Successor Agency to the
Redevelopment Agency of the City of Riverside
Independent Auditor’s Reports and Financial Statements
June 30, 2021
Prepared by the City of Riverside
Edward Enriquez, Chief Finance Officer/Treasurer
3900 Main Street, Riverside, California 92522
Successor Agency to the Redevelopment Agency of the City of Riverside
Contents
Independent Auditor’s Report ....................................................................................................................... 1
Financial Statements
Statement of Fiduciary N et Position/(Deficit) ............................................................................................. 4 Statement of Changes of Fiducia ry Net Position/(Deficit) ......................................................................... 5 Notes to Financial Statements ................................ ................................................................................... 6
Independent Auditor’s Report on Internal Control Over
Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards .................................................................................. 13
INDEPENDENT AUDITORS’ REPORT
To the Honorable Members of the Oversight Board
Successor Agency to the Redevelopment Agency of the City of Riverside City of Riverside, California
Report on the Financial Statements
Opinions
We have audited the accompanying financial statements of the Successor Agency to the Redevelopment Agency of the City of Riverside (the Successor Agency), a fiduc iary component unit of the City of Riverside, California, (the City) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Successor Agency’s financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the fiduciary net position of the Successor A gency to the Redevelopment Agenc y of the City of Riverside as of June 30, 2021, and the changes in fiduciary net position for th e year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matters
As discussed in Note 1, the financial statements present only the Successor Agency to the Redevelopment Agency of the City of Riverside and do not purport to, and do not present fairly the financial position of the City as of June 30, 2021 or the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Basis for Opinions
We conducted our audit in accordance with auditing standards ge nerally 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 r esponsibilities under those standards are further described in the Auditor’s Responsibiliti es for the Audit of the Financial Statements section of our report. We are required to be independent of the Successor Agency and to meet our other ethical responsibilities, in accordance with the relevant ethic al requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presenta tion of these financial statements in accordance with accounting prin ciples generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control rel evant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial dou bt about the Successor Agency’s ability to continue as a going concern for twelve months beyond the date of the financial statements.
203 N. Brea Blvd., Suite 203
Brea, CA 92821 Lance, Soll & Lunghard, LLP Phone: 714.672.0022 1 To the Honorable Members of the Oversight Board
Successor Agency to the Redevelopment Agency of the City of Riverside City of Riverside, California
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 opinion. 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 t he 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 collusi on, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skept icism 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 respons ible 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 au dit 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 Successor A gency’s internal control. Acco rdingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and t he reasonableness of significant accounting estimates made by management, as well as evaluate th e overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or eve nts, considered in the aggregate, that raise substantial doubt about the Successor Agency’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.
Other Reporting Responsibilities
Required Supplementary Information
Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presente d to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standar ds 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. Our opinion on the basic financial statements is not affected by this missing information. 2 To the Honorable Members of the Oversight Board
Successor Agency to the Redevelopment Agency of the City of Riverside City of Riverside, California
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards , we have also issued our report dated November 9, 2021 on our consideration of the City’s internal co ntrol over financial reporting and on our tests of its compliance with certain provisions of laws, regula tions, contracts, and grant agreements and other matters. The purpose of t hat report is solely to describe the scope of our testing of Internal control over financial reporting and compliance and th e results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Brea, California
November 9, 2021
3 4
Successor Agency of the Redevelopment Agency of the City of Riverside Statement of Fiduciary Net Position/(Deficit)
For the year ended June 30, 2021
(amounts expressed in thousands)
Assets
Cash and investments $ 26,986
Cash and investments with fiscal agent 4,043
Receivables:
Interest 46
Accounts 67
Intergovernmental 795
Notes 2,199
Direct financing lease receivable 9,710
Deposits 2
Land and improvements held for resale 7,440
Capital assets:
Land 185
Total assets 51,473
Liabilities
Accounts payable 15
Accrued interest 2,528
Advances from City of Riverside 2,925
Noncurrent liabilities
Due within one year
Long-term obligations 7,193
Due in more than one year
Long-term obligations 179,782
Total liabilities 192,443
Deferred Inflows of Resources
Deferred charge on refunding 808
Total deferred inflows of resources 808
Net Position/(Deficit)
Restricted for other governments (141,778)
Total net position/(deficit) $ (141,778)
The notes to financial statements are an integral part of this statement.
5 Successor Agency to the Redevelopment Agency of the City of Riverside Statement of Changes in Fiduciary Net Position/(Deficit) For the year ended June 30, 2021
(amounts expressed in thousands)
Additions
Property tax revenue 13,483 $
Rental and investment income 236
Total additions 13,719
Deductions
Professional services and other deductions 1,153
Redevelopment projects 535
Interest expense 6,539
Total deductions 8,227
Change in Net Position 5,492
Net position/(deficit) - beginning (147,270)
Net position/(deficit) - ending (141,778) $
The notes to financial statements are an integral part of this statement.
Successor Agency to the Redevelopment Agency of the City of Riverside Notes to Financial Statements
For the year ended June 30, 2021
(amounts expressed in thousands)
6 Note 1. Description of Reporting Entity and Summary of Significant Accounting Policies
A. Reporting entity: The Redevelopment Agency of the City of Riverside (Redevelopmen t Agency) was established in 1967 to provide affordable housing, revitalize c ommunities, eliminate blight, and fuel economic growth through focused reinvestment of local funds bac k into local projects and programs that supported job growth and private investment.
There are six project areas throughout the City of Riverside (City) including Arlington, Casa Blanca, merged Downtown/Airport Industrial/Hunter Park/Northside, La Sierra/Ar lanza, Magnolia Center, and University Corridor/Sycamore Canyon (Projec t Areas). Over the years, the R edevelopment Agency was active in implementing housing programs, bus iness incentive programs, com mercial improvement programs, planning and development of projects, capital improvement projects, and property acquisition in the Project Areas.
On June 29, 2011, Governor Brown signed Assembly Bill 1X 26 (AB 1X 26) eliminating redevelopment agencies throughout the state. On July 18, 2011, the California Redevelopment Association and the League of California Cities filed a lawsuit against the State of Calif ornia (State) in response to the passage of AB 1X 26. On December 29, 2011, the California Supreme Court uphe ld AB 1X 26. The bill provided that upon dissolution of the Redevelopment Agency, either the city or another unit of local government will agree to serve as the “successor agency” to hold the assets until the y are distributed to other units of state and local government.
Pursuant to City Council actions taken on March 15, 2011, and January 10, 2012 the City elected to serve as the Successor Agency to the Redevelopment Agency of the City of Riverside (Successor Agency). The Successor Agency is a separate l egal entity, which serves as a custodian for the assets and liabilities of the dissolved Redevelopment Agency pending distribution to the appropriate taxing entities after the payment of enforceable obligations. The activity of the Success or Agency is overseen by an Oversight Board comprised of individuals appointed by various government agencies and the City of Riverside as Successor Agency of the former Redevelopment Agency. In 2018, t he oversight was transferred to the Riverside Countywide Oversight Board, as a result of state legislation that consolidated all oversight boards of successor agencies. The Countywide Oversight Board was created to oversee the wind down activities of the various successor agencies in Riverside County.
In 1987, the Riverside Public Financing Authority (Authority), a non-profit corporatio n, was created as a joint-powers authority between the former Redevelopment Agency and the City to serve as a conduit for the issuance of bonds to fund improvements in various redevelop ment project areas. The Authority has issued tax allocation bonds secured by loan agreements between the former Redevelopment Agency and the Authority. These loan agreements are secured by a first pledge of and lien on a portion of property tax revenues within the respective project areas. Financial data of the Authority is included in the activity of the Successor Agency. Separate Aut hority financial statements may b e obtained from the City's Finance Department, 3900 Main Street, Riverside, California 92522.
B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation: The Successor Agency is presented herein as a private-purpose trust fund and is reported using the economic resources measurement focus and the accrual basis of accounting.
Successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the f ormer Redevelopment Agency until all enforceable obligations of the former Redevelopment Agency have been paid in full and all assets have been liquidated. Such funds are paid from the Redevelopment Property Tax Trust Fund (RPTTF), which is administered by the County Audito r-Controller of the County of Riverside (County Auditor-Controller). In January and June of each year, the County Auditor-Controller a llocates revenue from the RPTTF to each successor agency for payments listed on the Recognized Obligation Payment Schedule (ROPS) for each six month period. Property taxes are recognized as revenues in the year for which they are levied.
Successor Agency to the Redevelopment Agency of the City of Riverside Notes to Financial Statements (Continued)
For the year ended June 30, 2021
(amounts expressed in thousands)
7 C. Cash and Investments
The Successor Agency's cash and investments, except for cash an d investments with fiscal agents, are invested in a pool managed by the Treasurer of the City. The Su ccessor Agency does not own specific, identifiable investments of the pool. The pooled interest earne d is allocated monthly based on the month end cash balances. The pooled funds are not subject to level 1, 2, or 3 of the fair value hierarchy prescribed by Governmental Accounting Standards Board Statement No. 72, Fair Value Measurement and Application.
The City values its cash and investments in accordance with the provisions of Governmental Accounting Standards Board Statement No. 72 (GASB 72), Fair Value Measurement and Application, which requires governmental entities to use valuation techniques that are appr opriate under the circumstances and for which sufficient data are available to measure fair value. The techniques should be consistent with one or more of the following approaches: the market approach, the cost approach or the income approach.
The City categorizes its fair value measurements within the fai r value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of assets. Level 1 are quoted prices in an active market for id entical assets; Level 2 inputs are significant other observable inputs; and Leve l 3 inputs are significant uno bservable inputs. The City does not value any of its investments using Level 1 and Level 3 inputs. The levels of valuation inputs are as follows:
Level 1 – Quoted prices for identical assets or liabilities in an active market Level 2 – Observable inputs other than quoted market prices; and Level 3 – Unobservable inputs
Cash accounts of all funds are pooled for investment purposes t o enhance safety and liquidity while maximizing interest earnings.
Citywide information concerning cash and investments for the ye ar ended June 30, 2021 including authorized investments, custodial credit risk, credit and inter est rate risk for debt securities, and concentration of investments, carrying amount, and market value of deposits and investments may be found in the notes of the City’s “Comprehensive Annual Financial Report” at https://riversideca.gov/finance/cafr/
D. Cash and Investments with Fiscal Agent
Cash and investments maintained by fiscal agents are considered restricted because their use is limited by applicable bond covenants. Provisi ons of debt agreements govern investments of debt proceeds held by bond fiscal agents. Permitted investments are specified in the related trust agreements and include the following types of investments:
Investments in money market funds rated in the single highest classification Investments in the Local Agency Investment Fund (State Investment Pool)
No maximum percentage of the related debt issue or maximum investment in one issuer is specified.
Cash and investments with fiscal agent are as follows:
Total
12 Months
or Less
13 to 24
Months
25 to 60
Months
Money Market Funds 2,806$ 2,806 $ - $ - $ State Investment Pool 1,237 1,237 - - Total 4,043 $ 4,043 $ - $ - $
Remaining Maturity (in Months)
Successor Agency to the Redevelopment Agency of the City of Riverside Notes to Financial Statements (Continued)
For the year ended June 30, 2021
(amounts expressed in thousands)
8 Total AAA A Unrated
Money Market Funds 2,806$ 2,806 $ - $ - $ State Investment Pool 1,237 - - 1,237 Total 4,043 $ 2,806 $ - $ 1,237$
Ratings as of Year End
E. Land and Improvements Held for Resale
Land and improvements held for resale were generally acquired f or future development projects. The properties are carried at the lower of cost or net realizable value.
F. Bond Premiums
Bond premiums are deferred and amortized over the life of the b onds using the effective interest method.
Bonds payable are reported net of the applicable bond premiums.
G. Deferred Inflows of Resources
The statement of fiduciary net position reports a separate sect ion for deferred inflows of resources.
Deferred inflows of resources represent inflows of resources (acquisition of net position) that apply to future periods and that, therefore, are not recognized as an inflow of resources (revenue) until that time . The deferred amount on refunding is deferred and amortized over the life of the bonds using the effective interest method. The deferred amount on refunding is recorded as a deferred inflow of resources.
H. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that can affect certain reported amounts and disclosures. Actual results could differ from those estimates.
Note 2. Notes and Direct Financing Lease Receivable
Rehabilitation Notes Receivable
Notes receivable consist of $2,199 of rehabilitation loans. The loans were granted for a period of up to 55 years and bear interest at rates from 0 to 12 percent, which are secured by deeds of trust to individuals and businesses.
Direct Financing Lease Receivable
The former Redevelopment Agency had a direct financing lease ar rangement with the State for the California Tower Office Complex, located in the merged Downtown /Airport Industrial/Hunter Park/Northside. The Agreement is for a thirty year period and at maturity the ownership of California Tower will be transferred to the State. The lease calls for semi-ann ual payments not less than the debt service owed on the related lease revenue bonds issued by the former Re development Agency for the purchase and renovation of the building. The future minimum lease payments to be received are as follows:
Successor Agency to the Redevelopment Agency of the City of Riverside Notes to Financial Statements (Continued)
For the year ended June 30, 2021
(amounts expressed in thousands)
9 Fiscal Year Amount
2022 2,724
2023 2,759
2024 2,786
2025 2,823
Total Due 11,092
Less: Amount applicable to interest (1,382)
Total direct financing lease receivable 9,710 $
Note 3. Long-Term Obligations
Changes in Long-Term Obligations:
Below is a summary of changes in long-term obligations during the fiscal year:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Lease revenue bonds 13,790 $ - $ (2,149)$ 11,641 $ 2,242 $ Tax allocations bonds 177,256 - (5,840) 171,416 4,923 Direct borrowings:
3,918 - - 3,918 28 194,964$ - $ (7,989)$ 186,975 $ 7,193 $ Notes payable
Lease Revenue Bonds:
Principal Outstanding
$26,255 State of California Department of General Services Project, 2003 Lease Revenue Refunding Bonds, Series A are secured by lease payments made by the State of California Department of General Services for the California Tower office building; 2% to 5% due in annual installments from $545 to $2,230 through October 1, 2024. The bonds are subject to acceleration under th e Trust Agreement upon the occurrence of an event of default and with t he consent of the Insurer. There is no remedy of acceleration of the total Base Rental over the term of the Lease.
$ 8,085
$4,810 State of California Department of General Services Project, 2003 Lease Revenue Refunding Bonds, Series B are secured by lease payments made by the State of California Department of General Services for the California Tower office building; $310 serial bonds 1.20% to 1.42% through October 1, 2004; $620 term bonds at 3.090% due October 1, 2008; $1,110 term bonds at 4.340% due October 1, 2014 and $2,770 term bonds at 5.480% due October 1, 2024. The bonds are subject to acceleration under the Trust Agreement upo n the occurrence of an event of default and with the consent of the I nsurer. There is no remedy of acceleration of the total Base Rental over the term of the Lease.
1,290
In 2019, the 2012A Lease Revenue Refunding bonds were distributed between Governmental Activities, Busines s-Type Activities, and the Succ essor Agency to properly reflect their proportional share.
$41,240 Lease Revenue Refunding Bonds, Series 2012A. The bonds are secured by lease payments on a portion of the City Hall Complex and the Lincoln Police Patrol Center. The bonds were issued to refinance the 20 03 Certificates of Participation. Interest on the bonds is payable semi-annuall y on May 1 and November 1 of each
year, commencing May 1, 2013. The rate of interest varies
Successor Agency to the Redevelopment Agency of the City of Riverside Notes to Financial Statements (Continued)
For the year ended June 30, 2021
(amounts expressed in thousands)
10 from 2% to 5% per annum depending on maturity date. Principal i s payable in annual installments ranging from $1,295 to $2,840 commencing No vember 1, 2013 and ending November 1, 2033. In the event of default, the Trustee may retain the Lease Agreement and hold the City liable for all Base Rental Payments on an annual basis. The rental payments may not be accelerated. $2,415 relates to the Successor Agency
2,069
Subtotal 11,444
Add: Unamortized bond premium 197
Total Lease Revenue Bonds
$11,641
Remaining debt service will be paid by the Successor Agency fro m future property tax revenues. Annual debt service requirements to maturity are as follows:
Fiscal Year Principal Interest Total
2022 2,242 $ 510 $ 2,752 $ 2023 2,399 392 2,791 2024 2,556 267 2,823 2025 2,716 135 2,851 2026 141 64 205 2027-2031 812 213 1,025 2032-2036 577 35 612 Premium 198 - 198 Total 11,641$ 1,616 $ 13,257 $
Tax Allocation Bonds:
Principal Outstanding
The Successor Agency Tax Allocation Bonds are secured by tax re venues deposited in the Redevelopment Property Tax Trust Fund for the Agency established and held by the Count y of Riverside Auditor-Controller pursuant to Section 34813(a)(2) of the Dissolution Act. Upon event of defau lt, the principal due on the Bonds is subject to acceleration.
$62,980 Subordinate Tax Allocation Refunding Bonds (2014 Series A and B).
The bonds were issued to refund certain obligations of the form er Redevelopment Agency. Interest is due semi-annually on March 1 and September 1, commencing March 1, 2015. Principal is due in annu al installments from $160 to $4,745 through September 1, 2034. The rate of interest varies from 0.6% to 5% per annum.
37,900
$114,815 Tax Allocation Refunding Bonds (2018 Series A and B). The bonds were issued to refund the 2007 Riverside Public Financing Autho rity Redevelopment Agency Tax Allocation Bonds (Series A, B, C and D). Principal is payable in annual installments from $140 to $9,180 through S eptember 1, 2037. The rate of interest varies from 3.125% to 5% per annum. The refunding transaction resulted in a total net present value savings of $20,000.
Subtotal
114,815
152,715
Add: Unamortized bond premium 18,701
Total Tax Allocation Bonds
$171,416
Successor Agency to the Redevelopment Agency of the City of Riverside Notes to Financial Statements (Continued)
For the year ended June 30, 2021
(amounts expressed in thousands)
11 Remaining debt service will be paid by the Successor Agency fro m future property tax revenues. Annual debt service requirements to maturity are as follows:
Fiscal Year Principal Interest Total
2022 4,923 $ 7,061 $ 11,984 $ 2023 4,710 6,823 11,533 2024 10,280 6,450 16,730 2025 10,690 5,928 16,618 2026 10,795 5,392 16,187 2027-2031 51,660 19,011 70,671 2032-2036 44,365 7,737 52,102 2037-2041 15,292 579 15,871 Premium 18,701 - 18,701 Total 171,416$ 58,981 $ 230,397 $
Direct Borrowings: Notes Payable: Principal Outstanding
These notes payable have been issued to promote development and expansion within the City’s redevelopment areas.
Pepsi Cola Bottling Company of Los Angeles, 10.5%, payable in n et annual installments of $341, subject to recording of completion. Inter est accrues on the outstanding note balance upon issuan ce of the Certificate of Co mpletion.
Principal and interest on the note are payable solely from Proj ect Property Tax Increment. Payments start upon the time sufficient increment is generated in one year to pay the annual principal and interest on the note. Upon 25 years from the first anniversary date of the certificate of completion, all unpaid principal together with any accrued interest will be forgiven.
$ 2,987
Smith’s Food and Drug Centers Inc., 6% payable in variable installments, subject to payment of annual Community Facilities District assessment. The note is secured under a developer agreement.
931
Total Notes Payable $ 3,918
Remaining debt service will be pai d by the Successor Agency fro m future property tax revenues. Annual debt service requirements to maturity are as follows:
Fiscal Year Principal Interest Total
2022 28 $ 314 $ 342 $ 2023 31 310 341 2024 34 307 341 2025 38 304 342 2026 42 300 342 2027-2031 1,217 1,423 2,640 2032-2036 471 1,238 1,709 2037-2041 777 933 1,710 2042-2046 1,280 430 1,710 Total 3,918$ 5,559 $ 9,477 $
Successor Agency to the Redevelopment Agency of the City of Riverside Notes to Financial Statements (Continued)
For the year ended June 30, 2021
(amounts expressed in thousands)
12 Note 4. Advances from the City of Riverside
The former Redevelopment Agency had entered into various arrang ements with the City. The State of California, Department of Finance had concluded that certain loans were not enforceable obligations, which would have resulted in the repayment of only 80 percent of the loans. The City sued the State of California, Department of Finance and in July 2013, a Sacramento County Sup erior Court ruled that the loans are enforceable obligations and therefore must be repaid in full. T he outstanding Advance from the City of Riverside at June 30, 2021 was $2,925, which is related to the Riverside Golf Course acquisition. The Advance from the City of Riverside will be paid with future property tax revenues.
Note 5. Net Position/(Deficit)
The deficit in the Successor Agency Trust Fund will be reduced over the years as the related debt is paid- off with funds received from the RPTTF, which is administered by the County Auditor-Controller.
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Members of the Oversight Board
Successor Agency of the Redevelopment Agency
of the City of Riverside
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Successor Agency of the Redevelopment Agency of the City of Riverside (the Successor Agency), a fiduciary component unit of the City of Riverside, California, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which colle ctively comprise the Successor Agency’s financial statements, and have issued our report thereon dated November 9, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Successor Agency’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effecti veness of the Successor Agency’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Successor Agency’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that ther e is a reasonable possibility t hat a material misstatement of the entity’s financial statements will not be pr evented, or detected and cor rected on a timely basis. A significant deficiency is a deficiency, or a combinati on of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal c ontrol was for the limited purpo se described in the first paragraph of this section and was not designed to i dentify all deficiencies in internal control that might be material weaknesses or, significant defic iencies. Given these limitation s, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Successor Agency’s financial statements are free from material misstatement, we performed tests of its comp liance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that a re required to be reported under Government Auditing Standards.
203 N. Brea Blvd., Suite 203
Brea, CA 92821 Lance, Soll & Lunghard, LLP Phone: 714.672.0022 13 To the Honorable Members of the Oversight Board
Successor Agency of the Redevelopment Agency
of the City of Riverside
Purpose of this Report
The purpose of this report is solely to describe the scope of o ur testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Successor Agency’s internal control or on compliance. This report is an integral p art of an audit performed in accordance with Government Auditing Standards in considering the Successor Agency’s internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
Brea, California
November 9, 2021
14