
• Securities of the U.S. Government or its
agencies
• Certificates of Deposit, or Time
Deposits, placed with commercial
banks and savings and loan
associations
• Negotiable Certificates of Deposit
• Bankers’ Acceptances
• Commercial Paper (rated A -1/P-1 or
better)
• Medium-Term Corporate Notes
• Corporate and Municipal Bonds
• Preferred Stock
• Common Stock
• Fixed-Income Funds
• Senior Bank Loans
• Foreign Stock and Corporate Bonds
• Mutual Funds
• Liquid Alternative Investments
• Real Estate Investment Trust (“REIT”)
• Real Estate
• Treasury Inflation Protected Securities
• Short-Term Investment-Grade Bonds
The Boar
d established an Investment Performance Statement (“IPS”) in accordance with applicable local, state, and federal laws. The Board exercise s authority and control over the management of the System’s assets by setting policy which the Board executes through the use of external prudent experts. During the fiscal year ending June 30, 2021, the alternative investment was changed from PIMCO All Asset Institutional to PanAgora Risk Parity Fund in November 2020. The Investment Policy Statement was revised to reflect the latest changes to the asset allocation which were approved by the Board.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Authorized Investments (Continued)
The IPS
encompasses the following asset classes and asset allocation targets:

The S
ystem requires approximately $1,250,000 per month to cover benefit payments and administrative costs. On a quarterly basis, the Board and the investment consultant evaluate the assets against their allocation targets and determine the appropriate asset class/classes from which to withdraw for payment of benefits and administration. This process also serves as a regular rebalance process to ensure that the portfolio stays within the Board’s adopted allocation goals.

Fair Value and Fair Value Hierarchy of Investments
Investments are reported in the Statement of Fiduciary Net Position at fair value. The System categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets. Level 2 inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model -derived from valuation techniques in which all significant inputs are observable. Level 3 inputs are significant unobservable inputs.

Target As s et
Allocation
Domestic Equity
Large Cap Value 4%
Large Cap Growth 4%
Large Cap Core 8%
Small Cap Core 4%
Total Domestic Equity 20%
Foreign Equity 20%
Real Estate 10%
Fixed Income
Domestic Core Fixed Income 25%
Short-Term Investment-Grade Bonds 10%
Senior Bank Loans 5%
Treasury Inflation Protected Securities (TIPS) 5%
Total Fixed Income 45%
Risk Parity 5%
Total Portfolio 100%
Asse t Cla ss
Inves tment Performance Statement
As s et Clas s es and Targets
As of June 30, 2021

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Fair Value and Fair Value Hierarchy of Investments (Continued) The fol
lowing table presents a summary of the fair value hierarchy of the recurring fair value measurements of the System as of June 30, 2021:

Debt an
d equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Debt securities classified in level 2 of the fair value hierarchy are valued using a matrix pricing technique or based on quoted prices that are not in active markets . Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Fair Value and Fair Value Hierarchy of Investments (Continued) Real es
tate funds include investment in the Invesco Core Real Estate – U.S.A Limited Partnership (“Fund”).

The fair value of the investment in this type have been determined using the NAV per share (or its equivalent) of the System’s ownership interest in partners’ capital. The System may request redemption of some or all of its interest by delivering a redemption notice at least 45 days in advance to the Fund.

Redempt
ion requests are honored pro- rata based on the ratio of the ownership interest held by each individual investor making a redemption request to the total ownership of interest held by all investors requesting redemptions.

The Fund
will use best efforts to honor redemption requests as quickly as possible; however, capital availability will dictate the ultimate redemption date and amount. The Fund’s portfolio manager is not required to liquidate, encumber assets, or defer investments in order to pay any redemption.

The Sy
stem’s investment in the Senior Bank Loans Secured Subscription Agreement ( “Trust Fund”) is valued using the NAV per share (or its equivalent) of the System’s ownership interest in the Trust Fund.

The Trust Fund has imposed restrictions on the amount and timing of withdrawals . Withdrawals of participation shall be permitted only on a withdrawal date, which is 15 th of each month. A written notice of
withdrawal request is required to be provided to the Trust Fund no later than the 15th of the month preceding the requested withdrawal date. If withdrawal requests for any given withdrawal date exceed limitations set forth in the Trust Fund’s agreement, all such withdrawal requests shall be processed pro rata. Withdrawal amounts requested but not paid on any given withdrawal date will not be carried over to the following withdrawal date and a new withdrawal request must be timely submitted.

The Sy
stem’s investment in the PanAgora Risk Parity Group Trust is also valued using the NAV per share (or its equivalent) of the System’s ownership interest in the Risk Parity Group Trust. PanAgora Risk Parity Group Trust redemptions are beginning and mid-month with a two day notice.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Asset Allocation Policy and Expected Long-term Rate of Return by Asset Class The investments of the System are allocated by the IPS as approved by the Board and noted in the following table. The long- term geometric expected real rates of return are reported by asset class, and are based on CalPERS’ Capital Markets Assumptions studies.

Asset Class
Target Asset
Allocation
Expected
Geometric
Real Return*
Domestic Equity - Large Cap 16% 4.36%
Domestic Equity - Small Cap 4% 5.18%
Foreign Equity 20% 4.60%
Domestic Core Fixed Income 25% 1.47%
TIPS 5% 1.29%
Short-Term Investment-Grade Bonds 10% 1.26%
Senior Bank Loans 5% 3.10%
Alternative (Risk Parity) 5% 2.79%
Real Estate 10% 3.04%
100%
Inflation 2.75%
6/30/2021
Expected Long-Term Rates of Return
Source is the June 30, 2021 GASB 67 actuarial information prepared by System Actuary, Bartel Associates, LLC. The rate for Alternative (Risk Parity) is used for Liquid Alternative Investments.
* 10-year geometric expected real rates of return from CalPERS' 2017 Capital Market Assumptions study.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Rate of Return
For the year ended June 30, 2021, the annual money-weighted rate of return on the System’s investments, net of investment expenses, was 18.5%. The money -weighted rate of return expresses investment performance, net of investment fees, adjusted for the changing amounts actually invested.

Deposit and Investment Risks
The Sy
stem follows GASB Statement No. 40, Deposit and Investment Risk Dis closures – an amendment to GASB S tatement No. 3 (“GASB Statement No. 40”). GASB S tatement No. 40 is designed to inform financial statement users about deposit and investment risks that could affect the ability to provide services and meet obligations as they become due. The disclosures required by this statement provide information to assess common risks inherent in deposit and investment transactions.

Deposi
t and investment resources represent considerable assets of the System, and these resources are necessary to carry out fiduciary responsibilities. GASB Statement No. 40 requires the disclosure of the following specific risks that apply to the System’s investments:
• Credit Risk and Fair Value of Investments
• Custodial Credit Risk – Deposits and
Investments
• Concentration of Credit Risk
• Interest Rate Risk
• Highly Sensitive Investments
• Foreign Currency Risk
GASB Statement No. 40 also requires the disclosure of deposit or investment policies (or the lack thereof) that relate to the investment and custodial risks that are required to be disclosed. The Board has chosen to manage the investment risks described by GASB S tatement No. 40 by contractually requiring each portfolio investment manager to abide by the IPS, specifically tailored to that individual manager, rather than adopting across- the-board investment policies with respect to these investment risks. The fixed income policy stipulates the strategy and investments, investment process, quality constraints, duration constraints, diversification, cash reserves, derivatives, and rate of return expectation. At June 30, 2021 , the System had nine (9) external investment managers.

Credit Risk
Credit risk is the risk that the issuer of a debt security or other counterparty to an investment will not fulfill its obligations. The individual investment guidelines for the fixed income investment manager describe applicable restrictions on credit risk. The System seeks to maintain a diversified portfolio of fixed income instruments in order to obtain the highest total return for the fund at an acceptable level of risk within this asset class. The credit quality ratings of investments in fixed income securities by a nationally recognized statistical rating organization, Standard and Poor’s Rating Services (“S&P”), as of June 30, 2021, are as follows:

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Credit Risk (Continued)
Custodial Credit Risk – Deposits
Custodial credit risk for deposits is the risk that, in the event of a financial institution’s failure, the System will not be able to recover the value of deposits nor be able to recover collateral securities that are in the possession of an outside party. Deposits are exposed to custodial credit risk if they are not insured or not collateralized. As of June 30, 2021, the System was not exposed to such risk. The System does not have a formal policy for custodial credit risk.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Custodial Credit Risk – Investments
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the System will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The individual investment guidelines for each investment manager require that managed investments be held and maintained with the master custodian in the name of the System. Investment securities are exposed to custodial credit risk if the securities are uninsured, or are not registered in the System’s name, and held by the counterparty. The System’s investments are not exposed to custodial credit risk if they are insured or registered in the System’s name. The System’s investments are not exposed to custodial credit risk because all securities are held by the System’s custodial bank in the System’s name.

Concentration of Credit Risk – Investments
Concent
ration of credit risk is the risk of potential loss attributed to the magnitude of the System’s investment in a single issuer of securities. The Board’s investment policies and guidelines permit investments in numerous specified asset classes to take advantage of professional investment management advice and a well-diversified portfolio. The active core fixed income asset manager develops and applies diversification standards as deemed prudent, and is expected to maintain diversification by sector and issue. Allocations to any one issuer in fixed income ( excluding issues issued by or explicitly guaranteed by the U.S. government) should not exceed 5% of the total portfolio fair market value.

Fiduc
iary Net Position ( “FNP”) on June 30, 2021 was $134,732,586. The system did not have any fixed income investment holdings that represents 5% or more of total investments, nor was there any issuers that represents 5% or more of the System’s FNP as of June 30, 2021.

Interest Rate Risk
Inter
est rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Duration is a measure of the price sensitivity of a fixed income portfolio to changes in interest rates. It uses the present values of cash flows, weighted for those cash flows as a percentage of the investment’s full price. The longer the duration of a portfolio, the greater its price sensitivity is to changes in interest rates.

Whil
e no specific ranges are required, one of the ways the System manages its exposure to interest rate risk is by requiring the fixed income investment manager to maintain its portfolio effective duration within +/- 20% of the benchmark, the Barclays Capital U.S. Aggregate Bond I ndex. See Other Supplementary Information, page 46 for the Core Fixed Income asset manager’s historic effective duration. The effective duration is a measure, in years, of interest -rate sensitivity in debt investments. The longer the effective duration, the greater the sensitivity to interest rate changes.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Interest Rate Risk (Continued)
Infor
mation about the sensitivity of the fair values of the System’s investments to market interest rate fluctuations is provided in the table below that reports the average effective duration of the System’s fixed income investments by asset type as of June 30, 2021:

Highly Sensitive Investments
High
ly sensitive investments are certain debt investments whose terms may cause their fair value to be highly sensitive to market interest rate changes. Terms include such information as embedded options, coupon multipliers, benchmark indexes, and reset dates. The System’s asset -backed investments have embedded prepayment options that will typically cause prepayments by the obligees of the underlying investments when interest rates fall. Prepayments eliminate the stream of future interest payments and, therefore, diminish the fair value of the asset -backed investment. The table on the following page reports the fair value of the System’s investments that are highly sensitive to changes in interest rates:

Asse t Type Fair Value
Effective
Weighted
Dur
ation
(years)
Government Bonds 16,839,514$ 4.89
M
unicipal Bonds 304,104 12.21
Corporate Bonds 7,389,624 7.74
Government Mortgage Backed Securities 10,687,772 4.56 Government Issued Commercial Mortgage Backed 324,302 5.75 Commercial Mortgage Backed 781,002 4.31
Asset Backed Securities 1,659,292 0.63
Non-Government Backed CMOs 1,564,182 0.46
No Effective Duration:

Mutual Funds Fixed Income 20,169,940 N/A
Risk Parity Group Trust 6,668,492 N/A
Other Fixed Income* 7,001,235 N/A
T
otal Fixed Income 73,389,459$
Fixed Income
Effective Duration by Asset Type
As of June 30, 2021
* Other Fixed Income includes assets held in Senior Bank Loans and one U.S. Government is
sue for which effective duration is unavailable.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 3 – CASH AND INVESTMENTS (Continued)
Highly Sensitive Investments (Continued)
Foreign Currency Risk
Forei
gn currency risk is the risk that changes in foreign exchange rates will adversely affect the fair value of an investment or deposit . The System’s authorized investment managers are permitted to invest in approved countries or regions, as stated in their respective investment guidelines. Currency hedging will be permitted as part of a defensive strategy to protect the portfolio’s underlying assets.

The Sy
stem’s foreign investment holdings on June 30, 2021, are as follows (note that all foreign assets are held in US Dollars):

Alt
hough these investments are denominated in US dollars, they are exposed to foreign currency risk due to the underlying fund investments.

Investment Type Fair Value
Government Mortgage Backed Securities 10,889,710$
Government Issued Commercial Mortgage Backed Securities 324,302 Asset Backed Securities 1,659,292
Commercial Mortgage Backed Securities 781,002
Non-Government Backed Commercial Mortgage Obligations 1,564,182 Total Highly Sensitive Investments 15,218,488$
Highly Sensitive Investments
As of June 30, 2021
Fair Value % of Total
Cor
porate Obligations in USD Fair Value
Australia 84,286$ 0.06%
Bermuda 93,659 0.07%
Canada 26,794 0.02%
China 50,167 0.04%
Ireland 424,436 0.32%
Mexico 107,006 0.08%
Switzerland 162,455 0.13%
United Kingdom 638,379 0.49%
Total Foreign Currency (US Dollars) 1,587,182$ 1.22% Foreign Currency Risk
As of June 30, 2021

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 4 – CONTRIBUTION INFORMATION
Contr
ibution requirements are established by the City Charter and by contract, and, subject to any constitutional limitations, may be amended by the City Charter or further agreement between the City and the System.

General
His
torically, the City has made monthly contributions to the System based on actuarially determined employer contribution rates which, together with employee contributions, were expected to provide sufficient assets to pay funded basic benefits when due. However, the City Charter did not require actuarially determined funding for unfunded basic, 1919 benefits, and COLA benefits, which are funded under Contribution Agreement No. 16,900, dated March 18, 1999, between the City and the System. Per the terms negotiated through their respective recognized Associations, employee contributions of 9% for both Fire and Police Department personnel base earnings were made by the City on behalf of the employees and credited to their individual accounts.

Member Contributions
As a condition of participation, members were required to contribute a percentage of their annual salary to the System. Currently there are no active members in the System, and hence no further member contributions are due to the System.

The C
ity Charter required members’ contributions to be credited to the individual account of the member from whose compensation the contribution was deducted. Such contributions accrued interest at a rate determined by the Board and were either to be refunded to members or their beneficiaries upon separation from City service for reasons other than retirement, or applied towards providing members’ retirement or death allowances. Amendments to the City Charter cannot prevent the refund of such contributions plus accrued interest. Because there were no active members, accumulated contributions for 2021 w ere $0 with no interest credited.

City Contributions
The Sy
stem’s funding mechanism was updated on March 18, 1999, when the System entered into Contribution Agreement No. 16,900 (“Agreement No. 16,900”) with the City. As a result of this agreement, the City made a contribution of $100,000,000 to the System on August 5, 1999, and agreed to make supplemental contributions to the System when needed. Per Agreement No. 16,900, the System was considered to meet minimum funding requirements for the year ended June 30, 2001, if the funded percentage exceeded 70%. As per the agreement, the required minimum funded percentage increases by 1/2% each year until it reaches 80% in the year ending June 30, 202 1. Thereafter it may, but need not, be changed by the System.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 4 – CONTRIBUTION INFORMATION (Continued)
City Contributions (Continued)
On October
20, 2011, the Board approved Amended and Restated Agreement No. 20,823 ( “Agreement No. 20,823” ). Under this new agreement, the City’s minimum funding percentage schedule and reimbursement cap in Agreement No. 16,900 carried forward, and the City agreed to provide a contribution of $46,600,000 to the System through the issuance of pension obligation bonds. Agreement No. 20,823 provided that the annual required supplemental contribution would be actuarially calculated using an interest assumption of 6% and an inflation rate of 3% beginning with the June 30, 2012 valuation. Pursuant to this agreement, future annual valuations after June 30, 2012, shall adopt an assumed interest rate and inflation assumption based on analysis performed by the System’s actuary and after seeking input from the City and Syst em’s professional consultant. Agreements No. 16,900 and No. 20,823 state that if the minimum funding deficit is greater than $3,000,000 in a year, the City will pay $3,000,000 to the System. Any remaining amount necessary to reach the minimum funding percentage will be phased in over a five- year period; however, no annual supplemental payment may exceed a reimbursement cap measured by the prior year’s payments for benefits other than the funded basic benefits.

As of J
une 30, 2021, the funded percentage of the System, calculated in accordance with Agreement No. 20,823 and Agreement No. 16,900, was 92.1%. As provided by Contribution Agreement No. 16,900, if the funded percentage is below the minimum funding percentage of 80 % for fisca l year 2021 , the City will reimburse the System in the following fiscal year subject to certain reimbursement limits. Based on the June 30, 2021 actuarial valuation, the funding deficiency was $0, or 0%, below the funding requirement of 80% as of June 30, 2021. Thus, no required supplemental contribution is owed to the System by the City for the fiscal year ended June 30, 2021.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 5 – NET PENSION LIABILITY/(ASSET)
Net Pension Liability/(Asset)
The
City’s Net Pension Liability/(Asset) (“NPL”) at June 30, 2021, was ($7,881,000). Fiduciary Net Position (“FNP”) as a percentage of total pension liability is 106.2%. At June 30, 2021, the components of the NPL were as follows:

Key Methods and Assumptions Used in Valuation of Total Pension Liability Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about mortality and cost trends. Actuarially determined amounts are subject to continual review or modification as actual results are compared with past expectations and new estimates are made about the future.

Proj
ections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employers and plan members) and include the types of benefits provided at the time of each valuation. Following the recommendation provided by the System ’s Actuary on May 19 , 2021, the Board later accepted the recommended assumptions for use in the preparation of the actuarial valuation for the fiscal year ended June 30, 2021.

Net Pension Liability 6/30/2021
Dis
count Rate 5.75%
Total Pension Liability (TPL)* 126,852$
Fiduciary Net Position (FNP) 134,733
Net Pension Liability/(Asset) (NPL) (7,881)$
FNP as a Percentage of TPL 106.2%
_______________________________________________________ Net Pension Liability
(In Thousands)
*Source for the TPL is the June 30, 2021 GASBS 67 plan actuarial information report prepared by System Actuary, Bartel Associates, LLC.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 5 – NET PENSION LIABILITY/(ASSET) (Continued)
Key Methods and Assumptions Used in Valuation of Total Pension Liability (Continued) The T
otal Pension Liability (“TPL”) was determined by the actuarial valuation performed as of June 30, 2021, using the following actuarial assumptions:

Valuation Date/Measurement Date June 30, 2021
Expected Geometric Real Rate of Return
Domestic Equity - Large Cap 4.36%
Domestic Equity - Small Cap 5.18%
Foreign Equity 4.60%
Domestic Core Fixed Income 1.47%
Senior Bank Loans 3.10%
Short-Term I-G Bonds 1.26%
TIPS 1.29%
Risk Parity 2.79%
Real Estate 3.04%
Number of Participants Retirees & Beneficiaries 179
Vested Terminations -
Actives -
Total Participants 179
Actuarial Assumptions *Discount Rate: 5.75%
Salary Scale: No active employees
Inflation Rate: 2.75%
Mortality CalPERS 1997-2015 Experience Study,
Mortality Improvement Scale MP-2017
Key Methods and Assumptions Used in Valuation of
Total Pension Liability
*Discount Rate reflects assumed investment expenses of 40bp.

Source is the June 30, 2021 GASBS 67 plan actuarial information prepared by System Actuary, Bartel Associates, LLC.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 5 – NET PENSION LIABILITY/(ASSET) (Continued)
Discount Rate
The discount rate of 5.75% was selected by the System actuary and approved by the Board to measure the June 30, 2021 TPL for accounting purposes. The discount rate is the expected real long- term rate of return, plus the inflation assumption of 2.75%, less assumed investment expenses of 40 basis points. The expected long-term real rate of return is compared at the 50% and 55% confidence levels of capital market assumptions. Based on the assumptions, the System 's Fiduciary Net Position was projected to be available to make all projected future benefit payments. The discount rate used as of June 30, 2021 is the same as the discount rate used as of June 30, 2020.

Sensitivity of the NPL to Changes in the Discount Rate
Exam
ining the sensitivity of the NPL to changes in the discount rate by a 1% decrease, from 5.75% to

4.75%, revealed an increase in the NPL by $ 10,525,000 to a total NPL of $2,644,000. Conversely, increasing the discount rate by 1%, from 5.75 % to 6.75%, revealed a corresponding decrease in the NPL of $9,150,000 to total NPL of ($17,031,000) as of June 30, 2021.

NOTE 6 – ADMINISTRATIVE COSTS
The cos
ts to administer the System are paid by the System. Administrative expenses were $ 326,542 for the year ended June 30, 2021. Administrative expenses increased by a net amount of $5,416 in fiscal year 2021 over the fiscal year 2020 amount of $321,126.
6/30/2021
Discount Rate 5.75%
Ne
t Pension Liability/(Asset) (7,881)$
Discount Rate (-1%) 4.75%
Net Pension Liability/(Asset) 2,644
Net Increase in NPL 10,525
Discount Rate (+1%) 6.75%
Net Pension Liability/(Asset) (17,031)
Net Decrease in NPL (9,150)
Sensitivity of Net Pension Liability/(Asset) (NPL) to
Changes in the Discount Rate
(In Thousands)

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
JUNE 30, 2021
NOTE 7 – CONCORD SENIOR HOUSING PROPERTY AGREEMENT
The C
ity Council adopted Resolution No. 6179 at its July 18, 1989, meeting assigning a 93% beneficial interest in the Concord Senior Housing property at 275 E. Cordova, Pasadena (Concord Property), to the System, and 100% of the cash flow received by the City from the property for ground lease rent payments through 2031. The property was previously used for federally subsidized housing and was subject to federal restrictions on its use through August 2016. Resolution No. 6179 also declared the City’s formal intent to continue to utilize the property for federally subsidized housing through 2031.

The System’s Board reviewed and approved an amendment to Agreement No. 20,823 (Amended Agreement) at its meeting on February 20, 2019, which was later approved by City Council at its meeting on March 11, 2019. The amendment memorializes the accrued rent and interest owed to the City as of July 31, 2018, in the amount of $6,435,116. Further, the amendment assigns the System 100% of the past due amount and all future rents and income from operations through the term of the ground lease agreement, which expires on August 1, 2031, or until the City sells the Concord Property, whichever occurs first.

The sale of the Concord Property closed on May 28, 2020. The total proceeds received by the System was $23,137,382 as of June 30, 2020, which are comprised of the ground lease due through May 27, 2020, of $3,180,180, accrued interest on ground lease rent of $3,950,613, and the System's 93% beneficial interest of $16,006,589. The total proceeds transferred to the System were reduced by the amount of the City’s mandatory contribution of $3,478,000 for a total remittance of $19,659,382, which are reported as contributions in the statement of changes in fiduciary net position.

At J
une 30, 2021, the City has an outstanding note receivable related to the sale in the amount of $18,350,000 of which $ 17,065,500 is expected to be contributed to the System upon receipt based on the System’s 93% beneficial interest in accordance with the Amended Agreement. A pproximately $13,505,395 of the outstanding note receivable balance is to be paid upon completion of construction.

The System’s portion of the second installment of Sale Proceeds will be due upon the Permanent Financing Closing date of the Concord Property, which entitles the System to receive from the City its 93% beneficial interest of approximately $12,560,017. According to the Disposition, Development and Loan Agreement (DDLA), the Permanent Financing Closing date is scheduled to occur no later than March 31, 2022. The remaining note receivable balance of $4,844,605 will be due 55 years after the project completion date and bears interest at a fixed rate of 2.5% per year. If and when there are payments received by the City, 93% of the payment will be remitted to the System as additional contributions for a total of $4,505,483.

REQUIRED SUPPLEMENTARY INFORMATION

P A S A D E N A
FIRE &
POLICE

RETIREMENT

S Y S T E M

PASADENA FIRE & POLICE RETIREMENT SYSTEM

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

SCHEDUL
E OF CHANGES IN EMPLOYER’S NET PENSION LIABILITY/(ASSET) 2021 2020 2019 2018 2017 2016 2015 2014
Dis
count Rate 5.75% 5.75% 5.75% 5.75% 6.50% 6.50% 6.50% 6.00% Total Pension Libility (TPL):

Service Cost -$ -$ -$ -$ -$ -$ -$ -$ Interest 7,335 7,600 7,781 8,832 9,272 9,644 9,162 10,185 Benefit Payments (12,506) (12,773) (12,824) (12,815) (13,118) (13,448) (13,645) (14,140) Experience Losses (Gains) (1,799) 438 1,862 1,261 (3,081) (2,098) (3,075) (5,310) Assumption Changes* - - - 2,189 - - 3,141 - Benefit Changes - - - - - - - - Net Change (6,969) (4,735) (3,181) (533) (6,927) (5,902) (4,417) (9,265) Total Pension Liability at Beginning of Year 133,821 138,556 141,737 142,270 149,197 155,099 159,516 168,781 Total Pension Liability at End of Year (a) 126,852$ 133,821$ 138,556$ 141,737$ 142,270$ 149,197$ 155,099$ 159,516$ 2021 2020 2019 2018 2017 2016 2015 2014
Fiduciary Net Position:

Employer contributions -$ 23,137$ -$ -$ -$ -$ -$ 1,164$ Member Contributions - - - - - - - - Net Investment Income 22,354 3,394 5,923 6,656 12,514 49 5,683 21,303 Benefit Payments (12,506) (12,773) (12,824) (12,815) (13,118) (13,448) (13,645) (14,140) Administrative Expenses (327) (321) (257) (274) (300) (301) (273) (296) Net Change 9,521 13,437 (7,158) (6,433) (904) (13,700) (8,235) 8,031 Fiduci
ary Net Position at Beginning of Year 125,211 111,774 118,932 125,365 126,269 139,969 148,204 140,173 Fiduciary Net Position at End of Year (b) 134,733$ 125,211$ 111,774$ 118,932$ 125,365$ 126,269$ 139,969$ 148,204$ Net Pension Liability/(Asset) (a) - (b) (7,881)$ 8,610$ 26,782$ 22,805$ 16,905$ 22,928$ 15,130$ 11,312$ * June 30, 2015 Assumption Changes of $1,895,000 for change in base mortality rates, $8,301,000 for change in mortality improvement scale, and ($7,055,000) for change in the discount rate. (In Thousands)
Source for pension liability is the June 30, 2021 GASBS 67 plan actuarial information prepared by System Actuary, Bartel Associates, LLC. GASB Statement No. 67 requires this information be reported for 10 years, or as many years as are available upon implementation.

Changes in Total Pension Liability
(In Thousands)
Changes in Fiduciary Net Position
Fiscal Year Ending
Fiscal Year Ending

PASADENA FIRE & POLICE RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) (Continued) SCHEDU
LE OF EMPLOYER’S NET PENSION LIABILITY/(ASSET) AND RELATED RATIOS Date
Discount
Rate
Total
Pension
Liabilit
y
(TPL)
Fiduciary
Net Position
(FNP)
Net Pension
Liability
(NPL)
FNP as a
Percentage
of TPL

(FNP/TPL)
Covered
Payroll NPL %Pay
6/30/2021 5.75% 126,852$ 134,733$ (7,881)$ 106.2% n/a n/a 6/30/2020 5.75% 133,821$ 125,211$ 8,610$ 93.6% n/a n/a 6/30/2019 5.75% 138,556$ 111,774$ 26,782$ 80.7% n/a n/a 6/30/2018 5.75% 141,737$ 118,932$ 22,805$ 83.9% n/a n/a 6/30/2017 6.50% 142,270$ 125,365$ 16,905$ 88.1% n/a n/a 6/30/2016 6.50% 149,197$ 126,269$ 22,928$ 84.6% n/a n/a 6/30/2015 6.50% 155,099$ 139,969$ 15,130$ 90.2% n/a n/a 6/30/2014 6.00% 159,516$ 148,204$ 11,312$ 92.9% n/a n/a 6/30/2013 6.00% 168,781$ 140,173$ 28,608$ 83.1% n/a n/a Net Pension Liability/(Asset)
(In Thousands)
Source for pension liability is the June 30, 2021 GASBS 67 plan actuarial information prepared by System Actuary, Bartel Associates, LLC. GASB Statement No. 67 requires this information be reported for 10 years or as many years as are availabl
e upon implementation.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) (Continued)

SCHEDULE

OF EMPLOYER CONTRIBUTIONS
Fiscal Year
Ending
Contractually
Required
Contribution*
Actual Fiscal
Year
Contribution
Deficiency
(Excess)
Covered
Payroll
Contribution
as % of
Payroll
6/30/2021 -$ -$ -$ n/a n/a
6/30/2020 3,478$ 3,478$ -$ n/a n/a 6/30/2019 -$ -$ -$ n/a n/a
6/30/2018 -$ -$ -$ n/a n/a
6/30/2017 -$ -$ -$ n/a n/a
6/30/2016 -$ -$ -$ n/a n/a
6/30/2015 -$ -$ -$ n/a n/a
6/30/2014 1,164$ 1,164$ -$ n/a n/a 6/30/2013 -$ -$ -$ n/a n/a
6/30/2012 9,079$ 46,600$ (37,521)$ n/a n/a (In Thousands)
*Contractually required contributions are based on Board-adopted assumptions for use in preparing the valuation, and as required by applicable Contribution Agreements with the City.

Source is the June 30, 2021 GASBS 67 plan actuarial information prepared by System Actuary, Bartel Associates, LLC. GASB Statement No. 67 requires this information be reported for 10 years.

Employer Contributions

PASADENA FIRE & POLICE RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) (Continued)

SCHEDUL

E OF INVESTMENT RETURNS
2021 2020 2019 2018 2017 2016 2015 2014
Annual money-weighted rate of return,
net of investment expense 18.50% 2.80% 5.50% 5.60% 10.70% 0.40% 3.70% 15.40% Money-Weighted Rate of Return
Source is the June 30, 2021 Investment Performance Review provided by System investment advisor, Verus Investments.

GASB Statement No. 67 requires this information be reported for 10 years. Additional years will be displayed as information becomes available.

PASADENA FIRE & POLICE RETIREMENT SYSTEM

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) NOTE 1 – SCHEDULE OF CHANGES IN THE EMPLOYER NET PENSION LIABILITY /(ASSET) The tot
al pension liability contained in this section was provided by the System’s actuary, Bartel Associates, LLC. The Net Pension Liability /(Asset) is measured as the Total Pension L iability less the amount of the Fiduciary Net Position of the System.

NOTE 2 – SCHEDULE OF EMPLOYER CONTRIBUTIONS
The requi
red employer contribution and percent of those contributions actually made are presented in this section.

The Sy
stem’s funding mechanism was updated on March 18, 1999, when the System entered into Contribution Agreement No. 16,900 (“Agreement No. 16,900”) with the City. As a result of this agreement, the City made a contribution of $100,000,000 to the System on August 5, 1999 and agreed to make supplemental contributions to the System when needed. Per Agreement No. 16,900, the System was considered to meet minimum funding requirements for the year ended June 30, 2001, if the funded percentage exceeded 70%. As per the agreement, the required minimum funded percentage increases by 1/2% each year until it reaches 80% in the year ending June 30, 2021. Thereafter it may, but need not, be changed by the System.

On O
ctober 20, 2011, the Board approved Amended and Restated Agreement No. 20,823 ( “Agreement No. 20,823” ). Under this new agreement, the City’s minimum funding percentage schedule and reimbursement cap in Agreement No. 16,900 carried forward, and the City agreed to provide a contribution of $46,600,000 to the System through the issuance of pension obligation bonds. Agreement No. 20,823 provided that the annual required supplemental contribution would be actuarially calculated using an interest assumption of 6% and an inflation rate of 3% beginning with the June 30, 2012 valuation. Pursuant to this agreement, future annual valuations after June 30, 2012, shall adopt an assumed interest rate and inflation assumption based on analysis performed by the System’s actuary and after seeking input from the City and Syst em’s professional consultant. Agreements No. 16,900 and No. 20,823 state that if the minimum funding deficit is greater than $3,000,000 in a year, the City will pay $3,000,000 to the System. Any remaining amount necessary to reach the minimum funding percentage will be phased in over a five- year period; however, no annual supplemental payment may exceed a reimbursement cap measured by the prior year’s payments for benefits other than the funded basic benefits.

The June
30, 2013 actuarial valuation determined there was a funding deficiency of $1,164,000 or 0.67% to meet the minimum funding requirement of 76.5%. The June 30, 2019 actuarial valuation determined there was a funding deficiency of $3,478,000 or 3.4% to meet the minimum funding requirement of 79.5%.

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) (Continued)

NOTE 2 – SCHEDULE OF EMPLOYER CONTRIBUTIONS (Continued)

The June 30, 2021 actuarial valuation determined the AVA Funded Percentage, calculated in accordance with Agreement No. 20,823 and Contribution Agreement No. 16,900, to be 92.1% as compared to 89.2% in the prior year. The AVA Funded Percentage increased by 3.6% over what was originally projected for 2021 in the June 30, 2020 valuation (88.5%), and was primarily attributed to the following actuarial changes:

2.3% investment gains (investment return was higher than expected), 0.7% COLA gains (COLA was lower than anticipated), 0. 5% demographic gains ( more deaths than actuarially estimated), and 0.1% benefi t payments (lower than anticipated). As required by Contribution Agreement No. 16,900, if the AVA Funded Percentage was below the minimum funding percentage of 80% for fiscal year 2021, the City would have been required to reimburse the System in the following fiscal year subject to certain reimbursement limits.

Based on the June 30, 2021 actuarial valuation, the funding deficiency was $0, or 0.0%, below the funding requirement of 80%. A required supplemental contribution is not owed to the System for the fiscal year ending June 30, 2022

NOTE 3 – ACTUARIAL ASSUMPTIONS

The information presented in the required supplementary schedules was used in the June 30, 2021 actuarial valuation for purposes of determining the Actuarially Determined Contribution (“ADC”). The assumptions and methods used for the June 30, 2021, and all prior actuarial valuations were recommended by the System’s actuary and adopted by the Board. Consistent with the requirements of GASB Statement No. 67, the factors impacting the ADC and any changes to the factors that significantly affect trends in the reported schedules must be disclosed for 10 years.

Actuarial Demographic Assumptions

Year Ended
June 30 Mortality Mortality Improvement
2018-2021 CalPERS 1997-2015
Experience Study
Mortality Improvement Scale
MP-2017
2015-2017 CalPERS 1997-2011
Experience Study
Modified MP-2014, to converge to
ultimate mortality improvement
ra
tes in 2022
2012-2014 CalPERS 1997-2007
Experience Study
Scale AA
Schedule of Changes to Actuarial Demographic Assumptions For the Years Ended June 30, 2012 - 2021

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) (Continued) NOTE 3 – ACTUARIAL ASSUMPTIONS (Continued)
Actuarial Demographic Assumptions (Continued)
Actuarial Methods
Year
Ended
June 30 Service Disability Beneficiaries
Subtotal
Retirees &
Beneficiaries
Active
Members
Total
Members
2021 67 63 49 179 - 179
2020 72 67 55 194 - 194
2019 74 71 59 204 - 204
2018 79 75 58 212 - 212
2017 82 79 56 217 - 217
2016 90 84 59 233 - 233
2015 96 86 55 237 - 237
2014 98 90 59 247 - 247
2013 106 92 59 257 - 257
2012 109 98 55 262 - 262
Retirees & Beneficiaries
Schedule of Changes to Actuarial Demographic Assumptions For the Years Ended June 30, 2012 - 2021
Year
Ended
June 30
Actuarial Cost
Method
Amortization
Method
Remaining
Amortization
Period
Asset Valuation
Method
2012-2021 Entry Age
Normal Cost
Level Dollar
Open Period
5-year Investment gains and
losses smoothed over
5-year fixed period
Schedule of Actuarial Cost and Amortization Methods
For the Years Ended June 30, 2012 - 2021

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) (Continued) NOTE 3 – ACTUARIAL ASSUMPTIONS (Continued)
Actuarial Economic Assumptions
Year
Ended
June 30
Discount
Rate
Invest.

Expenses
Admin.

Expenses Inflation
Cost of
Living
Salary
Increase
Employee
Contrib.

Rate Notes
2021 5.25% 40 bp 50 bp 2.75% 3.00% N/A N/A
No changes made from 6-30-20 assumptions, with the
exception of the 1% decrease in the cost of living
adjustment.
2020 5.25% 40 bp 50 bp 2.75% 4.00% N/A N/A
No changes made from 6-30-19 assumptions, with the
exception of the 1% increase in the cost of living
adjustment.
2019 5.25% 40 bp 50 bp 2.75% 3.00% N/A N/A
No changes made from 6-30-18 assumptions, with the
exception of the 1% increase in the cost of living
adjustment.
2018 5.25% 40 bp 50 bp 2.75% 2.00% N/A N/A
The funding discount rate was decreased to 5.25%,
inflation to 2.75%, expected rate of return to 5.75%
and 1% increase in the cost of living adjustment. The
expected return changed due to change in Capital
Market Assumptions. The model predicts that the
Expected Long-Term Nominal Net Rate of Return
(Rate of Return before factoring in inflation but after subtracting investment fees) is only estimated to be
between 5.61% and 5.83%.
2017 6.00% 40 bp 50 bp 3.00% 1.00% N/A N/A No changes made from 6-30-15 assumptions. 2016 6.00% 40 bp 50 bp 3.00% 1.00% N/A N/A No changes made from 6-30-15 assumptions. 2015 6.00% 40 bp 50 bp 3.00% 1.00% N/A N/A Discount rate assumes no cash reserve and is net of Investment Expenses; Administrative Expenses are
included in the City's contribution.
2014 6.00% 40 bp 60 bp 3.00% 2.00% N/A N/A The Discount Rate of 6.0% was evaluated and recommended by the actuary using the 6-30-14 target
asset allocation, future asset allocation rebalanced to maintain cash reserve equal to expected benefits
plus Admin Expenses less City Contribution, CalPERS
investment advisors' 2013 capital market
assumptions, and Investment Expenses of 40 bps
(Admin Expenses are excluded from the Discount
Rate).
2013 6.00% 40 bp 60 bp 3.00% 3.00% N/A N/A The discount rate assumed the Trust would maintain a cash reserve equal to one year's benefit payments;
Investment and Administrative Expenses are included
in the Discount Rate
2012 6.00% 40 bp 60 bp 3.00% 1.00% N/A N/A The discount rate assumed the Trust would maintain a cash reserve equal to one year's benefit payments;
Investment and Administrative Expenses are included
in the Discount Rate.

Beginning with the June 30, 2009 valuation, all members were retired; salary increase rates and employee contribution rates were N/A.

Schedule of Changes to Actuarial Economic Assumptions
For the Years Ended June 30, 2012 - 2021
Sources are the Board-approved valuations, as prepared by Bartel Associates, LLC (June 30, 2012-2021).

PASADENA FIRE & POLICE RETIREMENT SYSTEM
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) (Continued) NOTE 3 – ACTUARIAL ASSUMPTIONS (Continued)
Actuarial Economic Assumptions
Asset Class 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Domestic Equity - Large Cap N/A N/A N/A N/A N/A 16% 16% 16% 16% 16% Domestic Equity - Small Cap N/A N/A N/A N/A N/A 4% 4% 4% 4% 4% Total Domestic Equity 32% 27% 22% 22% 20% 20% 20% 20% 20% 20% Foreign Equity 20% 20% 20% 20% 20% 20% 20% 20% 20% 20%
Fixed Income 30% 30% 30% 33% 35% 20% 20% 25% 25% 25%
TIPS 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
Short-Term Investment-Grade Bonds N/A N/A N/A N/A N/A 10% 10% 10% 10% 10% Bank Loans N/A N/A 5% 5% 5% 10% 10% 5% 5% 5%
Alternative (Hedge Fund) N/A 0.05 5% 5% 5% 5% 5% 5% 5% N/A Alternative (Risk Parity) N/A N/A N/A N/A N/A N/A N/A N/A N/A 5% Real Estate 0.1 0.1 10% 10% 10% 10% 10% 10% 10% 10%
Cash Equivalents 3% 3% 3% 0% 0% 0% 0% 0% 0% 0%
Total Portfolio 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Asset Class 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Domestic Equity - Large Cap N/A N/A N/A N/A N/A N/A 4% 4. 36% 4.36% 4.36% Domestic Equity - Small Cap N/A N/A N/A N/A N/A N/A 5% 5.18% 5.18% 5.18% Total Domestic Equity 5.50% 5.35% 5.00% 5.00% 5.00% 5.00% N/A N/A N/A N/A Foreign Equity 5.50% 5.35% 5.00% 5.00% 5.00% 5.00% 4.60% 4.60% 4.60% 4.60% Fixed Income 1.60% 1.55% 0.74% 0.74% 0.74% 0.74% 1.47% 1.47% 1.47% 1.47% TIPS 1.60% 1.53% 0.20% 0.20% 0.20% 0.20% 1.29% 1.29% 1.29% 1.29% Short-Term Investment-Grade Bonds N/A N/A N/A N/A N/A 0.74% 1.26% 1.26% 1.26% 1.26% Bank Loans N/A N/A 0.74% 0.74% 0.74% 0.74% 3.10% 3.10% 3.10% 3.10% Alternative (Hedge Fund) 5.50% 5.35% 3.14% 3.14% 3.14% 3.14% 2.79% 2.79% 2.79% N/A Alternative (Risk Parity) N/A N/A N/A N/A N/A N/A N/A N/A N/A 2.79% Real Estate 0.041 0.0383 4% 4% 4% 4% 3% 3% 3% 3%
Cash Equivalents 1% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Inflation 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.75% 2.75% 2.75% 2.75% Discount Rate 6.00% 6.00% 6.00% 6.50% 6.50% 6.50% 5.75% 5.75% 5.75% 5.75% Expected Long-Term Geometric Real Rates of Return
Target Asset Allocation, Year Ended June 30
For the Years Ended June 30, 2012 - 2021
Target Asset Allocation & Expected Long-Term Geometric Real Rates of Return Schedule of Changes to Actuarial Economic Assumptions
For Domestic Equity, Bartel Associates, LLC started breaking out large and small cap for the target asset allocation in 2017 and for the expected long-term geometric real rates of return in 2018.

Sources are the Board-approved actuarial valuations, as prepared by Bartel Associates, LLC (June 30, 2012-2021).

For the June 30, 2013 valuation, Expected Rates of Return are adjusted capital market assumptions from CalPERS investment advisors' 2010 capital market assumptions study.

For the June 30, 2015-2017 valuations, Discount Rate assumes no cash reserve and is net of investment expenses; the expected rates of return are based on CalPERS investment advisors' 2013 capital market assumptions.

For the June 30, 2018-2021 valuations, the expected rates of return are based on CalPERS investment advisors' 2017 capital market assumptions.

OTHER SUPPLEMENTARY INFORMATION

P A S A D E N A
FIRE &
POLICE

RETIREMENT

S Y S T E M

PASADENA FIRE & POLICE RETIREMENT SYSTEM

OTHER SUPPLEMENTARY INFORMATION
ADDI

TIONS BY SOURCE AND DEDUCTIONS BY TYPE
Net
Fisca l Emp loyer Investment
Year Contributions Income (Loss) Total
2021 -$ 22,354$ 22,354$
2020 23,137 3,394 26,531
2019 - 5,923 5,923
2018 - 6,656 6,656
2017 - 12,514 12,514
2016 - 49 49
2015 - 5,683 5,683
2014 1,164 21,303 22,467
2013 - 15,630 15,630
2012 46,600 2,036 48,636

ADDITIONS BY SOURCE
(In Thousands)
Fisca l Administrative
Year Be
nefits Expens es Total
2021 12,506$ 327$ 12,833$
2020 12,773 321 13,094
2019 12,824 257 13,081
2018 12,815 274 13,089
2017 13,118 300 13,418
2016 13,448 301 13,749
2015 13,645 273 13,918
2014 14,140 296 14,436
2013 14,322 271 14,593
2012 14,148 287 14,435

DEDUCTIONS BY TYPE
(In Thousands)

PASADENA FIRE & POLICE RETIREMENT SYSTEM
OTHER SUPPLEMENTARY INFORMATION (Continued)
COMPAR

ATIVE INFORMATION FROM PRIOR FISCAL YEARS

INTEREST RATE RISK EFFECTIVE DURATION BY ASSET MANAGER (UNAUDITED) Market Value Duration Benchmark % Under/Over
$33,325,246 6.06 Years 6.58 Years -7.9%
Market Value Duration Benchmark % Under/Over
$28,338,102 5.41 Years 6.04 Years -10.4%
Market Value Duration Benchmark % Under/Over
$27,496,065 5.72 Years 5.73 Years -0.2%
Market Value Duration Benchmark % Under/Over
$23,701,251 6.12 Years 6.01 Years 2%
Market Value Duration Benchmark % Under/Over
$24,131,769 5.62 Years 6.01 Years -6%
Market Value Duration Benchmark % Under/Over
$43,100,920 4.82 Years 5.47 Years -12%
Market Value Duration Benchmark % Under/Over
$45,285,057 4.99 Years 5.63 Years -11%
Market Value Duration Benchmark % Under/Over
$45,858,083 4.63 Years 5.60 Years -17%
Market Value Duration Benchmark % Under/Over
$43,690,404 4.57 Years 5.49 Years -17%
Market Value Duration Benchmark % Under/Over
$47,991,530 4.16 Years 5.07 Years -18%
June 30, 2012
Source is the June 30, 2012-2021 Investment Performance Reviews by asset manager MetWest.

MetWes t Fixed Income As s et Manager
Effective Duration
June 30, 2017
June 30, 2015
June 30, 2014
June 30, 2013
June 30, 2016
June 30, 2018
June 30, 2019
June 30, 2020
June 30, 2021

CITY OF PASADENA, CALIFORNIA

AIR QUALITY IMPROVEMENT

SPECIAL REVENUE FUND

FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Attachment G

CITY OF PASADENA, CALIFORNIA

AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021
INDEPENDENT AUDITORS’ REPORT 1

FINANCIAL STATEMENT
S
BALANCE SHEET 3

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE 4

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET TO ACTUAL 5
NOTES TO FINANCIAL STATEMENTS 6
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH APPLICABLE REQUIREMENTS AND ON INTERNAL CONTROL OVER COMPLIANCE 8
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 10

CliftonLarsonAllen LLP
CLAconnect.com

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. (1)

INDEPENDENT AUDIT
ORS’ REPORT
Honorable Mayor and Members of the City Council
of the City of Pasadena, California

Pasadena, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Air Quality Improvement Special Revenue Fund (AQMD) of the City of Pasadena, California (the City), as of and for the year ended June 30, 2021, and the related notes to the 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 an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Honorable Mayor and Members of the City Council
of the City of Pasadena, California
(2)
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Air Quality Improvement Special Revenue Fund of the City of Pasadena, California, as of June 30, 2021, and the changes in financial position and the budgetary comparison for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter
As discussed in Note 1, the financial statements present only the Air Quality Improvement Special Revenue Fund and do not purport to, and do not present fairly the financial position of the City of Pasadena, California, as of June 30, 2021, or the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Other Matters
Required Supplementary Information
Management has not presented the management’s disc ussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the financial statements. Such missing information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. Our opinion on the AQMD’s financial statements is not affected by this missing information.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 19, 2022, on our consideration of the internal control over the City’s AQMD financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over AQMD financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the internal control over the City’s AQMD financial reporting and compliance.

CliftonLarsonAllen LLP
Irvine, California
January 19, 2022