ROSE BOWL OPERATING COMPANY
(A COMPONENT UNIT OF THE
CITY OF PASADENA, CALIFORNIA)
BASIC FINANCIAL STATEMENTS
WITH INDEPENDENT AUDITORS’ REPORT
YEAR ENDED JUNE 30, 2022
ATTACHMENT D
ROSE BOWL OPERATING COMPANY
(A COMPONENT UNIT OF THE CITY OF PASADENA, CALIFORNIA)
BASIC FINANCIAL STATEMENTS
JUNE 30, 2022
TABLE OF CONTENTS
FINANCIAL SECTION
Independent Auditors’ Report 1
Management’s Discussion and Analysis 4
BASIC FINANCIAL STATEMENTS
Statement of Net Position 22
Statement of Revenues, Expenses, and Changes in Net Position 23 Statement of Cash Flows 24
Notes to the Basic Financial Statements 25
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Proportionate Share of Net Pension Liability 45 Schedule of Plan Contributions 47
OTHER REPORT
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Governmental Auditing Standards 49
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
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INDEPENDENT AUDITORS’ REPORT
Board of Directors
Rose Bowl Operating Company
Pasadena, California
Report on the Audit of the Financial Statements
Opinions
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, which comprise the statement of net position as of June 30, 2022, and the related statements of revenues, expenses and changes in net position, and the statement of cash flows for the year then ended, and the related notes to the financial statements, which collectively comprise the Company’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each enterprise fund of the Rose Bowl Operating Company, as of June 30, 2022, and the respective changes in financial position and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
Change in Accounting Principle
As discussed in Note 1 to the financial statements, effective July 1, 2021, the Company adopted Governmental Accounting Standards Board (GASB) Statement No. 87, Leases. Our opinions are not modified with respect to this matter.
Board of Directors
Rose Bowl Operating Company
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Responsibilities of Management 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; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Governmental Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsible to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Board of Directors
Rose Bowl Operating Company
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Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedule of proportionate share of net pension liability and schedule of pension plan contributions, be presented to supplement the basic financial statements.
Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with 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 January 12, 2023, on our consideration of the Company’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 Company’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 Company’s internal control over financial reporting and compliance.
CliftonLarsonAllen LLP
Irvine, California
January 12, 2023
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ROSE BOWL OPERATING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
TABLE OF CONTENTS
I. OVERVIEW OF THE FINANCIAL STATEMENTS
II. EXECUTIVE SUMMARY
III. FINANCIAL STATEMENTS
IV. FINANCIAL ANALYSIS
a. Statistical and Net Event Income Comparison
b. Net Event and Operations Income Comparison
c. Expense Comparison
d. Other Non-Operating Revenue
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, 2022 (FY 2022), with selected comparative information with the year ended June 30, 2021. This discussion should be read in conjunction with the financial statements. Unless otherwise indicated, years (2021, 2022) in this discussion refer to the fiscal year ended June 30.
I. OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis serves 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 22-24 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 25-44 of this report.
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II. EXECUTIVE SUMMARY (STADIUM AND GOLF COURSE)
In FY 2022, Stadium and Golf Course key areas impacting events, operations and net income are highlighted below:
The RBOC successfully transitions back into the operation of displacement events after a one- year hiatus due to the COVID-19 pandemic, while also contributing towards FY 2022 debt service.
Legacy Connections continues both successful donors fundraising efforts and focusing on State and Federal grants that resulted in over $10 million in funds for the RBOC.
Music Festival agreement renewal and renegotiation with AEG resulting in a new 5-year partnership that guarantees the RBOC $3 m illion annually with the potential for additional revenue based on the success of the festival business.
Flea market net event income reaches a 10-ye ar high based on new marketing efforts and a new 5-year agreement with the operator.
Enterprise events continue to grow and outper forming net event income expectations, while the campus resumes displacement events.
Golf operations continued generating strong revenues with the 2 nd highest revenues in the past five years due to increases in rates, while ro unds decreased due to increased major events which reduced playable days.
As full operations resume, the stadium and golf complex experience challenges to restaff during the labor market shortages. Increases in overhead salaries and benefits were due to having fewer open positions the prior year; with 33 full-time employees on a budget of 37 in FY 2022.
Event personnel are experiencing labor shortages with increases in rates for security, janitorial, public safety, rentals, and event productions (plumbing, electrical, etc.) due to the post COVID- 19 labor market.
Significant decreases in investments revenues ar e due to fair market valuations and based on an allocation of the RBOC’s funds invested with the City of Pasadena.
Increased Non-Operating revenues from the Legacy Connections transfer, grants, while the City of Pasadena contribution toward debt service declined from FY 2021 to FY 2022.
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III. FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS (Continued)
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IV. FINANCIAL ANALYSIS
a. Statistical and Fiscal Trends
During FY 2022 the Rose Bowl stadium hosted 14 disp lacement event and 12 flea market events with a combined attendance of 638,914, as well as 132 enterprise events including: runs/walks, food truck events, parties, graduations, and filming. The Flea Market set a record annual attendance of 209,616 during FY 2022. Football is starting to experience increase s in per game attendance, while Americafest (City of Pasadena event) saw a slight decrease in attendance.
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Stadium / Golf Complex Net Event Income Comparison:
Stadium and Golf Net Event income for FY 2022 was $14.6 million, close to th e FY 2020 pre-COVID net event income. Highlights include - Football shows signs of rebounding with UCLA net event income at a 4-year high of $4.7 million and Rose Bo wl Game net event income matching a 5-year high of $5 million.
The new Music Festival contract was effective November 2021 impacting the 5 events with an average net event income of approximately $276,000 (per event) with potential increased revenues at the conclusion of contracted year one based on the RBOC percentage share.
Enterprise events net income during FY 2022 was approximately $1.9 million $57,000 less than the record set during FY 2021. A key driver included the increased Golf Complex and Rose Bowl enterprise events, such as Craftoberfest. The average per enterprise event net income is approximately $14,500 slightly less than the FY 2021 amount of $17,800. The Flea Market operated for 12 months with an
annual net event income of $1.5 million increasing the per event net income to $131,000, or $37,000 higher than the 4 prior year averages – due to increased attendance and contracted RBOC share for the last 3 months of the year.
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Golf Complex Key Statistics:
As interest in the sport of golf continues the Broo kside Golf Complex works to find a balance between demand, course availability (given the resumed displacement events), pricing, and reinvestments in course health and renovation. Below are key statistics utilized to manage the golf course financial performance:
The number of rounds continue to be strong at 158,599 with only 327 playable days generating a gross course revenue of $6.8 million, near the 5-year high in FY 2021. A rounds per day average of 485 is 2 nd only to FY 2021, which had no displacement events. The average revenues per round was $43.13, a 5-year high.
Net Complex Income (made up of the below operating units) totals a 5-Year high of $2.5 million for FY2022; with key drivers from Golf Course, Displacement / Parking, and Golf Enterprise Events.
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FINANCIAL ANALYSIS (Continued)
b. Revenue/Expense, Net Event and Operations Income comparison (Stadium and Golf Complex)
Below are two sets of comparisons: a year-to-ye ar comparison of Revenues/Expenses (Chart) and a 5- year comparison of key drivers of Net Event and Operations Income:
Revenues, Expenses, Debt Service (Net), and Preventative Maintenance Fiscal Years 2021 and 2022:
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Combined Net Event and Operations Income Comparison 5-Years:
Operating analysis excluding Depreciation and Nonoperating Revenues
Stadium
Key changes to Net Event and Operations Income were mainly due to the stadium resuming displacement events with fans. The Net Income from stadium operations is $2.4 million after the Rose Bowl assuming $2.5 million of the $11.8 million net debt service, with the City of Pa sadena paying $9.3M after the $2.7 million federal subsidies.
The FY 2022 Net Event Income is $14.3 million, ov erhead expenses of $9.4 million and debt service of $2.5 million resulted with a Stadium Net Event and Operations income of $2.4 million.
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Golf Complex
Golf Complex Net Operating Income has a 5-year high of $2.5 million, with key drivers of direct golf course Income, restaurant, parking/displacement, and a new record set by golf enterprise events.
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FINANCIAL ANALYSIS (Continued)
c. Expense Comparison
The RBOC has 5 key areas of operating Expenses: Stadium Overhead, Event Expenses, Debt Service, Golf Complex Overhead and Golf Course Direct expens es. Many of these expenses have experienced increases due to changes in market demands driving co sts higher than the Consumer Price Index (CPI).
Key areas of increases included staffing due to s hortages and market costs of retaining industry experienced staff, professional and contracted services in areas such as information technology, business development and legal services. Other areas experiencing material increases included utilities and insurance rates.
Stadium Overhead Expenses:
Stadium total overhead expenditures have maintained the FY 20 20 spend rate of $9.1 - $9.2 million with growth of 5.8% since 2018 - based on CPI, contract renegotiations to market rates, and increased demands of events on the RBOC staff.
Salaries and Benefits have a growth rate of 7% due to market rate adjustments, promotions, and open full- time positions. Since 2018 salaries increased $614,000 mainly due to CPI growth of $542,000, 2 new Full- time employees in Legacy and Event support, promotions, and market rate adjustments. There were (4) fully or partially open budgeted FTE positions during of FY 2022 with a savings to budget of $173,000.
Benefits increased by $500,000 since FY 2018 with a growth rate of 13.3% due to cost of healthcare, vision, dental, and CalPERS.
The General and Administrative (G&A) expense growth rate of 10% is due to increases in market contracted rates, growing costs of business development and opportunity planning, as well as increased professional services in information technology and operating changes. The top three spend categories that comprises 74% of the $5.2 million total stadium overhead expenses are utilities, professional, and contracted services.
G&A expenses were lower than the trend in FY 2018 due to several intiaives were put on hold while staff focused on 5 displacement events occuring during the last 2 months of FY 2018.
Since FY 2018 utilities have increased by approximately $200,000 at growth rate of 3.6% with an annual spend of $1.5 million. Combined professional services and contracted services have grown at a rate of
14.3% with the most significant growth during FY 2022 of approximately $700,000 in professional services occurring after COVID-19. The increase is mainly d ue to higher security, legal costs/settlements, revenue opportunity study, increased efforts in business/staff development and training, information technology and supporting consulting in areas of concessions, and contract negotiations.
Other significant areas of increases included insurance allocation from the City of Pasadena with a growth rate of 35% from a low $96,000 in FY 2019 to $375,000 in FY 2022. Other overhead expenditure categories totaling $1 million have remained stable: Premium Seat ing sales/contract maintenance, operating leases, other administrative banking fees, permits, and supplies as outlined below.
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FINANCIAL ANALYSIS (Continued)
Event Expenses:
The Rose Bowl Stadium experienced some changes to events operations which impacted event expenses.
Event mix changes in FY 2022 have mitigated the incr eased expenses to reduce the per event average cost. Events, such as concerts, require increased security, public safety, and turf replacements; while Music Festivals and soccer matches generally have lower production costs, reducing event expenses. Key cost drivers continue to be security, public safety , event production costs, parking/neighborhood traffic management and janitorial services. The average expense per displacement event has been reduced by $269,000 since the 2019 high, which had 5-concerts. Enterprise and Flea Market per event costs and cost recovery increased based on market rates.
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FINANCIAL ANALYSIS (Continued)
d. Other Non-Operating Revenue:
Total Other Non-Operating re venues of $24.4 million encom passes both recurring and non- recurring sources. Recurring sources include Lega cy Connections, federal government subsidies on debt service, cell site rental and utilities cost recovery contracted to FY 2025.
Non-Recurring sources include $10.0 million by Legacy Connections efforts to secure the Shuttered Venue Operators Grant. The City of Pasadena net debt service contribution was $9.3 million.
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FINANCIAL ANALYSIS (Continued)
e. Balance Sheet Highlights:
On a full accrual basis, the Net Position increased by $2.234 million, 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 ye ar end increased by $16.2 million; changes since FY 2021 were mainly due to the Shuttered Venue Operator Grant (SVOG) which reimbursed the RB OC for $10 million of operating expenditures during COVID-19. An additional $3.1 milli on is due to the increased events associated deposits and non-events cash receipts in FY 2022. Golf operations cash increased by $3.1 million due to an increase in liabilities intercompany d ue American Golf Corp of $1.6 million. The change in cash was also due to golf cash draw-down of $1.5 million to operations du ring FY 2021, which did not reoccur during FY 2022.
Accounts Receivables increased by $3.8 million due to Stadium $3.8 million and Non-Event of $33,000.
Stadium accounts receiv ables increased by $2.8 milli on mainly due to Music Festival events during May and June 2022 and billing for deposits at year end. Non-Event incr eased accounts receivable were due to Capital related $300,000 from Legacy and non-event collection of $47,000 at June 2022.
The Golf Complex Accounts receivables show $625,000 increase in Due from Stadium – mainly in relation to expenditures carried out by the Golf Complex asso ciated events (such as the music festival) occurring on the golf course. Other non-event expenses and $33,000 due from Levy Concessionaire for capital fund and in transit golf credit card receipts.
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Balance Sheet highlights (Continued)
Change in Capital reflect assets decreased by $10.9 million mainly due to $12.4 million in depreciation offset by changes to cons truction in progress and new assets of $1.5 million. Assets placed in service included phase 1 of future capital opportunity studi es, walk through metal detector replacements, Levy related projects (East Wine Garden, storage/stands upgrades) - and on Golf complex patio improvements, pump house repairs and complex assessment studies.
There has been a change in capital / depreciati on methodology in FY 2022, due to the FY 2021 audit recommendations. The new methodology no longer capitalizes depreciable assets with a useful life of a year or less but recognizes expenses as preventative maintenance on the income statement.
Financials reflect a new accounting standard (GASB 87) which requires balance sheet recognition of leased assets with material over 1 year contract terms.
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Balance Sheet highlights (Continued)
CHANGE IN DEBT
Outstanding debt decreased by $3.0 million during FY 2022 mainly due to principal payments on the 2016 and 2018 Bonds ($3.8 million), one year of the 2016 bond premium amortiza tion ($550,201), one year of the 2018 bond premium amortization ($178,323) net of accreted interest amortization of $1.6 million.
Financials reflect a new accounting standard (GASB87) which requires balance sheet recognition of lease liability recognition for assets with material over 1 year contract terms.
(i) Accreted Interest is a discount rate on bonds amortized over the life of the 2010 bond.
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REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the RBOC’s finances. Questions concerning any of the information provided in this re port, or requests for additional financial information, should be addressed to the Office of the Controller, Rose Bowl Operating Company, 1001 Rose Bowl Dr., Pasadena, California 91103.
ROSE BOWL OPERATING COMPANY
STATEMENT OF NET POSITION
JUNE 30, 2022
See accompanying Notes to Basic Financial Statements.
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Rose Bowl Golf Course Total
Assets:
Current:
Cash and investments 20,155,549 $ 15,956,749 $ 36,112,298 $ Accounts receivable, net of allowance of
$353,141 for the Rose Bowl 5,612,763 348,589 5,961,352
Lease receivable 225,789 - 225,789 Inventory 519 122,378 122,897
Prepaid expenses 344,913 2,660 347,573
Total Current Assets 26,339,533 16,430,376 42,769,909 Noncurrent:
Due from other funds - 625,497 625,497 Due from City of Pasadena 438,830 - 438,830 Cash and investments, restricted 11,188,835 - 11,188,835 Lease receivable 479,042 - 479,042 Capital Assets:
Construction in progress - 970 970 Depreciable capital assets 149,320,201 6,130,782 155,450,983 Total Noncurrent Assets 161,426,908 6,757,249 168,184,157 Total Assets 187,766,441 23,187,625 210,954,066 Deferred Outflows of Resources:
Deferred refunding charge 1,776,732 - 1,776,732 Deferred outflows related to net pension liability 847,666 40,593 888,259 Total Deferred Outflows of Resources 2,624,398 40,593 2,664,991 Liabilities:
Current:
Accounts payable and accrued expenses 3,871,311 2,132,652 6,003,963 Accrued salaries and benefits 570,005 70,583 640,588
Accrued interest payable 3,110,530 - 3,110,530 Due to other funds 625,497 - 625,497 Due to City of Pasadena 1,182,341 350,313 1,532,654
Deposits 377,285 - 377,285
Unearned revenues 4,232,612 65,707 4,298,319
Current portion of long-term advance 100,000 - 100,000 Current portion of long-term liabilities 4,610,414 60,490 4,670,904 Total Current Liabilities 18,679,995 2,679,745 21,359,740 Noncurrent:
Long-term advance 500,000 - 500,000 Long-term liabilities, net of current portion 199,052,866 518,813 199,571,679 Net pension liability 1,326,523 63,525 1,390,048
Total Noncurrent Liabilities 200,879,389 582,338 201,461,727 Total Liabilities 219,559,384 3,262,083 222,821,467 Deferred Inflows of Resources:
Deferred inflows related to leases 694,573 - 694,573 Deferred inflows related to net pension liability 1,157,985 55,454 1,213,439 Total Deferred Inflows of Resources 1,852,558 55,454 1,908,012 Net Position:
Net investment in capital assets (21,564,150) 5,562,297 (16,001,853) Restricted for debt service 11,188,835 - 11,188,835 Unrestricted (20,645,788) 14,348,384 (6,297,404) Total Net Position (31,021,103) $ 19,910,681 $ (11,110,422) $
ROSE BOWL OPERATING COMPANY
STATEMENT OF REVENUES, EXPENSES,
AND CHANGES IN NET POSITION
YEAR ENDED JUNE 30, 2022
See accompanying Notes to Basic Financial Statements.
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Rose Bowl Golf Course Total
Operating Revenues:
Green fees and other golf revenues - $ 6,830,452$ 6,830,452 $ Parking revenue - 765,084 765,084 Advertising revenue 3,303,689 - 3,303,689 Facility rentals and parking revenues 16,211,805 415,350 16,627,155 Concessions 2,493,772 - 2,493,772 Pro shop - 127,246 127,246 Restaurant - 379,412 379,412 Admission tax 376,772 - 376,772 Cost recoveries 7,839,603 107,341 7,946,944 Total Operating Revenues 30,225,641 8,624,885 38,850,526 Operating Expenses:
Salaries and benefits 4,107,243 88,319 4,195,562 General and administrative 5,160,941 664,309 5,825,250 Depreciation 11,658,581 795,821 12,454,402 Capital preventative maintenance 1,150,867 212,353 1,363,220 Events and parking 15,444,444 378,425 15,822,869 Salaries and benefits - events 466,199 27,356 493,555 Green fee and other golf expenses - 4,622,862 4,622,862 Total Operating Expenses 37,988,275 6,789,445 44,777,720 Operating Income (Loss) (7,762,634) 1,835,440 (5,927,194) Nonoperating Revenues (Expenses):
Investment income (loss) (3,840,769) (156,341) (3,997,110) Interest expense (12,275,424) - (12,275,424) Contribution from the City of Pasadena 9,258,005 - 9,258,005 Grant revenues 10,000,000 - 10,000,000 Other nonoperating revenues 5,128,045 47,572 5,175,617 Total Nonoperating Revenues (Expenses) 8,269,857 (108,769) 8,161,088 Changes in Net Position 507,223 1,726,671 2,233,894 Beginning of Year (31,528,326) 18,184,010 (13,344,316) End of Year (31,021,103) $ 19,910,681 $ (11,110,422) $
ROSE BOWL OPERATING COMPANY
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2022
See accompanying Notes to Basic Financial Statements.
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Rose Bowl Golf Course Total
Cash Flows from Operating Activities:
Cash received from customers 16,724,014 $ 7,875,102 $ 24,599,116 $ Cash payments to employees for services (4,309,865) (268,434) (4,578,299) Cash payments to suppliers for goods and services (19,030,014) (4,421,487) (23,451,501) Unrealized loss on investments (4,033,068) (185,971) (4,219,039) Other cash receipts 11,520,064 107,341 11,627,405 Net Cash Provided (Used) by Operating Activities 871,131 3,106,551 3,977,682 Cash Flows from Non-Capital Financing Activities:
Non-capital contributions 21,645,258 47,572 21,692,830 Net Cash Provided by Non-Capital Financing Activities 21,645,258 47,572 21,692,830 Cash Flows from Capital and Related Financing Activities:
Acquisition of capital assets (1,515,381) (16,304) (1,531,685) Payment on advance (100,000) - (100,000) Federal interest subsidy on bonds payable 2,740,792 - 2,740,792 Principal payments on long-term debt (3,866,877) (51,769) (3,918,646) Interest payments on long-term debt (11,069,865) - (11,069,865) Net Cash Used by Capital and Related Financing Activities (13,811,331) (68,073) (13,879,404) Cash Flows from Investing Activities:
Interest received 192,299 29,630 221,929 Net Cash Provided by Investing Activities 192,299 29,630 221,929 Net Increase (Decrease) in Cash and Cash Equivalents 8,897,357 3,115,680 12,013,037 Cash and Cash Equivalents at Beginning of Year 22,447,027 12,841,069 35,288,096 Cash and Cash Equivalents at End of Year 31,344,384$ 15,956,749 $ 47,301,133 $ Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities:
Operating income (loss) (7,762,634) $ 1,835,440 $ (5,927,194) $ Adjustments to Reconcile Operating Income (Loss) to
Net Cash Provided (Used) by Operating Activities:
Depreciation 11,658,581 795,821 12,454,402 Unrealized loss on investments (4,033,068) (185,971) (4,219,039) Change in allowance for doubtful accounts 28,743 - 28,743 (Increase) decrease in accounts receivables (3,221,077) (33,030) (3,254,107) (Increase) decrease in lease receivable 224,266 - 224,266 (Increase) decrease in inventory 342 (108,536) (108,194) (Increase) decrease in prepaid expenses (252,804) 5,142 (247,662) (Increase) decrease in due from other funds - (625,497) (625,497) (Increase) decrease in due from City of Pasadena 16,495 - 16,495 (Increase) decrease in deferred outflows related to pension liability 68,812 (16,344) 52,468 Increase (decrease) in accounts payable and accrued expenses 2,053,499 1,209,543 3,263,042 Increase (decrease) in accrued salaries and benefits (20,408) 30,171 9,763 Increase (decrease) in due to other funds 625,497 - 625,497 Increase (decrease) in due to City of Pasadena 737,160 350,313 1,087,473 Increase (decrease) in deposits payable (626,377) - (626,377) Increase (decrease) in accrued compensated absences (72) (2,886) (2,958) Increase (decrease) in net pension liability (1,388,116) (218,603) (1,606,719) Increase (decrease) in deferred revenue 1,859,654 16,085 1,875,739 Increase (decrease) in deferred inflows related to leases (234,524) - (234,524) Increase (decrease) in deferred inflows related to pension liability 1,137,162 54,903 1,192,065 Net Cash Provided (Used) by Operating Activities 871,131$ 3,106,551 $ 3,977,682 $ Non-Cash Capital and Related Financing Activities:
Purchase of capital assets through lease financing 29,922 $ - $ 29,922 $ Accretion of interest on bonds payable 1,583,125 $ - $ 1,583,125$ Amortization of deferred charge and bond discounts/premiums (347,797) $ - $ (347,797)$
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2022
(25)
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 re sidential 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, 2022
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Note 1: Organization and Summary of Si gnificant Accounting Policies (Continued)
d. Capital Assets (Continued)
The estimated useful lives of the assets are as follows:
Building and improvements 1 - 55 years
Improvements other than building 1 - 95 years
Machinery and equipment 1 - 93 years
e. Cash Equivalents
For the purposes of the statement of cash flows, investments are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insi gnificant risk of changes in value because of changes in interest rates, and have an original maturity date of three months or less.
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, 2022
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Note 1: Organization and Summary of Si gnificant Accounting Policies (Continued)
h. Deferred Outflows/Inflows of Resources (Continued)
1. The deferred outflows relating to the net pension liability reported in the statement of net position. These outflows are the re sults 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 contri butions, 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, 2022
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Note 1: Organization and Summary of Si gnificant Accounting Policies (Continued)
k. Pensions
For purposes of measuring the net pensi on liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Company’s California Public Employees’ Retirement System (CalPERS) Plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit term s. Investments are reported at fair value.
The General Fund has typically been used in prior years to liquidate pension liabilities.
l. Adoption of New Accounting Standards
GASB Statement No. 87, Leases
In June 2017, the GASB issued GASB Statement No. 87, Leases. This standard requires the recognition of certain lease assets and lia bilities for leases that previously were classified as operating leases and as inflow s of resources or outflows of resources recognized based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational pr inciple that leases are financings of the right to use an underlying asset. Under this st andard, a lessee is r equired to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources.
The Company adopted the requirements of the guidance effective July 1, and has applied the provisions of this standard to the beginning of the period of adoption.
Note 2: Cash and Investments
Cash and Investments as of June 30, 2022, are classified in the accompanying financial statements as follows:
Statement of net position:
Cash and investments 36,112,298 $
Cash and investments, restricted 11,188,835
Total cash and investments 47,301,133 $
Cash and investments as of June 30, 2022, consist of the following:
Cash on hand 3,000 $
Deposits with financial institutions 26,390,602
Cash with fiscal agent - deposits 91,966
Investment in the City cash and investment pool 20,815,565 Total cash and investments 47,301,133 $
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
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Note 2: Cash and Investments (Continued)
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.
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, 2022
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Note 2: Cash and Investments (Continued)
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in mark et 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, 2022, 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 20,815,565$ N/A 20,815,565 $ Total 20,815,565 $ 20,815,565 $
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.
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NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
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Note 2: Cash and Investments (Continued)
The California Government Code and the Company’s investment policy do not contain legal or policy requirements that would limit t he exposure to custodial credit risk for deposits or investments, other than the following provision for d eposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure Company deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public dep osits. As of June 30, 2022, $416,062 of the Company’s deposits (bank balances) were insured by the Federal Deposit Insurance Corporation and none were uninsured and uncollateralized.
Fair Value Hierarchy
The Company categorizes its fair value measurements within the fair value hierarchy established by generally accepted accountin g principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are quoted prices for similar assets in active markets; Level 3 inputs are significant unobservable inputs.
The Company’s investments in the City cash and investment pool are not subject to the fair value hierarchy. Further details on the City’s cash and investment pool fair value hierarchy can be found in the City’s Comprehensive Annual Financial Report for the fiscal year ended June 30, 2022.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
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Note 3: Capital Assets
Rose Bowl
Capital Assets activity for the year ended June 30, 2022, is as follows:
Balance at Balance at
July 1, 2021 Balance at
Restated (1) Transfers Additions Deletions June 30, 2022 Capital assets being depreciated
and amortized:
Buildings and improvements 209,232,153$ - $ - $ - $ 209,232,153$ Improvements other than buildings 44,906,019 1,083,315 36,825 - 46,026,159 Machinery and equipment 17,872,958 529,376 - - 18,402,334 Right-to-use lease assets 47,716 - 29,922 - 77,638 Total capital assets being
depreciated and amortized 272,058,846 1,612,691 66,747 - 273,738,284 Less accumulated depreciation
and amortization:
Buildings and improvements (61,911,173) - (7,550,654) - (69,461,827) Improvements other than buildings (36,542,373) - (2,750,332) - (39,292,705) Machinery and equipment (14,305,956) - (1,336,043) - (15,641,999) Right-to-use lease assets - - (21,552) - (21,552) Total accumulated depreciation
and amortization: (112,759,502) - (11,658,581) - (124,418,083) Net depreciable/amortizable assets 159,299,344 1,612,691 (11,591,834) - 149,320,201 Capital assets not depreciated:
Construction in progress 134,135 (1,612,691) 1,478,556 - - Capital assets, net 159,433,479 $ - $ (10,113,278)$ - $ 149,320,201$
Depreciation expense for the year was $11,658,581.
(1) The beginning balance was restated to add right-to-use lease assets due to the implementation of GASB Statement No. 87, Leases. See Note 1l.
Golf Course
Capital asset activity for the year ended June 30, 2022, is as follows:
Balance at Balance at
July 1, 2021 Transfers Additions Deletions June 30, 2022 Capital assets being depreciated:
Buildings and improvements 1,638,524 $ - $ - $ - $ 1,638,524$ Improvements other than buildings 12,077,513 - 16,304 - 12,093,817 Machinery and equipment 1,634,532 - - - 1,634,532 Total depreciable capital assets 15,350,569 - 16,304 - 15,366,873 Less accumulated depreciation:
Buildings and improvements (1,130,062) - (43,831) - (1,173,893) Improvements other than buildings (6,518,173) - (649,712) - (7,167,885) Machinery and equipment (792,035) - (102,278) - (894,313) Total accumulated depreciation (8,440,270) - (795,821) - (9,236,091) Net depreciable assets 6,910,299 - (779,517) - 6,130,782 Capital assets not depreciated:
Construction in progress 970 - - - 970 Capital assets, net 6,911,269 $ - $ (779,517)$ - $ 6,131,752$
Depreciation expense for the year was $795,821.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
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Note 4: Lease Receivables
The Company, acting as lessor, leases land under a long-term, noncancelable, multi-party, contract. The lease expires on June 30, 2025. During the year ended June 30, 2022, the Company recognized $231,524 and $3,212 in lease revenue and interest revenue, respectively, pursuant to this contract.
Note 5: Long-Term Liabilities
Rose Bowl
Long-term liabilities for the year ended June 30, 2022, are as follows:
July 1, 2021, Additions/ Deletions/ Balance at Due in
as Restated (1) Accretions Amortizations June 30, 2022 One Year 2010A Tax-Exempt Lease
Revenue Bonds:
Capital Appreciation Bonds 23,282,536 $ 1,583,125 $ 24,865,661$ -$ 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 - 1,980,000 19,885,000 2,255,000 2016A Bond Premium 3,163,665 - 550,202 2,613,463 - 2018A Tax-Exempt Lease Revenue
Bonds 30,585,000 - - 30,585,000 - 2018A Bond Premium 4,068,204 - 184,919 3,883,285 - 2018B Taxable Lease Revenue
Bonds 9,405,000 - 1,865,000 7,540,000 2,155,000 2018B Bond Discount (46,170) - (6,596) (39,574) - Subtotal - Bonded Long-Term
Liabilities 206,383,235 1,583,125 4,573,525 203,392,835 4,410,000 Leases Payable 47,716 29,922 21,877 55,761 23,847 Compensated Absences 214,756 176,554 176,626 214,684 176,567 Total Long-Term Liabilities 206,645,707 $ 1,789,601 $ 4,772,028 $ 203,663,280 $ 4,610,414 $
(1) The beginning balance was restated to add leases payable due to the implementation of GASB Statement No. 87, Leases. See Note 1l.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
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Note 5: Long-Term Liabilities (Continued)
2010 Rose Bowl Lease Revenue Bonds
On November 18, 2010, the City of Pasadena issued four series of lease revenue bonds, Series 2010A through D (Rose Bowl Renovation Project) in the aggregate amount of $155,873,265. Series A in the amount of $36,808,265 contained $25,220,000 of current interest bonds maturing between fiscal year 2019-2020 and fiscal year 2026-2027, with the remaining $11,588,265 in the form of capital app reciation bonds maturing serially from fiscal year 2026-2027 to 2032-2033. Series B contai ned $106,660,000 of taxable Build America Bonds. These bonds are in two coupons, the initial series maturing during fiscal year 2033-2034 and the final maturing during fiscal year 2042-2043. Series C contained $5,005,000 of taxable bonds which have fully ma tured as of fiscal year 2019-2020. Finally, Series D contained $7,400,000 of taxable Recovery Zone Economic Development Bonds that have one maturity during fiscal year 2042-2043. The bonds, except for the capital appreciation bonds in Series 2010A, commenced interest payments on March 1, 2011, and are payable semiannually. The Company received $154,878,301 of the proceeds from the bonds. The bonds were issued to finance improvements to the Rose Bowl Stadium, to fund capitalized interest on a por tion of the 2010 Bonds, to fund a Bond Reserve Fund, and to pay the costs of issuance of the 2010 Bonds. Renovations of the existing Rose Bowl Stadium are proposed to continue to allow use by the UCLA Bruins football team, the Rose Bowl Game, Bowl Championship Series (BCS) games, soccer matches, concerts, and special events as well as to bring certain building systems up to current City Building Code requirements and improve public safety.
The 2010B bonds were issued for purposes of the American Recovery and Reinvestment Act of 2009 signed into law on February 17, 2009 (the Recovery Act). Pursuant to the Recovery Act, the City expects to receive a cash subsidy payment from the United States Treasury equal to 35% of the interest payable by the City on or about each interest payment date. The cash payment does not constitute a full faith and credit guarantee of the United States Government but is required to be paid by the Treasury under the Recovery Act. Any cash subsidy payments received by the City do not constitute revenues that can offset interest expense and are not pledged under the indenture to secure the 2010 bonds.
The 2010D bonds were issued for purposes of the Recovery Act. Pursuant to the Recovery Act, the City expects to receive a cash subsidy pay ment from the United States Treasury equal to 45% of the interest payable by the City on or about each interest payment date. The cash payment does not constitute a full faith and credit guarantee of the United States Government but is required to be paid by the Treasury under the Recovery Act. Any cash subsidy payments received by the City do not c onstitute revenues that can offset interest expense and are not pledged under the indenture to secure the 2010 bonds.
For the year ended June 30, 2022, the Treasury made subsidy payments totaling $2,740,792 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, 2022
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Note 5: Long-Term Liabilities (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, 2022, are as follows:
June 30 Series A Series B Series D Interest Total
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 2,095,000 - - 8,138,391 10,233,391 2028-2032 33,875,000 - - 40,691,955 74,566,955 2033-2037 5,955,000 37,605,000 - 36,628,988 80,188,988 2038-2042 - 61,525,000 - 19,124,117 80,649,117 2043 - 7,530,000 7,400,000 1,067,196 15,997,196 Total 41,925,000 106,660,000 $ 7,400,000 $ 138,204,211 $ 294,189,211 $ Less: Future Accretion (17,059,339)
24,865,661$
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 t he 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, 2022
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Note 5: Long-Term Liabilities (Continued)
2016 Rose Bowl Lease Revenue Bonds (Continued)
The balance outstanding at June 30, 2022 is comprised of the principal amount of $19,885,000, plus unamortized deferred bond premium of $2,613,463, for a total of $22,498,463.
The annual debt service requirements for the 2016 Lease Revenue Bond as of June 30, 2022, is as follows:
June 30 Principal Interest Total
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 19,885,000 $ 3,146,750 $ 23,031,750 $
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, 2022 is comprised of the principal amount of $30,585,000, plus unamortized deferred b ond premium of $3,883,285, for a total of $34,468,285.
The Series 2018B balance outstanding at June 30, 2022 is comprised of the principal amount of $7,540,000, plus unamortized deferred bo nd discount of ($39,574), for a total of $7,500,426.
The annual debt service requirements for t he 2018 Lease Revenue Bonds as of June 30, 2022, are as follows:
June 30 Series A Series B Interest Total
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 - 1,425,000 1,596,713 3,021,713 2028-2032 6,730,000 1,215,000 6,987,763 14,932,763 2033-2037 9,665,000 - 4,791,375 14,456,375 2038-2042 9,105,000 - 2,140,125 11,245,125 2043 5,085,000 - 64,625 5,149,625 Total 30,585,000 $ 7,540,000 $ 22,361,954 $ 60,486,954 $ Principal Payments
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
(37)
Note 5: Long-Term Liabilities (Continued)
Pledge of Rose Bowl 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 $377,707,915. Principal and interest paid for the current year and total net revenues were $14,896,741 and $30,225,641, respectively.
Rose Bowl Leases Payable
The Company leases equipment for various terms under long-term, noncancelable lease agreements. The leases expire at various dates through October 2024.
Total future minimum lease payments under lease agreements are as follows:
Principal Interest Total
2023 23,847$ 141 $ 23,988$
2024 23,922 66 23,988
2025 7,992 5 7,997
Total minimum lease payments 55,761$ 212 $ 55,973$
Golf Course
Long-term liabilities for the year ended June 30, 2022, are as follows:
Balance at Additions/ Deletions/ Balance at Due in
July 1, 2021 Accretions Amortizations June 30, 2022 One Year Lease Payable 621,224 $ - $ 51,769$ 569,455 $ 51,769 $ Compensated Absences 12,734 8,390 11,276 9,848 8,721 Total Long-Term Liabilities 633,958 $ 8,390 $ 63,045 $ 579,303 $ 60,490 $
Lease Payable
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.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
(38)
Note 6: Net Position
Net position for the Rose Bowl Stadium at June 30, 2022, consisted of the following:
Net investment in capital assets:
Property, plant, and equipment, net 149,320,201 $
Less:
Net carrying value of capital-related debt (170,764,128) Accounts payable on capital assets (120,223)
Total net investment in capital assets (21,564,150)
Restricted for debt service 11,188,835
Unrestricted net deficit (20,645,788)
Total net position (31,021,103) $
Net position for the Golf Course at June 30, 2022, consisted of the following:
Net investment in capital assets:
Property, plant, and equipment, net 6,131,752 $
Less:
Outstanding debt issued to construct capital assets (569,455) Accounts payable on capital assets -
Total net investment in capital assets 5,562,297
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 13,252,964
Total unrestricted net position 14,348,384
Total net position 19,910,681 $
Note 7: 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.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
(39)
Note 7: Defined Benefit Pension Plan (Continued)
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. The PEPRA Plan of the Compan y went into effect during the fiscal year ending June 30, 2014.
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 12.20% 7.59%
Required employer unfunded liability payment 275,768 $ 4,018 $ * Closed to new entrants.
Contribution Description:
Section 20814(c) of the California Public Empl oyees’ 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, 2022, the Company made contributions to the Plans totaling $593,271.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
(40)
Note 7: Defined Benefit Pension Plan (Continued)
Pension Liabilities (Assets), P ension Expenses and Deferred Outflows/Inflows of Resources Related to Pension
As of June 30, 2022, the Company reported a net pension liability for its proportionate share of the net pension liability of each Plan of $1,390,048.
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, 2021, 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, 2020, rolled forward to June 30, 2021, 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, 2020 and 2021, was as follows:
Miscellaneous
Proportion - June 30, 2020 0.07105%
Proportion - June 30, 2021 0.07321%
Change - Increase (Decrease) 0.00216%
For the year ended June 30, 2022, the Co mpany recognized pension expense of $231,085 for the Plans. At June 30, 2022, 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 593,271 $ - $
Difference between expected and actual
experience 155,879 -
Changes in assumptions - -
Net difference between projected and actual
earnings on pension plan investments - (1,213,439) Changes in proportion and difference between
employer contributions and proportionate share of
contributions 139,109 -
Total 888,259 $ (1,213,439) $
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
(41)
Note 7: Defined Benefit Pension Plan (Continued)
The $593,271 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year 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
2023 (138,094) $
2024 (188,076)
2025 (256,950)
2026 (335,331)
Total (918,451) $
Actuarial Assumptions
For the measurement period ended June 30, 2021 (the measurement date), the total pension liability was determined by rolling forward the Ju ne 30, 2020, total pension liability. The June 30, 2020 and the June 30, 2021, 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.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
(42)
Note 7: Defined Benefit Pension Plan (Continued)
All other actuarial assumptions used in the June 30, 2020 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, 2021, there were no changes of assumptions.
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, actu arially 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 benef its 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.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
(43)
Note 7: Defined Benefit Pension Plan (Continued)
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.
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) 3,292,145 $ 1,390,048 $ (182,388) $
Note 8: 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, 2022, was $600,000. 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 9: 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 Pa sadena as additional insured on their policies.
See the City of Pasadena’s financial statements for further details.
ROSE BOWL OPERATING COMPANY
NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2022
(44)
Note 10: 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.
Note 11: 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 $1,839,368 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 $2,750,000 and Golf utilities totaling $1,314,268. At June 30, 2022, amounts payable to the City totaled $1,532,654.
During the current year, the City contributed $9,258,005 to the Company by making payments towards the debt service requirement s of the bonds described in Note 5 on behalf of the Company.
In addition, at June 30, 2022, Company has amo unts receivable from the City related to the 2006 bond refunding in the amount of $438,830, which will be received through annual payments from the City through 2043.
Note 12: Commitments and Contingencies
Grant Programs
The Company has received intergovernmental grant revenues in the current year ($10,000,000 through the shuttered venue oper ating grant from the U.S. Small Business Administration). The use of these grant revenu es is subject to further examination by the grantors, and the amount, if any, of expenses which may be disallowed by the granting agencies cannot be determined at this time. The Company expects such amounts, if any, to be immaterial.
Management Agreement
As a part of the Company’s management agreement with American Golf Corporation, the Company may be required to return up to $6 00,000 of capital contributions previously received from AGC, if the management agreement were to be terminated prior to the end of the stated term in June 2028.
ROSE BOWL OPERATING COMPANY
SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
CALPERS MISCELLANEOUS PENSION PLAN
Last Ten Years*
(45)
Fiscal year ended June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 Measurement period June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 Plan's proportion of the net pension liability 0.07321% 0.07105% 0.06964% 0.06867% Plan's proportionate share of the net
pension liability 1,390,048 $ 2,996,767 $ 2,788,864 $ 2,587,867 $ Plan's covered payroll 2,655,214 $ 3,273,956 $ 3,083,082 $ 2,798,456 $ Plan's proportionate share of the net
pension liability as a percentage of its
covered - payroll 52.35% 91.53% 90.46% 92.47%
Plan's proportionate share of the fiduciary
net position as a percentage of the Plan's
total pension liability 90.35% 76.58% 75.26% 77.69%
Plan's proportionate share of aggregate
employer contributions 511,956 $ 437,821 $ 355,030 $ 302,458 $ Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Changes in Assumptions:
From fiscal year June 30, 2015 to June 30, 2016
For fiscal year ended June 30, 2017:
There were no changes in assumptions.
For fiscal year ended June 30, 2018:
The discount rate was reduced from 7.65% to 7.15%.
For fiscal year ended June 30, 2019:
For fiscal years ended June 30, 2020, 2021, and 2022:
There were no changes in assumptions.
* Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation, therefore, only eight 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 adm inistrative 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*
(46)
Fiscal year ended June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Measurement period June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Plan's proportion of the net pension liability 0.06821% 0.067 66% 0.07266% 0.02717% Plan's proportionate share of the net
pension liability 2,688,676 $ 2,350,455 $ 1,993,478 $ 1,690,891 $ Plan's covered payroll 2,583,602 $ 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 104.07% 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 7 5.39% 75.87% 78.40% 76.63%
Plan's proportionate share of aggregate
employer contributions 262,966 $ 410,605 $ 211,985 $ 103,894 $
ROSE BOWL OPERATING COMPANY
SCHEDULE OF THE PLAN CONTRIBUTIONS – MISCELLANEOUS COST SHARING PLAN
Last Ten Years*
(47)
Fiscal year ended June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 Contractually required contribution
(actuarially determined) 593,271 $ 513,532 $ 537,091 $ 470,264 $ Contributions in relation to the actuarially
determined contributions (593,271) (513,532) (537,091) (470,264) Contribution deficiency (excess) - $ - $ - $ - $ Covered payroll 3,209,344 $ 2,655,214 $ 3,273,956 $ 3,083,082 $ Contributions as a percentage of covered
payroll 18.49% 19.34% 16.40% 15.25%
Notes to Schedule:
Valuation Date 6/30/2019 6/30/2018 6/30/2017 6/30/2016
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 2.50% 2.50% 2.63% 2.75%
Salary increases (2) (2) (2) (2)
Investment rate of return 7.00% (3) 7.00% (3) 7.25% (3) 7.375% (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 eight years are shown.
ROSE BOWL OPERATING COMPANY
SCHEDULE OF THE PLAN CONTRIBUTIONS – MISCELLANEOUS COST SHARING PLAN (CONTINUED)
Last Ten Years*
(48)
Fiscal year ended June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution
(actuarially determined) 403,984 $ 371,534 $ 317,561 $ 324,587 $ Contributions in relation to the actuarially
determined contributions (403,984) (371,534) (317,561) (324,587) Contribution deficiency (excess) - $ - $ - $ - $ Covered payroll 2,798,456 $ 2,583,602 $ 2,373,593 $ 1,922,101 $ Contributions as a percentage of covered
payroll 14.44% 14.38% 13.38% 16.89%
Notes to Schedule:
Valuation Date 6/30/2015 6/30/2014 6/30/2013 6/30/2012
Methods and Assumptions Used to
Determine
Contribution Rates:
Actuarial cost method Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1)
Asset valuation method Market Value Market Value Market Value 15 Year Smoothed
Market Method
Inflation 2.75% 2.75% 2.75% 2.75%
Salary increases (2) (2) (2) (2)
Investment rate of return 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement age (4) (4) (4) (4)
Mortality (5) (5) (5) (5)
(49)
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, 2022 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 January 12, 2023.
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.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.
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. We consider the deficiency descri bed in the accompanying schedule of findings and questioned costs as item 2022-001 to be a material weakness.
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
Board of Directors
Rose Bowl Operating Company
(50)
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. We consider the deficiency descri bed in the accompanying schedule of findings and questioned costs as item 2022-002 to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether 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.
Company’s Response to Finding
The City’s response to the findings identified in our audit are described in the accompanying schedule of findings. The City’s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.
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
January 12, 2023
Board of Directors
Rose Bowl Operating Company
(51)
Rose Bowl Operating Company
Schedule of Findings
Year Ended June 30, 2022
2021– 001
T
ype of Finding: Material Weakness in Internal Control over Financial Reporting Condition: During our review of grant revenues, we noted that revenue in the amount of $700,000 on cost reimbursement-type grants had been recognized though no allowable expenditures under the grants had been incurred.
Criteria or specific requirement: Revenue on cost reimbursement-type grants should be recognized once allowable expenditures under the grants have been incurred.
Effect: This resulted in a material audit adjustment to adjust for an overstatement of grant revenue and receivables.
Cause: Grant revenues from reimbursement-type gr ants had not been recognized in the Company’s recent past so they were unaware of the revenue recognition requirements of the grants.
Recommendation: We recommend that the Company research and consult, as necessary, when accounting for transactions which they are not familiar with.
Views of responsible officials and planned corrective actions:
RBOC grant application and experience history has been limited. During the 2021 year end close RBOC was not going to recognize $10M in the SVOG grant. In consultation with CLA, RBOC recognized the $10M in 2021; and after additional consultation with CLA the grant entry was reversed as the award date was after fiscal 2021 year end.
RBOC received award letters for the Save America’s Treasures grant (award for period duration 09/01/2021 to 09/30/2024) and California State Nonprofit Security Grants Program (award period duration 01/01/22 to 12/31/23). During the current year, RBOC recorded the grants as revenue as their award period encompassed 06/30/22. However, since the allowable expenditures had not been incurred during Fiscal 2022 the conditions to recognize the grant were not fully met; therefore, the entry needed to be reversed.
In future years RBOC intends on consulting prior to recording unusual and unfamiliar transactions. As related to grants, RBOC will assure that the grant award and allowable expenditures are incurred in the audited fiscal year for the grant revenue recognition to occur.
Board of Directors
Rose Bowl Operating Company
(52)
2021– 002
T
ype of Finding: Significant Deficiency in Internal Control over Financial Reporting Condition: During our review of balances due to the Company’s golf course operator, we noted that the balance was blended with interfund balances and that an amounts due to golf course operator had not been fully reconciled. Additionally, we noted that the allocation of net pension liability allocated to the golf fund was overstated.
Criteria or specific requirement: As a part of internal control procedures over financial close and reporting, the Company should ensure that account balances are reconciled and reviewed for reasonableness.
Effect: Interfund balances of $625,497 were blended within balances due and from the operator of the golf course, and the allocation of net pension liability between the stadium and golf course operation was misstated by approximately $170,000.
Recommendation: We recommend that the Company reconcile its balances between funds and the golf operator on a regular basis to ensure that they are reported accurately and to ensure that reconciling items are cleared on a timely basis. We further recommend that, as a part of its closing procedures, the Company perform a review of its financial statements for reasonableness of account balances.
Views of responsible officials and planned corrective actions:
Interfund balance of $625,497: In
December of 2021 AGC made an accounting software change and experienced staff turnover which significantly impacted reporting and reconciliation to the RBOC. This caused delays and difficulties for RBOC review of interfund balances and accounts reconciliations reported by AGC. RBOC worked diligently to understand the interfund balances for reconciliation purposes.
RBOC remediation plan is to set a recurring statement review process and reconciliation with AGC.
Golf Course / Stadium operation allocation on pension liability $170,000: RBOC remediation plan is to use the General Ledger expense allocation as a check point to assure the model output is in line with the annual CalPERS allocations between the Golf and Stadium.