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▪ The encroachment may conflict with RMC 12.30.190(a)(2)(J)(i).1 This section requires that a four (4)-foot area of space be allocated for a sidewalk. However, the encroachment may be considered permissible due to the conditions of the site and the potential complications of building a sidewalk on such an extreme slope. Creating an acceptable refuge area for pedestrians will be addressed in the encroachment agreement conditions should Council approve this item.2 BE IT FURTHER RESOLVED THAT all the required findings have been met, and the City Council hereby: 1) approves the Encroachment Agreement it directed City staff to enter into with title of record property holders at 130 E. Scenic Avenue in Richmond, California for a private landowner encroachment into the unimproved Public ROW; and 2) reaffirms its decision within Resolution 20-23 that the encroachment meets the requisite findings pursuant to RMC
12.30.190(a)(1)(A-G).
BE IT ALSO RESOLVED THAT this Resolution takes effect immediately upon its adoption.
SECTION 4. Severability. If any section, subsection, sentence, clause or phrase of this Resolution is for any reason held by a court of competent jurisdiction to be invalid, such decision shall not affect the validity of the remaining portions of this Resolution. The City Council declares that is would have passed this Resolution and each section, subsection, sentence, clause and phrase thereof, irrespective of the fact that any one or more section, subsection, sentence, clause, or phrase be declared invalid.
-----------------------------------
I hereby certify that the foregoing Resolution of the Council of the City of Richmond was duly passed and adopted at a meeting thereof held March 21, 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTENTION:
___________PAMELA CHRISTIAN___________
1 On February 21st, the paragraph directly above cited RMC 12.30.180(a)(2)(J)(i), which was a scrivener’s error. The correct citation is RMC 12.30.190(a)(2)(J)(i).
2 The City Council subsequently approved this item by adoption of Resolution 20-23 on February 21, 2023.
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CLERK OF THE CITY OF RICHMOND
Approved:
Mayor
Approved as to form:
City Attorney
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Application for Encroachment into unimproved Public ROW To: Robert Armijo – Richmond City Engineer 2/1/23
From: Owner/Builder-Eli Berland
Contractor- Eli Berland
130 East Scenic Ave.
Richmond CA 94801
734.834.3093
To Whom it may concern,
I Would like to build a Wood and Metal Fence in the public ROW in front of our home (130 East Scenic). Our home and our next-door neighbor’s homes were built around 2005 and have modern architecture. The street and surrounding area are quite lush and filled with trees and blackberry thicket. I Have chosen to build the fence from natural wood with a clear finish to blend in with the surrounds, and steel posts painted Red to alert Pedestrians and Vehicles of the fence. The Fence design is modern, matching the aesthetics of the fence to the surrounding architecture.
The Road in Front of our house is parallel to and above the entry path to our home. I am hoping to create a barrier between the Road and our path with this fence. I am concerned for the safety of my family and friends that use this path regularly. Currently, there is nothing protecting people who are walking on my property from a car coming off the road above crashing down into my property. The fence will be a guardrail.
Another purpose of this fence will be to create a safer space for pedestrians to walk on.
There is no safe area for people to walk now unless they are on the road. This can be problematic when a car is coming. The fence would allow for a refuge area for pedestrians to step off the road without falling down the steep hill and allow cars to pass in a safe manner.
The Final purpose of this fence is create some privacy for my family. Our house is quite close to the road, and it is very easy for people to peer into our bedrooms. It would be nice to have a little separation between onlookers and our bedrooms. We also have many deer that frequent the area. Often they come into our yard and eat our roses. It would be nice to keep them out so we can enjoy our garden, and this fence would achieve that purpose.
The area where we would like to build the fence is very steep, and narrow. These unique conditions restrict the width of clearance we can provide to 13’ from the far side of the road to the inside of the fence. Although we maintain the requested 3’ setback from the road in most cases, It is not possible to achieve at all areas due to the hillside dropping off to a steep slope. In order for our posts to be set in concrete, we need relatively flat ground to dig post
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holes. If the Posts are set any further down the hill than we have proposed, it will make installation almost impossible, our post locations are limited by the current site conditions.
The project will commence on 3/1/23, should last for 2 weeks. All materials, and equipment needed will be stored off of the street. The street will remain clear for the duration of Work. When unloading materials and for minimal periods of time( no longer than 30mins) or while working just off of the street, we will have flaggers, and construction signs posted alerting oncoming traffic and pedestrians.
Please see attached documentation for items 6, 7 and 9.
I appreciate your consideration and time.
Eli Berland
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Application For Encorachment Agreement
Applicant - Eli Berland -130 E.Scenic Ave
Phone -734-834-3093
Project - Proposed new fence off road to
create a safe refuge for pedestrians.
Start Date:
Completion Date:
Public Hearing Date:
Copy of application available - call above
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10494 Closure Calculation.doc 5/24/2022
MORAN ENGINEERING, INC.
1930 Shattuck Avenue
Berkeley, CA 94704
(510) 848-1930
BOUNDARY CLOSURE CALCULATIONS
Address: 130 East Scenic Avenue, Richmond
APN: 556-163-006
Parcel A
North: 10000.0000 East : 10000.0000
Line Course: S 78-14-52 W Length: 14.60
North: 9997.0263 East : 9985.7061
Line Course: N 44-03-38 W Length: 5.00
North: 10000.6193 East : 9982.2290
Line Course: S 45-56-22 W Length: 0.48
North: 10000.2855 East : 9981.8840
Line Course: S 70-35-25 W Length: 0.91
North: 9999.9831 East : 9981.0257
Line Course: S 12-09-03 E Length: 29.86
North: 9970.7920 East : 9987.3109
Line Course: S 33-22-04 E Length: 3.57
North: 9967.8105 East : 9989.2744
Line Course: N 80-01-26 E Length: 1.42
North: 9968.0565 East : 9990.6729
Line Course: S 15-39-15 E Length: 11.46
North: 9957.0216 East : 9993.7652
Line Course: S 21-11-18 E Length: 21.01
North: 9937.4319 East : 10001.3589
Line Course: S 27-47-55 E Length: 20.87
North: 9918.9705 East : 10011.0920
Line Course: S 33-48-06 E Length: 39.23
North: 9886.3716 East : 10032.9164
Line Course: N 69-05-15 E Length: 8.86
North: 9889.5341 East : 10041.1928
Line Course: S 59-29-08 E Length: 12.85
North: 9883.0095 East : 10052.2630
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10494 Closure Calculation.doc 5/24/2022
Line Course: N 34-19-00 W Length: 60.50
North: 9932.9785 East : 10018.1552
Line Course: N 15-09-00 W Length: 69.44
North: 10000.0051 East : 10000.0073
Perimeter: 300.07 Area: 1,952 sq. ft.
Mapcheck Closure - (Uses listed courses, radii, and deltas) Error Closure: 0.0089 Course: N 54-55-37 E
Error North: 0.00509 East : 0.00725
--------------------------------------------------------------------------- Parcel B
North: 9876.8896 East : 10077.5116
Line Course: N 77-19-00 W Length: 24.68
North: 9882.3084 East : 10053.4338
Line Course: S 58-33-52 E Length: 26.47
North: 9868.5032 East : 10076.0188
Line Course: N 45-25-13 E Length: 16.47
North: 9880.0636 East : 10087.7499
Line Course: N 08-03-30 W Length: 17.22
North: 9897.1135 East : 10085.3360
Line Course: S 21-08-00 W Length: 21.69
North: 9876.8823 East : 10077.5159
Perimeter: 106.53 Area: 237 sq. ft.
Mapcheck Closure - (Uses listed courses, radii, and deltas) Error Closure: 0.0085 Course: S 30-32-13 E
Error North: -0.00728 East : 0.00430
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1 Robert Armijo
From: eli berland <[email protected]>
Sent: Monday, February 6, 2023 4:43 PM
To: Robert Armijo
Cc: William Berland; Stephanie Vollmer
Subject: Fwd: Fence Pics
This email originated from outside of the City's email system. Do not open links or attachments from untrusted sources.
Robert,
Please see attached pics to accompany application.
Best
Eli
Eli Berland
Principal
734.834.3093
www.berland-design.com
653 S. 31st ST. Richmond CA 94804
Begin forwarded message:
From: Sean Casper <[email protected]>
Date: February 6, 2023 at 3:58:31 PM PST
To: Eli Berland <[email protected]>
Subject: Fence Pics
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March 21, 2023
Finance Department
DATE: March 21, 2023
TO: Mayor Martinez and Members of the City Council
FROM: Nickie Mastay, Deputy City Manager, Internal Services Mubeen Qader, Deputy Director of Finance
Jerry Chak, Accounting Manager
Subject: City of Richmond Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022
FINANCIAL IMPACT: There is no fiscal impact to receiving this report.
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
The City retains an independent auditor to annually
review and express an opinion regarding the accurate
representation of the City’s financial statements.
RECOMMENDED ACTION: RECEIVE a report on the City’s Annual Comprehensive Financial Report (ACFR) for Fiscal Year 2021-2022 –
Finance Department (Nickie Mastay/Mubeen Qader/Jerry
Chak 510-620-6569).
DISCUSSION:
The Finance Department issued a Request for Proposals (RFP) to select firms of certified public accountants to audit the City of Richmond’s (City) financial statements and financial statements of component entities, including the Richmond Housing Authority (RHA), for the fiscal years ending June 30, 2020 through June 30, 2022, with an option to extend the contract in one-year periods, not to exceed a total of two additional fiscal years. Based on the RFP and interview rating matrixes, Badawi & AGENDA
REPORT
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March 21, 2023
Associates scored the highest points and was selected as our external auditors. On March 17, 2020, City Council approved a contract with Badawi & Associates.
The Annual Comprehensive Financial Report (ACFR) is a set of financial statements comprising the financial report of the City. State law requires that every general-purpose local government publish an annual report on its financial position and activity, and that the report be audited by an independent firm of certified public accountants. Since the ACFR is audited by an independent expert, the report provides additional assurance to the community that the City is being a responsible steward of the community’s tax dollars.
The ACFR is prepared in accordance with generally accepted accounting procedures (GAAP) for local governments as established by the Governmental Accounting Standards Board (GASB). The report is designed to highlight changes in the City’s financial condition and practices over time and to allow consistencies between all state, municipal, and other governmental agencies.
Badawi & Associates have audited financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City for the fiscal year ending June 30, 2022, and the related notes to the financial statements.
For the fiscal year ending June 30, 2022, Badawi & Associates did not audit RHA. Maze and Associates, external auditors for RHA, are completing the financial audit for the fiscal year ending June 30, 2019, by the end of this current fiscal year. Once that audit has been completed, Badawi & Associates will complete the RHA audit for the fiscal year ending June 30, 2020, and subsequent years.
Comprehensive Audit Report) states:
Disclaimer of Opinion on Business-Type Activities, Aggregated Discretely Presented Component Units and Richmond Housing Authority “Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements of the business-type activities, Richmond Housing Authority Enterprise Fund, and the aggregate discretely presented component units of the City. Accordingly, we do not express an opinion on these financial statements.”
Basis for Disclaimer of Opinion
“The financial statements of the Richmond Housing Authority and RHA Properties, RHA Housing Corporation and RHA RAD LLC have not been audited for the year ended June 30, 2022. The Richmond Housing Authority’s financial activities are included in the City’s basic financial statements as a major enterprise fund and
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March 21, 2023
represent 8.22 percent, 21.42 percent, and 6.47 percent of the assets, net position, and revenues, respectively, of the City’s business-type activities. The financial activities of the RHA Properties, RHA Housing Corporation, and RHA RAD LLC are included in the City’s financial activities as discretely presented component units and represent the City’s only discretely presented component units.” Unmodified Opinions on Governmental Activities, Major Governmental Funds, Port of Richmond, Municipal Sewer Fund and Aggregate Remaining Fund Information
In Badawi & Associates’ opinion, the financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the General Fund, The Community Development and Loan Programs Special Revenue Fund, the Port of Richmond Enterprise Fund, the Municipal Sewer Enterprise Fund and the aggregate remaining fund information of the City as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Unmodified 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 Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City 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.” DOCUMENTS ATTACHED:
Attachment 1 – City of Richmond Annual Comprehensive Financial Report for the year ended June 30, 2022
Attachment 2 – Badawi & Associates fiscal year 2022 Presentation to City Council
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Richmond California
The City of
Annual
Comprehensive
Financial Report
For The Year Ended June 30, 2022
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City of Richmond
California
Annual Comprehensive
Financial Report
Fiscal Year Ended June 30, 2022
Prepared by the Finance Department
Delmy Cuellar
Director of Finance/Treasurer
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City of Richmond
Annual Comprehensive Financial Report
For the year ended June 30, 2022
Table of Contents
Page
INTRODUCTORY SECTION
Table of Contents ............................................................................................................................................................ i Letter of Transmittal ...................................................................................................................................................... v Organizational Chart .................................................................................................................................................... xi List of Elected and Appointed Officials .................................................................................................................... xii
FINANCIAL SECTION
Independent Auditor’s Report ................................................................................................................................... 1 Management’s Discussion and Analysis .................................................................................................................. 7 Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position ..................................................................................................................................... 26 Statement of Activities .......................................................................................................................................... 28 Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet – Governmental Funds ............................................................................................................. 33 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position .............................................................................................................................. 34 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds .................................................................................................................. 35 Reconciliation of the Governmental Funds Statement of Revenue, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ...................................... 36 Proprietary Fund Financial Statements:
Statement of Net Position – Proprietary Funds ............................................................................................. 38 Statement of Revenues, Expenses and Changes in Fund
Net Position – Proprietary Funds ................................................................................................................. 40 Statement of Cash Flows – Proprietary Funds ............................................................................................... 42 Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Position – Fiduciary Funds ............................................................................... 45 Statement of Changes in Fiduciary Net Position – Fiduciary Funds .......................................................... 46 Notes to Basic Financial Statements ................................................................................................................... 49 i
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City of Richmond
Annual Comprehensive Financial Report
For the year ended June 30, 2022
Table of Contents
Page
Required Supplemental Information:
Budget and Budgetary Accounting ...................................................................................................................... 169 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:
General Fund ....................................................................................................................................................... 170 Community Development and Loan Programs Special Revenue Fund ..................................................... 171 Schedule of Changes in the Net Pension Liability and Related Ratios – Miscellaneous Plan ........................... 172 Schedule of Contributions – Miscellaneous Plan ........................................................................................................ 174 Schedule of Changes in the Net Pension Liability and Related Ratios – Safety Plan ....................................... 176 Schedule of Contributions – Safety Plan ............................................................................................................... 178 Schedule of Changes in the Net Pension Liability and Related Ratios:
General Pension Plan ..................................................................................................................................................... 180 Police and Firemen’s Pension Plan ..................................................................................................................... 182 Garfield Pension Plan .......................................................................................................................................... 184 Schedule of Contributions:
General Pension Plan ........................................................................................................................................... 186 Police and Firemen’s Pension Plan ............................................................................................................................. 186 Garfield Pension Plan .......................................................................................................................................... 186 Schedule of Investment Returns:
Police and Firemen’s Pension Plan ..................................................................................................................... 187 General Pension Plan ..................................................................................................................................................... 187 Garfield Pension Plan .......................................................................................................................................... 187 Other Post-Employment Benefits Plan Schedules - OPEB Plan:
Schedule of Changes in the Net OPEB Liability and Related Ratios ........................................................... 188 Schedule of Plan Contributions ......................................................................................................................... 190 Schedule of Investment Returns ........................................................................................................................ 190 Other Post-Employment Benefits Plan Schedules -RPOA Plan:
Schedule of Changes in the Net OPEB Liability and Related Ratios ........................................................... 192 Schedule of Plan Contributions ......................................................................................................................... 193 Supplementary Information:
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet – Nonmajor Governmental Funds ....................................................................... 200 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds ....................................................................................... 204 ii
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City of Richmond
Annual Comprehensive Financial Report
For the year ended June 30, 2022
Table of Contents
Page
Supplementary Information (Continued):
Schedules of Revenue, Expenditures, and Changes in Fund Balance – Budget and Actual:
Nonmajor Governmental Funds:
State Gas Tax Fund .......................................................................................................................................... 208 General Purpose Fund ..................................................................................................................................... 209 Paratransit Operations Fund .......................................................................................................................... 210 Employment and Training Fund ................................................................................................................... 211 Public Safety Fund ........................................................................................................................................... 212 Lighting and Landscaping Districts Fund .................................................................................................... 213 Developer Impact Fees Fund .......................................................................................................................... 214 Secured Pension Override Fund .................................................................................................................... 215 Richmond Neighborhood Stabilization Corporation Fund ....................................................................... 216 Rent Control Fund ........................................................................................................................................... 217 Cost Recovery Fund ......................................................................................................................................... 218 Environmental and Community Investment Agreement Fund ................................................................ 219 American Rescue Plan Act Fund ................................................................................................................... 220 2005 Pension Obligation Bonds Fund ........................................................................................................... 221 General Debt Service Fund ............................................................................................................................. 222 Civic Center Debt Service Fund ..................................................................................................................... 223 General Capital Improvement Fund ............................................................................................................. 224 Measure C/J Fund ........................................................................................................................................... 225 Harbor Navigation Fund ................................................................................................................................ 226 Combining Statements of Net Position – Nonmajor Enterprise Funds ........................................................... 228 Combining Statement of Revenues, Expenses and Changes in Fund Net Position – Nonmajor Enterprise Funds ....................................................................................... 229 Combining Statement of Cash Flows – Nonmajor Enterprise Funds ........................................................... 230 Combining Statement of Net Position – Internal Service Funds ................................................................... 232 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds ........................................................................................................... 233 Combining Statement of Cash Flows – Internal Service Funds .................................................................... 234 Combining Statement of Fiduciary Net Position – Pension Trust Funds.................................................... 236 Combining Statement of Changes in Fiduciary Net Position – Pension Trust Funds ............................... 237 Combining Statement of Fiduciary Net Position – Private Purpose Trust Funds ...................................... 238 Combining Statement of Changes in Fiduciary Net Position – Private Purpose Trust Funds ................. 239 Sub-Combining Statement of Fiduciary Net Position –
Successor Agency to the Richmond Community Redevelopment Agency ............................................. 240 Sub-Combining Statement of Changes in Fiduciary Net Position – Successor Agency to the Richmond Community Redevelopment Agency ............................................. 242 Combining Statement of Fiduciary Net Position – Custodial Funds ........................................................... 246 Combining Statement of Changes in Fiduciary Net Position – Custodial Funds ...................................... 248 iii
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City of Richmond
Annual Comprehensive Financial Report
For the year ended June 30, 2022
Table of Contents
Page
STATISTICAL SECTION
Net Position by Component Last Ten Fiscal Years ............................................................................................ 256 Changes in Net Position Last Ten Fiscal Years ................................................................................................... 258 Fund Balances of Governmental Funds Last Ten Fiscal Years ......................................................................... 260 Changes in Fund Balance of Governmental Funds Last Ten Fiscal Years ...................................................... 262 Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years ....................................... 264 Property Tax Rates – All Overlapping Governments Last Ten Fiscal Years .................................................. 266 Principal Property Tax Payers Current Year and Nine Years Ago .................................................................. 268 Property Tax Levies and Collections Last Ten Fiscal Years.............................................................................. 269 Utility Users Tax Collections Last Ten Fiscal Years ........................................................................................... 270 Utility Users Tax Direct Rates On Charges For Services Last Ten Fiscal Years ............................................. 271 Top Ten Utility Users Taxpayers .......................................................................................................................... 272 Ratio of Outstanding Debt by Type Last Ten Fiscal Years ................................................................................ 273 Computation of Direct and Overlapping Debt .................................................................................................. 274 Computation of Legal Bonded Debt Margin ...................................................................................................... 275 Revenue Bond Coverage 1999, 2006, 2008, 2010A, 2010B, 2017A, 2019A and 2019B Wastewater Revenue Bonds Last Ten Fiscal Years...................................................................... 276 Revenue Bond Coverage 1996, 1999, 2004, 2007 and 2009 Port Terminal Lease Revenue Bonds, Note and Point Potrero Lease Revenue Bonds Last Ten Fiscal Years ............................................. 277 Bonded Debt Pledged Revenue Coverage Tax Allocation Bonds and Refunding Bonds Last Ten Fiscal Years ............................................................................................................................... 278 General Bonded Debt Pension Obligation Bonds Last Ten Fiscal Years ........................................................ 279 Demographic and Economic Statistics Last Ten Calendar Years ..................................................................... 280 Principal Employers Current Year and Nine Years Ago ................................................................................... 281 Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years .............................. 282 Operating Indicators by Function/Program Last Ten Fiscal Years ................................................................. 283 Capital Asset Statistics by Function/Program Last Ten Fiscal Years .............................................................. 284 iv
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FINANCE DEPARTMENT
450 CIVIC CENTER PLAZA
RICHMOND, CA 94804
(510) 620-6740
February 6, 2023
Citizens of the City of Richmond
The Honorable Mayor and
Members of the City Council
We are pleased to present the Annual Comprehensive Financial Report (ACFR) of the City of Richmond, California (City). The Finance Department has prepared this report to present the financial position and the results of the City’s operations for the fiscal year ended June 30, 2022, and the cash flows of its proprietary fund types for the year then ended. The basic financial statements and supporting schedules have been prepared in compliance with Article IV, Section 1(b)3 of the City Charter, with California Government Code Sections 25250 and 25253, and in accordance with generally accepted accounting principles (GAAP) for local governments as established by the Governmental Accounting Standards Board (GASB).
This report consists of management’s representations concerning the finances of the City.
Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft or misuse, and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement.
As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects.
The City Council is required to adopt an initial budget for the fiscal year to be effective July 1, for the ensuing fiscal year. Budgeted expenditures are adopted through the passage of a resolution, which constitutes the maximum authorized expenditures for the fiscal year and cannot legally be exceeded except by subsequent amendments of the budget by the City Council. Expenditures are controlled at the fund level for all budgeted departments within the City which means, this is the level at which expenditures may not legally exceed the appropriations. v
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The City’s financial statements have been audited by an independent auditing firm of licensed certified public accountants. The objective of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2022, are free of material misstatement. The independent audit involved examining on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was reasonable basis for rendering an unmodified opinion on the City’s financial statements for the fiscal year ended June 30, 2022, but with a disclaimer of opinion for business-type activities as it relates to the Richmond Housing Authority Enterprise Fund and the aggregate discretely presented component units, as the financial statements of the Richmond Housing Authority and RHA Properties, RHA Housing Corporation and RHA RAD LLC have not been audited for the year ended June 30, 2022. The Independent Auditors’ Report is presented as the first component of the Financial Section of this report.
Accounting standards require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors.
The Reporting Entity and Its Services
The City has defined its reporting entity in accordance with GAAP that provide guidance for determining which governmental activities, organizations and functions should be included in the reporting entity. This ACFR presents information on the activities of the city and its component units.
As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with data of the City. Discretely presented component units, on the other hand, are reported in a separate column in the basic financial statements to emphasize their legal separateness from the City. Each blended component unit has a June 30 year-end. The City’s three discretely presented component units are RHA Properties, RHA Housing Corporation and RHA RAD LLC. Please see note 1 for a detailed discussion of the financial reporting entity.
The City’s component units and assessment districts are as follows: the Richmond Housing Authority, the Richmond Joint Powers Financing Authority, the Richmond Neighborhood Stabilization Corporation, the Richmond Surplus Property Authority and Harbor Navigation, Country Club Vista and Atlas Interchange Special Assessment Districts. The City also has one inactive component unit, Richmond Parking Authority.
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Profile of the Government
The City of Richmond was chartered as a city in 1909, and is located 16 miles northeast of San Francisco, directly across San Francisco Bay. Richmond is on a peninsula separating San Francisco Bay (on the south) and San Pablo Bay (to the north), spanning 32 total miles of shoreline. The City's total area is 56.1 square miles, 33.8 of which is land area and 22.3 water area. Richmond is situated near major metropolitan cities and major new growth areas. San Francisco is within 35 minutes from Richmond by freeway; Oakland is 20 minutes; San Jose is approximately one hour's drive to the south and Sacramento, the state capitol, is approximately 90 minutes to the east.
Central Marin County is 15 minutes from Richmond directly across the Richmond-San Rafael Bridge. Freeways provide direct access from Richmond to major new growth areas along Interstate 80 north and east to Vallejo, Fairfield and Sacramento; along Interstate 680 in central Contra Costa County; and south along Interstate 880 to the San Jose area.
Richmond’s population is 115,639. The population within a 30-mile radius of Richmond is over
3.7 million, and within a 70-mile radius is approximately 7.8 million. Richmond is located on the western shore of Contra Costa County, and it is the largest city in the "West County" region consisting of five cities: Richmond, El Cerrito, San Pablo, Hercules and Pinole.
The City of Richmond provides a full range of municipal services, including police and fire protection, construction and maintenance of highways, streets and infrastructure, library services, storm water and municipal sewer systems, wastewater treatment facility and the administration of recreational activities and cultural events. The City also operates the Richmond Memorial Convention Center and the Port of Richmond.
The City Council is the governing body of the City and has six members elected at-large to alternating 4-year terms. The Mayor is elected at large and is a seventh member of the City Council. The City of Richmond is a Council-Manager form of government. The City Manager, appointed by the Mayor and Council, has administrative authority to manage administrative and fiscal operations of the City. In addition to the City Manager, the City Attorney, City Clerk and Investigative Appeals Officer are appointed by the Mayor and Council.
The mission of the City of Richmond is:
The City of Richmond provides services that enhance economic vitality, the environment and the quality of life of our community.
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Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates.
Local economy
The American Rescue Plan Act of 2021 (ARPA) was signed into law on March 11, 2021. The City’s allocated amount was $27.7 million. The City received the first installment in the amount of $13.8 million in August 2021 and the second installment in the amount of $13.8 million in August 2022.
COVID-19 pandemic impacts have significantly lessened on the City of Richmond’s tax revenues. Revenue reduction reflected in Transient Occupancy Tax (TOT), and fees and rentals collected by both the Police Department and Community Services. The TOT decreased 43% in FY2020-21 compared to FY2019-20. When compared to FY2018-19, a full year pf prepandemic activity, the decrease is 56%. TOT has stabilized and FY2021-22 revenues increased by 5%.
Property Tax continues to see steady growth with actual General Fund Property Taxes in FY2021- 22 being 5% more than the previous year. More recently, the County released 2022-2023 Assessment Roll in July 2022 which indicated growth of the Assessed Valuation (AV) at 8.15% for Secured Property Taxes, which is the main component in changes to secure property taxes year to year.
The City received $535 million in Sales Tax revenue which is $5.8M million more than the preCOVID high of $44.5M received in FY2018-19, a total increase of 12% over the last three years.
The most recent forecast from the City’s financial consultants, using the most likely scenarios, expect this trend to continue.
In November 2020, Richmond voters approved Measure U which significantly changed the calculation for the Business License Tax. This changed the tax calculation from based on number of employees or location a percentage of the business gross receipts. Measure U imposes a calculation based on Gross Receipts. This calculation methodology means the business tax collected by the City will change with inflation, with the number of businesses opening and closing. In other words, it will be much more closely tied to the local economy than years past. viii
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Significant Events and Accomplishments
The City of Richmond is committed to providing excellent municipal services to its diverse residents and visitors. Highlights of the City’s activities and accomplishments for the fiscal year ended June 30, 2022, include the following:
Employment and Training
Awarded over $11 million dollars to provide employment and training services to Richmond residents (Adult workers, Youth, Dislocated Workers, English as Second Language, Youth with Disabilities and Construction Trades) Served over 500 youth through year-round, summer employment, and supportive services Graduated 3 Pre-Apprenticeship (Construction Trade) Cohorts (60) with 80% placement Served over 6,000 residents at the One-Stop Career Center Library
Reopened West Side and Bayview Branch libraries for in-person service and expanded hours: Main Library 41 hours per week, West Side and Bayview Branch libraries 20 hours per week
Lunch @ the Library moves to Free Summer Lunch Sites with a side of books Grants Awarded = $282,000 and Grants Pending = $10.3 million dollars Added new self-guided online learning Courses (Coursera, LinkedIn Learning, GetSetUp, Learning Express, Northstar Digital Library and Skillshare) Started a new technology service lending Internet Hotspots and Chromebooks to increase access to Library online resources
Literacy for Every Adult Program (LEAP)
LEAP received grants to support literacy services including adult literacy instruction, families for literacy services, and English as a Second Language services totaling $195,200 LEAP provided literacy services to Richmond residents, offered GED preparation classes at Bay Area Rescue Mission, partnered with Office of Neighborhood Safety, served as host site for YouthWORKS summer youth employees, Richmond Promise mentor and Contra Costa Health Services Health Career Pathways mentor
3 adult learners became members of the City of Richmond’s Race and Equity Team after completing LEAP’s civic engagement training
127 active adult learners; 14 GED certificate earned, 6 high school diplomas, 21 adults and 39 children participate in the Families for Literacy Services LEAP has a group of dedicated volunteers who donated 1,263 hours, the equivalent of $34,985 in salary costs
Entered partnership with T-Mobile Government contracting to secure 25 free tablets for students to continue their education remotely with free hotspots ix
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Recreation
Youth and adult sports opportunities were reopened
Transitioned virtual afterschool and summer camps for youth to in-person and hybrid opportunities
Reinstated In-Person Special Events such as Spring Egg Hunt, Park Rx Day Celebrated Willie Mays Day and the reopening of Martin Luther King, Jr. Turf Field Aquatic centers were reopened to serve the community
Senior Centers continued to provide programs in a hybrid format to allow our seniors the freedom to choose programs of their comfort level
Developing Personal Resources Center continued to provide virtual programs. Awarded 8 grants for various facilities and parks improvements LYB COVID-19 Mini-Grants were awarded
Transportation
Commenced the on-demand city-wide shuttle for Richmond residents thereby reducing the need for vehicle trips
Expanded electric vehicle (EV) charging stations for increased accessibility and EV purchases within Richmond
Reduced the cost of the ride share LYFT service travel for qualified seniors and disabled persons in Richmond that resulted in the use of efficient transportation modes like transit and other forms of ridesharing
Expanded the LYFT coverage area to Contra Costa Regional Medical Center, Contra Costa County Government offices and the Veterans Hospital in Martinez, CA Implemented Richmond’s first bike share program
Implemented various micro-mobility services including carshare programs and the Richmond MOVES On-Demand Shuttle program
Respectfully submitted,
Delmy Cuellar
Director of Finance/Treasurer
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People of Richmond
Mayor and City Council
City Manager
Public Works Director
Richmond Rent Board
Confidential
Investigative Appeals
Officer
(Police Commission)
City Clerk City Attorney
Executive Assistant
Community
Development Director
Director of Library and
Community Services
Fire Chief Police Chief
Deputy City Manager
Economic Development Deputy City Manager Internal Services Business
Development
Richmond Housing
Authority
Environmental & Health Initiatives
Real Estate
Patrol
Traffic
Investigations
Administration and
Support
Fire Prevention
Emergency Services
Emergency
Operations
Training
Library
Recreation
Transportation
Employment &
Training
Engineering and
Capital Improvement
Program (CIP)
Building Maintenance
Water Resource
Recovery
Fleet
Public Works
Maintenance and
Abatement
Parks Maintenance
Planning
Building
Code Enforcement
Housing Policy
RDA Successor
Agency
Finance
Human Resources
Information
Technology
Office of
Neighborhood Neighborhood Safety
ECIA Grant
Administration
Administration and
Support
Rent Program
Rev. 3.16.2022
Department of
Children & Youth
Arts & Culture
Port
Organizational Chart
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CITY OFFICIALS
JUNE , 202
CITY COUNCIL
Mayor.......................................................................................................................................................................................................................................................................Tom ButtVice Mayor ...........................................................................................................................................................................................................................................(GXDUGR0DUWLQH] Councilmember...........................................................................................................................................................................................................................................Nathaniel BatesCouncilmember .......................................................................................................................................................................................................................................... Claudia Jimenez Councilmember ..................................................................................................................................................................................................................................'HPQOXV-RKQVRQ,,, Councilmember ........................................................................................................................................................................................................................................Gayle McLaughlin Councilmember.................................................................................................................................................................................................................................................Melvin Willis
ADMINISTRATION AND EXECUTIVE MANAGEMENT
City Manager .............................................................................................................................................................................................................................................. 6KDVD&XUO Deputy City Manager, Internal Services (Interim).............................................................................................................................................................................................Anil ComeloCity Attorney ................................................................................................................................................................................................................................................. 'DYH$OHVKLUH City Clerk................................................................................................................................................................................................................................................... Pamela Christian 'LUHFWRUCommunity Development .................................................................................................................................................................................................................. Lina Velasco Director of Information Technology .................................................................................................................................................................................................................Sue HartmanDirector of Library and Community Services (Interim) ............................................................................................................................................................................. LaShonda WhiteFinance Director .............................................................................................................................................................................................................................................'HOP\&XHOODU Fire Chief ......................................................................................................................................................................................................................................... $QJHO0RQWR\D Human Resources Director ($FWLQJ) ........................................................................................................................................................................................................7HUHVD)DLUEDQNVPolice Chief ,QWHULP
........................................................................................................................................................................................................................................../RXLH7LURQD 'LUHFWRURIPublic Works....................................................................................................................................................................................................................................... Joe Leach xii
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INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of Richmond
Richmond, California
Report on the Audit of the Financial Statements
Disclaimer of Opinion and Unmodified Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Richmond, California (City), as of and for the year ended June 30, 2022, and the related notes to the financial statements. We were engaged to audit the financial statements of the discretely presented component units as of and for the year ended June 30, 2022. These financial statements collectively comprise the City’s basic financial statements as listed in the table of contents.
Summary of Opinions
Opinion Unit Type of Opinion
Governmental Activities Unmodified
Business-Type Activities Disclaimer
Aggregate Discretely Presented Component Units Disclaimer Major Governmental Funds:
General Fund Unmodified
Community Development and Loan Programs Special Revenue Unmodified Major Enterprise Funds:
Richmond Housing Authority Disclaimer
Port of Richmond Unmodified
Municipal Sewer Unmodified
Aggregate Remaining Fund Information Unmodified
Disclaimer of Opinion on Business-Type Activities, Aggregated Discretely Presented Component Units and Richmond Housing Authority
Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements of the business-type activities, Richmond Housing Authority Enterprise Fund, and the aggregate discretely presented component units of the City. Accordingly, we do not express an opinion on these financial statements.
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To the Honorable Mayor and Members of the City Council
of the City of Richmond
Richmond, California
Basis for Disclaimer of Opinion
The financial statements of the Richmond Housing Authority and RHA Properties, RHA Housing Corporation and RHA RAD LLC have not been audited for the year ended June 30, 2022. The Richmond Housing Authority’s financial activities are included in the City’s basic financial statements as a major enterprise fund and represent 8.22%, 21.42%, and 6.47% of the assets, net position, and revenues, respectively, of the City’s business-type activities. The financial activities of the RHA Properties, RHA Housing Corporation and RHA RAD LLC are included in the City’s financial activities as discretely presented component units and represent the City’s only discretely presented component units.
Unmodified Opinions on Governmental Activities, Major Governmental Funds, Port of Richmond, Municipal Sewer Fund and Aggregate Remaining Fund Information In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the General Fund, the Community Development and Loan Programs Special Revenue Fund, the Port of Richmond Enterprise Fund, the Municipal Sewer Enterprise Fund, and the aggregate remaining fund information of the City as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Unmodified 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 Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City 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.
Responsibilities of Management for the Financial Statements The City’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 2
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To the Honorable Mayor and Members of the City Council
of the City of Richmond
Richmond, California
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 auditor’s 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 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, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’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 City’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.
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To the Honorable Mayor and Members of the City Council
of the City of Richmond
Richmond, California
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, and required pension and other postemployment benefits information on pages 7-20 and 169-193 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.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements and schedule and budget comparison information of nonmajor governmental funds are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements and schedule and budget comparison information of nonmajor governmental funds are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedule and budget comparison information of nonmajor governmental funds are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the information included in the ACFR but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 4
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To the Honorable Mayor and Members of the City Council
of the City of Richmond
Richmond, California
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 6, 2023 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Badawi & Associates, CPAs
Berkeley, California
February 6, 2023
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Year Ended June 30, 2022
This narrative overview and analysis of the City of Richmond’s (the “City”) Basic Financial Statements is for the fiscal year ended June 30, 2022. We encourage readers to consider the information presented here in conjunction with the accompanying transmittal letter, basic financial statements, and notes to the financial statements.
FINANCIAL HIGHLIGHTS
The City’s total net position increased by $122 million during the fiscal year attributed to a $95.5 million increase in governmental activities and $26.5 million increase in business-type activities.
The liabilities and deferred inflows of the governmental activities of the City exceeded its assets and deferred outflows at the close of the most recent fiscal year by $160.3 million (net deficit). Alternatively, the assets and deferred outflows of the business-type activities of the City exceeded its liabilities and deferred inflows by $113.8 million. As of June 30, 2022, the City’s unrestricted net deficit (governmental and business-type activities) totaled $454 million, a $116 million decrease from prior year. The unrestricted net deficits represent the net unfunded liabilities of the government. Over time, increases and decreases in this account will allow the reader to determine if the City’s condition is improving or deteriorating. Restricted net position for governmental and business-type activities increased by a net $483 thousand to $117.7 million. The City’s financial statements include a disclaimer of opinion on the financial statements of the Richmond Housing Authority Enterprise Fund (“RHA”), a blended component unit included in the City’s business-type activities, and three discretely presented component units, RHA Properties, RHA Housing Corporation and RHA RAD LLC. As of June 30, 2022, the net position of RHA is $24.4 million or 21.4% of the City’s business-type activities.
Additional information about the disclaimer of opinion can be found in the Independent Auditor’s Report.
The City’s General Fund contingency reserve policy to the minimum 15% of the General Fund’s next year’s budgeted appropriations or $28.2 million and the balance was $44.9 million as of June 30, 2022.
The Net Pension Liability of $214.3 million, representing an accounting measure of the City’s unfunded pension obligation, decreased by $138 million from $352.3 million. The City reports $84.5 million in the Other Post-Employment Benefit (OPEB) liability for this fiscal year which is a decrease of $19.3 million from the $103.8 million obligation reported in the prior year.
The City’s General Fund revenue and other financing sources (uses) exceeded expenditures by $21.3 million in fiscal year 2022. This is primarily attributable to other taxes and sales tax fee revenues in excess of expectations for the year.
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OVERVIEW OF FINANCIAL STATEMENTS
The City’s basic financial statements are comprised of government-wide financial statements, fund financial statements, and notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements.
Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to private-sector business.
The Statement of Net Position presents information on all City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference between the four 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 City is improving or deteriorating.
The Statement of Activities presents information showing how the government’s net position changed during the 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 the related cash flows.
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and grants, governmental activities, and business-type activities, which are intended to recover all or a significant portion of their costs through user fees and charges. The City’s activities include five blended component units which consist of the Richmond Housing Authority, Richmond Joint Powers Financing Authority, Richmond Neighborhood Stabilization Corporation, Richmond Surplus Property Authority and Richmond Parking Authority. Although legally separate, the City is financially accountable for the activities of these entities which are therefore shown as blended as part of the primary government.
RHA Properties, RHA Housing Corporation and RHA RAD LLC are discretely presented component units of the City that are legally separate reporting entities but are important because the City is financially accountable for them.
The government-wide financial statements can be found on pages 26-29 of the financial report.
Fund Financial Statements
Fund Financial statements are designed to report information about the groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds – Governmental funds focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year 2022. Such information may be useful in determining what financial resources are available in the near future to finance the City’s programs. 8
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Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities.
The City has twenty-one governmental funds, of which two are considered major funds for presentation purposes. Each major fund is presented separately in the governmental fund Balance Sheet and in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances. The City’s two major funds are the General Fund and the Community Development and Loan Programs Special Revenue Fund. The basic governmental fund financial statements can be found on pages 38-43 of the financial report. Data from the other nineteen governmental funds are combined into a single, aggregated presentation and reported separately on pages 200-207 of the financial report.
Proprietary Funds – Proprietary funds of the City are two types: (1) enterprise funds; and (2) internal service funds. The City maintains six enterprise funds that provide the same type of information as the government-wide financial statements, only in more detail. The City maintains four internal service funds to account for its vehicle operations, risk management program, police telecommunications and compensated absences. The proprietary fund financial statements can be found on pages 38-43 of the financial report.
Fiduciary Funds – Fiduciary funds are used to account for resources held for the benefit of third parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The fiduciary funds for the City consist of Pension Trust Funds, City OPEB Plan Trust Fund, RPOA OPEB Plan Trust Fund, Pt. Molate Private-Purpose Trust Fund, Successor Agency to the Richmond Community Redevelopment Agency Private-Purpose Trust Fund, and Custodial Funds. The fiduciary funds financial statements for these funds can be found on pages 45-46 of the financial report.
The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 49-193 of the financial report. 9
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GOVERNMENT-WIDE FINANCIAL ANALYSIS
Government-wide Net Position
This Comparative financial information includes the long-term and short-term information about the City’s overall financial condition. The following table provides the reader with highlights of changes from the prior year.
FY2022 FY2021 FY2022 FY2021 FY2022 FY2021
Assets:
Current assets 245,417 $ 189,516$ 63,729$ $ 309,146 56,179 $ 245,695 $ Other noncurrent assets 49,189 50,818 72,441 11,222 121,630 62,040 Capital assets 296,418 286,156 226,354 522,772 201,775 487,931 Total Assets 591,024 526,490 362,524 953,548 269,176 795,666 Deferred Outflows of Resources:
Deferred outflows related to pensions 36,064 41,853 778 1,538 36,842 43,391 Deferred outflows related to OPEB 4,095 2,982 122 152 4,217 3,134 Deferred outflows related to fair value of derivative 21,986 35,966 - - 21,986 35,966 Deferred charge on refunding - - 5,901 6,248 5,901 6,248 Total Deferred Outflows of Resources 62,145 80,801 6,801 7,938 68,946 88,739 Liabilities:
Current liabilities 108,322 90,106 20,953 18,536 129,275 108,642 Noncurrent liabilities 561,493 719,301 161,964 723,457 167,848 887,149 Total Liabilities 669,815 809,407 182,917 852,732 186,384 995,791 Deferred Inflows of Resources:
Deferred inflows related to pensions 94,876 5,672 2,378 202 97,254 5,874 Deferred inflows related OPEB 47,928 50,956 1,321 2,347 49,249 53,303 Deferred inflows related to leases 898 - 68,857 - 69,755 - Total Deferred Inflows of Resources 143,702 56,628 72,556 216,258 2,549 59,177 Net Position:
Net investment in capital assets 213,930 206,420 75,469 75,738 289,399 282,158 Restricted 117,137 103,402 608 13,860 117,745 117,262
Unrestricted (491,415) (568,566) 37,775 (453,640) (1,417) (569,983) Total Net Position (Deficit) $ (258,744)$ 113,852 (160,348) $ 88,181 $ (46,496) $ $ (170,563) City of Richmond's Net Position
June 30, 2022 and 2021
(in thousands)
Governmental
Activities
Business-typex
Activities Totals
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Government-wide Activities
The following table indicates the changes in net position for governmental and business-type activities.
FY2022 FY2021 * FY2022 FY2021 * FY2022 FY2022
Revenues:
Program revenues:
Charges for services 26,965 $ 26,130$ 43,173$ $ 43,150 70,138$ 69,280$ Operating grants/contributions 37,756 29,316 2,212 3,772 39,968 33,088 Capital grants/contributions 10,787 4,387 - 13 10,787 4,400 General revenues:
Property taxes-current collections 65,249 65,075 - - 65,249 65,075 Sales taxes 53,453 48,998 - - 53,453 48,998
Utility user taxes 48,374 45,241 - - 48,374 45,241
Documentary transfer taxes 18,612 19,858 - - 18,612 19,858 Other taxes 8,177 7,424 - - 8,177 7,424
Unrestricted Intergovernmental 7,241 6,594 - - 7,241 6,594 Use of money and property 1,594 1,461 909 146 2,503 1,607 Gain on sale of capital assets 88 71 - - 88 71
Other 2,140 1,357 - - 2,140 1,357
Total revenues 280,436 255,912 46,294 47,081 326,730 302,993 Expenses:
General government 48,312 47,854 - - 48,312 47,854
Public safety 68,260 93,442 - - 68,260 93,442
Public works 35,555 33,980 - - 35,555 33,980
Community development 3,552 4,433 - - 3,552 4,433
Cultural & recreation 9,970 9,006 - - 9,970 9,006
Housing & redevelopment 3,376 3,108 - - 3,376 3,108
Interest and fiscal charges 12,322 12,825 - - 12,322 12,825 Richmond Housing Authority - - (1,751) 3,608 (1,751) 3,608 Port of Richmond - - 4,764 6,263 4,764 6,263
Municipal Sewer - - 18,141 20,467 18,141 20,467
Richmond Marina - - 245 228 245 228
Storm Sewer - - 1,283 1,796 1,283 1,796
Cable TV - - 665 789 665 789
Total expenses 181,347 204,648 23,347 33,151 204,694 237,799 Excess (Deficiency) of Revenues
Over (Under) Expenses 99,089 51,264 22,947 13,930 122,036 65,194 Transfers (3,517) (11,280) 3,517 11,280 - -
Changes in Net Position 95,572 39,984 26,464 25,210 122,036 65,194 Net position (deficit) at beginning of
year (July 1, 2021 restated) (255,920) (298,728) 87,388 62,971 (168,532) (235,757) Net position (deficit) at end of year $ (258,744) (160,348) $ 113,852 $ 88,181$ $ (46,496) $ (170,563) * Governmental Activities beginning balance was restated and increased by $2.8 million.
Business-type Activities beginning balance was restated and decreased by $0.91 million in the Richmond Housing Authority and increased by $0.12 million in the Municipal Sewer
City of Richmond's Changes in Net Position
For the Years Ended June 30, 2022 and 2021
(in thousands)
Governmental Activities Business-type Activities Totals 11
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Governmental Activities
Governmental activities increased the City’s net position by 95.6 million, accounting for 78% of the City’s total increase in net position of $122 million. Total revenues of $280.4 million exceeded expenses of $181.3 million by $99.1 million. Revenues increased by $24.5 million or 9.6% from prior year primarily due to an increase in operating grants/contributions and capital grants/contributions. These two categories went from $29.3 and $4.4 million in fiscal year 2021 to $37.8 and $10.8 million in fiscal year 2022. Expenses decreased $23.3 million or 11.4% from prior year primarily due to decreases in public safety expenses.
Business Type Activities
Business-type activities increased the City’s net position by $26.5 million. Key factors contributing to the increase in business-type activities are as follows:
The Richmond Housing Authority’s (“RHA”) net position increased by $4.7 million, resulting from an operating income of $2.5 million, additionally a grant income of $2.2 million and net transfers of $949 thousand. Operating income is attributable to the reallocation of the GASB 68 and GASB 75 liability. RHA staff was significantly reduced which affected the allocations and resulted in a credit balance in the Salaries and Benefits. The Port of Richmond (“Port”) reported operating income of $5.9 million. During the year, the Port incurred $169 thousand of interest expense which resulted in a $6.4 million increase in net position.
The Municipal Sewer fund reported operating income of approximately $14.9 million. There were $4.7 million of non-operating expenses, the majority of which represented interest and swap expenses incurred on various Wastewater Debt issues. Other Enterprise funds had a combined $1.6 million increase in net position, with operating income of approximately $1.7 million.
Net Program (Expenses) Revenues
Comparisons of the costs of services by functions for the City’s government-wide activities are shown in the preceding tables, along with the revenues used to cover the net expenses. 12
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The following table details the net program costs for each of the governmental functions.
Total governmental activities expenses of $181.3 million were offset by $75.5 million in program revenues in fiscal year 2022. Program revenues are derived directly from the program itself or from parties outside the reporting government’s taxpayers or citizenry. They reduce the net cost of the function to be financed from the government’s general revenues. During the fiscal year, the net costs funded by the City’s general revenues were $105.8 million.
As reflected in the pie chart below, 36% of the governmental program revenues came from Charges for Services, which includes licenses, permits, fees, fines, forfeitures, penalties and several other revenues. The remaining 64% of governmental program revenues came from Operating Grants and Capital Grants Contributions, which include restricted revenues such as Gas Tax, Transportation and Sales Tax, and Federal/State Grants.
Net (Expenses)
Expenses Revenues Revenues
Functions
General government 48,312,143 $ $ 21,516,488 $ (26,795,655) Public safety 68,259,779 5,983,657 (62,276,122)
Public works 35,554,874 29,037,759 (6,517,115)
Community development 3,552,363 18,225,944 14,673,581
Cultural and recreational 9,969,799 776,163 (9,193,636) Housing and redevelopment 3,375,875 (31,718) (3,407,593) Interest on long-term debt 12,322,289 (12,322,289) -
Total $ 181,347,122 $ 75,508,293 $ (105,838,829)
Governmental Activities
Expenses and Program Revenues
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General revenues are all other revenues not categorized as program revenues and include property taxes, sales taxes, utility users’ tax, documentary transfer taxes, investment earnings, grants and contributions not related to specific programs and other miscellaneous general revenues. Total general revenues from governmental activities were $204.9 million in fiscal year 2022. The three largest components of general revenues received were Property Taxes-current collections of $65.2 million, Sales Taxes of $53.5 million and Utility User Taxes of $48.4 million.
The following graph shows the City’s general revenues by source.
The following table details net program costs for business-type activities. Business-type activities revenue exceeded expenses by $22 million, as Municipal Sewer, the Port of Richmond, and other Enterprise Funds contributed net revenues of $10 million, $5.8 million, and $6.2 million respectively.
Program Net (Expenses)
Expenses Revenues Revenues
Business-type Activities
Richmond Housing Authority (1,750,799) $ $ 2,994,663 $ 4,745,462 Port of Richmond 4,763,557 10,530,653 5,767,096
Municipal Sewer 18,140,943 28,168,977 10,028,034
Richmond Marina 246,064 524,652 278,588
Storm Sewer 1,282,576 2,061,815 779,239
Cable TV 664,656 1,103,873 439,217
Total $ 23,346,997 $ 45,384,633 $ 22,037,636
Expenses and Program Revenues
Business-type Activities
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As reflected in the following pie chart, 95% of the business-type program revenues came from Charges for Services and the remaining 5% were derived from Operating and Capital Grants.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financial capacity.
At the end of the fiscal year 2022, the City’s governmental funds reported total fund balances of $157.3 million, an increase of $27.2 million, or 20.9% from prior year. Financial highlights for the City’s major funds are discussed below:
General Fund The General Fund is the primary operating fund of the City. It is used to report the financial results of the daily operations of the City. The major revenue sources are utility users’ tax, sales tax, and property taxes. The major expenditures are salaries and administrative expenses. The City’s general fund revenues increased by $14.7 million or 8.2% and expenditures increased by $6.3 million or 3.9%. The increase in revenues is primarily due to the increased collection of both Sales Tax and Licenses, permits and fees. Sales Tax increased by $4.5 million or 9.1% and Licenses, permits and fees increased by $5.5 million, an increase of over 169.9%. The Sales Tax increase is a result of renewed business activity that had either slowed down or shut down completely during the height of the COVID-19 restrictions. The Licenses, permits and fees increase is a result of increase in collection of business tax which Measure U changed the business tax calculation methodology in fiscal year 2022. 15
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General Fund expenditures increased by 4% across several categories with General Government being the major source of increase. In Other Financing Sources and Uses, Operating TransfersIn increased by 4%; however, Operating Transfers Out decreased by 13%. Operating TransfersOut include negative cash clearing in Engineering Cost Recovery fund, $3.5 million, Wastewater fund, $2.7 million, and contribution to the department of children and Youth, $1.9 million.
At the end of the fiscal year 2022, the total fund balance increased by $21.3 million from the prior year to $70.5 million. The General Fund reported an unassigned fund balance of $44.9 million and committed fund balance of $3.4 million which details are represented in the following table:
Community Development and Loan Programs This fund was established to account for the receipt of Community Development Block Grant, HOME Investment Partnership Program, Neighborhood Stabilization Program grant monies and the use of the grants. In conjunction with the dissolution of the Redevelopment Agency, this fund also accounts for the low and moderate income housing activities of the City as Housing Successor to the former Redevelopment Agency’s low and moderate income housing activities. As of June 30, 2022, fund balance is $31.4 million which increased slightly by $212 thousand from prior year.
Proprietary Funds:
The City’s proprietary funds are enterprise and internal service funds. Proprietary funds provide the same type of information found in the government-wide financial statements but in more detail.
The City’s major enterprise funds are the Richmond Housing Authority, Port of Richmond, and Municipal Sewer.
Richmond Housing Authority. The Richmond Housing Authority (RHA) provides decent affordable housing for low and very low-income residents of Richmond through federally funded housing programs. RHA’s net position increased by $5.7 million to $24.4 million as of June 30, 2022.
The Port of Richmond. The Port of Richmond (“Port”) is a public enterprise established by the City and is administered as a department of the City. Operations include the marine terminal facilities and commercial property rentals. The Port’s net position increased by $6.4 million to $22.3 million as of June 30, 2022.
Municipal Sewer Fund. This fund is used to account for a variety of sewer service-related revenues and expenses. Municipal Sewer’s net position increased by $10.2 million to $60 million as of June 30, 2022.
Committed Fund Balance (Resolution No. 25-20, 78-21 & 142-22 COVID-19 (1,332,367) $
Reimagining Public Safety (233,934)
Community Facilities Improvements (1,410,485)
Staff Compensation - OTP (406,667)
Committed Fund Balance $ (3,383,453)
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GENERAL FUND BUDGETARY HIGHLIGHTS
The adopted budget, excluding transfers, bond premium and proceeds from sale of property, reflected $178.5 million in estimated revenues and $180 million in appropriations.
Budget adjustments reflected extensive analysis and updates arising from Expenditure Review and Council approved amendments that occurred during the fiscal year.
The final revised budget included a $3.3 million increase in estimated revenues and appropriations. Actual revenues of $193.5 million were $11.6 million more than the revised revenue budget, a variance of 6%. Key elements of the variances in revenues are discussed as follows:
Property Taxes totaled $ 47.4 million, which is $2.1 million more than the Revised Budget and $100 thousand less than the original budget. The increase stems from increases in residual Redevelopment Property Tax Trust Fund (RPTTF) after Recognized Obligation Payments Schedule (ROPS), or in other words, more than expected Successor Agency Residual and Passthrough revenue.
Sales Taxes totaled $53.5 million, which was $1.5 million above the Revised Budget and $3.4 million more than the Original Budget. This corresponded to increases in the regular Sales Tax and proportional increases in both half cent Sales Tax measures.
Utility Users Tax (UUT) totaled $48.4 million, which was $1.9 million more than expected. The bulk of the increase was in tax collected related to telecommunications and pre-paid wireless collected at stores and by the State.
Licenses, Permits and Fees totaled $8.7 million, which was $587 thousand more than the Revised Budget amount. The bulk of this stemmed from the collection of Medical Marijuana Permits.
The final adjusted appropriations were $183.6 million, an increase of $3.6 million from the original adopted budget appropriation of $180 million. The adopted budget appropriation was increased primarily due to increase adjustments in Public Safety and Engineering services. The final budget appropriation for transfers out was $19.2 million, an increase of 11.3 million. The increase was due to several adjustments to the budget made during Mid-year adjustment to incorporate the City Council approved set asides for Reimagining Public Safety and several transfers approved as part of year-end clean-up to clear negative cash form other funds. 17
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CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2022 amounted to $522.8 million, net of accumulated depreciation. Investment in capital assets includes land, construction in progress, buildings and improvements, machinery and equipment, and infrastructure. Details by type are shown in the following table.
The City’s infrastructure assets are recorded at their historical costs in the government-wide financial statements.
Additional information about the City’s capital assets can be found in Note 6 on pages 81-84.
Debt Administration
Long Term Debt – The City’s total debt outstanding increased $256 thousand to $406.1 million as of June 30, 2022.
Revenue Bonds had a decrease due to an increase in principal payments for the 2017A Wastewater and the 2019B Wastewater Bonds.
Lease Revenue Bonds had a decrease due to an increase in the principal payment to the 2019B JPFA Lease Revenue Refunding Bond (Pt Potrero) and the 2019A JPFA Lease Revenue Refunding Bond (Civic Center).
2022 2021 2022 2021 2022 2021
Land $ 24,634,683 $ 24,361,564 $ 7,195,986 $ 7,195,986 $ 31,830,669 $ 31,557,550 Construction in Progress 34,549,467 34,235,379 63,868,930 32,958,119 98,418,397 67,193,498 Building and improvements 102,746,858 105,655,032 22,925,841 23,674,759 125,672,699 129,329,791 Machinery and equipment 13,396,901 7,367,001 1,612,772 2,186,083 15,009,673 9,553,084 Land improvements and infrastructure 116,311,619 114,536,661 129,838,589 135,760,413 246,150,208 250,297,074 Leased building, land, and improvements 4,778,869 - 911,690 - 5,690,559 - Total Capital assets $ 296,418,397 $ 286,155,637 $ 226,353,808 $ 201,775,360 $ 522,772,205 $ 487,930,997 Governmental activities Business-type activities Total
Capital Assets by Type
June 30, 2022 and 2021
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Pension Obligation Bonds had a decrease due to large principal payment to the 2005 POB and decrease in SWAP payments.
The City does not have any general obligation bonds as of June 30, 2022.
Economic Factors, Next Year’s Budget and Inflation Rates The City’s economic base has mostly recovered from the slowdown related to the effects of the COVID-19 restrictions. As of January 1, 2022, Property values assessed by the County have increased by 0.15% over the prior year. Flat Assessed Valuation (AV) primarily stemmed from a decreased valuation of the Chevron Refinery in Richmond. While the CPI growth was 1.036% and there were significant property sales during the year, the refinery assessment by the County went from approximately $3 billion in FY2020-21, to under $2.7 billion. Residual Redevelopment Property Tax Trust Fund (RPTTF) after Recognized Obligation Payments Schedule (ROPS) payments have gone from $600 thousand in fiscal year 20116 to $2.5 million in fiscal year 2017, to $4.0 million in fiscal year 2018, to $5.7 million in fiscal year 2019, and to $6.5 million in both fiscal year 2020 and fiscal year 2021. Sales Tax revenue has rebounded to above pre-pandemic levels. Sales Tax revenue was $47.7 million in fiscal year 2019, was dipped down to $44.5 million in fiscal year 2020, and was finally rebounded to $49.0 million in fiscal year 2021. In fiscal year 2022, Sales Tax revenue was increased to $53 million.
Measure H
In November 2018, Richmond voters approved Measure H which called for a new tiered calculation for the Documentary Transfer Tax. The tax rate goes up based on the sale price of the property. The rate of 0.70% did not change for sales under $1 million, but for sales from $1 million and above, the rates changed according to the following table.
FY2022 FY2021 FY2022 FY2021 FY2022 FY2021
Revenue bonds - $ - $ 134,416,180 $ 137,886,366 $ 134,416,180 $ 137,886,366 $ Lease revenue bonds 99,240,012 103,543,451 9,112,946 13,604,419 108,352,958 117,147,870 Pension obligation bonds 136,976,078 140,816,305 - - 136,976,078 140,816,305 Total bonds payable 236,216,090 244,359,756 143,529,126 151,490,785 379,745,216 395,850,541 Loans payable 887,622 1,023,223 15,229,299 3,338,388 16,116,921 4,361,611 Financed Purchases 4,581,187 5,642,605 - 4,581,187 - 5,642,605 Lease Liability 4,852,956 814,745 - 5,667,701 - -
Total outstanding debt 246,537,855 $ $ 251,025,584 $ 159,573,170 $ 154,829,173 $ 406,111,025 $ 405,854,757 Outstanding Debt
June 30, 2022 and 2021
Governmental Activities Business-Type Activities Totals Sale Price $1 to $999,999 $1M to $2,999,999 $3M to $9,999,999 $10M and above Amount per $1,000 $7.00 $12.50 $25.00 $30.00
Rate 0.70% 1.25% 2.50% 3.00%
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Even before the new tiered system, the Documentary Transfer Tax was one of the most volatile of revenue streams for the City. A few sales can have a dramatic impact on the General Fund. In fiscal year 2018, before the new tiered rate structure was approved and put in place, the transfer tax collected totaled $6.5 million. In fiscal year 2019, with half a year a year of the rate structure, the tax collected went up to $8.0 million. In fiscal year 2020 it went up modestly to $8.7 million.
In fiscal year 2021, due to a few unusually large real-estate transactions, it increased significantly to $19.9 million. In fiscal year 2022, the Transfer Tax revenue saw a dip of $1.3 million or a decrease of 6%, with a total of $18.6 million in Transfer Tax.
Measure U
In November 2020, Richmond voters approved Measure U which significantly changed the calculation for the Business License Tax. This changed the tax calculation from based on number of employees or location to a percentage of the business gross receipts. The percentage charged varies based on both the type of business and the amount of gross receipts with the new rates ranging from 0.06% to 0.68% for businesses and 1.08% to 2.4% for rental properties. The new methodology brought in an additional $5.3 million for the City in fiscal year 2022, an increase of 168% compared to prior year.
The City continues to closely monitor revenue and expenditures through monthly variance reports to assure adherence to budget controls. Simultaneously, position control is strictly enforced, ensuring that any employee hired is moving into a funded position. For the upcoming fiscal year, staff is working to align the budget forecast with City Council priorities and California State Auditor’s recommendations, review the City’s organizational structure, and provide recommended actions for fiscal sustainability.
This will include planning and addressing pension and Other Post-Employment Benefits (OPEB) funding and determining adequate reserve level per the California State Auditor’s recommendation. Additionally, the City continues to analyze the structural integrity of all funds and identify additional cost reductions and efficiencies.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City’s finances for all of its citizens, taxpayers, customers, investors and creditors. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the City of Richmond, Finance Department, 450 Civic Center Plaza, Richmond, CA 94804.
Alternatively, you may send your inquiries via e-mail to [email protected]. 20
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BASIC
FINANCIAL STATEMENTS
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GOVERNMENT-WIDE
FINANCIAL STATEMENTS
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City of Richmond
Statement of Net Position
June 30, 2022
Governmental Business-type
Activities Activities Total
ASSETS
Current assets:
Cash and investments $ 181,564,842 $ 58,071,560 $ 239,636,402 Restricted cash and investments 15,361,210 3,493,769 18,854,979 Receivables:
Accounts, net 16,655,500 6,891,305 23,546,805
Interest 104,899 30,245 135,144
Grants 18,138,781 440,241 18,579,022
Loans - - -
Leases 49,614 7,576,109 7,625,723
Internal balances 12,774,486 (12,774,486) -
Prepaids and supplies 767,700 - 767,700
Total current assets 245,417,032 63,728,743 309,145,775 Noncurrent assets:
Due from developer - 10,221,743 10,221,743
Loans 46,035,586 - 46,035,586
Leases 857,213 62,219,640 63,076,853
Property held for resale 78,016 - 78,016
Net pension asset 2,218,075 - 2,218,075
Capital assets:
Nondepreciable 59,184,150 71,064,916 130,249,066
Depreciable 767,965,711 357,978,758 1,125,944,469
Less accumulated depreciation (530,731,464) (202,689,866) (733,421,330) Total capital assets 296,418,397 226,353,808 522,772,205 Total noncurrent assets 345,607,287 298,795,191 644,402,478 Total assets 591,024,319 362,523,934 953,548,253
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources - pension 36,063,903 778,359 36,842,262 Deferred outflows of resources - OPEB 4,095,434 121,871 4,217,305 Deferred ouflows - change in fair value of derivative instruments 21,985,226 - 21,985,226 Deferred charge on refunding - 5,900,629 5,900,629
Total deferred outflows of resources 62,144,563 6,800,859 68,945,422
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 16,299,932 10,723,192 27,023,124 Interest payable 1,017,039 2,425,411 3,442,450
Refundable deposits 921,498 469,956 1,391,454
Unearned revenue 28,198,899 - 28,198,899
Derivative instrument at fair value 21,985,226 - 21,985,226 Compensated absences - due within one year 6,320,594 104,923 6,425,517 Claims liabilities - due within one year 14,606,071 - 14,606,071 Long-term debt - due within one year 18,972,571 7,229,069 26,201,640 Total current liabilities 108,321,830 20,952,551 129,274,381 Noncurrent liabilities:
Unearned revenue - 2,974,100 2,974,100
Compensated absences 5,168,607 102,508 5,271,115
Claims liabilities 36,486,531 - 36,486,531
Long-term debt 227,565,284 152,344,101 379,909,385
Net pension liability 210,525,045 3,767,729 214,292,774 Net OPEB liability 81,747,794 2,775,735 84,523,529
Total noncurrent liabilities 561,493,261 161,964,173 723,457,434 Total liabilities 669,815,091 182,916,724 852,731,815
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 94,875,548 2,378,144 97,253,692 Deferred inflows of resources - OPEB 47,928,567 1,321,475 49,250,042 Deferred inflows of resources - leases 898,041 68,856,596 69,754,637 Total deferred inflows of resources 143,702,156 72,556,215 216,258,371
NET POSITION
Net investment in capital assets 213,930,154 75,469,292 289,399,446 Restricted for:
Capital projects 13,963,699 - 13,963,699
Debt service 12,760,459 607,958 13,368,417
Housing and redevelopment 19,154,393 - 19,154,393
Community development projects 71,257,965 - 71,257,965
Total restricted 117,136,516 607,958 117,744,474
Unrestricted (491,415,035) 37,774,604 (453,640,431)
Total net position $ (160,348,365) $ 113,851,854 $ (46,496,511) Primary Government
See accompanying Notes to Basic Financial Statements
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RHA RHA Housing RHA
Properties Corporation RAD LLC
$ - $ 78,270 $ -
- - -
- - $ -
- - -
- - -
- - 15,510,000
- - -
- - -
- - -
- 78,270 15,510,000
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- 78,270 15,510,000
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- 78,270 15,510,000
$ - $ 78,270 $ 15,510,000
Component Units
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City of Richmond
Statement of Activities
For the year ended June 30, 2022
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary Government:
Governmental activities:
General government 48,312,143 $ 18,422,370 $ 3,094,118 $ - $ 21,516,488 $ Public safety 68,259,779 3,448,026 904,964 1,630,667 5,983,657 Public works 35,554,874 4,405,851 15,475,553 9,156,355 29,037,759 Community development 3,552,363 110,552 18,115,392 - 18,225,944 Cultural and recreational 9,969,799 577,978 198,185 - 776,163 Housing and redevelopment 3,375,875 - (31,718) - (31,718) Interest on long-term debt 12,322,289 - - - -
Total governmental activities 181,347,122 26,964,777 37,756,494 10,787,022 75,508,293 Business-type activities
Richmond Housing Authority (1,750,799) 782,951 2,211,712 - 2,994,663 Port of Richmond 4,763,557 10,530,653 - - 10,530,653
Municipal Sewer 18,140,943 28,168,977 - - 28,168,977
Richmond Marina 246,064 524,652 - - 524,652
Storm Sewer 1,282,576 2,061,815 - - 2,061,815
Cable TV 664,656 1,103,873 - - 1,103,873
Total business-type activities 23,346,997 43,172,921 2,211,712 - 45,384,633 Total primary government $ 204,694,119 $ 70,137,698 $ 39,968,206 $ 10,787,022 $ 120,892,926 Component units:
RHA Properties - - - - -
RHA Housing Corporation - - - - -
RHA RAD LLC - - - - -
Total component units $ - $ - $ - $ - $ -
General Revenues:
Taxes:
Property taxes - current collections
Sales taxes
Utility user taxes
Documentary transfer taxes
Other taxes
Total taxes
Unrestricted intergovernmental
Use of money and property
Gain (loss) from sale of capital assets
Other
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning of year, as restated
Net position - end of year
Program Revenues
See accompanying Notes to Basic Financial Statements
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Governmental Business-Type RHA RHA Housing RHA
Activities Activities Total Properties Corporation RDA LLC $ (26,795,655) $ (26,795,655) - $
(62,276,122) - (62,276,122)
(6,517,115) - (6,517,115)
14,673,581 - 14,673,581
(9,193,636) - (9,193,636)
(3,407,593) - (3,407,593)
(12,322,289) - (12,322,289)
(105,838,829) - (105,838,829)
- 4,745,462 4,745,462
- 5,767,096 5,767,096
- 10,028,034 10,028,034
- 278,588 278,588
- 779,239 779,239
- 439,217 439,217
- 22,037,636 22,037,636
(105,838,829) 22,037,636 (83,801,193)
- - -
- - -
- - -
- - -
65,248,507 - 65,248,507 - - -
53,453,323 - 53,453,323 - - -
48,373,587 - 48,373,587 - - -
18,612,087 - 18,612,087 - - -
8,176,511 - 8,176,511 - - -
193,864,015 - 193,864,015 - - -
7,241,103 - 7,241,103 - - -
1,593,846 909,597 2,503,443 - - -
88,477 - 88,477 - - -
2,140,211 - 2,140,211 - 73,461 -
(3,516,663) 3,516,663 - - - -
201,410,989 4,426,260 205,837,249 - 73,461 -
95,572,160 26,463,896 122,036,056 - 73,461 -
(255,920,525) 87,387,958 (168,532,567) - 4,809 15,510,000 $ (160,348,365) $ 113,851,854 $ (46,496,511) $ - $ 78,270 $ 15,510,000 Primary Government Component Units
Net (Expense) Revenue
and Changes in Net Position
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FUND
FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
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GOVERNMENTAL FUND FINANCIAL STATEMENTS
The funds described below were determined to be major governmental funds by the City in the current fiscal year.
Individual nonmajor governmental funds may be found in the supplemental section.
The General Fund is used for all the general revenues of the City not specifically levied or collected for other City funds and the related expenditures. The General Fund accounts for all financial resources of a governmental unit which are not accounted for in another fund.
The Community Development and Loan Programs Special Revenue Fund accounts for the receipt of Community Development Block Grant, HOME Investment Partnership Program, and Neighborhood Stabilization Program grant monies and the use of the grants. The Fund also accounts for the low and moderate income housing activities of the City as Housing Successor to the former Redevelopment Agency. Related to the grant disallowed costs discussed in the notes to the financial statements, the City purchased certain loans that had previously been funded with Community Development Block Grant and HOME funds. The grants and loan programs are to be used to provide, within the City of Richmond, new affordable housing, improve existing conditions, assist homeless and disabled with housing, and to expand economic opportunities in business, and employment for low and moderate income residents. 32
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City of Richmond
Balance Sheet
Governmental Funds
June 30, 2022
Community
Development Other Total
General and Loan Governmental Governmental
Fund Programs Funds Funds
ASSETS
Cash and investments $ 58,411,015 $ 5,541,626 $ 63,054,334 $ 127,006,975 Restricted cash and investments - 2,356,095 13,005,115 15,361,210 Receivables:
Accounts, net 15,449,492 13,996 1,188,700 16,652,188
Interest 32,231 3,545 37,048 72,824
Grants - 166,431 14,682,024 14,848,455
Loans 2,999,705 42,256,868 779,013 46,035,586
Leases 906,827 - - 906,827
Due from other funds 41,505 - - 41,505
Advances to other funds 12,774,486 - - 12,774,486
Property held for resale - 78,016 - 78,016
Prepaids and supplies 767,700 - - 767,700
Total assets 91,382,961 50,416,577 92,746,234 234,545,772
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities 7,345,900 11,682 7,956,642 15,314,224 Refundable deposits 252,242 - 669,256 921,498
Due to other funds - - 41,505 41,505
Unearned revenue 10,118,705 - 18,080,194 28,198,899
Total liabilities 17,716,847 11,682 26,747,597 44,476,126 Deferred inflows of resources:
Unavailable revenue 2,304,304 18,977,904 10,563,837 31,846,045 Leases related 898,041 - - 898,041
Total deferred inflows of resouces 3,202,345 18,977,904 10,563,837 32,744,086 Fund Balances:
Nonspendable 14,242,186 - - 14,242,186
Restricted 1,505,053 31,426,991 56,764,509 89,696,553
Committed 3,383,453 3,383,453
Assigned 6,397,688 - 45,618 6,443,306
Unassigned 44,935,389 - (1,375,327) 43,560,062
Total fund balances 70,463,769 31,426,991 55,434,800 157,325,560 Total liabilities, deferred inflows
of resources, and fund balances $ 91,382,961 $ 50,416,577 $ 92,746,234 $ 234,545,772 See accompanying Notes to Basic Financial Statements
33
3-21-23, CC Mtg.
Total Fund Balances - Total Governmental Funds $ 157,325,560 Capital assets used in governmental activities were not current financial resources.
Therefore, they were not reported in the Governmental Funds Balance Sheet. Except for the internal service funds reported below, the capital assets were adjusted as follows:
GovernmentWide Statement
of Net Position
Internal Service
Funds Total
Nondepreciable $ - 59,184,150 $ 59,184,150
Depreciable, net 237,234,247 (10,225,643) 227,008,604
Total capital assets $ 296,418,397 $ (10,225,643) 286,192,754 Internal service funds were used by management to charge the costs of certain activities, such as insurance, to individual funds. The assets and liabilities of the Internal service funds were included in governmental activities in the GovernmentWide Statement of Net Position. 11,740,238 Unavailable revenues recorded in the fund financial statements resulting from activities in which revenues were earned but were not available are reclassified as revenues in the Government-Wide Financial Statements. 31,846,045 In the Government-Wide Financial Statements, deferred employer contributions for pension and OPEB, certain differences between actuarial estimates and actual results, and other adjustments resulting from changes in assumptions and benefits are deferred in the current year.
Deferred outflows of resources related to pension 35,831,556 Deferred outflows of resources related to OPEB 4,068,531 Deferred inflows of resources related to pension (94,165,650) Deferred inflows of resources related to OPEB (47,636,852) Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet.
GovernmentWide Statement
of Net Position
Internal Service
Funds Total
Compensated absences - due within one year $ (6,320,594) $ 66,303 $ (6,254,291) Interest payable (1,017,039) 8,485 (1,008,554)
Long-term debt - due within one year (18,972,571) 261,947 (18,710,624) Compensated absences - due in more than one year (5,168,607) - (5,168,607) Long-term debt - due in more than one year (227,565,284) 1,474,133 (226,091,151) Net pension liability/asset (208,306,970) 1,124,702 (207,182,268) Net OPEB liability (81,747,794) 612,742 (81,135,052)
Total long-term liabilities $ (549,098,859) $ 3,548,312 (545,550,547) Net Position of Governmental Activities $ (160,348,365) City of Richmond
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2022
Amounts reported for governmental activities in the statement of net position are different because:
See accompanying Notes to Basic Financial Statements
34
3-21-23, CC Mtg.
City of Richmond
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the year ended June 30, 2022
Community
Development Other Total
General and Loan Governmental Governmental
Fund Programs Funds Funds
REVENUES:
Property taxes $ 47,362,317 $ - $ 25,000,065 $ 72,362,382 Sales taxes 53,453,323 - - 53,453,323
Utility user taxes 48,373,588 - - 48,373,588
Other taxes 26,573,077 - - 26,573,077
Licenses, permits and fees 8,731,752 26,302 11,952,281 20,710,335 Fines, forfeitures and penalties 405,439 - 2,054 407,493 Use of money and property 254,822 160,477 206,969 622,268 Intergovernmental 618,716 - 27,395,865 28,014,581
Charges for services 6,153,304 - 7,398,199 13,551,503
Rent 723,596 - - 723,596
Other 898,401 1,014,187 244,525 2,157,113
Total revenues 193,548,335 1,200,966 72,199,958 266,949,259 EXPENDITURES:
Current:
General government 33,961,939 - 14,882,083 48,844,022
Public safety 94,871,787 - 1,880,703 96,752,490
Public works 25,445,699 - 8,476,942 33,922,641
Community development - 507,865 5,173,005 5,680,870
Cultural and recreational 10,268,987 - 314,279 10,583,266 Housing and redevelopment - 735,675 2,622,312 3,357,987 Capital outlay 470,678 - 12,932,367 13,403,045
Debt service:
Principal 2,782,527 - 14,452,000 17,234,527
Interest and fiscal charges 125,779 - 5,992,068 6,117,847 Total expenditures 167,927,396 1,243,540 66,725,759 235,896,695
REVENUES OVER (UNDER)
EXPENDITURES 25,620,939 (42,574) 5,474,199 31,052,564
OTHER FINANCING SOURCES (USES):
Proceeds from sale of property 6,788 81,689 - 88,477
Transfers in 9,859,938 - 10,884,180 20,744,118
Transfers out (14,137,938) (10,000) (10,713,861) (24,861,799) Total other financing sources (uses) (4,271,212) 71,689 170,319 (4,029,204) Net change in fund balances 21,349,727 29,115 5,644,518 27,023,360 FUND BALANCES (DEFICITS):
Beginning of year, as restated 49,114,042 31,397,876 49,790,282 130,302,200 End of year $ 70,463,769 $ 31,426,991 $ 55,434,800 $ 157,325,560 See accompanying Notes to Basic Financial Statements
35
3-21-23, CC Mtg.
City of Richmond
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities For the year ended June 30, 2022
Net Change in Fund Balances - Total Governmental Funds $ 27,023,360 Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of those assets was allocated over their estimated lives as depreciation expense. This was the amount of capital assets recorded in the current period, net of the amount related to internal service funds. 13,712,389
Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities, but did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the governmental funds, net of the amount related to internal service funds. (12,626,693) Gain on sale of assets are not recorded in the governmental funds since the assets are not recorded there but they are recorded in the government-wide 97,280
Proceed from sale assets are recorded in the governmental funds but the gain or loss is recorded in the government-wide (88,477)
Accrued compensated leave payments were reported as expenditures in the governmental funds, however expense is recognized in the Government-Wide Statement of Activities based on earned leave accruals. 1,582,874 Debt proceeds provide current financial resources to governmental funds, but issuing debt increased longterm liabilities in the Government-Wide Statement of Net Position. Repayment of debt was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position.
Long-term debt repayments 17,234,527
Capital appreciation bond accretion (7,171,770)
Amortization of bonds premium 863,438
Interest payable 176,726
Current year employer pension and OPEB contributions are recorded as expenditures in the governmental funds, however, these amounts are reported as a deferred outflow of resources in the Government-Wide Statement of Net Position. 35,416,930
Pension expense is reported in the Government-Wide Statement of Activities does not require the use of current financial resources, and therefore is not reported as expenditures in governmental funds. (4,187,831) OPEB expense is reported in the Government-Wide Statement of Activities does not require the use of current financial resources, and therefore is not reported as expenditures in governmental funds. 20,044,159 Unavailable revenues recorded in the fund financial statements resulting from activities in which revenues were earned but were not available are reclassified as revenues in the Government-Wide Financial Statements. 4,565,666
Internal service funds were used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the internal service funds was reported with governmental activities. (1,070,418)
Change in Net Position of Governmental Activities $ 95,572,160 Amounts reported for governmental activities in the Government-Wide Statement of Activities were different because:
See accompanying Notes to Basic Financial Statements
36
3-21-23, CC Mtg.
PROPRIETARY FUND FINANCIAL STATEMENTS
Proprietary funds account for operations financed and operated in a manner similar to a private business enterprise.
The intent of the City is that most of the cost of providing goods and services be financed primarily through user charges.
The concept of major funds extends to proprietary funds. The City has identified the funds below as major proprietary funds in the current fiscal year.
Generally accepted accounting principles do not provide for the disclosure of budget versus actual comparisons regarding proprietary funds that are major.
The Richmond Housing Authority fund accounts for all funds provided by the Department of Housing and Urban Development (HUD) to assist low income families in obtaining decent, safe and sanitary housing.
The Port of Richmond fund accounts for all financial transactions relating to the City-owned marine terminal facilities and commercial property rentals.
The Municipal Sewer fund accounts for all financial transactions relating to the City's Wastewater Collection and Treatment. Services are on a user charge basis to residents and business owners located in Richmond. 37
3-21-23, CC Mtg.
City of Richmond
Statement of Net Position
Proprietary Funds
For the year ended June 30, 2022
Richmond Housing Port of Municipal Other Enterprise
Authority Richmond Sewer Funds
ASSETS
Current assets:
Cash and investments $ 3,118,639 $ 6,245,066 $ 41,704,346 $ 7,003,509 Restricted cash and investments 97,786 77,892 3,231,466 86,625 Receivables:
Accounts, net 495,744 5,977,080 68,121 350,360
Interest - 3,062 22,961 4,222
Grants 440,241 - - -
Total current assets 4,152,410 12,303,100 45,026,894 7,444,716 Noncurrent assets:
Receivables:
Due from developer 10,221,743 - - -
Lease receivables - 64,399,300 - 5,396,449
Capital assets:
Nondepreciable 1,708,686 4,937,160 60,521,442 3,897,628 Depreciable 44,836,474 87,500,286 190,273,099 35,368,899 Less accumulated depreciation (30,158,605) (59,476,155) (79,804,418) (33,250,688) Net capital assets 16,386,555 32,961,291 170,990,123 6,015,839 Total noncurrent assets 26,608,298 97,360,591 170,990,123 11,412,288 Total assets 30,760,708 109,663,691 216,017,017 18,857,004
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources - pension 157,783 91,074 312,012 217,490 Deferred outflows of resources - OPEB 21,073 7,024 53,735 40,039 Deferred charge on refunding - - 5,900,629 -
Total deferred outflows of resources 178,856 98,098 6,266,376 257,529
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 1,624,304 275,286 8,267,769 555,833 Interest payable - 69,417 2,263,792 92,202
Refundable deposits 141,867 238,423 - 89,666
Compensated absences - current 19,327 6,207 38,791 40,598 Claims payable - current - - - -
Long-term debt - current - 4,270,000 2,852,838 106,231
Total current liabilities 1,785,498 4,859,333 13,423,190 884,530 Noncurrent liabilities:
Advances from other funds - 12,774,486 - -
Unearned revenue 1,814,047 531,906 36,280 591,867
Compensated absences 22,700 32,196 36,521 11,091
Claims payable - - - -
Long-term debt 1,001,530 4,842,946 144,370,654 2,128,971 Net pension liability 763,765 440,855 1,510,327 1,052,782 Net OPEB liability 479,954 159,985 1,223,883 911,913
Total noncurrent liabilities 4,081,996 18,782,374 147,177,665 4,696,624 Total liabilities 5,867,494 23,641,707 160,600,855 5,581,154
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 482,080 278,262 953,299 664,503 Deferred inflows of resources - OPEB 228,497 76,166 582,668 434,144 Deferred inflows of resources - leases - 63,484,960 - 5,371,636 Total deferred inflows of resources 710,577 63,839,388 1,535,967 6,470,283
NET POSITION (DEFICIT)
Net investment in capital assets 15,385,025 23,848,345 32,455,285 3,780,637 Restricted for debt service - 77,892 443,441 86,625
Unrestricted 8,976,468 (1,645,543) 27,247,845 3,195,834 Total net position $ 22,280,694 24,361,493 $ 60,146,571 $ 7,063,096 $ Business-type Activities
See accompanying Notes to Basic Financial Statements.
38
3-21-23, CC Mtg.
Governmental
Activities
Total Enterprise Internal Service
Funds Funds
$ 58,071,560 $ 54,557,867
3,493,769 -
6,891,305 3,312
30,245 32,075
440,241 3,290,326
68,927,120 57,883,580
10,221,743 -
69,795,749 -
71,064,916 -
357,978,758 31,213,838
(202,689,866) (20,988,195)
226,353,808 10,225,643
306,371,300 10,225,643
375,298,420 68,109,223
778,359 232,347
121,871 26,903
5,900,629 -
6,800,859 259,250
10,723,192 985,708
2,425,411 8,485
469,956 -
104,923 66,303
- 14,606,071
7,229,069 261,947
20,952,551 15,928,514
12,774,486 -
2,974,100 -
102,508 - - 36,486,531
152,344,101 1,474,133
3,767,729 1,124,702
2,775,735 612,742
174,738,659 39,698,108
195,691,210 55,626,622
2,378,144 709,898
1,321,475 291,715
68,856,596 -
72,556,215 1,001,613
75,469,292 8,489,563
607,958 -
37,774,604 3,250,675
$ 113,851,854 $ 11,740,238
39
3-21-23, CC Mtg.
City of Richmond
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the year ended June 30, 2022
Richmond Housing Port of Municipal Other Enterprise
Authority Richmond Sewer Funds
OPERATING REVENUES:
Rental $ 534,339 $ 6,932,845 $ - $ 162,777
Service charges - 626,982 28,168,977 3,160,235
Lease income - 2,920,787 - 367,328
Other 248,612 50,039 - -
Total operating revenues 782,951 10,530,653 28,168,977 3,690,340 OPERATING EXPENSES:
Salaries and benefits (4,203,909) (1,015,124) 226,498 159,836 General and administrative 1,960,522 1,622,021 9,115,474 1,723,639 Maintenance 779,755 541,167 101,507 3,048
Depreciation - 3,529,821 3,862,299 132,317
Housing assistance (301,417) - - -
Claims losses - - - -
Other 14,250 (83,201) 7,667 -
Total operating expenses (1,750,799) 4,594,684 13,313,445 2,018,840 OPERATING INCOME (LOSS) 2,533,750 5,935,969 14,855,532 1,671,500 NONOPERATING REVENUES (EXPENSES):
Gain (loss) from retirement of capital assets - - - -
Interest income 297 663,112 123,270 122,918
Grants 2,211,712 - - -
Interest expense - (168,873) (4,827,498) (174,456)
Total nonoperating revenues (expenses) 2,212,009 494,239 (4,704,228) (51,538) Income (loss) before
contributions and transfers 4,745,759 6,430,208 10,151,304 1,619,962 CONTRIBUTIONS AND TRANSFERS:
Capital contributions - - - -
Transfers in 949,414 - - 2,654,027
Transfers out - - - (86,778)
Total contributions and transfers 949,414 - - 2,567,249 Change in net position 5,695,173 6,430,208 10,151,304 4,187,211 NET POSITION:
Beginning of year, as restated 18,666,320 15,850,486 49,995,267 2,875,885 End of year $ 24,361,493 $ 22,280,694 $ 60,146,571 $ 7,063,096 Business-type Activities
See accompanying Notes to Basic Financial Statements.
40
3-21-23, CC Mtg.
Governmental
Activities
Total Enterprise Internal Service
Funds Funds
$ 7,629,961 $ -
31,956,194 22,230,208 3,288,115 -
298,651 -
43,172,921 22,230,208
(4,832,699) 553,140 14,421,656 1,151,902 1,425,477 7,543,534 7,524,437 2,254,908 (301,417) -
- 21,145,703
(61,284) -
18,176,170 32,649,187
24,996,751 (10,418,979)
- (3,361)
909,597 248,000
2,211,712 7,217,327
(5,170,827) (72,836)
(2,049,518) 7,389,130
22,947,233 (3,029,849)
- 1,358,413
3,603,441 601,018
(86,778) -
3,516,663 1,959,431
26,463,896 (1,070,418)
87,387,958 12,810,656
$ 113,851,854 $ 11,740,238
41
3-21-23, CC Mtg.
City of Richmond
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2022
Richmond Housing Port of Municipal Other Enterprise
Authority Richmond Sewer Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers/interfund services $ 525,638 $ 9,679,897 $ 28,179,359 $ 3,749,956 Payments to suppliers (2,342,346) (2,098,007) (7,448,704) (1,504,298) Payments to employees (746,365) (352,265) (1,435,674) (833,039) Insurance premiums and claims paid - - - -
Net cash provided by (used in) operating activities (2,563,073) 7,229,625 19,294,981 1,412,619
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Interfund receipts (payments) - (287,739) - (2,580,535) Receipts from other governments 1,977,979 - - -
Transfers in 949,414 - - 2,654,027
Transfers out - - - (86,778)
Net cash provided by (used in)
noncapital financing activities 2,927,393 (287,739) - (13,286)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Grant receipts - - - -
Acquisition of capital assets - - (30,867,877) (62,835) Issuance of long-term debt - - 11,992,567 -
Principal payments on capital debt - (4,100,000) (2,480,000) (101,656) Principal payments on lease - - (246,666) -
Interest paid - (587,679) (5,516,664) (178,649)
Net cash provided by (used in)
capital and related financing activities - (4,687,679) (27,118,640) (343,140) CASH FLOWS FROM INVESTING ACTIVITIES:
Interest 297 660,722 111,552 120,183
Net cash provided by (used in) investing activities 297 660,722 111,552 120,183 Net cash flows 364,617 2,914,929 (7,712,107) 1,176,376
CASH AND INVESTMENTS - Beginning of year 2,851,808 3,408,029 52,647,919 5,913,758 CASH AND INVESTMENTS - End of year $ 3,216,425 $ 6,322,958 $ 44,935,812 $ 7,090,134
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) $ 2,533,750 $ 5,935,969 $ 14,855,532 $ 1,671,500 Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation expense - 3,529,821 3,862,299 132,317
Changes in assets and liabilities:
Receivables, net (257,313) 51,678 10,382 84,429
Accounts payable and accrued liabilities 112,663 (18,020) 1,775,944 221,896 Refundable deposits (1,899) - - 493
Unearned revenue - 11,906 - -
Compensated absences payable 25,808 9,795 (32,331) 4,114 Claims payable - - - -
Net pension liability and deferred outflows/inflows (2,868,428) (844,030) (731,750) (598,524) Net OPEB liability and deferred outflows/inflows (2,107,654) (533,154) (445,095) (78,793) lease receivable and deferred outflows/inflows - (914,340) - (24,813) Net cash provided by (used in) operating activities $ (2,563,073) $ 7,229,625 $ 19,294,981 $ 1,412,619 Business-type Activities
See accompanying Notes to Basic Financial Statements
42
3-21-23, CC Mtg.
Governmental
Activities
Total Enterprise Internal Service
Funds Funds
$ 42,134,850 $ 22,235,896
(13,393,355) (9,319,461)
(3,367,343) (3,461,753)
- (14,445,440)
25,374,152 (4,990,758)
(2,868,274) 2,580,535
1,977,979 -
3,603,441 601,018
(86,778) -
2,626,368 3,181,553
- 3,927,001
(30,930,712) (736,759)
11,992,567 -
(6,681,656) (251,950)
(246,666) -
(6,282,992) (74,068)
(32,149,459) 2,864,224
892,754 232,117
892,754 232,117
(3,256,185) 1,287,136
64,821,514 53,270,731
$ 61,565,329 $ 54,557,867
$ 24,996,751 $ (10,418,979)
7,524,437 2,254,908
(110,824) 5,688
2,092,483 (624,025) (1,406) -
11,906 -
7,386 (44,924) - 6,700,263
(5,042,732) (1,657,674) (3,164,696) (1,206,015) (939,153) - $ 25,374,152 $ (4,990,758)
43
3-21-23, CC Mtg.
FIDUCIARY FUND FINANCIAL STATEMENTS
Fiduciary funds are presented separately from the Government-Wide and Fund financial statements.
Trust funds are used to account for assets held by the City as a trustee agent for individuals, private organizations, or other governments.
Custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments.
The financial activities of the Trust and Custodial funds are excluded from the City-wide financial statements, but are presented in separate Fiduciary Fund financial statements. 44
3-21-23, CC Mtg.
City of Richmond
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2022
Pension Private-Purpose
Trust Funds Trust Funds Custodial Funds
ASSETS
Cash and investments $ - $ 6,909,914 $ 6,424,641
Restricted cash and investments 1,146,556 18,126,162 547,582 Pension and OPEB plan cash and investments:
Local Agency Investment Fund 184,164 - -
Mutual fund investments 10,001,639 - -
Accounts receivable - 523 -
Interest receivable 866 6 3,904
Prepaids and other assets - 5,485,179 -
Total assets 11,333,225 30,521,784 6,976,127
DEFERRED OUTFLOWS OF RESOURCES
Deferred ouflows of resources - deferred loss on refunding - 391,179 - Total deferred outflows of resources - 391,179 -
LIABILITIES
Accounts payable and accrued liabilities - 234,206 4,801 Interest payable - 593,945 -
Long-term debt:
Due within one year - 6,590,000 -
Due in more than one year - 47,043,648 -
Total liabilities - 54,461,799 4,801
NET POSITION:
Restricted for employees' pension and OPEB benefits 11,333,225 - - Held in trust for other governments - (23,548,836) -
Restricted for individuals, organizations, and other governments - - 6,971,326 Total net position $ 11,333,225 $ (23,548,836) $ 6,971,326 See accompanying Notes to Basic Financial Statements.
45
3-21-23, CC Mtg.
City of Richmond
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the year ended June 30, 2022
Pension Private-Purpose
Trust Funds Trust Funds Custodial Funds
ADDITIONS:
Property taxes $ - $ 8,306,100 $ 1,208,401
Contributions to trust - employers 357,756 - 279,697
Net investment income:
Net increase (decrease) in fair value of investments (2,098,881) - - Interest income 239,004 218,995 21,154
Less investment management fees (77,258) - -
Gain from sale of property - 954,500 -
Total additions (1,579,379) 9,479,595 1,509,252
DEDUCTIONS:
Community development - 1,459,882 -
Pension benefits 1,543,274 - -
Payments in accordance with trust agreements - 903,639 - Interest and fiscal charges - 2,052,525 1,912,920
Other - - 117,085
Total deductions 1,543,274 4,416,046 2,030,005
Change in net position (3,122,653) 5,063,549 (520,753)
NET POSITION:
Beginning of year 14,455,878 (28,612,385) 7,492,079
End of year $ 11,333,225 $ (23,548,836) $ 6,971,326
See accompanying Notes to Basic Financial Statements.
46
3-21-23, CC Mtg.
NOTES TO BASIC
FINANCIAL STATEMENTS
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Richmond, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The City’s significant accounting policies are described below.
A. Financial Reporting Entity
The City was incorporated in 1905 under the laws of the State of California and adopted its charter in 1909. The City operates under a Council-Manager form of government and provides the following services to its citizens as authorized by its charter: police and fire protection, planning and community development, streets and roads, parks and recreation, sewage treatment, drainage and capital projects.
In addition, the City has a port, marina, municipal and storm sewer enterprises, a housing authority, a joint powers financing authority, and a parking authority which is inactive.
The accompanying basic financial statements present the financial activity of the City, which is the primary government presented, along with the financial activities of its component units, which are entities for which the City is financially accountable. Although they are separate legal entities, blended component units are in substance part of the City’s operations and are reported as an integral part of the City’s financial statements. The discretely presented component unit, on the other hand, is reported in a separate column in the basic financial statements to emphasize it is legally separate from the government.
Primary Government
The financial statements of the primary government of the City include the activities of the City as well as the Richmond Housing Authority, the Richmond Joint Powers Financing Authority, the Richmond Neighborhood Stabilization Corporation, the Richmond Parking Authority, the Richmond Municipal Sewer District, and the Richmond Surplus Property Authority all of which are controlled by and dependent on the City. While these are separate legal entities, their financial activities are integral to those of the City. Their financial activities have been aggregated and merged (termed “blended”) with those of the primary government of the City in the accompanying financial statements.
Blended Component Units
Richmond Housing Authority (Housing Authority) – Formed in 1941 as a separate legal entity under the provisions of the Housing Act of 1937, the Housing Authority was established to use funds provided by the Department of Housing and Urban Development (HUD) to rehabilitate local deteriorated housing and to subsidize low-income families in obtaining decent, safe, and sanitary housing needs.
Although the Housing Authority is a separate legal entity, it is an integral part of the City. The City exercises significant financial and management control over the Housing Authority and members of City Council serve as the governing board of the Housing Authority. The financial statements of the Housing Authority are included in the City’s basic financial statements as an enterprise fund. Separate financial statements for the Housing Authority may be obtained by contacting the Richmond Housing Authority, 330 24th Street, Richmond, California 94804.
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City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued A. Financial Reporting Entity, Continued
Blended Component Units, Continued
Richmond Joint Powers Financing Authority (JPFA) – A joint exercise of powers authority formed on December 1, 1989, by and between the City and the former Redevelopment Agency, the JPFA was created to assist the City, the Redevelopment Agency, and other local public agencies in financing and refinancing capital improvements and working capital pursuant to the Marks-Roos Local Bond Pooling Act of 1985. The JPFA is authorized to purchase obligations of the City, Redevelopment Agency, and other local public agencies.
Although the JPFA is a separate legal entity, it is an integral part of the City. The City exercises significant financial and management control over the JPFA and the members of the City Council serve as the Board of Directors. The operations of the JPFA are included in the City’s basic financial statements as a debt service fund. Separate financial statements for the JPFA may be obtained by contacting the Office of Finance, City of Richmond, 450 Civic Center Plaza, Richmond, California 94804.
Richmond Neighborhood Stabilization Corporation (RNSC) – A California nonprofit public benefit Corporation formed in July 2009 by the City and the former Redevelopment Agency under the laws of the State of California. The Corporation was organized for the purpose of administering and operating the City’s Neighborhood Stabilization Program (NSP), which includes purchasing, developing, financing, rehabilitating, land banking and/or demolishing blighted properties and foreclosed or abandoned properties utilizing the NSP funds or other public and private funding sources, and assisting the City and the Agency in providing affordable home ownership opportunities for households of low and moderate income by facilitating the financing necessary for the sale and resale of deed-restricted affordable ownership units to low and moderate income households at affordable costs, and other similar functions.
The Corporation is governed by a board of directors consisting of the City Manager, the Finance Director, and five other City and Housing Authority Directors. Although the RNSC is a separate legal entity, it is an integral part of the City. The City exercises significant financial and management control over the RNSC and members of the Board of Directors are appointed by City Council and City management has operational responsibility for the RNSC. The operations of the RNSC are included in the City’s basic financial statements as a special revenue fund. Separate financial statements for the RNSC may be obtained by contacting the Office of Finance, City of Richmond, 450 Civic Center Plaza, Richmond, California 94804.
Richmond Surplus Property Authority – Formed to become the owner of certain property declared surplus by the U.S. Government, the Authority is a separate legal entity but it is an integral part of the City. The City exercises significant financial and management control over the Authority and members of the City Council serve as the governing board of the Authority. The Authority was reactivated in fiscal year 2011 to facilitate certain Port of Richmond transactions. The financial activities of the Authority are included in the Port of Richmond Enterprise Fund. Separate financial statements are not issued for the Authority.
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City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued A. Financial Reporting Entity, Continued
Blended Component Units, Continued
Richmond Parking Authority (Parking Authority) – Formed in 1975 pursuant to the provisions of California statutes for the purpose of financing the construction of off-street parking facilities. Although the Parking Authority is a separate legal entity, it is an integral part of the City. The City exercises significant financial and management control over the Parking Authority and members of the City Council serve as the governing board of the Parking Authority. The Parking Authority is inactive.
Richmond Municipal Sewer District (RMSD) – The Richmond Municipal Sewer District (RMSD) was established on September 17, 1956, pursuant to the Municipal Sewer District Act of 1911. It encompasses approximately fourteen square miles of the City of Richmond. The district was formed to provide “wastewater collection and treatment for the residents and businesses located in the central part of the City of Richmond”.
The RMSD contracts the operation and maintenance of the Wastewater Treatment Plant and the Sanitary Sewer Collection System to Veolia Water North America (formerly US Filter). However, the City of Richmond still maintains complete ownership of all the assets for both the wastewater treatment plant and the collection system.
The district is a separate legal entity, but it is an integral part of the City. The City exercises significant financial and management control over the district and members of the City Council serve as the governing board of the district. The financial activities of the district are included in the Municipal Sewer Enterprise Fund. Separate financial statements are not issued for the district.
Discretely Presented Component Units
RHA Properties – A joint powers agreement between the City and the Housing Authority formed in 2004 for the purpose of owning and managing the operations of an affordable housing residential complex known as The Hilltop at Westridge Apartments in the City, dedicated to the needs of elderly persons.
The City and the Housing Authority funded the acquisition of this complex through the issuance of debt.
The City and Housing Authority exercise significant financial and management control over RHA Properties and appoint members of the Board of Directors, however RHA Properties manages its own programs separate from the City or the Housing Authority. Therefore, the financial activities of RHA Properties are discretely presented in the RHA Properties Component Unit column of the Statement of Net Position and the Statement of Activities.
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued A. Financial Reporting Entity, Continued
Discretely Presented Component Units, Continued
RHA Housing Corporation – RHA Housing Corporation was incorporated and registered on January 26, 2004 as a California nonprofit public benefit corporation to benefit and support the RHA with respect to the Easter Hill development. RHA Housing Corporation entered into RAD Conversion redevelopment activities and it acts as the sole and managing member of RHA RAD LLC. The Corporation’s fiscal year ends on December 31. The City and Housing Authority exercise significant financial and management control over RHA Housing Corporation and appoint members of the Board of Directors, however RHA Housing Corporation manages its own programs separate from the City or the Housing Authority.
Therefore, the financial activities of RHA Housing Corporation are discretely presented in the RHA Housing Corporation Component Unit column of the Statement of Net Position and the Statement of Activities. Separate financial statements for RHA Housing Corporation may be obtained by contacting the Richmond Housing Authority, 330 24th Street, Richmond, California 94804.
RHA RAD LLC – A California limited liability company was formed on July 11, 2013 by RHA Housing Corporation, the sole and managing member. The company is operated exclusively to further the tax exempt charitable purposes of the sole and managing member to provide affordable housing for lowincome persons where no adequate housing exists for such persons, and to own and operate housing for the benefit of low-income persons who are in need of affordable, decent, safe and sanitary housing and related services, where an inadequate supply of housing exists for such persons. The City and Housing Authority exercise significant financial and management control over RHA RAD LLC and RHA Housing Corporation is the sole member of RHA RAD LLC, however RHA RAD LLC manages its own programs separate from the City or the Housing Authority. Therefore, the financial activities of RHA RAD LLC are discretely presented in the RHA RAD LLC Component Unit column of the Statement of Net Position and the Statement of Activities. Separate financial statements for RHA RAD LLC may be obtained by contacting the Richmond Housing Authority, 330 24th Street, Richmond, California 94804.
In order for the Authority to proceed in its participation into the RAD Program as discussed in Note 17, RHA RAD LLC shall act as the managing general partner of RHA RAD Housing Partnership LP.
B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for in a separate set of self-balancing accounts that comprise its assets, liabilities, deferred outflows/inflows of resources, fund equity, revenues, and expenditures or expenses. City resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled.
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City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government-Wide Financial Statements
The Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. Fiduciary activities of the City are not included in these statements; they are presented separately.
The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
The Government-wide financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets, deferred outflows/inflows of resources and liabilities, including capital assets as well as infrastructure assets and long-term liabilities, are included in the Statement of Net Position. The Statement of Activities presents all the City’s revenues, expenses and other changes in Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.
Certain eliminations have been made in regards to interfund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total column. In the Statement of Activities, internal service fund transactions have been eliminated. However, transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:
Due to/from other funds
Advances to/from other funds
Transfers in/out
The City applies all applicable GASB pronouncements including all NCGA Statements and Interpretations currently in effect.
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and in the aggregate for all non-major funds. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the Government-Wide financial statements.
All governmental funds are accounted for on the “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.
Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.
Accordingly, revenues are recorded when received such as business licenses and fines and penalties in cash, except that revenues subject to accrual (generally ninety days after the fiscal year-end) are recognized when due. The primary revenue sources which have been treated as susceptible to accrual by the City are property taxes, sales taxes, transient occupancy taxes, franchise taxes, certain other intergovernmental revenues, and earnings on investments. Expenditures are recorded in the accounting period in which the related fund liability is incurred also generally ninety days after the fiscal year end.
Reconciliations of the Fund Financial Statements to the Government-Wide Financial Statements are provided to explain the differences between the two approaches.
The City reports the following major governmental funds in the accompanying financial statements:
General Fund – the General Fund is used for all the general revenues of the City not specifically levied or collected for other City funds and the related expenditures. The General Fund accounts for all financial resources of a governmental unit which are not accounted for in another fund.
Community Development and Loan Programs Special Revenue Fund – accounts for the receipt of Community Development Block Grant, HOME Investment Partnership Program, and Neighborhood Stabilization Program grant monies and the use of the grants. The Fund also accounts for the low and moderate income housing activities of the City as Housing Successor to the former Redevelopment Agency. Related to the grant disallowed costs discussed in Note 4, the City purchased certain loans that had previously been funded with Community Development Block Grant and HOME funds. The grants and loan programs are to be used to provide, within the City of Richmond, new affordable housing, improve existing housing conditions, assist homeless and disabled with housing, and to expand economic opportunities in business, and employment for low and moderate income residents. 54
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Fund Net Position, and a Statement of Cash Flows for each major proprietary fund and in the aggregate for all non-major funds. A column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the Government-Wide Financial Statements.
Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets, liabilities and deferred outflows/inflows of resources (whether current or non-current) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in total net position.
Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred, regardless of when cash changes hands.
Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.
The City reports the following major enterprise funds as proprietary funds of the City:
Richmond Housing Authority – This fund accounts for all funds provided by the Department of Housing and Urban Development (HUD) to assist low income families in obtaining decent, safe and sanitary housing.
Port of Richmond – This fund accounts for all financial transactions relating to the City-owned marine terminal facilities and commercial property rentals.
Municipal Sewer – This fund accounts for all financial transactions relating to the City’s Wastewater Collection and Treatment. Services are on a user charge basis to residents and business owners located in Richmond.
The City also reports the following proprietary fund type:
Internal Service Funds – The funds account for insurance reserves and equipment services and replacement, all of which are provided to other departments on a cost-reimbursement basis. 55
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Fiduciary Fund Financial Statements
Fiduciary Fund Financial Statements include a Statement of Fiduciary Net Position, and a Statement of Changes in Fiduciary Net Position. The City’s Fiduciary funds represent Pension and OPEB Trust funds, Private-Purpose Trust funds and Custodial funds. Custodial funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Pension Trust funds and PrivatePurpose Trust funds are accounted for on an economic resources measurement focus under the accrual basis of accounting.
The City reports the following fiduciary fund types:
Trust Funds - The Pension and OPEB Trust Funds account for assets held by the City as an Agent for various functions. The General Pension, Police and Firemen’s and Garfield Pension Funds account for the accumulation of resources to be used for retiree pension payments at appropriate amounts and times in the future. The Pt. Molate Private-Purpose Trust Fund is used to account for assets held by the City as an agent for the U.S. Navy and a private developer for the cleanup of Point Molate as discussed in Note 17. The Successor Agency to the Richmond Community Redevelopment Agency Private-Purpose Trust Fund was established as of February 1, 2012 to account for the activities of the Successor Agency to the former Richmond Community Redevelopment Agency as discussed in Note
18. The financial activities of the Trust Funds are excluded from the Government-wide financial statements, but are presented in the separate Fiduciary Fund financial statements.
Custodial Funds – These funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments, including special assessment districts within the City and non-public organizations. The financial activities of these funds are excluded from the government-wide financial statement, but are presented in separate Fiduciary Fund financial statements.
C. Cash and Investments
The City maintains a cash and investments pool that is available for use by all funds. Each fund’s portion of this pool is displayed as cash and investments on the balance sheet for governmental funds and the statements of net position for proprietary and fiduciary funds. Investments are stated at fair value.
In accordance with GASB Statement No. 40, Deposit and Investment Disclosures (Amendment of GASB Statement No. 3), certain disclosure requirements for deposits and investment risks were made in the following areas:
Interest Rate Risk
Credit Risk
o Overall
o Custodial Credit Risk
o Concentrations of Credit Risk
In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures. 56
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Cash and Investments, Continued
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid money market investments with maturities of one-year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. The City categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The City did not have any investments measured using Level 3 inputs as of June 30, 2022.
The City participates in an investment pool managed by the State of California entitled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled funds in Structured Notes and AssetBacked Securities. LAIF’s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to the change in interest rates.
Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the City and are presented as “cash and investments” in the accompanying basic financial statements.
For the purpose of the statement of cash flows, the City considers all pooled cash and investments (consisting of cash and investments and restricted cash and investments) held by the City as cash and cash equivalents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (consisting of cash with fiscal agent and restricted cash and investments held by fiscal agent) as cash and cash equivalents because investments meet the criteria for cash and equivalents defined above.
D. Prepaids and Supplies
Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed, rather than when purchased. Prepaid items in governmental funds are equally offset by nonspendable fund balance which indicates that they do not constitute available spendable resources even though they are a component of net current assets.
Supplies are valued at cost using the weighted average method. Supplies of the governmental funds consist of expendable supplies held for consumption. The cost is recorded as an expenditure in the governmental funds at the time individual inventory items are consumed rather than when purchased.
Reported governmental fund inventories are equally offset by nonspendable fund balance which indicates that they do not constitute available spendable resources even though they are a component of net current assets.
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued E. Capital Assets
Capital assets are valued at historical cost or at estimated acquisition value on the date donated. If actual historical costs are not available, assets have been valued at approximate historical cost. The City’s policy is to capitalize assets costing at least $5,000, and the Housing Authority’s policy is to capitalize assets costing at least $1,000. Depreciation is recorded on a straight-line basis over the following estimated useful lives:
Infrastructure includes streets systems, parks and recreation lands and improvement systems, storm water collection systems, and buildings combined with site amenities such as parking and landscaped areas used by the City in the conduct of its business. Each major infrastructure system is divided into subsystems. For example, the street system includes pavement, curbs and gutters, sidewalks, medians, streetlights, traffic control devices such as signs, signals and pavement markings, landscaping and land.
In the case of the initial capitalization of general infrastructure assets reported by governmental activities, the City chose to include all such items regardless of their acquisition date or amount.
Net interest costs incurred during the construction of capital assets for the business-type and proprietary funds are capitalized as part of the asset’s cost.
F. Property Held for Resale
Property held for resale is accounted for at the lower of cost or net realizable value or agreed upon sales price if a disposition agreement has been made with a developer.
The City received five properties for resale in fiscal year 2013 with a book value of $573,822 from the acceptance of a deed in lieu of foreclosure on the property related to developer defaults on prior loans under the Richmond Neighborhood Stabilization loan program discussed in Note 4. These properties were rehabilitated during fiscal years 2014 and 2015 increasing the carrying value by a total of $749,716 and $39,303, respectively. In fiscal year 2014, the City received an additional four properties with a carrying value of $648,238. Six properties were sold in fiscal year 2016, the remaining two properties held for resale had a book value of $671,255 as of June 30, 2017. In fiscal year 2018, one property was sold during the year, and the carrying value of the one remaining property held for resale was $78,016 as of June 30, 2022.
Type Useful Life
Improvements other than buildings 20 years
Buildings and building improvements 20 - 50 years
Vehicles 3 - 10 years
Infrastructure 25 - 50 years
Machinery and equipment 3 - 20 years
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued G. Property Taxes
The State of California’s Constitution limits the combined maximum property tax rate on any given property to one percent of its assessed value except for voter approved incremental property taxes.
Assessed value equals purchase price and may be adjusted by no more than two percent per year unless the property is modified, sold, or transferred. The State Legislature distributes property tax receipts from among the counties, cities, school districts, and other districts.
Contra Costa County assesses properties and bills for and collects property taxes as follows:
The term “unsecured” refers to taxes on personal property other than land and buildings. These taxes are secured by liens on the property being taxed. Property taxes levied are recorded as revenue in the fiscal year of levy.
H. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position or balance sheet report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The first item that qualifies for reporting in this category is the deferred charge on refunding reported in the statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The City also has deferred outflows of resources related to change in fair value of derivative instruments, pensions and OPEB as discussed in Notes 8, 12, and 13.
In addition to liabilities, the statement of net position or balance sheet report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The first item which qualifies for reporting in this category arises only under a modified accrual basis of accounting. Accordingly, the item, unavailable revenue, is only reported in the governmental funds balance sheet. The governmental funds report unavailable revenues from three sources: loans receivable, grants receivable and interest on interfund advances. See Note 9 for further discussion. The City also has deferred inflows of resources related to pensions and OPEB as discussed in Notes 12 and 13. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.
Secured Unsecured
Valuation/lien dates January 1 March 1
Levied dates July 1 July 1
Due dates 50% on November 1 July 1
50% on February 1
Delinquent as of December 10 (for November) August 31
April 10 (for February)
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I. Net Position and Fund Balances
Net Position
In the City-wide financial statements, Net Position is classified as follows:
Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation plus deferred outflows of resources associated with the refunding of related capital debt, reduced by outstanding debt that was used for the acquisition, construction, or improvement of these capital assets.
Restricted Net Position – This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments. In addition, net position restricted for pension benefits are restricted as a result of enabling legislation.
Unrestricted Net Position – This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first.
Fund Balances
Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash and receivables, less its liabilities.
The City’s fund balances are classified based on spending constraints imposed on the use of resources.
For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint:
Nonspendable represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, interfund advances and notes receivable are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then nonspendable amounts are required to be presented as a component of the applicable category.
Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose.
Committed fund balances have constraints imposed by formal action of the City Council which may be altered only by the same formal action of the City Council. The highest level of formal action of the City Council is an Ordinance.
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I. Net Position and Fund Balances, Continued
Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designee, the Finance Director, and may be changed at the discretion of the City Council or its designee, during the budget approval process or via budget amendments in accordance with the City’s adopted budget policy. This category includes encumbrances; nonspendables, when it is the City’s intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed.
Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds.
J. Compensated Absences
Compensated absences comprise unused vacation and certain other compensated time off, which are accrued and charged to expense as earned. Governmental funds include only amounts that have matured, while their long-term liabilities are recorded in the Statement of Net Position.
K. Bond Issuance Costs, Original Issue Discounts and Premiums and Deferred Charge on Refunding For proprietary fund types, bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Any differences between proprietary refunded debt and the debt issued to refund it, called a deferred charge on refunding, is amortized over the remaining life of either the refunded debt or the refunding debt, whichever is shorter. The deferred charge on refunding is reported as a deferred inflow or outflow of resources, as applicable. Bond issuance costs, other than prepaid insurance, are expensed in the year incurred.
L. Pension
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) 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 currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
M. Other Post Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s OPEB Plans and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported by the CalPERS Trust and the PARS Trust. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued N. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
2. CASH AND INVESTMENTS
The City maintains a cash and investment pool for all funds. Certain restricted funds that are held and invested by independent outside custodians through contractual agreements are not pooled. These restricted funds include cash and investment held by trustees. Interest income earned on pooled cash and investments is allocated to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related funds.
The following is a summary of cash and investments at June 30, 2022:
A. Classification
Cash and investments at June 30, 2022 consist of the following:
Total Discrete Total
Governmental Business-Type Total Primary Component Fiduciary Cash and Activities Activities Government Units Funds Investments Cash and investments $ 181,564,842 $ 58,071,560 $ 239,636,402 $ 13,334,555 78,270 $ 253,049,227 $ Restricted cash and investments 15,361,210 3,493,769 18,854,979 19,820,300 - 38,675,279 Total cash and investments 196,926,052 $ $ 61,565,329 $ 258,491,381 $ 33,154,855 78,270 $ 291,724,506 $ Primary Government
Government-Wide Statement of Net Position
Primary Government:
Local Agency Investment Funds (LAIF) $ 74,218,538
CalTrust Short-Term Fund 148,490,228
CalTrust Medium-Term Fund 88,624
Money Market Mutual Funds (U.S. Securities) 4,478,414
Held by Trustee:
Money Market Mutual Funds (U.S. Securities) 38,007,797
Investment Agreement 1,039,778
Guaranteed Investment Contracts 625,001
Total investments 266,948,380
Cash in banks and on hand - Primary Government 24,697,856 Cash in banks - RHA Housing Corporation 78,270
Total cash on hand and deposits 24,776,126
Total cash and investments $ 291,724,506
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
B. Deposits
The carrying amount of the City’s cash deposit was $24,776,126 at June 30, 2022. Bank balances before reconciling items were a positive amount of $37,603,043 at June 30, 2022. The City’s cash deposit was fully insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). The remaining amount was collateralized with securities held by pledging the financial institutions.
The California Government Code (Code) Section 53652 requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. The Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City’s name.
The fair value of pledged securities must equal at least 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits.
C. Investments Authorized by the Code and the City’s Investment Policy Under the provisions of the City’s Investment Policy, and in accordance with California Government Code, the following investments are authorized:
Investments are stated at fair value using the aggregate method in all funds, resulting in the following investment income in all funds for the year ended June 30, 2022:
Minimum Maximum
Maximum Credit Maximum % Investment
Authorized Investment Type Maturity Quality of Portfolio in One Issuer U.S. Treasury Bills, Bonds and Notes 5 years A None None Obligations issued by the United States 5 years N/A None None Government Federally Sponsored Agencies
Treasury bonds and notes issued by the State 5 years A None None of California or any local agency with California
Commercial Paper 270 days Top rating category 25%(A) 10% Negotiable Certificates of Deposit 5 years A 30% 10%
Medium-Term Corporate Notes 5 years A 30% 100%
Money Market Mutual Funds N/A Top rating category 20% 10% Local Agency Investment Fund (LAIF) N/A N/A None $75 Million/Account Investment Trust of California (CalTrust) N/A N/A None None (A) The City may invest an additional 15% or a total of 25% of City surplus money, only if dollar weighted average maturity of the entire amount does not exceed 31 days.
Interest income $ 114,551
Realized gain (loss) on investments 2,098,881
Total investment income $ 2,213,432
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
C. Investments Authorized by the Code and the City’s Investment Policy, Continued The City’s portfolio value fluctuates in an inverse relationship to any change in interest rate. Accordingly, if interest rates rise, the portfolio value will decline. If interest rates fall, the portfolio value will rise. The portfolio for year-end reporting purposes is treated as if it were all sold. Therefore, fund balance must reflect the portfolio’s change in value. These portfolio value changes are unrealized unless sold.
Generally, the City’s practice is to buy and hold investments until maturity dates. Consequently, the City’s investments are carried at fair value.
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2022 include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments included the following:
Structured Notes are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or have embedded forwards or options.
Asset-Backed Securities, the bulk of which are mortgage backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as collateralized mortgage obligations) or credit card receivables.
At June 30, 2022, the City had $74,218,538 invested in LAIF, which had invested 1.88% of the pool investment funds in Structured Notes and Asset-Backed Securities as compared to 2.31% in the previous year. The LAIF fair value factor of 0.98712541 was used to calculate the fair value of the investments in LAIF.
The City reports its investment in CalTrust at the fair value amount provided by CalTrust, which is the same as the value of the pool shares. The balance in the Short-Term Fund is available for withdrawal on demand and the balance in the Medium-Term Fund is available for withdrawal upon two days’ notice, and is based on the accounting records maintained by CalTrust. Included in CalTrust’s investment portfolio are: United States Treasury Notes, Bills, Bonds or Certificates of Indebtedness; registered state warrants or treasury notes or bonds; California local agency bonds, notes, warrants or other indebtedness; federal agency or United States government-sponsored enterprise obligations; bankers acceptances; commercial paper; negotiable certificates of deposit; repurchase agreements; medium-term notes; money market mutual funds; notes, bonds or other obligation secured by a first priority security interest in securities authorized under Government Code Section 53651; and mortgage passthrough securities, collateralized mortgage obligations, and other asset – backed securities. CalTrust’s Short-Term Fund has a target portfolio duration of 0 to 2 years and CalTrust’s Medium-Term Fund has a target portfolio duration of 1.5 to 3.5 years. At June 30, 2022 the Short-Term Fund investments matured in an average of 324 days and the Medium-Term Fund investments matured in an average of 760 days.
Money market funds and mutual funds are available for withdrawal on demand and as of June 30, 2022 have an average maturity from 18 to 36 days.
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
C. Investments Authorized by the Code and the City’s Investment Policy, Continued Prohibited Investments
Under the City’s Investment Policy, the City imposed restrictions on investments. The City cannot invest in any funds in inverse floaters, range notes, or interest only Separate Trading of Registered Interest and Principal of Securities (STRIPS) that are derived from a pool of mortgages, or in any security that could result in zero interest accrual if held to maturity (other than money market mutual funds).
D. Investments Authorized by the Code and the Housing Authority’s Investment Policy The California Government Code allows the Authority to invest in the following; provided approved percentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code:
There are no restrictions on the maximum amount invested in each security type or maximum that can be invested in any one issuer.
The Authority does not have reverse repurchase agreements.
Specified Minimum
Maximum Percentage Credit
Authorized Investment Type Maturity of Portfolio Quality Local Agency Bonds 5 years None None
U.S. Treasury obligations 5 years None None
State of California obligations 5 years None None
CA Local Agency obligations 5 years None None
U.S. Agencies 5 years None None
Banker's Acceptances 180 days 40% A1/P1
Commercial Paper - select agencies 270 days 40% A1/P1
Commercial Paper - other agencies 270 days 25% None
Negotiable Certificates of Deposit 5 years 30% None
Repurchase Agreements 1 year None None
Reverse Repurchase and Securities Lending Agreements 92 days 20% None Medium Term Corporate Notes 5 years 30% A
Mutual Funds N/A 20% Multiple
Money Market Mutual Funds N/A 20% Multiple
Collateralized Bank Deposits 5 years None None
Mortgage Pass-Through Securities 5 years 20% AA
Time Deposits 5 years None None
County Pooled Investment Funds N/A None None
California Local Agency Investment Fund N/A None None
Supranationals 5 years N/A AA
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
E. Investments Authorized by Debt Issues and Lease Agreements Under the terms of the City’s and Authority’s debt issues and lease agreements, the City and Authority are subject to various restrictions in the type, maturity and credit ratings of investments of the unspent proceeds of these issues. These restrictions are generally no more restrictive than those listed above regarding investment of the City’s and Authority’s funds. In addition, some bond indentures authorize investments in guaranteed investment contracts and investment agreements with maturity dates that coincide with the applicable debt maturities. At June 30, 2022, the City and Authority were in compliance with the terms of all these restrictions.
F. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity or earliest call date:
12 months 13 to 24 25 to 60 More than 60
or Less Months Months Months Total
Primary Government:
Local Agency Investment Funds (LAIF) 74,218,538 $ - $ $ - $ 74,218,538 - $ CalTrust Short-Term Fund 148,490,228 - - 148,490,228 -
CalTrust Medium-Term Fund 88,624 - - - 88,624
Money Market Mutual Funds (U.S. Securities) 4,478,414 - - - 4,478,414 Held by Trustee:
Money Market Mutual Funds (U.S. Securities) 38,007,797 - - 38,007,797 - Investment Agreement - 1,039,778 - - 1,039,778
Guaranteed Investment Contracts - 625,001 - - 625,001
Total Investments $ 1,039,778 265,283,601 $ $ 625,001 $ 266,948,380 - Cash in banks and on hand - Primary Government 24,697,856 Cash in banks - RHA Housing Corporation 78,270
Total Cash and Investments $ 291,724,506
Remaining Maturity (in Months)
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
G. Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating at June 30, 2022 for each investment type:
H. Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. None of the City’s investments were subject to custodial credit risk for the current year.
I. Fair Value Hierarchy
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.
Investment Type AAA AAf/S1+ AA-f/S1 Total
Money Market Mutual Funds (U.S. Securities) $ 38,007,797 $ - $ 38,007,797 - $ CalTrust Short-Term Fund - 148,490,228 148,490,228 -
CalTrust Medium-Term Fund - - 88,624 88,624
Totals $ 38,007,797 $ 148,490,228 $ 88,624 186,586,649
Not Rated:
Local Agency Investment Funds (LAIF) 74,218,538
Investment Agreement 1,039,778
Guaranteed Investment Contracts 625,001
Money Market Mutual Funds (U.S. Securities) 4,478,414
Total Investments 266,948,380
Cash in Banks and On Hand - Primary Government 24,697,856 Cash in Banks - RHA Housing Corporation 78,270
Total Cash and Investments $ 291,724,506
Credit Quality Rating as of Year-End
67
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
I. Fair Value Hierarchy, Continued
The following is a summary of the fair value hierarchy of the fair value of investments of the City as of June 30, 2022:
J. Concentration of Credit Risk
The City had no significant investments in the securities of any individual issuers, other than U.S.
Treasury securities, investment pools and money market funds at June 30, 2022.
3. INTERFUND TRANSACTIONS
A. Due To/From Other Funds
Due to/from other fund balances arise in the normal course of business and represent short-term borrowings occurring as a result of expenditures which are paid prior to the receipt of revenues. These balances are expected to be repaid shortly after the end of the fiscal year when revenues are received.
The amount for due from one fund to another at June 30, 2022 were as follows:
Total
Investment Type Level 1 Level 2 Level 3 Fair Value
Investments Measured at Amortized Cost
Held by Trustee:
Investment Agreement $ 1,039,778
Guaranteed Investment Contracts 625,001
Money Market Mutual Funds 38,007,797
Investments not subject to levelling:
Local Agency Investment Funds (LAIF) 74,218,538
CalTrust Short-Term Fund 148,490,228
CalTrust Medium-Term Fund 88,624
Treasury Curve
Money Market Mutual Funds (U.S. Securities) 4,478,414
Total Investments $ 266,948,380
Fair Value Measurement Using
Due to Other Funds General Fund Total
Nonmajor Governmental Funds 41,505 41,505
Total $ 41,505 41,505 $
Due from Other
Funds
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
3. INTERFUND TRANSACTIONS, Continued
B. Advances To/From Other Funds
At June 30, 2022 the funds below had made advances which were not expected to be repaid within the next year.
In fiscal 2006 the General Fund established repayment terms for its advance of $17,139,855 to the Port of Richmond Enterprise Fund to assist the Port with various lease transactions and other projects. The advance did not bear interest for the first three years; the next five years it bore an interest rate of 4%, with the balance payable on or before June 30, 2015. The advance repayment terms were amended in October 2013, effective June 30, 2013, to convert the accrued unpaid interest of $745,119 to principal and reduce the advance balance by $842,877, and the advance no longer bears interest. Annual principal payments of $150,000 are due beginning June 30, 2014 through June 30, 2066, with a final principal payment of $32,593 due on June 30, 2067, and in addition to those payments, the annual berthing cost of the vessel Red Oak Victory at the Port that is to be paid by the General Fund will instead offset and reduce the principal balance of the advance based on an established rental schedule. Historical rental payments from August 2004 to June 30, 2012 totaling $842,877 were applied to the principal balance of the loan as of June 30, 2013. Another provision of the amended agreement provides that upon the sale of any Port property, including Terminal One and Terminal Four, the proceeds from the sale are to be used to repay and reduce the principal balance of the advance. The balance of the advance as of June 30, 2022 is $12,774,486.
C. Transfers In/Out
With Council approval, resources may be transferred from one City fund to another. The purpose of the majority of the transfers is to move General Fund resources to provide an annual subsidy to the Cost Recovery Fund and other non-major governmental funds, as well fund debt service, pension costs and capital projects. Transfers between funds during the fiscal year ended June 30, 2022 were as follows:
General
Advances from Other Funds Fund Total
Port of Richmond 12,774,486 $ $ 12,774,486
Total $ 12,774,486 $ 12,774,486
Advances to Other Funds
Nonmajor Richmond Nonmajor Internal
General Governmental Housing Enterprise Service
Transfers Out Fund Funds Authority Funds Funds Total
General Fund $ - $ 9,933,479 $ 949,414 $ 2,654,027 $ 601,018 $ 14,137,938 Nonmajor Governmental Funds 9,773,160 940,701 - - - 10,713,861 Community Development and Loan
Programs Fund - 10,000 - - - 10,000
Nonmajor Enterprise Funds 86,778 - - - - 86,778
Total $ 9,859,938 $ 10,884,180 $ 949,414 $ 2,654,027 $ 601,018 $ 24,948,577 Transfers In
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
3. INTERFUND TRANSACTIONS, Continued
C. Transfers In/Out, Continued
None of these transfers were unusual or non-recurring in nature, except for the transfer from General Fund to the Cost Recovery Fund to write off interfund borrowings in the Fund due to inability to repay, the Secured Pension Override Special Revenue Fund to the General Fund in the amount of $9,773,160 to fund current year pension contributions to CalPERS, which is included in transfers from Non-Major Governmental Funds, and the transfer from the General Fund to the Storm Sewer Fund to assist with the repayment of advance between Storm Sewer Fund and Insurance Reserve Fund.
4. NOTES AND LOANS RECEIVABLE
At June 30, 2022, notes and loans receivable consisted of the following:
Balance at
June 30, 2022
General Fund:
RHA RAD Project Loan $ 752,510
Deferred Loans 260,335
Infill Phase II Loan 1,464,886
Nevin Court Homeowner Development Project 521,974
Subtotal - General Fund Loans 2,999,705
Richmond Neighborhood Stabilization Loans 779,013
Community Development Block Grant, Home Investment
Partnership Program, EDA, CALHome Loans and City Loans
Deferred Loans 3,236,791
Home Improvement Program Loans 768,734
Rental Rehabilitation Loans 374,847
The Carquinez Project 148,490
Creely Avenue Housing Rehabilitation Loan (Arbors) 2,504,455 Lillie Mae Jones Project Loan 988,460
Greater Richmond Interfaith Program 910,728
CALHome Program 2,290,358
RHA RAD Project Loan 3,768,603
Subtotal - CDBG, HOME, EDA, CALHome Loans, City Loans 14,991,466 Housing Successor Loans:
Rental Rehabilitation Loans 20,000
The Carquinez Project 1,152,510
Creely Avenue Housing Rehabilitation Loan (Arbors) 2,348,982 Lillie Mae Jones Project Loan 1,999,301
Miraflores Loan 3,416,410
MacDonald Place Senior Housing 3,402,371
Greater Richmond Interfaith Program 302,066
Silent Second Mortgage Loans 1,754,044
Deferred Loans 633,126
Chesley Avenue Mutual Housing Development 6,275,017
Easter Hill Project 4,790,188
RHA RAD Project Loan 1,171,387
Subtotal - Housing Successor Loans 27,265,402
Total Notes and Loans Receivable $ 46,035,586
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3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
4. NOTES AND LOANS RECEIVABLE, Continued
RHA RAD Project
In December 2014, the General Fund loaned $700,000 to the Richmond Housing Authority Enterprise Fund for predevelopment costs related to the Triangle Court and Friendship Manor Rental Assistance Demonstration (RAD) Projects.
In December 2015, the loan agreement was replaced and the City entered into an amended agreement to loan $5,400,000 to the RHA Housing Corporation for the furtherance of the development of the RAD Projects as discussed in Note 17. Funding for the loan was revised in fiscal year 2018 and is as follows: $700,000 from the City’s General Fund, $3,600,000 will come from housing-in-lieu funds and $1,100,000 from the Housing Successor funds. The housing-in-lieu funds and Housing Successor Funds are included in the Community Development and Loan Programs Fund. RHA Housing Corporation assigned the loan agreement and associated obligations to RHA RAD Housing Partners L.P. on December 22, 2015 upon closing of the financing for the rehabilitation of the RAD projects. See Note 17 for additional information related to the RAD projects. The loan is secured by a leasehold deed of trust, assignment of rents and security agreement. The loan bears simple interest of 1% and the loan is repayable from residual receipts, as defined in the loan agreement, starting May 1 of the year after issuance of the Certificate of Completion, and unpaid principal and accrued interest is due December 1, 2070. As noted above, $700,000 of the General Fund loan was disbursed in December 2014 and the balance at June 30, 2022, including accrued interest, was $752,510.
As of June 30, 2022, $4,939,990 of the funds had been drawn down from the Housing Successor Community Development and Loan Programs Fund.
Deferred Loans
Deferred loans are granted to low and moderate income families to assist them in purchasing their homes.
Emergency repair loans not exceeding $10,000 funded by the HOME Investment Partnership Program (HIPP) are provided to low income families in Richmond to assist them in rehabilitating their existing housing units.
These loans are required to be repaid over a period of 15 years to 30 years.
During fiscal year 2019, the City’s General Fund purchased a portion of the deferred loans in the amount of $353,335 and the loans were transferred to the General Fund. As of June 30, 2022, the outstanding loan amount is $260,335. In addition, as of June 30, 2022, $3,236,791 of the funds had been drawn down from the CDBG & Home Program Fund and $633,126 from the Successor Housing Agency Fund.
Scattered Site Infill Housing Development (Infill Phase II) Under a loan agreement dated September 30, 2010, the City loaned Community Housing Development Corporation of North Richmond $1,198,013 to fund construction of 36 townhomes to be made available for very-low and low income households. Funding for the loan was as follows: $602,556 in HOME funds, $266,000 in CDBG funds and $329,457 in CDBG-R. Although the developer has not drawn down all of the proceeds from the HOME funds portion of the loan, the Department of Housing and Urban Development (HUD) has indicated that future drawdowns will not be reimbursed by the grantor. Related to the grant disallowed costs discussed in Note 17, during fiscal year 2018 the City purchased $1,331,709 of the loan balance that had previously been funded with Community Development Block Grant and HOME funds. 71
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
4. NOTES AND LOANS RECEIVABLE, Continued
Scattered Site Infill Housing Development (Infill Phase II), Continued During fiscal year 2019, the City’s General Fund purchased the loan balance in the amount of $1,099,594 and the loan and accrued interest of $265,104 were transferred to the General Fund.
The current funding was for predevelopment activities in conjunction with the construction and development of the townhomes. The loan is secured by a deed of trust on the property. The outstanding balance of the loan bears simple interest at the rate of 3% per year. The payment of principal and interest is deferred and due at the end of the term due September 30, 2065. As of June 30, 2022, $1,464,886 had been drawn down on the loan.
Nevin Court Homeowner Development Project
In May 2005, the City entered into an agreement with Community Housing and Development Corporation of North Richmond (Development), in the original amount of $227,000 to construct and develop 10 single family homes for low and moderate income households. The agreement was amended in November 2008, to increase the loan to $377,000. In fiscal year 2010, the Development drew down $343,839, in fiscal year 2016 an additional $21,453 was drawn, and the outstanding balance of the loan is $490,203, which includes accrued interest of $124,911. The loan bears interest of 3% per year and the unpaid balance is due in November 2063.
During fiscal year 2019, the City’s General Fund purchased the loan balance in the amount of $365,292 and the loan and accrued interest of $124,911 were transferred to the General Fund. As of June 30, 2022, $521,974, which includes accrued interest of $10,959, had been drawn down on the loan.
Richmond Neighborhood Stabilization Loans
The Richmond Neighborhood Stabilization Corporation (RNSC) operates a residential rehabilitation loan program financed by Department of Housing and Urban Development grants that have passed through the City under its Neighborhood Stabilization Program (NSP1) and additional allocation under the third round of funding referred to as (NSP3). The program provides affordable home ownership opportunities for households of low and moderate income by facilitating the development financing necessary for the purchase, rehabilitation, and resale of deed-restricted affordable ownership units. During fiscal year 2014, the City foreclosed on seven of the loans with a carrying value of $780,153 and reacquired the properties which have been recorded as property held for resale as discussed in Note 2. As of June 30, 2022, the total balance of outstanding loans for NSP1 was $779,013 and no NSP3 loans had been issued. Loans are payable upon the resale of improved properties.
Home Improvement Program Loans
“Silent second” mortgage loans are provided to low and moderate income first time homebuyers as gap financing to provide the minimum amount needed to close the gap between the primary lender’s requirements and the borrower’s ability to pay down payments or closing costs.
Home improvement program loans include amortized loans to assist low income families in Richmond in the improvement of their homes. The interest rates for these loans range from 0% to 3% and are payable over a period of 15 to 30 years.
72
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
4. NOTES AND LOANS RECEIVABLE, Continued
Rental Rehabilitation Loans
Rental Rehabilitation Loans help make rental units affordable to low and very low income housing families.
Loans assist private and non-profit owners in purchasing and rehabilitating existing multifamily housing units.
The Carquinez Project
Under a loan agreement dated November 14, 2008, the former Redevelopment Agency loaned Carquinez Associates, L.P. $1,000,000 to fund rehabilitation of a five-story building, with 36 apartments housing lowincome seniors. On August 23, 2010 the agreement was amended to provide the Developer with a total amount of $1,301,000. Funding for the loan is as follows: $1,152,510 funded by Series 2007 Bonds and $148,900 funded by CDBG. Repayments on the loan are to be made from residual receipts as defined in the agreement.
The loan does not bear interest and the unpaid principal balance is due in November 2043. With the dissolution of the Redevelopment Agency as discussed in Note 18, the City agreed to become the successor to the Redevelopment Agency’s housing activities and as a result City, as Housing Successor, assumed the loans receivable of the Redevelopment Agency’s Low and Moderate Income Housing Fund, including the balance of the Carquinez loan as of February 1, 2012.
Creely Avenue Housing Rehabilitation (Arbors)
On September 15, 2006, the former Redevelopment Agency and the City loaned Arbors Preservation Limited Partnership the amount of $2,558,557, to construct extremely low, very low and low income rental housing units and a new community room on Creely Avenue. On October 31, 2008, the loan was amended to provide the developer a total loan amount of $3,208,113. Funding for the loan is as follows: $2,160,282 in HOME funds, $103,377 in CDBG funds and $1,594,057 in 2007 Series B bond funds. Although the developer has not drawn down all of the proceeds from the HOME funds portion of the loan, the Department of Housing and Urban Development (HUD) has indicated that future drawdowns will not be reimbursed by the grantor. The loan bears simple interest at the rate of 3% per year. All unpaid principal and interest on the loan is due on April 29, 2063. With the dissolution of the Redevelopment Agency as discussed in Note 18, the City agreed to become the successor to the Redevelopment Agency’s housing activities and as a result the City, as Housing Successor, assumed the loans receivable of the Redevelopment Agency’s Low and Moderate Income Housing Fund, including the balance of the Arbors loan as of February 1, 2012. 73
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
4. NOTES AND LOANS RECEIVABLE, Continued
Lillie Mae Jones Project
On January 19, 2010, the former Redevelopment Agency and the City entered into an agreement with Lillie Mae Jones Plaza, L.P. and the Community Housing Development Corporation of North Richmond to loan $3,119,000 to construct and provide 26 housing units to very low and low income households. Funding for the loan is as follows: $1,081,291 in HOME funds, $84,000 in Section 108 funds and $1,953,709 in 2007 Series B bonds. Although the developer has not drawn down all of the proceeds of the HOME funds portion of the loan, HUD has indicated that future drawdowns will not be reimbursed by the grantor. The loan bears an interest rate of 3% per year and repayments on the loan are to be made from residual receipts as defined in the agreement. All unpaid principal and accrued interest is due in January 2065. The agreement was amended in November 2011, due to securing a $293,884 loan from County of Contra Costa with Mental Health Services Act, which specifies that two units are required to be available to and occupied by Mental Health Services Act Eligible Tenants pursuant to the County Regulatory Agreement with Lillie Mae Jones Plaza, L.P. With the dissolution of the Redevelopment Agency as discussed in Note 18, the City agreed to become the successor to the Redevelopment Agency’s housing activities and as a result the City, as Housing Successor, assumed the loans receivable of the Redevelopment Agency’s Low and Moderate Income Housing Fund, including the balance of the Lillie Mae Jones loan as of February 1, 2012. As of June 30, 2022, Lillie Mae Jones has drawn down $2,987,761.
Greater Richmond Interfaith Program
The loan agreement date was on June 20, 2005. The borrower shall use the Loan funds for development and related soft costs that are eligible under the applicable CDBG and HOME regulations, and consistent with the approved development budget. In addition, the borrower shall submit to the City’s Community and Economic Development Department a copy of the Construction Plans for the Development. As of June 30, 2022, Greater Richmond Interface Program has drawn down $1,212,794.
CALHome Program
The CALHome loan program provides housing assistance to Richmond residents to assist with first-time homeowner down payments or rehabilitation projects for owner-occupied homes. The loans are secured by deeds of trust on the properties. Principal and interest on the loans are deferred for 30 years, unless otherwise specified in the promissory note. With the dissolution of the Redevelopment Agency as discussed in Note 18, the CALHome loan program that was funded with grant funds is now administered by the City effective February 1, 2012.
Housing Successor Loans
With the dissolution of the Redevelopment Agency as discussed in Note 18, the City agreed to become the successor to the Redevelopment Agency’s housing activities and as a result City, as Housing Successor, assumed the loans receivable of the Redevelopment Agency’s Low and Moderate Income Housing Fund, including the balance of certain loans discussed above and all of the loans below as of February 1, 2012. 74
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
4. NOTES AND LOANS RECEIVABLE, Continued
Miraflores Loan
Under an amended loan agreement dated June 21, 2011, the City agreed to loan Community Housing Development Corporation of North Richmond and Eden Housing, Inc., $1,465,000 to fund the construction of 110 senior housing units for low and moderate income residents. Funding for the loan is as follows:
$449,000 in CDBG funds, $925,000 in HOME funds, and $91,000 Redevelopment Agency Low and Moderate Income Housing Fund funds. Although the developer has not drawn down all of the proceeds of the HOME funds portion of the loan, HUD has indicated that future drawdowns will not be reimbursed by the grantor.
Related to the grant disallowed costs by HUD in previous years, the City purchased $1,208,258 of the loan balance that had previously been funded by CDBG and HOME funds and the loans were transferred to the Housing Successor. With the dissolution of the Redevelopment Agency as discussed in Note 18, the portion of the Miraflores loan that was funded by the Redevelopment Agency’s Low and Moderate Income Housing Fund was assumed by the City as Housing Successor.
The loan does not bear interest and the unpaid principal balance was due September 22, 2015, unless it was converted to a permanent loan. The loan was converted into a permanent loan on June 25, 2015. In addition to the converted permanent loan, the Housing Successor approved an additional predevelopment loan in the amount of $1,500,000. As of June 30, 2022, $3,416,410 of the loan had been drawn down.
MacDonald Place Senior Housing
On June 26, 2007, the former Redevelopment Agency agreed to loan MacDonald Housing Partners, L.P., and Richmond Labor and Love Community Development Corporation the amount of $4,720,000, to construct senior housing units, a management office, small meeting rooms and ancillary retail use, and a separate space for community services. The loan’s principal is due 57 years from the date of disbursement. The loan bears simple of interest of 2% per year payable from any residual receipts available from the prior calendar year with an additional 1% per year, but only to the extent that funds are available to pay such contingent interest from the Agency’s share of residual receipts, as defined in the agreement.
Silent Second Mortgage Loans
Loans were provided to qualifying individuals for the difference between the amount received by the individuals who qualified for low and moderate income housing loans and the amount needed to purchase the homes. The loans are to be forgiven in the future if the property owners do not sell or refinance the property.
Chesley Avenue Mutual Housing Development
On December 1, 2003, the former Redevelopment Agency loaned Chesley Avenue Limited Partnership the amount of $4,741,492, which includes accrued interest of $1,272,798 to construct very low and low income housing units. The loan’s principal is due in 2058; interest is payable starting May 1, 2006, at the rate of 2% per annum or in the amount of 95% of any residual receipts remaining from the prior year, whichever is less.
As of June 30, 2022, $6,275,017, which includes accrued interest of $1,533,525, had been drawn down on the loan.
75
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
4. NOTES AND LOANS RECEIVABLE, Continued
Easter Hill Project
The loan from the former Redevelopment Agency to Easter Hill Development, L.P. is providing financial assistance in the development of the Easter Hill Project. The Easter Hill Project consists of single and multifamily home components. Easter Hill Development, L.P. shall use the loan to pay for predevelopment, acquisition and construction costs. The outstanding balance of the loan bears simple interest at the rate of 2% per year. Repayments on the loan are to be made from residual receipts as defined in the agreement. All unpaid principal and accrued interest on the loan is due February 1, 2069.
5. LEASES RECEIVABLE
At June 30, 2022, leases receivable consisted of the following:
Alcatraz Cruises
On October 15, 2021, Richmond, CA entered into a lease as Lessor for the use of Basin 4 and half of Basin 3 at Point Potrero Marine Terminal and the lease end date was on October 14, 2036. An initial lease receivable was recorded in the amount of $2,559,422 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $2,445,231. The lessee is required to make monthly fixed payments of $15,000.00, with step payment increase to $15,600 from October 15, 2026 to October 14, 2031 and 4% annual increase from October 15, 2031 to October 14, 2036. The lease has an interest rate of 1.2480%. The value of the deferred inflow of resources as of June 30, 2022 was $2,438,086, and Richmond, CA recognized lease revenue of $121,336 during the fiscal year. The lessee has 2 extension option(s), each for 60 months.
Balance at
June 30, 2022
Lease Receivable
Alcatraz Cruises $ 2,445,231
California Oils 2,004,395
DeSaulnier 5,164
Foss Maritime 2,431,155
MSRC 381,803
Nematode 643,008
NRC 355,669
Point San Pablo 8,072
PRAM 7,092
Richmond Art Center 798,696
Richmond Bay Marina 5,396,449
Terminal Three Partners 39,332,703
Dutra 2,201,505
YWCA 95,877
AWC 14,595,757
Total Lease Receivable $ 70,702,576
76
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
5. LEASES RECEIVABLE, Continued
California Oils
On July 1, 2016, Richmond, CA entered into a lease as Lessor for the use of Terminal 2 at 1145 Harbour Way South and the lease end date was on June 30, 2026. An initial lease receivable was recorded in the amount of $2,449,191 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $2,004,395. The lessee is required to make monthly fixed payments of $38,868, with step payment increase to $40,810.54 from July 1, 2022 to June 30, 2023 and 3% monthly increase from July 1, 2023 to June 30, 2026. The lease has an interest rate of 1.0590%. The value of the deferred inflow of resources as of June 30, 2022 was $1,959,353 and Richmond, CA recognized lease revenue of $489,838 during the fiscal year.
DeSaulnier
On January 3, 2019, Richmond, CA entered into a lease as Lessor for the use of the office space located at 440 Civic Plaza and the lease end date was on January 2, 2023. An initial lease receivable was recorded in the amount of $15,459 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $5,164. The lessee is required to make monthly fixed payments of $862. The lease has an interest rate of 0.5140%. The value of the deferred inflow of resources as of June 30, 2022 was $5,191, and Richmond, CA recognized lease revenue of $10,268 during the fiscal year.
Foss Maritime
On October 1, 2012, Richmond, CA entered into a lease as Lessor for the use of Basin 1 and Finger Pier 2 at Point Potrero Marine Terminal and the lease end date was on February 29, 2028. An initial lease receivable was recorded in the amount of $2,806,842 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $2,431,155. The lessee is required to make monthly fixed payments of $32,069, with step payment increase to $33,672 from May 1, 2022 to April 30, 2023 and 3% annual increase from May 1, 2023 to February 29, 2028.
The lease has an interest rate of 0.5140%. The value of the deferred inflow of resources as of June 30, 2022 was $2,385,816, and Richmond, CA recognized lease revenue of $421,026 during the fiscal year. The lessee has 1 extension option(s), each for 60 months.
MSRC
On July 1, 1993, Richmond, CA entered into a lease as Lessor for the use of Finger Pier 1 at 1314 Canal Boulevard and the lease end date was on June 30, 2023. An initial lease receivable was recorded in the amount of $750,849.26 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $381,803. The lessee is required to make monthly fixed payments of $30,976.25, with step payment increase to $31,906 from July 1, 2022 to June 30, 2023. The lease has an interest rate of 0.5140%. The value of the deferred inflow of resources as of June 30, 2022 was $375,425, and Richmond, CA recognized lease revenue of $375,425 during the fiscal year.
Nematode
On July 1, 2020, Richmond, CA entered into a lease as Lessor for the use of Terminal 4 at 1950 Stenmark Drive and the lease end date was on June 30, 2020. An initial lease receivable was recorded in the amount of $719,233. As of June 30, 2022, the value of the lease receivable is $643,008. The lessee is required to make monthly fixed payments of $6,816.50. The lease has an interest rate of 0.8930%. The value of the deferred inflow of resources as of June 30, 2022 was $639,318, and Richmond, CA recognized lease revenue of $79,915 during the fiscal year. The lessee has 1 extension option(s), each for 60 months. 77
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
5. LEASES RECEIVABLE, Continued
NRC
On October 1, 2017, Richmond, CA entered into a lease as Lessor for the use of Basin 3 at 1337 Canal Boulevard and the lease end date was on September 30, 2027. An initial lease receivable was recorded in the amount of $414,304 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $355,669. The lessee is required to make monthly fixed payments of $5,000, with step payment increase to $5,300 from October 1, 2022 to September 30, 2023 and 4% annual increase from October 1, 2023 to September 30, 2027. The lease has an interest rate of 0.3870%. The value of the deferred inflow of resources as of June 30, 2022 was $348,015, and Richmond, CA recognized lease revenue of $66,289 during the fiscal year. The lessee has 1 extension option(s), each for 60 months.
Point San Pablo
On June 1, 2021, Richmond, CA entered into a lease as Lessor for the use of Terminal 4 at 1950 Stenmark Drive and the lease end date was on May 31, 2023. An initial lease receivable was recorded in the amount of $16,472 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $8,072. The lessee is required to make monthly fixed payments of $700, with step payment increase to $735 from June 1, 2022 to April 30, 2023. The lease has an interest rate of 0.3160%. The value of the deferred inflow of resources as of June 30, 2022 was $7,878, and Richmond, CA recognized lease revenue of $8,594 during the fiscal year. The lessee has 1 extension option(s), each for 12 months.
PRAM
On September 1, 2019, Richmond, CA entered into a lease as Lessor for the use of The Washington Field House at 110 East Richmond Avenue and the lease end date was on August 31, 2024. An initial lease receivable was recorded in the amount of $10,333.79 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $7,092. The lessee is required to make monthly fixed payments of $275.00. The lease has an interest rate of 0.7270%. The value of the deferred inflow of resources as of June 30, 2022 was $7,071, and Richmond, CA recognized lease revenue of $3,263 during the fiscal year.
Richmond Art Center
On July 1, 2017, Richmond, CA entered into a lease as Lessor for the use of The Art Center buildings at 2540 and 2544 Barrett Avenue and the lease end date was on June 30, 2067. An initial lease receivable was recorded in the amount of $807,820.53 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $798,696.
The lessee is required to make monthly fixed payments of $2,344, with step payment increase to $2,503 from July 1, 2022 to June 30, 2067. The lease has an interest rate of 2.5830%. The value of the deferred inflow of resources as of June 30, 2022 was $790,259, and Richmond, CA recognized lease revenue of $17,561 during the fiscal year.
Richmond Bay Marina
On July 1, 2000, Richmond, CA entered into a lease as Lessor for the use of the land at 1340 Marina Way South and the lease end date was on June 30, 2055. An initial lease receivable was recorded in the amount of $5,534,412.78 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $5,396,449. The lessee is required to make quarterly fixed payments of $60,876. The lease has an interest rate of 2.5830%. The value of the deferred inflow of resources as of June 30, 2022 was $5,371,636, and Richmond, CA recognized lease revenue of $162,777 during the fiscal year.
78
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
5. LEASES RECEIVABLE, Continued
Terminal Three Partners
On December 15, 2020, Richmond, CA entered into a lease as Lessor for the use of Terminal 3 at 1411 Harbour Way South and the lease end date was on December 14, 2086. An initial lease receivable was recorded in the amount of $39,376,061.50 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $39,332,703.
The lessee is required to make monthly fixed payments of $36,667, with step payment increase to $38,133 from July 1, 2022 to June 30, 2023 and 2% annual increase from July 1, 2023 to December 14, 2086. The lease has an interest rate of 1.1000%. The value of the deferred inflow of resources as of June 30, 2022 was $38,774,492, and Richmond, CA recognized lease revenue of $601,569 during the fiscal year. The lessee has 4 extension option(s), each for 120 months.
Dutra
On June 1, 2017, Richmond, CA entered into a lease as Lessor for the use of Basin 2, Basin 3 and the structure at 1319 Canal Boulevard and the lease end date was on May 31, 2032. An initial lease receivable was recorded in the amount of $2,393,510.09 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $2,201,505. The lessee is required to make monthly fixed payments of $16,500.00, with step payment increase to $17,160 from June 1, 2022 to May 31, 2023 and 2% annual increase from June 1, 2023 to May 31, 2032. The lease has an interest rate of 0.3160%. The value of the deferred inflow of resources as of June 30, 2022 was $2,174,257 and Richmond, CA recognized lease revenue of $219,253 during the fiscal year. The lessee has 2 extension option(s), each for 60 months.
YWCA
On July 1, 2015, Richmond, CA entered into a lease as Lessor for the use of the building at 3230 MacDonald Avenue and the lease end date was on June 30, 2025. An initial lease receivable was recorded in the amount of $127,360.86 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $95,877. The lessee is required to make monthly fixed payments of $2,700.00. The lease has an interest rate of 0.8930. The value of the deferred inflow of resources as of June 30, 2022 was $95,521, and Richmond, CA recognized lease revenue of $31,840 during the fiscal year.
AWC
On May 1, 2009, Richmond, CA entered into a lease as Lessor for the use of the land at 1311 Canal Boulevard and the lease end date was on December 31, 2024. An initial lease receivable was recorded in the amount of $20,135,248.98 on July 1, 2021. As of June 30, 2022, the value of the lease receivable is $14,595,757. The lessee is required to make annual fixed payments of $5,718,800.00, with a fixed increase to $5,833,350 from July 1, 2022 to June 30, 2023 and $5,950,800 from July 1, 2023 to June 30, 2024. The lease has an interest rate of 0.8930%.
The value of the deferred inflow of resources as of June 30, 2022 was $14,382,321, and Richmond, CA recognized lease revenue of $5,752,928 during the fiscal year. 79
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
5. LEASES RECEIVABLE, Continued
The future revenue payments as of June 30, 2022, are as follows:
Year Ending
June 30, Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2023 150,342 $ 29,658 $ 470,781 $ 18,946 $ 5,164 $ 8 $ 394,514 $ 11,572 $ 381,803 $ 1,064 $ 76,368 $ 5,430 $ 61,431 $ 1,269 $ 8,072 $ 13 $ 2024 152,229 27,771 490,554 13,864 - 408,758 - 9,511 - 77,053 - 64,483 4,745 1,025 - - 2025 154,139 25,861 510,980 8,571 - 423,442 - 7,375 - 77,744 - 67,358 4,054 771 - - 2026 156,074 23,926 532,080 3,057 - 438,578 - 5,163 - 80,905 - 70,349 3,347 505 - - 2027 163,455 21,945 - - - 454,181 - 2,872 - 81,630 - 73,461 2,622 227 - - 2028-2032 863,536 78,080 - - - 311,682 - 601 - 249,308 - 18,587 3,447 12 - - 2033-2037 805,456 21,968 - - - - - - - - - - - - - -
2038-2042 - - - - - - - - - - - - - - - -
2043-2047 - - - - - - - - - - - - - - - -
2048-2052 - - - - - - - - - - - - - - - -
2053-2057 - - - - - - - - - - - - - - - -
2058-2062 - - - - - - - - - - - - - - - -
2063-2067 - - - - - - - - - - - - - - - -
2068-2072 - - - - - - - - - - - - - - - -
2073-2077 - - - - - - - - - - - - - - - -
2078-2082 - - - - - - - - - - - - - - - -
2083-2087 - - - - - - - - - - - - - - - -
Total 2,445,231 $ 229,209 $ $ 44,438 2,004,395 $ $ 5,164 $ 2,431,155 8 $ 37,094 $ 381,803 $ $ 643,008 1,064 $ $ 23,645 $ 355,669 $ 3,809 $ 8,072 $ 13 Alcatraz Cruises California Oils DeSaulnier Foss Maritime MSRC Nematode NRC Point San Pablo Year Ending
June 30, Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2023 3,259 $ 41$ 9,518$ 20,518$ 105,127$ $ 138,377 $ 25,066 $ 432,534 199,595$ 6,668$ 31,673 $ $ 5,703,010 727 $ $ 130,340 $ 7,625,723 $ 797,165 2024 3,283 17 9,766 20,269 107,868 135,636 34,542 432,210 204,358 6,031 31,957 443 5,871,387 79,412 7,456,238 730,934 2025 550 1 10,022 20,014 110,682 132,822 44,306 431,781 209,218 5,378 32,247 156 3,021,360 13,490 4,662,048 650,274 2026 - - 10,284 19,752 113,568 129,936 54,366 431,243 214,179 4,710 - - - - 1,670,383 621,639 2027 - - 10,552 19,483 116,530 126,974 64,728 430,593 219,240 4,026 - - - - 1,183,777 608,742 2028-2032 - - 57,046 93,133 629,858 587,662 490,177 2,139,046 1,154,915 9,289 - - - - 3,775,109 2,911,270 2033-2037 - - 64,902 85,277 716,393 501,127 798,941 2,103,934 - - - - - - 2,385,692 2,712,306 2038-2042 - - 73,839 76,340 814,817 402,703 1,154,408 2,050,601 - - - - - - 2,043,064 2,529,644 2043-2047 - - 84,007 66,172 926,764 290,756 1,562,261 1,976,327 - - - - - - 2,573,032 2,333,255 2048-2052 - - 95,574 1,054,090 54,604 163,430 2,028,824 1,878,064 - - - - - - 3,178,488 2,096,098 2053-2057 - - 108,735 41,444 700,752 29,760 2,561,124 1,752,395 - - - - - - 3,370,611 1,823,599 2058-2062 - - 123,708 26,470 - - 3,166,976 1,595,499 - - - - - - 3,290,684 1,621,969 2063-2067 - - 140,743 9,435 - - 3,855,059 1,403,097 - - - - - - 3,995,802 1,412,532 2068-2072 - - - - - - 4,635,017 1,170,412 - - - - - - 4,635,017 1,170,412 2073-2077 - - - - - - 5,517,557 892,106 - - - - - - 5,517,557 892,106 2078-2082 - - - - - - 6,514,565 562,221 - - - - - - 6,514,565 562,221 2083-2087 - - - - - - 6,824,786 175,976 - - - - - - 6,824,786 175,976 Total 7,092 $ 59$ 798,696$ 552,911$ $ 2,639,183 5,396,449 $ 39,332,703 $ $ 2,201,505 19,858,039 $ 36,102 $ $ 95,877 $ 14,595 1,326 $ ,757 $ 70,702,576 223,242 $ 23,650,142 $ PRAM Richmond Art Center Richmond Bay Marina Terminal Three Partners Dutra YWCA AWC Total 80
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
6. CAPITAL ASSETS
The following is a summary of capital assets for governmental activities:
Balance at
July 1, 2021 Balance at
as restated Additions Retirements Transfers Adjustment June 30, 2022 Governmental Activities
Capital assets not being depreciated:
Land $ 24,361,564 $ 273,119 $ - $ - $ 24,634,683 - $
Construction in progress 34,275,063 12,722,449 (12,448,045) - 34,549,467 - Total capital assets not being depreciated 58,636,627 12,995,568 (12,448,045) - 59,184,150 - Capital assets being depreciated:
Buildings and improvements 156,882,402 246,143 - 666,115 157,794,660 - Machinery and equipment 47,864,546 5,030,638 (982,018) 4,032,747 55,945,913 - Land improvements and infrastructure 539,785,539 - 7,749,183 - 547,534,722 - Total capital assets being depreciated 744,532,487 5,276,781 (982,018) 12,448,045 761,275,295 - Less accumulated depreciation for:
Buildings and improvements (51,077,776) (3,751,339) (218,687) - (55,047,802) - Machinery and equipment (40,463,502) (3,006,628) 982,935 (61,205) (612) (42,549,012) Land improvements and infrastructure (425,290,906) (6,212,089) - 279,892 (431,223,103) - Total accumulated depreciation (516,832,184) (12,970,056) 982,935 - (528,819,917) (612) Capital asset being depreciated, net 227,700,303 (7,693,275) 917 12,448,045 (612) 232,455,378 Lease assets being amortized:
Leased buildings and improvements 6,690,416 - - - 6,690,416 - Total Lease assets being amortized 6,690,416 - - - 6,690,416 - Less accumulated amortization for:
Leased buildings and improvements (1,911,547) - - - (1,911,547) - Total accumulated amortization (1,911,547) - - - (1,911,547) - Lease assets being amortized, net 6,690,416 (1,911,547) - - 4,778,869 - Governmental activity capital assets, net $ 293,027,346 $ 3,390,746 $ 917 $ - $ (612) $ 296,418,397 81
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
6. CAPITAL ASSETS, Continued
Governmental activities depreciation expenses for capital assets and amortization expense for lease assets charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program for the year ended June 30, 2022 were as follows:
Lease Asset
Dicon Fiberoptics
On January 1, 2020, Richmond, CA entered into a lease as Lessee for the use of DiCon Fiberoptics’ Building and the lease end date was on December 31, 2024. Richmond, CA is required to make monthly fixed payments of $152,298, with step payment increase to $156,735 from January 1, 2022 to December 31, 2022 and 3% annual increase from January 1, 2023 to December 31, 2024. The lease has an interest rate of 0.3160%. The value of the right to use asset as of June 30, 2022 of $6,690,416 with accumulated amortization of $1,911,547 is included with Buildings on the Lease Class activities table found above. Richmond, CA has 3 extension option(s), each for 12 months.
Governmental Activities
Depreciation expense
General Government 3,615,815 $
Public Safety 854,384
Public Services 5,958,047
Cultural and Recreational 159,561
Housing and Redevelopment 126,313
Community Development 1,026
Internal Service Funds 2,254,910
Total depreciation expense 12,970,056
Amortization expense
Public Safety 1,911,547
Total amortization expense 1,911,547
Total Governmental Activities $ 14,881,603
82
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
6. CAPITAL ASSETS, Continued
The following is a summary of capital assets for business-type activities:
Included in buildings and improvements is the Richmond Housing Authority’s Hacienda Property with a net book value of $7,203,134 at June 30, 2022 has been uninhabitable for an extended period of time and as a result necessitates major rehabilitation. The property was appraised in July 2019 at $6,290,000 “as is” and Mercy Housing is in negotiation with the City and the Housing Authority to acquire the improvements and to undertake significant renovation that would result in to 150 units, a fitness center and a library. The current site encompasses a total of 2.98 acres of land which is intended to be split into two parcels upon approval by HUD for which the currently improved portion of 1.941 acres will be subject to a ground lease to Mercy Housing and the remaining 1.043 acres will be retained by the City for future development.
Balance at
July 1, 2021 Balance at
as restated Additions Retirements Transfers Adjustments June 30, 2022 Business-type Activities
Capital assets not being depreciated:
Land $ 7,195,986 $ - $ - $ - $ 7,195,986 - $
Construction in progress 32,958,119 30,910,811 - - 63,868,930 - Total capital assets not being depreciated 40,154,105 30,910,811 - - 71,064,916 - Capital assets being depreciated:
Buildings and improvements 79,908,481 - - - 79,908,481 - Machinery and equipment 17,840,183 19,901 - - 17,860,084 - Infrastructure 259,038,020 - - - 259,038,020 -
Total capital assets being depreciated 356,786,684 19,901 - - 356,806,585 - Less accumulated depreciation for:
Buildings and improvements (56,233,722) (748,918) - - (56,982,640) - Machinery and equipment (15,654,100) (593,212) - - (16,247,312) - Infrastructure (123,277,607) (5,921,824) - - (129,199,431) - Total accumulated depreciation (195,165,429) (7,263,954) - - (202,429,383) - Capital asset being depreciated, net 161,621,255 (7,244,053) - - 154,377,202 - Lease assets being amortized:
Leased land and improvements 1,172,173 - - - 1,172,173 - Total Lease assets being amortized 1,172,173 - - - 1,172,173 - Less accumulated amortization for:
Leased land and improvements (260,483) - - - (260,483) - Total accumulated amortization (260,483) - - - (260,483) - Lease assets being amortized, net 1,172,173 (260,483) - - - 911,690 Business-type activity capital assets, net $ 202,947,533 $ 23,406,275 $ - $ - $ 226,353,808 - $ 83
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
6. CAPITAL ASSETS, Continued
Business-type activities depreciation expenses for capital assets allocated to each program for the year ended June 30, 2022 were as follows:
Lease Asset
West County Wastewater District
On January 1, 2010, Richmond, CA entered into a lease as Lessee for the use of West County Wastewater District’s land and the lease end date was on December 31, 2025. Richmond, CA is required to make annually fixed payments of $153,000, with 3% annual increase from January 1, 2013 to December 31, 2017 and 6% annual increase from January 1, 2018 to December 31, 2025. The lease has an interest rate of 1.0590%. The value of the right to use asset as of June 30, 2022 of $1,172,173 with accumulated amortization of $260,483 is included with Improvements on the Lease Class activities table found above.
7. COMPENSATED ABSENCES PAYABLE
Changes in compensated absence liabilities for the year ended June 30, 2022 were as follows:
The long-term portion of governmental activities compensated absences is liquidated primarily by the General Fund. Compensated absences for business-type activities are liquidated by the fund that has recorded the liability.
Business-Type Activities
Depreciation expense
Port of Richmond 3,529,821 $
Municipal Sewer 3,601,816
Richmond Marina 85,456
Storm Sewer 45,037
Cable TV 1,824
Total depreciation expense 7,263,954
Amortization expense
Municipal Sewer 260,483
Total amortization expense 260,483
Total Business-Type Activities 7,524,437 $
Balance Balance Due Within
July 1, 2021 Additions Deletions June 30, 2022 One Year Governmental Activities:
Compensated absences payable 13,116,999 $ $ 6,672,197 $ (8,299,995) $ 11,489,201 $ 6,320,594 Business-Type Activities:
Compensated absences payable 200,045 330,245 (322,859) 207,431 104,923 $ 13,317,044 $ 7,002,442 $ (8,622,854) $ 11,696,632 $ 6,425,517 84
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT
A. Governmental Activities
Following is a summary of governmental activities long-term debt transactions during the fiscal year ended June 30, 2022:
Bonds Payable
Bonds payable at June 30, 2022 consisted of the following:
1999 Series A City of Richmond Taxable Limited Obligation Pension Bonds – Original Issue $36,280,000
The bonds were issued to fund a portion of the unfunded accrued actuarial liability in the City’s pension plans together with the prepayment of certain pension benefit costs of the Beneficiaries and to pay the costs of issuance associated with the issuance of the bonds. Interest rates vary from 6.37% to a maximum of 7.39% and are payable semiannually on February 1, and August 1. The term bonds consist of $8,960,000 due August 1, 2020 with an interest rate of 7.57% and $3,435,000 due August 1, 2029 with an interest rate of 7.62%. The bonds are payable from certain pension tax override revenues received by the City from a special tax pursuant to City Council Ordinance 9-99 adopted by the City Council on March 30, 1999. Principal and interest paid for the current fiscal year and total pension tax revenues were $944,696 and $10,609,053, respectively.
Balance at
July 1, 2021 Balance at Due Within Due in More
as restated Additions (A) Retirements June 30, 2022 One Year than One Year Bonds payable:
Bonds $ 106,978,450 $ (5,013,438) - $ (B) 101,965,012 $ $ 4,270,000 $ 97,695,012 Bonds from direct placements 137,381,306 7,171,770 (10,301,998) 134,251,078 11,593,000 122,658,078 Loans payable from direct borrowings 1,023,223 (135,601) - 887,622 138,040 749,582 Financed purchases from direct borrowings 5,642,605 (1,061,418) - 4,581,187 1,075,111 3,506,076 Lease liability 6,690,416 (1,837,459) - 4,852,956 1,896,420 2,956,536 Total $ 257,716,000 $ 7,171,770 $ (18,349,914) $ 246,537,855 $ 18,972,571 $ 227,565,284 (A) Additions include bonds payable bond accretion for capital appreciation bonds totaling $7,171,770 (B) Retirements of bonds payable include principal retirements in the amount of $4,150,000 and amortization of bond premiums in the amount of $863,438
Net
Pension Obligation Bonds - 1999 Series A 2,725,000 $
Pension Funding Bond Series 2005 (Direct Placement) 134,251,078 JPFA Lease Revenue Bonds - 2016 27,073,536
JPFA Lease Revenue Bonds - 2019A 72,166,476
Total $ 236,216,090
85
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
1999 Series A City of Richmond Taxable Limited Obligation Pension Bonds – Original Issue $36,280,000, Continued
The annual debt service requirements on the bonds are as follows:
2005 Taxable Pension Funding Bonds – Original Issue $114,995,133 These Bonds from direct placements were issued to prepay the unfunded liability of the Miscellaneous and Safety pension plans provided through the California Public Employees’ Retirement System. The Bonds consist of three series as shown below:
Credit Adjustment – The Bonds were issued on November 1, 2005 in a private placement at the initial interest rates. Included in the Indenture were provisions which adjust the initial interest rates on each series based on the City’s meeting certain conditions. As a result of the City issuing its June 30, 2005 financial statements and receiving an upgraded credit rating of A3 by Moody’s by May 1, 2006, the initial interest rates were reduced by 1/10th of one percent.
Current Interest Bonds – The Series 2005A Bonds were fully repaid during fiscal year 2015.
Capital Appreciation Bonds – The Series 2005B-1 Bonds and 2005B-2 Bonds are capital appreciation bonds, which means no interest is paid until the Adjusted Maturity Value is reached on the Full Accretion Date.
Capital appreciation bonds are issued at a deep discount which then “accretes” over time. The discount on these bonds represented as the effective interest rate on each series is shown above.
For the Years
Ending June 30, Principal Interest Total
2023 620,000 $ 184,023 $ 804,023 $
2024 540,000 139,827 679,827
2025 455,000 101,918 556,918
2026 375,000 70,295 445,295
2027 295,000 44,768 339,768
2028-2030 440,000 39,245 479,245
Total $ 2,725,000 $ 580,076 $ 3,305,076
`
Initial Adjusted Original Full Adjusted Adjusted
Interest Less: Credit Interest Maturity Principal Accretion Subsequent Maturity Bond Type & Series Rate Adjustment Rate Date Amount Date Interest Rate Value Current Interest - 2005A 5.9350% -0.1000% 5.8350% 8/1/2013 26,530,000 $ n/a n/a n/a Convertible Auction
Rate Securities, Capital
Appreciation Bonds -
2005B-1 6.2550% -0.1000% 6.1550% 8/1/2023 47,061,960 8/1/2013 1 month LIBOR + 1.4% 46,025,000 $ 2005B-2 6.5650% -0.1000% 6.4650% 8/1/2034 41,403,173 8/1/2023 1 month LIBOR + 1.4% 99,842,000 $114,995,133 $ 145,867,000
Index Rate Conversion Data
86
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
2005 Taxable Pension Funding Bonds – Original Issue $114,995,133, Continued Mandatory Index Rate Conversion – On the respective Full Accretion Date, the Series 2005B-1 or 2005B2 Bonds convert from Capital Appreciation Bonds to Index Rate Bonds. From that date forward, the Bonds bear interest at a rate based on the 1-month LIBOR index plus 1.4%. This rate fluctuates according to the market conditions and is limited to 17 percent per year. Following the applicable Full Accretion Date, interest on the converted bond series is due semiannually each February 1 and August 1. The Series 2005B-1 Bonds are due in annual installments from 2014 to 2023 ranging from $4,468,000 to $11,593,000. The 2005B-2 Bonds are due in annual installments from 2024 to 2034 ranging from $6,466,000 to $18,538,000.
Optional Auction Rate Conversion – On the respective Full Accretion Date, the 2005B-1 and the 2005B-2 Bonds may be converted to Auction Rate Bonds provided that certain conversion requirements are met.
Auction rates fluctuate according to the market conditions and is limited to a maximum 17 percent per year and a minimum of 80 percent of the LIBOR index rate. The Series 2005B-1 Bonds did not convert to auction rate bonds, and were instead converted to index rate bonds, as discussed above.
Swap Agreements – The City entered into two interest rate swap agreements related to the 2005B-1 and 2005B-2 Bonds. The interest rate swap related to the 2005B-1 Bonds became effective August 1, 2013 while the 2005B-2 Bonds does not become effective until August 1, 2023, in the same amount as the outstanding principal balances of the Bonds on that date. The combination of the variable rate bonds and a floating swap rate will create synthetic fixed-rate debt for the City. The synthetic fixed rate for the 2005B-1 Bonds was 7.0039% at June 30, 2022.
At June 30, 2022, the Bonds consisted of the following:
The annual debt service requirements are as follows:
Unamortized
Accretion/ Premium
Maturity Value Amortization (Discount) Net
Capital appreciation bonds 145,867,000 $ 7,171,775 $ (18,787,697) $ 134,251,078 $ For the Years
Ending June 30, Principal Interest Total
2023 $ 11,593,000 $ 895,931 12,488,931
2024 6,306,000 7,068,894 13,374,894
2025 6,466,000 8,901,468 15,367,468
2026 6,687,000 8,421,992 15,108,992
2027 8,162,000 7,858,540 16,020,540
2028-2032 54,137,000 28,692,562 82,829,562
2033-2035 52,516,000 4,799,491 57,315,491
Total $ 145,867,000 $ 66,638,878 $ 212,505,878
87
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Richmond Joint Powers Financing Authority Lease Revenue Bonds, Series 2016 – Original Issue - $28,390,000
On February 1, 2016, the Authority issued Series 2016 Lease Revenue Bonds in the amount of $28,390,000. The proceeds from the Bonds were used to pay the obligations of the City related to the termination of the interest rate swap agreement and the option on swap agreement (swaption) related to the Authority’s Series 2009 Lease Revenue Refunding Bonds and to pay the costs associated with the issuance of the Series 2016 Bonds. On February 3, 2016 the interest rate swap agreement and the swaption related to the Series 2009 Bonds were terminated with a swap termination payment of $28,554,000.
The Bonds bear interest rates of 4.00% to 5.50%. Principal payments are due annually on November 1 through 2037 and semi-annual interest payments are due May 1 and November 1 commencing on May 1, 2016.
At June 30, 2022, the 2016 Bonds consisted of the following:
The annual debt service requirements are as follows:
Bonds outstanding $ 26,060,000
Unamortized premium 1,013,536
Total $ 27,073,536
For the Years
Ending June 30, Principal Interest Total
2023 1,165,000 $ 1,186,313 $ 2,351,313 $
2024 1,255,000 1,119,763 2,374,763
2025 1,365,000 1,047,713 2,412,713
2026 1,445,000 970,438 2,415,438
2027 1,510,000 889,175 2,399,175
2028-2032 8,555,000 3,143,000 11,698,000
2033-2037 9,015,000 1,247,900 10,262,900
2038 1,750,000 35,000 1,785,000
Total $ 26,060,000 $ 9,639,302 $ 35,699,302
88
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Richmond Joint Powers Financing Authority Lease Revenue Bonds, Series 2019A – Original Issue - $63,970,000
The Series 2019A Bonds are being issued to: redeem $77,315,000 outstanding principal amount of the Authority’s Lease Revenue Refunding Bonds (Civic Center Project) Series 2009, purchase a reserve facility for deposit into the reserve account established for the Series 2019A Bonds, fund a deposit into the Interest Account within the Revenue Fund to capitalize a portion of the interest due on May 1, 2020, and pay costs associated with the issuance of the Series 2019A Bonds. The Bonds are payable solely from, and secured solely by, Revenues of the Authority, consisting primarily of Base Rental Payments to be received by the Authority from the City of Richmond under a Facility Lease, dated as of August 1, 2019, by and between the City and the Authority, for the right to use and the occupancy of certain real property and facilities. The Series 2019A Bonds will mature on November 1 annually commencing November 1, 2020. Interest on the Series 2019A Bonds is payable at the rate of 5% on November 1 and May 1 of each year, commencing May 1, 2020. The refunding resulted in an overall debt service savings of $29,893,316.
The net present value of the debt service savings is called an economic gain and amounted to $25,000,596.
At June 30, 2022, the 2019A Bonds consisted of the following:
The annual debt service requirements are as follows:
Bonds outstanding $ 59,365,000
Unamortized premium 12,801,476
Total $ 72,166,476
For the Years
Ending June 30, Principal Interest Total
2023 2,485,000 $ 2,906,125 $ 5,391,125
2024 2,610,000 2,778,750 5,388,750
2025 2,745,000 2,644,875 5,389,875
2026 2,885,000 2,504,125 5,389,125
2027 3,035,000 2,356,125 5,391,125
2028-2032 17,665,000 9,281,375 26,946,375
2033-2037 22,680,000 4,263,000 26,943,000
2038 5,260,000 131,500 5,391,500
Total 59,365,000 $ 26,865,875 $ 86,230,875 $
89
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Interest Rate Swap and Swaption Agreements
The City entered into an interest swap agreement in connection with the 2005B-1 Taxable Pension Funding Bonds. The transaction allows the City to create a synthetic fixed rate or a synthetic variable rate on the Bonds, protecting it against increases and decreases in short-term interest rates and fair value. The various risks associated with the swap agreements are disclosed below. For the swap agreement pertaining to the 2005B-2 Taxable Pension Funding Bonds, the disclosure is included below, but the swap agreement does not become effective until August 1, 2023.
On May 13, 2015, Moody’s Investor Services (“Moody’s”) downgraded the City’s issuer rating from “A1” to “Ba1” and the rating on its 1999 Taxable Limited Obligation Pension Bonds from “A2” to “Baa2”. In addition, the City and its Wastewater Enterprise bonds were placed under review for possible downgrades. On August 4, 2015, Moody’s further downgraded the City’s issuer rating from “Ba2” to “Ba1” and its rating on the City’s Taxable Pension Obligation Bonds and 1999 Taxable Limited Obligation Pension Bonds (“POB’s) from “Baa2”. In addition, Moody’s downgraded its rating on the City’s Wastewater Revenue Bonds, Series 2006A to “Baa2” from “A2”. On November 21, 2018, Moody’s upgraded the City’s issuer rating to “Baa3” from “Bal” and the Pension Obligation Bond rating from “Ba1” to “Ba2”. On September 1, 2015, Standard and Poor’s Rating Services (“S&P”) lowered the City’s Issuer Credit Rating from “AA-” to “BBB+” placing the City on CreditWatch. Other credit ratings downgrades included S&P’s assigned underlying rating (SPUR) for the Wastewater Enterprise Fund that was lowered from “A+” to “BBB”.
Moody’s downgrade of the City’s issuer rating to “Ba1” resulted in allowing the counterparty, JPMorgan Chase Bank, NA (“JPM”) to declare an Additional Termination Event (ATE) with the interest rate swaps the City entered in conjunction with the 2005 Taxable POBs (2007 Swaps). This means that JPM could exercise a right to terminate the 2007 Swaps and demand immediate payment of an approximately $31.5 million settlement amount that represented the present value of the City’s expected future performance obligations under the 2007 Swaps at the time of the ATE. The City entered into a restructuring of certain of its obligations through the issuance by the Richmond Joint Powers Financing Authority of Lease Revenue Bonds Series 2016A (tax-exempt) to fund the cost of terminating the Civic Center Swaps relating to the Richmond Joint Powers Financing Authority Series 2009 Civic Center Lease Revenue Bonds held by Royal Bank of Canada (RBC). RBC simultaneously entered into a novation of the 2007 Swaps with JPM. By terminating the Civic Center Swaps, the City reduced RBC’s credit exposure to the City sufficiently to allow RBC to accept the additional credit exposure associated with stepping into JPM’s position in the 2007 swaps through novation. Contemporaneous with the novation from JPM to RBC, RBC and the City amended and restated the 2007 Swaps, including eliminating the existence of the ATE by removing reference to a Moody’s rating in the ATE provisions, reducing the Standard & Poor’s rating threshold for a future ATE to BBB- from BBB and providing a mandatory early termination of the 2007 Swaps in 2023. The early termination will require the City to either refund or restructure the 2007 Swap at that date if a termination payment is due at the time. In addition, terminating the Civic Center Swaps eliminated the risk of an ATE with respect to the Civic Center Swaps, which require the City to maintain its Issuer Credit Rating at the current level of BBB+ to avoid an ATE. 90
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Interest Rate Swap and Swaption Agreements, Continued
The City’s issuer credit rating from S&P was BBB+ as of June 30, 2017. On December 4, 2017, the City received an updated issuer credit rating from S&P upgrading the previous BBB+ issuer credit rating to an A- issuer credit rating.
Terms. The terms, including the counterparty credit ratings of the outstanding swaps, as of June 30, 2021, are included below. The swap agreements contain scheduled reductions to the outstanding notional amount on an annual basis.
Hedging Derivatives - Pay-Fixed, Receive-Variable Swap Agreements For the following Pay-Fixed, Receive-Variable swap agreements, the City owes interest calculated at a fixed rate to the counterparty of the swaps. In return, the counterparty owes the City interest based on a variable rate that approximates the rate required by the Bonds. Debt principal is not exchanged; it is only the basis on which the swap receipts and payments are calculated.
Fair value. Fair value of the swaps takes into consideration the prevailing interest rate environment, the specific terms and conditions of each transaction and any upfront payments that may have been received.
Fair value was estimated using the zero-coupon discounting method. This method calculates the future payments required by the swaps, assuming that the current forward rates implied by the LIBOR swap yield curve are the market’s best estimate of future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for a hypothetical zero-coupon rate bond due on the date of each future net settlement on the swap. The swaps are classified in Level 2 of the fair value hierarchy, using a market approach that considers observable swap rates commonly quoted for the full term of the swaps.
Long-Term
Outstanding Credit Rating Fixed Variable
Notional Effective Rate Rate Fair Value at Termination Hedging Amount Date Counterparty Paid Received 6/30/2022 Date Type 2005B-1 Taxable Pension Funding Bonds
$ 8/1/2013 Royal Bank AA-/Aa2/AA 5.580% 100% of USD (334,838) 28,205,221 $ 8/1/2023 Cash of Canada 1-Month LIBOR Flow
2005B-2 Taxable Pension Funding Bonds
$ 8/1/2023 Royal Bank AA-/Aa2/AA 5.665% 100% of USD (21,650,387) 127,990,254 $ 8/1/2034 Fair of Canada 1-Month LIBOR Value
Pay-Fixed, Receive-Variable
(S&P/Moody's
/Fitch)
91
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Hedging Activities - Pay-Fixed, Receive-Variable Swap Agreements, Continued As of June 30, 2022, the fair value for the each of the outstanding swaps was in favor of the respective counterparties. The fair value represents the maximum loss that would be recognized at the reporting date if the counterparty failed to perform as contracted. The City has accounted for the change in fair value of each of the effective hedges as noted below:
Credit risk. The fair values of the swaps represent the City’s credit exposure to the counterparties. As of June 30, 2022, the City was not exposed to credit risk on the outstanding swaps because the swaps had negative fair values. However, if interest rates change and the fair value of the swaps were to become positive, the City would be exposed to credit risk.
Interest rate risk. The City will be exposed to interest rate risk for the Pay-Fixed, Receive-Variable swaps only if the counterparty to the swaps defaults or if the swaps are terminated.
Basis risk. Basis risk is the risk that the interest rate paid by the City on the underlying variable rate bonds to the bondholders temporarily differs from the variable swap rate received from the counterparty. The City bears basis risk on the Pay-Fixed, Receive-Variable swaps. The swaps have basis risk since the City receives a percentage of the LIBOR Index to offset the actual variable bond rate the City pays on the underlying Bonds. The City is exposed to basis risk should the floating rate that it receives on a swap be less than the actual variable rate the City pays on the bonds. Depending on the magnitude and duration of any basis risk shortfall, the expected cost of the basis risk may vary.
A portion of this basis risk is tax risk. The City is exposed to tax risk when the relationship between the taxable LIBOR based swap and tax-exempt variable rate bond changes as a result of a reduction in federal and state income tax rates. Should the relationship between LIBOR and the underlying tax- exempt variable rate bonds converge the City is exposed to this basis risk.
Termination risk. The City may terminate if the other party fails to perform under the terms of the contract.
The City will be exposed to variable rates if the counterparties to the swap contracts default or if the swap contracts are terminated. A termination of the swap contracts may also result in the City’s making or receiving a termination payment based on market interest rates at the time of the termination. If at the time of termination the swaps have a negative fair value, the City would be liable to the counterparty for a payment equal to the swap’s fair value.
Classification Amount Classification Amount
Governmental Activities
Pay-Fixed, Receive-Variable
2005B-1 Taxable Pension Funding Bonds Deferred Outflow 1,345,523 $ Investment (334,838) $ 2005B-2 Taxable Pension Funding Bonds Deferred Outflow 12,635,222 Investment (21,650,387) Totals 13,980,745 $ (21,985,225) $
Changes in Fair Value Fair value at June 30, 2022
92
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Hedging Activities - Pay-Fixed, Receive-Variable Swap Agreements, Continued Swap payments and associated debt. Using rates as of June 30, 2021, debt service requirements of the City’s outstanding fixed rate 2005 Taxable Pension Funding Bonds and net swap payments, assuming current interest rates remain the same for their term, are as follows. The 2005B-2 Bond is not included in the table, because the swap is not effective until August 1, 2023. As rates vary, net swap payments will vary.
Loans Payable
Loans payable from direct borrowing at June 30, 2022 consisted of the following:
California Energy Commission Phase 1 – Original Amount $621,558 On April 22, 2013, the City entered into a direct borrowing loan agreement with the California Energy Commission in the amount of $621,558. The purpose of the loan is to provide funding for the replacement of street lighting with new LED lights. The loan bears a 3% interest rate and is due in semi-annual payments in December and June through December 2025.
For the Years Interest Rate
Ending June 30, Principal Interest Swap, Net (A) Total
2023 11,593,000 654,606 241,325 12,488,931
2024 6,306,000 7,051,185 17,709 13,374,894
2025 6,466,000 8,901,468 15,367,468 -
2026 6,687,000 8,421,992 15,108,992 -
2027 8,162,000 7,858,540 16,020,540 -
2028-2032 54,137,000 28,692,562 82,829,562 -
2033-2035 52,516,000 4,799,491 57,315,491 -
Total $ 145,867,000 $ 66,379,844 $ 259,034 $ 212,505,878 (A) Includes only the 2005 B-1, because the 2005 B-2 is not effective until August 1, 2023. 2005 Taxable Pension Funding Bonds
Variable-Rate Bonds
City Loans Payable
California Energy Commission Loan #1 200,128 $
California Energy Commission Loan #2 687,494
$ 887,622
93
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
California Energy Commission Phase 1 – Original Amount $621,558, Continued The annual debt service requirements on the loan are as follows:
California Energy Commission Phase 2 – Original Amount $1,239,036 During fiscal year 2015, the City entered into a direct borrowing loan agreement with the California Energy Commission in the amount of $1,239,036. The purpose of the loan is to provide funding for the replacement of street lighting with new LED lights. The loan bears interest at 1% and is due in semiannual payments in December and June through June 2030.
The annual debt service requirements on the loan are as follows:
For the Years
Ending June 30, Principal Interest Total
2023 55,071 $ 5,595 $ 60,666 $
2024 56,725 3,940 60,665
2025 58,449 2,216 60,665
2026 29,883 449 30,332
Total 200,128 $ 12,200 $ 212,328 $
For the Years
Ending June 30, Principal Interest Total
2023 82,969 $ 6,669 $ 89,638
2024 83,786 5,852 89,638
2025 84,641 4,997 89,638
2026 85,490 4,148 89,638
2027 86,347 3,291 89,638
2028-2030 264,261 4,652 268,913
Total 687,494 $ 29,609 $ 717,103 $
94
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Financed Purchases
Financed purchases payable from direct borrowing at June 30, 2022 consisted of the following:
Qualified Energy Conservation – Original Amount $1,052,526 On December 22, 2010 the City entered into a direct borrowing financed purchase with Bank of America in the amount of $1,052,526 to finance the purchase and installation of energy conservation equipment at various City-owned buildings. The City received an allocation of the national Qualified Energy Conservation Bond which includes a direct subsidy from the United States Treasury for the interest payable on the bonds under the Hiring Incentives to Restore Employment Act (HIRE Act). The subsidy will be payable on or about the date that the City makes its debt service payments and is equal to 59.79% of the interest payable on the purchase. The subsidy received in fiscal year 2019 was $23,026. The purchase bears interest at a rate of 6.79% and principal and interest payments are due semi-annually each June 15 and December 15 commencing on December 15, 2011 through June 15, 2026.
The annual debt service requirements on the financed purchase are as follows:
Qualified Energy Conservation $ 327,928
JPFA Recovery Zone Economic Development 372,049
Holman Capital Corporation #4 201,465
Street Light 1,943,666
Holman Capital Corporation #5 1,736,079
Total $ 4,581,187
For the Years
Ending June 30, Principal Interest Total
2023 78,678 $ 20,940 $ 99,618 $
2024 80,841 15,561 96,402
2025 83,063 10,035 93,098
2026 85,346 4,356 89,702
Total $ 327,928 $ 50,892 $ 378,820
95
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Richmond Joint Powers Financing Authority Recovery Zone Economic Development – Original Amount $1,316,000
On December 22, 2010 the Authority entered into a direct borrowing financed purchase with Bank of America in the amount of $1,316,000 to finance the improvements to three of the City’s fire stations and a senior center. The City agreed to use the three fire stations to the Authority in exchange for payments in the amount of the debt. The Authority received the proceeds under an allocation of the National Recovery Zone Economic Development Bonds under the American Recovery and Reinvestment Act of 2009, which includes a direct subsidy from the United States Treasury for the interest payable on the Bonds. The subsidy will be payable on or about the date that the Authority makes its debt service payments and is equal to 45% of the interest payable on the lease upon filing of a request by the Authority. The total subsidy received in fiscal year 2019 was $19,824. The lease bears interest at a rate of
6.50% and principal and interest payments on the lease are due semi-annually each June 15 and December 15, commencing on June 15, 2011, through 2026.
The annual debt service requirements on the financed purchase are as follows:
Holman Capital Corporation #4 – West Contra Costa Family Justice Center - Original Amount $2,000,000
On November 1, 2012 the City entered into a direct borrowing financed purchase agreement with Holman Capital Corporation in the amount of $2,000,000 to finance improvements to the City’s West Contra Costa Family Justice Center. The purchase bears an interest rate of 3.17%. Principal and interest payments on the purchase are due semi-annually on each July 14 and January 14 commencing on July 14, 2013 through January 14, 2023.
The annual debt service requirements on the financed purchase are as follows:
For the Years
Ending June 30, Principal Interest Total
2023 101,634 $ 22,546 $ 124,180 $
2024 105,300 15,881 121,181
2025 109,098 8,975 118,073
2026 56,017 1,821 57,838
Total 372,049 $ 49,223 $ 421,272 $
For the Years
Ending June 30, Principal Interest Total
2023 201,465 $ 4,565 $ 206,030 $
Total 201,465 $ 4,565 $ 206,030 $
96
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Street Light - Original Amount $4,641,936
On July 31, 2013 the City entered into a direct borrowing financed purchase agreement with Bank of America in the amount of $4,641,936 to finance the purchase of streetlights and the associated upgrade costs. The purchase bears an interest rate of 2.55%. Principal and interest payments on the purchase are due semi-annually on each October 30 and April 30 commencing on April 30, 2014 through October 30, 2026.
The annual debt service requirements on the financed purchase are as follows:
Holman Capital Corporation #5 – Fire Apparatus Equipment Lease - Original Amount $2,687,645 On May 17, 2018 the City entered into a direct borrowing financed purchase agreement with Holman Capital Corporation in the amount of $2,687,645 to finance the purchase of one Spartan Ladder Truck and two Spartan Pumper Trucks, which are pledged as collateral for the purchase. The purchase bears an interest rate of 3.91%. Principal and interest payments on the purchase are due quarterly on each August 17, November 17, February 17, and May 17 commencing on August 17, 2018 through May 17, 2028.
The annual debt service requirements on the financed purchase are as follows:
For the Years
Ending June 30, Principal Interest Total
2023 431,386 $ 46,864 $ 478,250 $
2024 453,254 35,726 488,980
2025 476,005 24,025 500,030
2026 499,675 11,738 511,413
2027 83,346 1,063 84,409
Total $ 1,943,666 $ 119,416 $ 2,063,082
For the Years
Ending June 30, Principal Interest Total
2023 261,946 $ 64,071 $ 326,017 $
2024 272,341 53,678 326,019
2025 283,146 42,872 326,018
2026 294,381 31,638 326,019
2027 306,061 19,958 326,019
2028 318,204 7,814 326,018
Total $ 1,736,079 $ 220,031 $ 1,956,110
97
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Lease Liability (Dicon Fiberoptics)
On 01/01/2020, Richmond, CA entered into a lease as Lessee for the use of Dicon Fiberoptics and the lease end date was on 12/31/2024.. An initial lease liability was recorded in the amount of $6,690,415.64 on 07/01/2021. As of 06/30/2022, the value of the lease liability is $4,852,956. Richmond, CA is required to make monthly fixed payments of $152,298.00, with step payment increase to $156,735 from 01/01/2022 – 12/31/2022 and 3% annual increase from 01/01/2023 – 12/31/2024. The lease has an interest rate of
0.3160%.
At June 30, 2022, the aggregate maturities of the governmental lease liability were as follows:
B. Business-Type Activities
The following is a summary of long-term debt of business-type activities during the fiscal year ended June 30, 2022:
Bonds payable at June 30, 2022 consisted of the following:
For the Years
Ending June 30, Principal Interest Total
2023 $ 1,896,420 $ 12,613 $ 1,909,033
2024 1,959,774 6,529 1,966,303
2025 996,762 919 997,681
Total $ 4,852,956 $ 20,061 $ 4,873,017
Balance at
July 1, 2021 Balance at Due Within Due in More
as restated Additions Retirements June 30, 2022 One Year than One Year Bonds payable 151,490,785 $ - $ (7,961,659) $ (A) 143,529,126 $ 6,870,000 $ 136,659,126 $ Notes and loans payable
from direct borrowing 3,338,388 11,992,567 (B) (101,656) 15,229,299 106,231 15,123,068 Lease liability 1,172,173 - (357,428) 814,745 252,838 561,907 Total 154,829,173 $ 11,992,567 $ (8,420,743) $ 159,573,170 $ 7,229,069 $ 152,344,101 $ (A) Retirements of bonds payable include principal retirements in the amount of $6,580,000 and amortization of bond premiums and discounts in the amount of $1,381,659. (B) California State Loan drawdown
2019B Point Potrero Lease Revenue Bonds $ 9,112,946
Wastewater Revenue Bonds Series 2017A 33,322,756
Wastewater Revenue Bonds Series 2019A 24,971,969
Wastewater Revenue Bonds Series 2019B 76,121,455
Total $ 143,529,126
98
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Richmond Joint Powers Financing Authority Point Potrero Lease Revenue Bonds, Series 2019B – Original Issue ($20,580,000)
The Series 2019B Bonds are being issued to: (i) defease and redeem on a current basis all of the Authority’s $26,830,000 outstanding Point Potrero Lease Revenue Bonds, Series 2009A and (ii) pay certain costs associated with the issuance of the Series 2019B Bonds. The Series 2019B Bonds are payable solely from, and secured solely by, Revenues of the Authority, consisting primarily of Base Rental Payments to be received by the Authority from the City under a Facility Lease, dated as of August 1, 2019, by and between the City of Richmond and the Authority, for the right to use and the possession of certain real property and facilities, consisting of Wharves No. 7 and 8 at the Point Potrero Marine Terminal of the Port of Richmond. The amount of the Base Rental Payments is calculated to be sufficient to pay principal of and interest on the Series 2019B Bonds when due. Interest on the Series 2019B Bonds is payable on May 1 and November 1 of each year, commencing November 1, 2019. The refunding resulted in an overall debt service savings of $4,351,195. The net present value of the debt service savings is called an economic gain and amounted to $4,177,680.
At June 30, 2022 the 2019B Bonds consisted of the following:
The annual debt service requirements on the 2019B Bonds are as follows:
Richmond Wastewater Revenue Bonds, Series 2017A – Original Issue $33,530,000 On July 19, 2017 the City issued Series 2017A Wastewater Revenue Bonds in the amount of $33,530,000.
The proceeds from the Bonds were used to finance improvements to the City’s wastewater collection, treatment and disposal system and to refund all of the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2006A. Principal payments are due annually on August 1. Interest rates on the Bonds range from 2% to 5.25% and payments are due semiannually on August 1 and February 1 beginning February 1, 2018. The bonds mature on August 1, 2047.
At June 30, 2022 the Series 2017A Bonds consisted of:
Bonds outstanding $ 8,330,000
Unamortized premium 782,946
Net $ 9,112,946
For the Years
Ending June 30, Principal Interest Total
2023 $ 4,270,000 $ 416,500 $ 4,686,500
2024 4,060,000 203,000 4,263,000
Total $ 8,330,000 $ 619,500 $ 8,949,500
Bonds outstanding $ 28,385,000
Unamortized premium 4,937,756
Net $ 33,322,756
99
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Richmond Wastewater Revenue Bonds, Series 2017A – Original Issue $33,530,000, Continued The annual debt service requirements on the 2017A Bonds are as follows:
Richmond Wastewater Revenue Bond Series 2019A and Wastewater Revenue Refunding Bonds, Series 2019B – Original Issue Series 2019A ($22,510,000) and Series 2019B ($66,075,000) On June 26, 2019 the City issued Series 2019A Wastewater Revenue Bonds and the 2019B Wastewater Revenue Refunding Bonds in the amounts of $22,510,000 and $66,075,000, respectively. The proceeds from the 2019A Bonds were used to finance improvements to the City’s wastewater collection, treatment and disposal system. The proceeds from the 2019B Bonds were used to refund all of the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2008A, and to partially refund and defease the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2010B. The outstanding balance of the defeased 2010B Bonds was $36,480,000 at June 30, 2019. Principal payments are due annually on August 1. Interest rates on the Bonds range from 3% to 5% and payments are due semiannually on August 1 and February 1 beginning February 1, 2020. The refunding resulted in an overall debt service savings of $6,799,507. The net present value of the debt service savings is called an economic gain and amounted to $4,738,022. The bonds mature on August 1, 2049.
At June 30, 2022 the Series 2019A Bonds consisted of:
For the Years
Ending June 30, Principal Interest Total
2023 1,430,000 $ 1,432,350 $ 2,862,350
2024 - 1,396,600 1,396,600
2025 - 1,396,600 1,396,600
2026 - 1,396,600 1,396,600
2027 - 1,396,600 1,396,600
2028-2032 - 6,983,000 6,983,000
2033-2037 - 6,983,000 6,983,000
2038-2042 4,080,000 6,799,250 10,879,250
2043-2047 18,545,000 3,667,550 22,212,550
2048 4,330,000 113,663 4,443,663
Total 28,385,000 $ 31,565,213 $ 59,950,213 $
Bonds outstanding $ 22,510,000
Unamortized premium 2,461,969
Net $ 24,971,969
100
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Richmond Wastewater Revenue Bond Series 2019A and Wastewater Revenue Refunding Bonds, Series 2019B – Original Issue Series 2019A ($22,510,000) and Series 2019B ($66,075,000), Continued The annual debt service requirements on the 2019A Bonds are as follows:
At June 30, 2022 the Series 2019B Bonds consisted of:
The annual debt service requirements on the 2019B Bonds are as follows:
For the Years
Ending June 30, Principal Interest Total
2023 - 973,900 $ 973,900
2024 - 973,900 973,900
2025 - 973,900 973,900
2026 - 973,900 973,900
2027 - 973,900 973,900
2028-2032 - 4,869,500 4,869,500
2033-2037 - 4,869,500 4,869,500
2038-2042 4,380,000 4,410,500 8,790,500
2043-2047 5,195,000 3,171,650 8,366,650
2048-2050 12,935,000 968,700 13,903,700
Total 22,510,000 $ 23,159,350 $ 45,669,350 $
Bonds outstanding $ 64,960,000
Unamortized premium 11,161,455
Net $ 76,121,455
For the Years
Ending June 30, Principal Interest Total
2023 $ 1,170,000 $ 2,961,850 4,131,850
2024 2,815,000 2,862,225 5,677,225
2025 2,930,000 2,718,600 5,648,600
2026 3,050,000 2,569,100 5,619,100
2027 3,175,000 2,413,475 5,588,475
2028-2032 18,030,000 9,490,500 27,520,500
2033-2037 22,055,000 4,582,075 26,637,075
2038-2041 11,735,000 648,725 12,383,725
Total $ 64,960,000 $ 28,246,550 $ 93,206,550
101
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City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Pledge of Wastewater Revenues
The City has pledged future wastewater customer revenues, net of specified operating expenses, to repay the 2017A, 2019A and 2019B Bonds through 2050. The Municipal Sewer Enterprise Fund’s total principal and interest remaining to be paid on the bonds is $198,823,112. The Municipal Sewer Enterprise Fund’s principal and interest paid for the current year, and total customer net revenues were $7,975,100 and $17,402,899, respectively.
Notes and Loans Payable – Direct Borrowing
Notes and loans payable at June 30, 2022, consisted of the following:
The City has four direct borrowing loan agreements with the California Department of Boating and Waterways for total borrowings of $3,772,278. Proceeds from the loans were used to finance marina construction projects. The loans bear interest at rates ranging from 4.5% to 7.9% and are due in annual installments through August 2042. The total amount outstanding at June 30, 2022 was $2,235,202.
The annual debt service requirements on these loans are as follows:
California Department of Boating and Waterways $ 2,235,202 RHA RAD Housing Partners L.P. Promissory Note 700,000
Contra Costa County loan payable 301,530
California State Loan 11,992,567
Total $ 15,229,299
For the Years
Ending June 30, Principal Interest Total
2023 106,231 $ 100,584 $ 206,815 $
2024 111,011 95,804 206,815
2025 116,007 90,808 206,815
2026 121,227 85,588 206,815
2027 126,682 80,133 206,815
2028-2032 724,204 309,846 1,034,050
2033-2037 584,762 153,273 738,035
2038-2042 341,084 32,894 373,978
2043 3,994 180 4,174
Total $ 2,235,202 $ 949,110 $ 3,184,312
102
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City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
RHA RAD Housing Partners, LP Promissory Note
On December 17, 2014, the Housing Authority’s Component Unit, RHA Housing Corporation, entered into an agreement with the City and promised to pay the City a principal amount of $700,000, plus accrued interest. The proceeds of the Note were then loaned from RHA Housing Corporation to the Housing Authority to finance acquisitions and development of the properties undergoing rehabilitation work in conjunction with a RAD conversion (Friendship Manor/Triangle Court). On December 22, 2015, the official closing of the RAD conversion took place, at which time the Note was assigned to a newly created entity, RHA RAD Housing Partners, L.P. The Note payable to the City was assigned from RHA Corporation to RHA RAD Housing Partners, L.P. along with a note receivable from the Housing Authority. The principle balance shall bear 1% simple interest. The term of the Note shall expire fiftyfive years after. The balance of the promissory note at June 30, 2019 was $700,000.
In fiscal year 2015, the City had advanced the $700,000 to the Richmond Housing Authority Enterprise Fund, however, in fiscal year 2016 that loan was assigned to RHA RAD Housing Partners L.P. as discussed in Note 4. Therefore, the Richmond Housing Authority Enterprise Fund now owes this amount to RHA RAD Housing Partners L.P. and the interfund advance was converted to long-term debt in fiscal year 2016. The repayment schedule is not available.
Contra Costa County Loan Payable
On December 1, 2019, the Richmond Housing Authority entered into a loan agreement with the County of Contra Costa in the amount of $401,523 to assist in the repair of the elevators at Nevin Plaza which is a 142 unit public housing development for senior and disabled residents. The loan repayment is deferred for 20 years unless a transfer or default occurs prior to the 20 years term. The loan bear no interest. The repayment schedule is not available.
California State Loan
Based on resolution Nos. 2019-0031 and 2019-0064, the City Council approved the California State Loan agreement between the City of Richmond and the California State Water Resources Control Board for a $50 million loan for the Water Resource Recovery Facility Project. The principal is paid over 30 years and the applicable interest rate was set at 1.4%. As of June 30, 2022, the City had partially drawn down the loan and had an outstanding principal balance of $11,992,567. 103
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
California State Loan, Continued
The annual debt service requirements on the loan is as follows:
Lease Liability (West County Wastewater District)
On 01/01/2010, Richmond, CA entered into a lease as Lessee for the use of West County Wastewater District and the lease end date was on 12/31/2025. An initial lease liability was recorded in the amount of $1,172,173 on 07/01/2021. As of 06/30/2022, the value of the lease liability is $814,745. Richmond, CA is required to make annually fixed payments of $153,000, with 3% annual increase from 01/01/2013 – 12/31/2017 and 6% annual increase from 01/01/2018 to 12/31/2025. The lease has an interest rate of
1.0590%.
At June 30, 2022, the aggregate maturities of the governmental lease liability were as follows:
For the Years
Ending June 30, Principal Interest Total
2023 $ - $ - $ -
2024 - - -
2025 313,713 167,896 481,609
2026 332,241 163,504 495,745
2027 333,780 158,853 492,633
2028-2032 1,740,317 722,847 2,463,164
2033-2037 1,865,598 597,566 2,463,164
2038-2042 1,999,899 463,266 2,463,164
2043-2047 2,143,866 319,298 2,463,164
2048-2052 2,298,198 164,966 2,463,164
2053-2054 964,954 20,311 985,265
Total $ 11,992,567 $ 2,778,505 $ 14,771,072
For the Years
Ending June 30, Principal Interest Total
2023 252,838 $ 8,628$ $ 261,466
2024 271,203 5,951 277,154
2025 290,704 3,079 293,783
Total 814,745 $ 17,658$ 832,403$
104
3-21-23, CC Mtg.
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2022
8. LONG-TERM DEBT, Continued
C. Events of Default, Termination Events and Subjective Acceleration Clauses Below is a summary of certain events of default and termination events with finance related consequences, along with the subjective acceleration clauses, as applicable, for all of the City’s outstanding long-term debt obligations. Each agreement may contain additional events of default, termination events or other subjective acceleration clauses. (A) If the City fails to pay debt service when due, the delinquent principal and interest is due and payable immediately. If the City files for reorganization under bankruptcy laws, the aggregate outstanding principal balance and accrued interest are immediately due and payable. (B) If the City fails to pay rental payable when due or the Authority fails to pay debt service when due, the delinquent principal and interest is due and payable immediately. In the event of default, the Authority has the option to exercise the right of entry and re-entry upon the leased property, including the right to re-lease the property if the City does not pay the delinquent rent.
Events of default Termination events Subjective
with finance-related with finance-related acceleration
consequences consequences clauses
Governmental Activities
Bonds Payable
Pension Obligation Bonds - 1999 Series A (A) N/A (A)
Pension Funding Bond Series 2005 (Direct Placement) (A) N/A (A) JPFA Lease Revenue Refunding Bonds - 2009 (B) (B) N/A
JPFA Lease Revenue Bonds - 2016 (B) (B) N/A
JPFA Lease Revenue Bonds - 2019 (B) (B) N/A
Loans Payable
California Energy Commission Loan #1 (C) (C) (C)
California Energy Commission Loan #2 (C) (C) (C)
California State Loan (L) (L) (L)
Capital Leases
Qualified Energy Conservation Lease (D) (D) N/A
JPFA Recovery Zone Economic Development Lease (E) (E) N/A Holman Capital Corporation Lease #4 (F) (F) N/A
Street Light Capital Lease (G) (G) N/A
Holman Capital Corporation Lease #5 (H) (H) N/A
Business-Type Activities
Bonds Payable
2019B Point Potrero Lease Revenue Bonds (B) (B) N/A
Wastewater Revenue Bonds Series 2017A (A) N/A (A)
Wastewater Revenue Bonds Series 2019A (I) N/A (I)
Wastewater Revenue Bonds Series 2019B (I) N/A (I)
Notes and Loans Payable
California Department of Boating and Waterways (J) (J) (J) RHA RAD Housing Partners L.P. Promissory Note (K) (K) (K) 105